ABR - Earnings call transcript Q2 2022 | Arbor Realty Trust, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Second Quarter 2022 Arbor Realty Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the call over to your speaker today, Paul Elenio, Chief Financial Officer. ahead. go Please

Paul Elenio

June Chelsea, and the you, This morning, and Ivan quarter everyone, we'll the me Okay. today Executive call earnings and Officer. call to is ended the for quarterly the our Trust. XXXX. for welcome With discuss on President Thank Kaufman, results good XX, Chief Arbor morning, Realty

cause results business, financial information statements assumptions Before operations, condition, about future the and Factors call These objectives. may earnings made statements of could in no materially available expectations based these we in begin, liquidity, in this not actual Arbor's on performance, reliance our results which Arbor of over future CEO, or I'll beliefs, forward-looking turn reports. risks events today. of forward-looking call assumed detailed I or to our currently need to plans to Listeners into deemed possible to SEC account reflect us. that unanticipated from forward-looking President to Arbor's today are revise circumstances results information cautioned speak occurrences only inform forward-looking statements now update obligation uncertainties, and on subject after including to you taking that our statements or are statements our are undue to are and be of events. or as differ expectations the these Ivan the undertakes statements, Kaufman. place these and to publicly of that

Ivan Kaufman

everyone call. and Thank today's to thanks for joining you, on us Paul,

dividend. earnings morning's in again that tremendous see had including can excess producing another well this from we once release, you As of our press were quarter,

the increase, our this quarterly our is ninth the $X.XX share, maintaining over period, lowest a a dividend we're growth to dividend payout As in dividend industry. XX% time ratio while able that increase all consecutive result, to representing and

environment. our is be something especially given model strategic that diverse recessionary mentioned As offers the emphasized, times, business several to needs we have many advantages, which

a asset $X built approximately operating stable is market. with focused the the is CLO right including have over outstanding of in XX% We indebtedness debt, requires billion secured on non-mark-to-market very current below with structures, well premium pricing that classes nonrecourse that our platform liability which

and us thriving diverse produces million that a income vehicles. returns ability -- of a to allowed during and $XXX balance exist of will keenly streams, liquidity addition has provide have the on business to downturn earnings in We cash in will sheet position, consistently us capital. around This our our grow generate hand, GSE/Agency focused superior roughly with to million $XXX also all maintaining single-family remain unique which rental currently with and that many We on many and opportunities dividends CLO take liquidity strong liquidity on cash cycles. economic maintain our the in to advantage deployable in this offensive remain

our peer graphs peer yield Additionally, exceptionally maintain to at superiorly our experience premium our a we manage significant and this the management than the substantial rest businesses this trade we have through believe anyone why And of group, monoline factors a These team dividend their lower are have struggle which to in a positions on multiple group. as well. well of this we through and cycle and downturn. asset expertise differentiating positioned business and to is the much should ourselves dividend lack are in and by succeed have seasonal us that successfully experienced cycles from operated most which very

well per distributable payout representing of which around of a earnings second of share, in our Turning dividend, will We is as in quarterly our detail, Paul now once more again remarkable. XX%. to quarter, financial our were ratio $X.XX excess discuss results current produced

significantly that increase earnings interest low our our on companies Clearly, will had also benefit this In lending will are rate continue income strong space book results only well our payout floating on and to strong potentially financial balances. Our the from earnings another with escrow ratio loan as rates, outlook, net which we our sheet greatly can extremely interest as dividend. one of our uniquely balance as raise business, our in positioned we quarter. the rising

of As quarter to balance the loan new book lenders to one $X multifamily X% of $XX in sheet the we the billion industry, second in another able top are our on grow billion originations.

