In This Article:
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Adjusted Distributable Earnings (ADE): $0.40 per share, a $0.07 increase from the second quarter.
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Dividends: $0.39 per share for the quarter.
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GAAP Net Income: $0.19 per share.
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Longbridge Segment ADE Contribution: $0.12 per share.
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Investment Portfolio Growth: Increased by 26% in non-QM, RTL, commercial mortgage bridge, HELOC, and closed-end second lien loan portfolios.
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Leverage Ratio: Increased to 1.8 times from 1.6 times.
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Agency Portfolio Reduction: Shrunk by 14% sequentially.
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Cash and Unencumbered Assets: Totaled $765 million, nearly 50% of total equity.
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Origination Volume at Longbridge: Increased by 16.5% sequentially.
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Book Value Per Common Share: $13.66 at quarter end.
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Total Economic Return: 0.9% non-annualized for Q3.
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Total Long Credit Portfolio: Increased by 19% to $3.25 billion as of September 30.
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Weighted Average Borrowing Rate: Decreased by 21 basis points to 6.77% at September 30.
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Recourse Debt to Equity Ratio: Increased to 1.8:1 from 1.6:1.
Release Date: November 07, 2024
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 an increase in adjusted distributable earnings to $0.40 per share, covering the $0.39 dividend for the quarter.
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The Longbridge segment showed significant improvement, contributing $0.12 per share to adjusted distributable earnings, driven by a successful proprietary reverse mortgage securitization.
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EFC's investment portfolio expanded, with high-yielding loan portfolios increasing by 26%, supported by strong balance sheet utilization.
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The company successfully executed multiple securitizations, including non-QM and proprietary reverse mortgage deals, achieving favorable financing terms.
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EFC added new financing lines, enhancing its ability to replace higher-cost debt and improve earnings through cost-effective refinancing.
Negative Points
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The Longbridge segment reported a GAAP net loss of $0.03 per share due to interest rate hedges, despite strong origination results.
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EFC faced net losses on its consumer loan portfolio and a related equity investment, impacting overall earnings.
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Operating expenses increased by 18% over the quarter, driven in part by one-time employee option redemptions at Longbridge.
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The percentage of delinquent loans increased in the commercial mortgage loan portfolio, with some loans moving to 90+ day delinquencies.
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EFC's overall leverage increased to 1.8 times from 1.6 times, raising concerns about potential risks associated with higher leverage.