Arbor Realty (ABR) Q1 2026 Earnings Transcript

Motley Fool Transcribing, The Motley Fool Fri, May 8, 2026 at 10:43 PM GMT+7 33 min read ABR Image source: The Motley Fool. Chairman, Chief Executive Officer, and President — Ivan Paul Kaufman Chief Financial Officer and Treasurer — Paul Anthony Elenio Ivan Paul Kaufman: Thank you, Stephanie, and good morning, everyone, and welcome to the quarterly earnings call for Arbor Realty Trust, Inc. This morning, we will discuss the results for the quarter ended March 31, 2026. Some of the short reports appear to have provoked investigative interest from regulators, as well as class actions and derivative claims from plaintiffs’ law firms. We have steadfastly maintained that these attacks and claims made against us were baseless and misleading. We are pleased to report in that regard that we believe any pending investigations that were initiated in the wake of the short reports have now been closed without any action against us. Additionally, and very recently, our motion to dismiss the class action lawsuit against us was granted and the claims dismissed without prejudice. We have been very pleased with these developments. Although our management team never lost sight of our shareholders and their interests during this challenging period, we are happy to put this chapter behind us and focus on creating shareholder value free of these costly and unwarranted distractions. On our last earnings call, we discussed at length how we feel we are at the bottom of the cycle and have ring-fenced the majority of our nonperforming and subperforming loans and are working exceedingly hard at accelerating the resolution of these loans into performing assets, which will allow us to start to build back our run rate of interest income for the future. This is our top priority, as these loans are having a tremendous drag on our earnings. We also mentioned that if rates went down the process would accelerate, and if rates increased, it would lead to a longer period of time needed to resolve these loans. Unfortunately, given the geopolitical landscape, the five- and ten-year have actually increased roughly 50 basis points in the first quarter, which is certainly pushing our timetable out a little bit. Despite these challenges, we continue to make progress in working through our assets, and again, we believe we have a clear line of sight on resolving a bulk of these assets over the next several quarters. We ended the first quarter with approximately $500 million in delinquencies and around $500 million of REO assets for total nonperforming assets of roughly $1 billion. These numbers are down approximately $100 million from the last quarter, or a 9% reduction in risk. Again, our goal is to continue to accelerate the resolution of our non–interest-earning assets and redeploy the capital into performing loans and grow our run rate of income. We had $200 million of resolutions, which is consistent with our goal of continuing to shrink our total delinquencies each quarter. Additionally, we have line of sight on roughly another $200 million to $300 million of delinquencies we expect to resolve in the second and third quarter, in addition to another $100 million we believe we have the potential to resolve by the end of the year. We also remain optimistic that we can reduce our REO assets to around $200 million to $300 million by the end of 2026, even after adding an additional $100 million of REO assets over the next few quarters, which were already reflected in our delinquency numbers at March 31. We have been actively marketing several of these assets for sale, which will go a long way towards helping reduce the drag on earnings and increase our run rate of income for the future. As we discussed in detail on our last quarter, we continue to focus heavily on our legacy portfolio, which currently sits at approximately $5 billion. Approximately $500 million of these loans are delinquent, which we are working through very aggressively, and $1.5 billion continue to perform in accordance with their original terms. The other $3 billion have modified pay-and-accrue features, of which only half of these loans we are accruing the full rate of interest on. We continue to make progress in reducing the amount of accrued interest outstanding on certain loans by resetting the rates to today’s market spreads and requiring that the borrowers pay down a large portion of the outstanding accrued interest as part of the modified terms. In fact, we are currently working on several loans totaling approximately $400 million that we think we can modify in the second and third quarter, which will result in receiving approximately $19 million in back accrued interest, reducing the outstanding accrued interest down to around $1.1 billion. This is a very effective strategy that will also put these loans in a much better position to cover our debt service from property operations and is resulting in improved terms from our line lenders. This, combined with having

Arbor Realty (ABR) Q1 2026 Earnings Transcript

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Arbor Realty (ABR) Q1 2026 Earnings Transcript

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