the will to balance with producing originations quality This normalized with of pipeline, strong and maintain higher second and year us very the more be spreads. for a our volumes anticipated given we'll continue also the result superior selective slowdown. in We market the of year quite the half for

as In earlier, we liquidity on of heavily yields to maintaining position the take able strong opportunities are garner mentioned be to a capital. focused accretive fact, think our exist premium I to advantage we will on many

bridge As sell $XX $XXX fresh capital. loans, result, which recently to million generated multifamily a we of million of decided

to and market demonstrates our And record, total sheet and retained also extremely exit securitization origination well our point of closed securitization vehicles billion balance XX% with produce a takeout three very quarter, allowing execution and portion these market, in us business as clearly a strategy expertise. which superior in another assets a outstanding to appropriately the is the potential nonrecourse utilization our our debt need and upfront CLOs, access approximately servicing our with all no the of our income have by positioned as leader over attractive dislocated each We've further greatly to challenging market. of basis the brand contributed we're a long-dated vital this pipeline of CLO has non-mark-to-market consistently We The success XX.X these control generate with loans long-term portfolio the fee which fees of of two level match-fund CLO us years and new track strong CLO fees for recognition, in second quality on debt additional a of GSE/Agency as environment. and been with In $X provide in returns the to loan, to well we streams. capital. loans

that replenishment are We in into environment unlevered well that originated to have second will our billion increase in the pricing vehicles allow features the we of Label current and higher-yielding us runoff meaningfully our these assets In returns. also from GSE/Agency $X.X loans market today's recycle in quarter. programs, capital below Private and and

for will year. We confidence robust of also to what our in the us have pipeline volumes rest consistent produce a ability the give

predictable offer Our cash annual premium requires it and streams continues value significant GSE/Agency platform significant limited to generates and as long-dated income produces a capital flow.

long-dated unique a diverse to all tremendous enhance origination produce million continue continue future reoccurring prepayment-protected our and high-quality, flow. cash approximately us addition quarter, generate interest on our servicing in $XXX strong experiencing rise, built GSE/Agency platform is reoccurring our a we allowing that products dividends. us dividend. our had with cycles platform to earnings. gain again rates to We mostly streams, and operate balances which sale a to and Additionally, annuity earnings many increase year our strategically as in and $XX generates increase another from billion that escrow income with are providing is This in significant we on greatly the portfolio earnings is once we margins our our of will successfully to in multiple to In summary, platform

will you right classes I are in to originator very structures to liability capitalized, to space outperform the this our are now asset and succeed the call results. in also us are through significantly invested premium with We take peers. which and stable extremely well in continue to financial this multifamily positions over environment well the and to our Paul turn

Paul Elenio

Thank Ivan. Okay. you,

As had run to of for an quarter industry million XX%, high another share. ROEs again again or to producing of rate approximately ninth increase a once dividend allowing exceptional Ivan results our per $X.XX the translated consecutive These $XX mentioned, quarter, distributable us of annual we share. earnings into $X.XX

loss the in had in a million $X.X previously and future earlier, pickup made million million. This we approximately the that to our mentioned largely million asset $X was we loans off recording ended unconsolidated strategic the the a by to quarter, resulted loan paid income of that up investments in fresh we GAAP in a related a recovering lending loss second of and retain our decision from capacity. the construction we performance had loans to of based equity two $XX did which project, in reserves second in metrics. certain full million the one million have that on ability Ivan in offset of us. up recover $X.X quarter, In on generating $X.X to bolster loss in capital liquidity loss of to second the disposition an of We our we liquidated sell to position some and our order $XXX As quarter

past a have of of at a buyer cash. generating multifamily on approximately Additionally, loans into We the approximately bridge been that in of in the the on million accreted million we million sale of the loss to of closed additional small origination needed passed fees reversed. to we sale were yesterday quarter portion be the and along GAAP $X collected second income as par, $XX the $XXX recorded an

