In This Article:
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GAAP Net Income: $0.35 per share.
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Adjusted Distributable Earnings (ADE): $0.39 per share.
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Recourse Leverage: 1.7:1, down from 1.8:1 at year-end.
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Book Value per Common Share: $13.44.
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Total Economic Return: 9.5% annualized for the first quarter.
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Adjusted Long Credit Portfolio: Decreased by 4% to $3.3 billion.
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Total Long Agency RMBS Portfolio: Declined by 14% to $256 million.
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Longbridge Portfolio: Increased by 31% to $549 million.
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Weighted-Average Borrowing Rate on Recourse Borrowings: Decreased by 12 basis points to 6.09%.
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Cash and Unencumbered Assets: Increased to approximately $853 million.
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Ellington Financial Inc (NYSE:EFC) reported GAAP net income of $0.35 per share and adjusted distributable earnings (ADE) of $0.39 per share, covering their dividends.
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The company successfully priced five new securitization deals in the first quarter, securing long-term, non mark-to-market financing at attractive terms.
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Ellington Financial Inc (NYSE:EFC) added two more loan financing facilities during the first quarter, enhancing their liquidity and capital flexibility.
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The company's non-QM originator affiliates, including LendSure and American Heritage, continued to provide a strong flow of products and profitability.
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Ellington Financial Inc (NYSE:EFC) made significant progress in resolving delinquent commercial mortgage loans, freeing up capital for redeployment.
Negative Points
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The Longbridge segment reported a slight net loss overall due to interest rate hedges, despite positive contributions from servicing and originations.
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Securitization debt spreads widened late in the quarter and surged in early April, causing Ellington Financial Inc (NYSE:EFC) to refrain from pricing more securitizations until spreads recovered.
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The company's total long Agency RMBS portfolio declined by 14% to $256 million as they rotated capital into higher-yielding opportunities.
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Ellington Financial Inc (NYSE:EFC) experienced net realized and unrealized losses on consumer loans, CLOs, non-QM loans, and residential transition loans.
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The company's recourse leverage remained low at 1.7:1, which could limit potential growth opportunities if not managed carefully.
Q & A Highlights
Q: Can you elaborate on the volatility in the past months and the trading opportunities it has created? Have you been able to deploy capital effectively in these trades? A: J. R. Herlihy, CFO, explained that while there hasn't been material growth in April, the portfolio has grown net relative to March 31. The growth is categorized into two buckets: continuing to grow the loan portfolio and opportunistically picking up securities, particularly in non-agency MBS. Mark Tecotzky, Co-CIO, added that the volatility allowed them to buy loan packages and securities at attractive prices, especially in non-QM deals.