Company: ABR-PF
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001628280-25-007183
Chunk: 99

Company: ARBOR REALTY TRUST INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 8
Chunk 99
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 fair value of collateral for loans that were individually evaluated for a specific reserve, which were sensitive to the use of certain market-based assumptions, including capitalization rates.How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to measure the allowance for credit losses for the structured loan portfolio. For example, we tested controls over the inputs into and operation and monitoring of the ACL model, the methodology and assumptions used to update collateral values and measure expected credit losses on individually evaluated loans, and management review controls over key judgments used in the evaluation of ACL model results and the estimate of collateral values for individually evaluated loans. Our test of controls included observation of and inspection of the related documentation for certain key meetings of the Company’s CECL working group, where key judgments on current and forward-looking macroeconomic conditions, internal and external factors, and uncertainty as it relates to economic, model, or credit risks, were discussed and effectively challenged.  Our procedures over the general reserve included, among others, the involvement of EY specialists to assist us with evaluating the ACL model’s methodology, conceptual soundness, and model performance. We performed procedures to test the completeness and accuracy of data used in the model, evaluating the economic forecast selected by management, and evaluating the reasonableness of model results.  Our procedures over the specific reserve included, among others, the testing of the completeness and accuracy of data inputs, the clerical accuracy of cash-flow models, and the involvement of EY valuation specialists to assist us with auditing management’s estimate of the fair value of collateral for a sample of loans, including testing certain key assumptions such as capitalization rates. As part of our overall evaluation of the Company’s determination of the ACL and our search for contrary evidence, we compared the current ACL to historical loss levels and evaluated subsequent events.  

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2003.

New York, New York

February 21, 2025

50

Table of ContentsARBOR REALTY TRUST, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS($ in thousands, except share and per share data)

December 31,20242023Assets:Cash and cash equivalents$503,803 $928,974 Restricted cash 156,376 608,233 Loans and investments, net (allowance for credit losses of $238,967 and $195,664)11,033,