GSE/Agency up loans these we margins a quarter, income annuity to of receive to have which first we higher and originated Business, which the percentage was GSE sales fee, $X exit off. much recorded GSE sale, increase sales, quarter. the FHA X.XX% second a fee $X.X did year of XX.X forward $XXX,XXX In will addition the a of part loan We due pay by in second loans a may greater billion servicing on generated our margin. As which servicing X.XX% in loan roughly our GSE point retain of annual in when loan in our sales going billion quarter, any basis mainly the in from we

million quarter, to to an $XX.X in of servicing rights larger billion servicing rate loans of fees. around compared the in committed X.XX% related lower last the quarter $X.X quarter, contain a second due MSR recorded greater mostly that also loans average of X.XX% We to income of mortgage second mix representing

fee result gross of estimated weighted slightly basis $XX from This XX last life remaining activity portfolio will was to runoff of as portfolio quarter annuity around has servicing of the is with average conditions. current June XX, sale nine continue million of down which and extensive Our a points from an a approximately billion to $XXX due income years. predictable on a portfolio our market in generate of annually, forward increased going servicing

prepayment result million quarter second in on billion to our certain be the this we fees million In $XX runoff, received $X portfolio of to related loans of X% another second sheet in of to the balance originations. $XX in our our first billion lending grew operation, quarter. $XX fees the new a As quarter compared in protection provisions prepayment continue prepayment with elevated to

from billion quarter, was offset as $XX portfolio for the to by second the X.XX% yield $XX by compared mainly average higher in due Our which SOFR quarter, and yield to rates, Total originations of interest was around X.XX% increases quarter due debt offset and and first approximately X%, $XX.X at on rates increases to at debt in LIBOR investments to an on portfolio. primarily a runoff average on for both June billion The our $XX.X facilities for assets second increased mostly our second our for of debt second index with from for was mainly quarters. benchmark the the compared in which cost March investments quarter. the LIBOR on experienced the rates was The again, on debt our billion second all-in XX, in quarter XX balance debt to LIBOR approximately X.XX% increased X.XX% to average $XX quarter quarters. the the partially facilities was billion as quarter and the compared to increases compared partially first we core the funds for XX, balance from significant The to all-in X.XX% due at growth an the last at $XX.X rates, rates of investment in significant due the cost these X.XX% X.XX% growth SOFR was XX, the had and compared rates. March first June billion second mainly quarter due higher during billion in in quarter. of due originations the in in up to financing first core runoff was And to to new up to this quarter, approximately which to our first SOFR cost average

slightly on overall originations net Net spot from the last XX, overall at as assets in Our to were well core our mostly other this LIBOR June compression on X.XX% further spreads compared yield to and to decreased interest loan increases increase to as SOFR and at quarter book. balance net growth compared during due interest increases current this continue LIBOR our to quarter. on sheet spreads floating our to hand, new the slightly SOFR significant down in book XX and increase, interest to interest income, quarter, quarter increased note X.XX% $XX.X portfolio in March X.XX% curves the X.XX% will important to rates continue million any rate our it's predicted in very the rates And that net are from and spreads these loan to income runoff. as

X% share additional remaining increase $X.XX annually equal, in things all rates a fact, a earnings. In approximately in produce would

also will is annually debt may the returns in of significantly on to earning $XX approximately effective increase giving sheet Ivan and average as escrow amount we unique X% which to this business are XX/XX/XXXX. around well outstanding, million model, ability mentioned escrow run as recurring as now time. us rates the earn And at features completes loan book. mentioned to future. balances this grow approximately our These we million and significantly of in will levered originations. for of we over, which to as morning, high-quality, have annually prepared are loan That up income excess is our and sheet Business earnings rise, billion that these from our to it earnings have Additionally, below we our lastly, operator $XX CLO or will long-dated earlier, of continue billion questions Agency turn balance of to balances take And from Chelsea? I'll market $X a continue X.XX generate you have pricing more allow meaningfully rate balance substantially current mid-July, the remarks with earlier, in now $X have from the the confidence large in us to our at back any we

Operator

from [Operator Delaney question Steve Securities. with Instructions] And we'll take JMP first our

Steven Delaney

Good morning, Ivan and Paul.

the of I remarks Another strength and envelope some Ivan, the here excellent referring comment the about push about no actions to, not needing note you've the new portfolio. did that your the quarter. to I given am taken cautionary CLOs of existing somewhat we, noticed structured sale, loan in of noted terms this of so loans that And at originated million I they're point the times. haven't in you selling in spread. you've time $XXX since expanded course, bridge then guys which is previous

reading I'd So on this in portfolio you've point know has sense I you're things a if because time? doing like I guess, to got not first, to -- am necessary no those and were you're in just that? already that Can that comment strong steps but correct you at reach taking,

Ivan Kaufman

Yes.

calls, XX of we separately. on The tremendous said business type in a address market expertise, have. of to them that me we certain it in debt, debt outstanding to have, terms there. running many total relative in the I've debt and Let percentages. roughly or CLO at debt requires which of amount we And And of XX right percentage XX% CLO CLO our high manage we're our lowest

that the levels many debt If levels. we market, our horrendous comment to trying because executing of My to relative of you're and to CLO debt. is have need their basically competitors out to watching CLO debt on CLO to access bank balance they're access the are profitable lines you don't

proportions. right the have We

low-cost huge these us gives embedded have We structures place that advantage. competitive a in

$X reaccess and saying, position to a that. sitting on billion the where not we're we're we're CLO the forced execution get So market the last to and back we're debt, best in one a in

one of the the market. we're positions in So best in

narrative is. you have the that just towards. are lock returns or follow comment it they've was who to if people based where unacceptable. the Yes, That's So that's had had kind to execute, of in that way

So we're very we're that. in great a proud and position, of

Steven Delaney

week noticed points a there, basis you earlier at so basis To priced able to we X.XX, X.XX just XX above. this XX SOFR. multifamily CLO, at to May points your point CLO your that were CLO, And execute June was over

pushing XXX case. is it's to understand towards So consider can this that not time? you over, obviously, at I that why up And the economic

Ivan Kaufman

It's for you a locking and other noneconomic, stuck in liability but you're them not while. only structures with

don't don't have do it. So to we do it,

Steven Delaney

currently, on Of of is debt much CLO period? your percentage the billion still that $X basis how in reinvestment a in

Ivan Kaufman

is. it of All

Steven Delaney

has of an open All it reinvestment, wow.

Ivan Kaufman

Yes.

Steven Delaney

Obviously, next there will run off run the over two down? year or or

Ivan Kaufman

Yes, it will tip off.

allocated that, the think they get first November benefit be with will in loans fully period our which of -- time. I one of tips off and tip over a and off and

that I in in maximizing mind, So Paul, them. what costs in keep liability them, we're the the are, managing average think And [X.XXs].

Paul Elenio

or particular that CLO For in total?

Ivan Kaufman

total. In

Paul Elenio

In total, yes.

said at even over [X.XX] did the just [X.XX] blended, we're Steve. in in May, commentary, and I my with we As that's CLO

So in. got we've locked liabilities low really cost

Ivan replenishment them the every has 'XX, them rest one still As small off of a one that's in of ability said, 'XX. and burns CLO are late November,

a here meaningfully really locked-in we've of So returns. enhance low-cost vehicles to those cost got -- or lot our utilize that enhance to low runway

Steven Delaney

I'm That makes ahead perfect sense. sorry. Go --

Ivan Kaufman

next the it. million. majority us close because market test levers was generate selling right loans, our like when to tested the and what our see of opportunity retain collateral. want retain some generate and this We flexibility sale selling to recycle Jumping market to we liquidity of our great comment the And a We're to doing the always levels we to fees. the on able are for the have we loan $XXX different about servicing, to

firm staying servicing potentially servicing facing a way a an that's getting importantly, maintain of on fee generate part capital. creating Most still agency loan want like then the and us, significant the of we with liquidity think our it back And was $XX to I clients end. and when our a and that million economics. for and to retaining know I another

our well. very, fit we So model very

to Now that given offensive, to been moves in the adequately or the we the ourselves another it we've make even not are not, has sure for positioned are. and many, today. put for this done in liquidity preparing sure be And to we're we've to many place if we get And and this where going be whether we've including year, adequate to the drop, that recession there's last make does things, taken that firm position defensive. these all are

Steven Delaney

who a on senior been guess that as the could structured I Fantastic. depending and... have buyer participation, is also

Ivan Kaufman

a do to Yes. There's different it. only way

testing so well. point our We've So waters. more in We've grown great lot access for balance the a and of capital any out time figure of at capital, done a another We've to structures. was sheet we're we way us job. and want out if used just liquidity just it our

Operator

Shane question Our with JPMorgan. come from next will Rick

Richard Shane

And I'm just movement environment are of vacancy delays lines sales? the on related current curious they finally, supply construction. in potential on longer shortages collateral the labor realistic we or that in in Agency any sheet for values it with balance loans -- with the sort chain in terms before see stay to migrated will the and absorption, is of time paper

Ivan Kaufman

year, a -- to with kind to to curve of at XX borrowing over [XXX] because to then level the over, that. Agency If [XXX] can So over maybe at inverted driven of [X.XX] is be yield you actually [X.XX] there's have look on people could curve. cost We a is. borrower two yield ways SOFR sheet, execution Agency our the an X%, facilitation think way there of a are the on balance at you of execute to

sheet in rate seeing rate of a we're the cap from potentially them and X% and convert for to to X.X% and X.X%. pay risks talking a up lot fixed more X.XX% to SOFR costs them into XX-year -- off move of X% balance would So we're a people,

pretty those a ago, And some that's a the real put I Agency X.X of which think you our for is products on So our that [X.XX], low. going on have to That's year going coin. years help at ago, XX-year we're surprise, that maintain were see volumes. side movement, to to

So I a quicker happen we'll thought. think little maybe see we that than

their to our costs construction On been XX were XX%. the we've clients side, last new up talking over months the because

risen now to Now to historical have even well though historical X% XX% is above rents levels, you're seeing XX%. X%,

advised that hold So some of of clients lot into costs rent our we've done seeing And their they've construction, by and now increases, offset those to off. cost actually they're increases come a line. slow were back

their construction for be because time on lines a bit into costs waiting there'll new but think side. little people a they I with of delay on that's So construction line, to were come the

six their slower. be Their going be I costs is construction but little people's so are months back a a up nine be to are be to think bit, to going So interest schedule. will behind little costs going in line, that to

Richard Shane

given answer. great. require actually both floating before. of helpful, That's rate you take think apologize to nature loans, interest do form of parts caps? asked It's rate borrowers that protection the very the we've any of in And I I But the this

Ivan Kaufman

loans our caps. require Yes,

Some moving place, of and a course, have was these whole were in them weren't place have process. rates be spring caps. will lot Most of were the of and -- a that in they the if caps put caps it up. of loans All

majority caps. Super of are of have majority those loans a our loans So our significant.

Operator

next Our with come Raymond James. will Laws Stephen from question

Stephen Laws

on how putting replenish new these older is off into wanted you're newer production, as to able on those CLO. with Delaney's you're around follow there I and much loans vehicles to facilities? questions loans spread pickup pay up Steve But the incremental

Ivan Kaufman

let outlook, think bit an me I little give So be and of a this helpful. will

last had, on eaten our months nine I period That price pricing. the eight a We time. think, bridge of increases is in have over

pricing, over we full which time, one almost a bridge is is So XXX] range think at was to to point. [XXX now a that XXX] point [XXX or in our

we vehicles, more point. you math this really at with replace talk the So as higher coupons. about off Paul, can them And pay those loans in

Paul Elenio

Yes.

quarter, billion a return originated, returns, seeing were the we we for And actually maybe So got on. what is levered In year been targeting to the the the Steve, XX% we've XX%. color. over things as I -- think that's $X we're XX% competitive XX%, levered second last quite excellent somewhere

deals and got and simple. were just Ivan And overspread math in we When [X.XX] we're we I the the X.XX] other returns quarter. day at originating we're pricing [X what move. under those putting over low-cost are vehicles, meaningfully think X.XX] the that off X.XX] CLOs now and and when can new is [X, about at loans them when those XX% to talking over paying was over loans first these I got were [X, in

You from could XX XX a we XX our business. XX. up to we're new loans to that's in forward see going being starting end that really the now normalized product. an And balance to in migration commentary, talked selective to volumes And forward about why having and very in in sheet more Ivan's our going

out drive the we instance, into of close For in think more meaningfully. about is July, but July, million pretty really did to be the going going that to we're runoff, that to up wider $XXX about had X.XX size million higher new and than the $XXX originated production -- meaningfully We we number of bridge-wise. returns we vehicles and is and credit we're replace quality about spreads,

Ivan Kaufman

is our on production to level with at try environment not manage in our to And in our And advantage year in have try think I going these the to the outlook and sheet take time. mind, this access balance of of try is that and the a low-cost point and market CLO vehicles maintain dislocated the at balance and our for we're runoff. to that match

Stephen Laws

math powerful fees. to up wanted turn repayment I certainly is as on over. follow Paul, the The the color. things Appreciate there

kind flat you around in what will should the a saw we expectations from million. of What said million $XX moves kind given your and basis? just second quarter, on think was I about this that go-forward of forward, roughly be that we quarter, going how that everything think are $XX the

Paul Elenio

Sure.

a talked we've been of So this and I. about Ivan things, quarters, Steve, and and couple surprising, for it's several

factors, million. That You changing. in to $X.X million have our up But right? market was book in sales quarter. $XX talking we've The the to somewhat flat, right? first $X.X about quarter. in certainly will in Fees billion from $XX about the saw start servicing second is been billion were two slow, We runoff internally

In of in collected in give runoff. million fact, for We fees July, you some prepayment on can color. million $X.X $XXX I July

that's X.XX, rise what's in for will any sales and with X.XX there rates, which your down. rates indication right? away. So But to of and and of and rise, slow SOFR that a good down two sitting sitting So July. maintenance has product started is love. go significantly is a rates reasons. LIBOR that numbers coupon, One, maintenance be already at to clip in sometimes annuity And be will come, even we at as be go retain you'll servicing is And news two, to portfolio volume going our turns to to able significantly down as the we'll the is long-term that

forward. the it's still size come So And down that, I of if X.X X, book, $XX we're is, maybe and going of again, of do those X.X, expect to that, you some July, significantly. fees our I Having said number have not don't sales to annualize decline in know because what but significantly, fees. going the it's million I do prepayment to expect

Operator

will from Rahmani KBW. question come next with Our Jade

Jade Rahmani

outlook achieved valuations loan the portfolio, the last quality the bridge growth the the the How quarters the several existing all and balance there? Considering feeling and in current the in you are about over you portfolio credit sheet real change of portfolio in estate.

Ivan Kaufman

We've step earlier, So lower had them we standards step. underwriting I by adjusted step over by that, when the price also commensurate eight increases I Jade, think having LTVs. mentioned our with last months, nine adjusted by we that

exit call do this We've when our underwritten because LTVs to adjusted ago on points Agency nine as now on bridge takeout. our loan, we think is until less test from I and final probably loan months bridge the we've every percentage originations execution X basis, talked a

kept standards. we those adjusting So underwriting

the nine very over feel book comfortable last months. we the on we So put with that

have In of lot lot our good addition, different a rebalance that tests loans have of enhancements. and a structural

real our we're book and So management and way in comfortable with capability. we asset we place have our the what manage

sure making with to We've our go portfolio. through they consideration work and with into rise And it So we're interest to borrowers rates. to interest we're a outlook. reserves that comfortable we've way replenishments and in running begun begun our have adequate take our the

Jade Rahmani

that. very the rent those side, are loan seeing robust strong market. continued the Thanks portfolio your multifamily that in And seeing bridge rent very growth? and growth plans? servicing in seems And the their much portfolio the are the business it continuing surveillance, transitional are Across loans, on you for hit projects you to rents be

Ivan Kaufman

our XX% you're rent XX% have to I of rent underwriting far all seeing exceeded that I growths all growth. mean expectations. the think and our

their You're having their dollars to growth. use seeing renovation turn get people not rent to

caution growth the a So been rest that is lot the strong. a I story a rent marketplace of the having than little different on cycles. of would still put through

if in a to forward. recession, at we're going a going And going I think little growth also bit to rent economic higher we're looking lower you're vacancy.

So and portfolio the for and in flat vacancy. rolls, we XXXX are proceeding caution points economic looking but growth we're of to the XXXX. with how X% in we're X higher still optimistic That's rent about points rent probably level some X what's at with to

Jade Rahmani

imply? rates And scenario, delinquency Anything of kind what does under that rates material? default that or

Ivan Kaufman

our we that Nominal. not that's Not not capital and handle anything anything within not significant, anything can't that's projections.

Jade Rahmani

rates think maybe in is basis the range you we've from that? Or gotten to diversified point the cover and do REITs point in in range. REITs that concur to cap as XX values, So XX that's mortgage we decline the overly somewhere you with increase perhaps in XX% other well as optimistic? somewhere Do basis color for a X%

Ivan Kaufman

optimistic. overly that's think I

the rates And values is the that on probably think market, level all probably varies and points XX up to basis It market all on are I XX. and I slow collateral. type right the cap in marketplace. the X% of are think it's XX%

more lot in a lot to And slowdown more we've lot a a nine been anticipation we're more conservative. of in months ago. market So conservative, the beginning XX the

we've special So behave. how see and been through sale, -- sales we'll the

Jade Rahmani

bond commercial trading people or CLOs. low that markets? is at and bond Are should gauge you market, say, think look rates the you or there estate Lastly, What of on at versus are treasury. are surprised maybe the you the think just when market CMBS look the to is that do more the health market treasury I yields we XX-year are, proxy how indicative, beavering be interestingly, real a by the finance particularly, focused high-yield where

Ivan Kaufman

some CMBS Well, We're whether taken And CLO at it have to gets for AAAs and to into it's something we on execute -- market the to significant at we wouldn't the right below be We'd us want to return for gets market would six a better. sure market liquidity looking to see into said, in is attractive, the not before market it now, thinking to the to change. we nine market, least down the months. see of we'd another as if normalcy. get X and CLO CLO I'm you're the execute kind would not have worse today. all feel CLO that

want So execute term. the you that near market, would as CMBS is one know, not into something to

not a normalized if level, So normalized we will these six return are see over next to levels. the three to they months

Jade Rahmani

of acquiring capital And is CLO pieces and interesting, deals? do think AAAs you or some acquiring other securities of these stack the

Ivan Kaufman

something explore in to position classes the Listen, CLO and can to we we to whether to love as together put funds market. we'll in start Yes. subordinate a some acquire be

would the as subordinate And ability well are that's the We over we with we love understand structures. to have good they with do off and think went and most, some we [X.XX] trade, as of it’s as with them that's buy a a and something probably $XXX better $XXX think firm. classes to than underlying these that trading,

Jade Rahmani

strategies. in Arbor certainly past, been hass putting Well, opportunistic together at the creative

look to seeing So forward that.

Operator

question from Love Piper with next come Crispin will Sandler. Our

Crispin Love

a quarter great on here. Congrats

very one on be during quarter. just contained the look core well Core First to expenses. is expenses

you on there's that curious keep to So if compensation here did proactively or out? if especially control, any them under the call other anything areas to I'm side there's

Paul Elenio

Sure.

at just in, and it let wants do high to So maybe Ivan he if can. then chime me level a

Crispin. look you at have So, to numbers the comparatively,

So yes, $XX and combined. million think last up in I quarter, we about G&A put comp

but variable million, there strip compare. items in $XX kind and it’s there's quarter out to that got some This you've of

quarter. $X.X They were So about $X this were million last commissions quarter. million about

last And $X.X trade of we volumes So that we quarter last volume Agency And the more stock because to that’s off. were that's million Obviously, an are. their based a able a we million grants $X because of only was APL year there lot give It million one-time employees as to change. comp variable of side the then stock on comp that get plan. of where quarter. $X comp, are was this part in our quarter March sale had on

quarter, quarter out those $XX in it strip came in million items. came variable and million and last G&A about you when about without So that comp this all $XX

XX% job comp last I G&A although think having some it's do But of reason only more a side, little elevated the right? comes preparing think on then down good and that's good are done the that. maintaining call our time. growing because areas that is said Most to all is than executives. of maybe the guided that, numbers of is that But they staff, year-over-year, million. sure the cycle of yes, we making it reset, think side, a first like better servicing we'll bonuses our for that -- and cost. quarter's cap you the you've The quarter that asset done for And I a always in having on staff hit are. really are meaningful, bit been maintaining for FICO FICO probably So management now, the up job because $X we've that where And we've our down. the even and We've I have this got FICO XX% the we're the

Ivan Kaufman

well that, staff do as getting where massive to inundated had this to Just with on years were as to two a and we're volumes retain was comment what industry very out everybody attract ago, we're costs than in of and their they control. environment can staff different we

not clearly, offset to were in were that. things a outsized that were enough of our volumes So but there normal course big business,

we're going more think a environment. to normalized I

to I a productivity. you'll in do job our good see our costs better us and very position a managing think at being

to in that getting look normal sense. forward to So back we

Crispin Love

on all helpful. point a in Structured just Great. That's a if it. And little earlier then originations I I'm the finer business, curious can appreciate on your bit but get you of commentary

talked second XXX per month, your kind is with $X.XX bit about billion So X was about XXX that if by kind which of that last divide below quarter. you the quarter, of a I start that little

is jumping how just trended So $XXX quarter? curious about And kind on for point few of kind originations through that the off of July then quarters? I'm next to million first, the good a that you talked

Ivan Kaufman

on credit conversation give well. want maybe I to will color and the as help little this Yes. a

their get to price we're own gone that the X% broker, either we loans geared extraordinarily reduction resized month. a on larger rates the a or We going to $XXX anywhere we're XX% approach and borrowers, pipeline we we a probably and work And and And into we pipeline a at very go reequitize points, have be to were three because took all letting adjusted. probably had up, them loans very, the borrowers towards So the $X scheduled our an to comments our And of the with values close know between hard had very us. a risk large billion more. back four months. lender, last the And with to was had not with and loans. one were active million

a fallout their result our with they to they that a than in guidance massive our had were went that, As what understood different under. we of values pipeline because contract

close considerable high portfolio. that more. on shrink even that My were million on low outlook $XXX terms expecting a forward our between in of of side we're my side, going month per comments we to $XXX number XX%, the runoff really million anywhere we able to the pace, to loans So in very, to the is very needed current

level will originate that's which year. a We position the and runoff still the of balance balance So a million we leading think that's originator. to we $XXX it's of more a million a look capital the level. level for to normalized for $XXX appropriate And sheet month. in as healthy think That's maintain our a probably

at at that? the how I course, to That's give change. given on color time scenario. look could that's want the So the current outlook any would you environment. Paul, That, the do on of present

Paul Elenio

now. things July, came our a month going $XXX portfolio -- kind our exactly bit to bridge we're we what anywhere maybe And growing keep for Ivan's of million to our constant exactly That's $XXX light little run July. to production, runoff that But in that's change, of but in right managing runoff be XXX We're can but little it's against a rate $XXX to in doing, right. with million Ivan, Crispin, estimating million a we're where runoff

Crispin Love

That's all Great. helpful. really

here of of at kind increasing kind is been? So the than idea looking environment have portfolio you you're in maintaining the the like more just rather

Ivan Kaufman

And recycle it into higher well. rate as loans

Paul Elenio

important. very That's

higher cost that grow substantially because returns while of balance not for the them levered So will may returns in these portfolio returns. we're the and financing really the out putting the up year, have will low our grow vehicles the we capital at drive

Operator

any Ivan like or additional to now closing remarks. back the call over hand Mr. Kaufman I'd to for

Ivan Kaufman

feel concludes and remarkable we dividend, everybody's is Take which are care. great everybody. are participation. to again once forward call. effort that our increased Appreciate adjusting And we which call Clearly, changing rest a a times, quarter's look result. to We're and times the our Well, have extremely summer, next of today. pleased these well positioned. Have

Operator

today's This Thank concludes gentlemen. appreciate you. we your ladies and you, Thank participation. and call, conference

disconnect may time. any at You

Arbor Realty Trust (ABR) 29 Jul 222022 Q2 Earnings call transcript