Ellington Credit Company Reports Fourth Quarter 2024 Results
Fourth Quarter Highlights
-
Net income (loss) of
$(2.0) million $(0.07) -
Adjusted Distributable Earnings1 of
$7.8 million $0.27 -
Book value of
$6.53 $0.24 -
Net interest margin2 of
8.54% on credit,3.24% on Agency, and5.07% overall. -
CLO portfolio increased to
$171.1 million $144.5 million -
Capital allocation3 to CLOs increased to
72% at year end, compared to58% as of September 30, 2024. - Debt-to-equity ratio of 2.9:1 and net mortgage assets-to-equity ratio of 2.6:14 as of December 31, 2024.
- Weighted average constant prepayment rate ("CPR") for the fixed-rate Agency specified pool portfolio of 9.55.
-
Cash and cash equivalents of
$31.8 million $79.2 million -
Dividend yield of
15.7% based on the March 11, 2025 closing stock price of$6.12 $0.08 -
Subsequent to year end, shareholders approved conversion to a
Delaware registered closed-end fund to be treated as a regulated investment company ("RIC") under the Internal Revenue Code, focused on corporate CLO investments (the "Conversion"). - Expect to complete the Conversion on April 1, 2025.
Fourth Quarter 2024 Results
"We continue to expand our CLO portfolio in preparation for the upcoming Conversion, and in the fourth quarter, we grew that portfolio by another
"Our results for the quarter reflect positive performance in our CLO portfolio, particularly CLO mezzanine debt. Net interest income in that portfolio rose, and we also generated net gains resulting from several opportunistic sales, tighter credit spreads, and redemptions of several of our discount seasoned CLO mezzanine tranches. However, intra-quarter interest rate and yield spread volatility drove underperformance in Agency MBS, which led to a small overall net loss for EARN for the quarter. The combination of portfolio growth and wide net interest margins on our CLOs continued to support our adjusted distributable earnings, which again covered our dividends for the quarter.
"With shareholder approval now secured, we are working to finalize the Conversion and expect to operate as a RIC beginning April 1. This conversion marks a pivotal milestone for Ellington Credit, positioning us to drive strong earnings and unlock greater value for shareholders over the long term. We remain committed to executing our strategies with discipline and appreciate our shareholders’ steadfast support throughout this process."
Strategic Transformation Update
On March 29, 2024, our Board of Trustees approved a strategic transformation of our investment strategy to focus on corporate CLOs, with an emphasis on mezzanine debt and equity tranches. As part of this transformation, we revoked our REIT tax election effective January 1, 2024 and rebranded as Ellington Credit Company. We remain listed on the New York Stock Exchange under the ticker symbol EARN.
At a special meeting of shareholders on January 17, 2025, we received approval to complete the Conversion. Over
We expect the Conversion to take effect on April 1, 2025, marking our full transition from an MBS-focused REIT to a CLO-focused closed-end fund. As part of this shift, we intend to sell our remaining liquid Agency MBS pools and, following the effectiveness of the RIC Conversion, operate in compliance with 1940 Act requirements.
Financial Results
The following table summarizes our portfolio of long investments as of December 31, 2024 and September 30, 2024:
|
December 31, 2024 |
|
September 30, 2024 |
||||||||||||||||||||||
($ in thousands) |
Current Principal |
|
Fair Value |
|
Average Price(1) |
|
Cost |
|
Average Cost(1) |
|
Current Principal |
|
Fair Value |
|
Average Price(1) |
|
Cost |
|
Average Cost(1) |
||||||
Credit Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dollar Denominated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
CLOs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
CLO Notes |
$ |
65,954 |
|
$ |
55,157 |
|
83.63 |
|
$ |
55,363 |
|
83.94 |
|
$ |
63,090 |
|
$ |
52,892 |
|
83.84 |
|
$ |
52,800 |
|
83.69 |
CLO Equity |
|
n/a |
|
|
91,832 |
|
n/a |
|
|
97,267 |
|
n/a |
|
|
n/a |
|
|
66,518 |
|
n/a |
|
|
69,188 |
|
n/a |
Total Dollar Denominated CLOs |
|
|
|
146,989 |
|
|
|
|
152,630 |
|
|
|
|
|
|
119,410 |
|
|
|
|
121,988 |
|
|
||
Corporate Debt |
|
1,787 |
|
|
428 |
|
23.95 |
|
|
398 |
|
22.27 |
|
|
1,222 |
|
|
391 |
|
32.00 |
|
|
372 |
|
30.44 |
Corporate Equity |
|
n/a |
|
|
56 |
|
n/a |
|
|
75 |
|
n/a |
|
|
n/a |
|
|
30 |
|
n/a |
|
|
43 |
|
n/a |
Non-Agency RMBS(2) |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
9,343 |
|
|
9,448 |
|
101.12 |
|
|
7,844 |
|
83.96 |
Total Dollar Denominated Credit |
|
|
|
147,473 |
|
|
|
|
153,103 |
|
|
|
|
|
|
129,279 |
|
|
|
|
130,247 |
|
|
||
Non-Dollar Denominated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
CLOs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
CLO Notes |
|
17,368 |
|
|
16,835 |
|
96.93 |
|
|
17,219 |
|
99.14 |
|
|
17,555 |
|
|
16,818 |
|
95.80 |
|
|
16,173 |
|
92.13 |
CLO Equity |
|
n/a |
|
|
7,298 |
|
n/a |
|
|
7,995 |
|
n/a |
|
|
n/a |
|
|
8,258 |
|
n/a |
|
|
8,394 |
|
n/a |
Total non-Dollar Denominated CLOs |
|
|
|
24,133 |
|
|
|
|
25,214 |
|
|
|
|
|
|
25,076 |
|
|
|
|
24,567 |
|
|
||
Total Credit |
|
|
|
171,606 |
|
|
|
|
178,317 |
|
|
|
|
|
|
154,355 |
|
|
|
|
154,814 |
|
|
||
Agency Portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dollar Denominated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Agency RMBS(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
30-year fixed-rate mortgages |
|
536,948 |
|
|
512,307 |
|
95.41 |
|
|
519,628 |
|
96.77 |
|
|
461,682 |
|
|
462,112 |
|
100.09 |
|
|
454,370 |
|
98.42 |
Reverse mortgages |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
34 |
|
|
34 |
|
100.00 |
|
|
37 |
|
108.82 |
Total Agency RMBS |
|
536,948 |
|
|
512,307 |
|
95.41 |
|
|
519,628 |
|
96.77 |
|
|
461,716 |
|
|
462,146 |
|
100.09 |
|
|
454,407 |
|
98.42 |
Agency IOs |
|
n/a |
|
|
2 |
|
n/a |
|
|
2 |
|
n/a |
|
|
n/a |
|
|
1,870 |
|
n/a |
|
|
1,583 |
|
n/a |
Total Agency |
|
|
|
512,309 |
|
|
|
|
519,630 |
|
|
|
|
|
|
464,016 |
|
|
|
|
455,990 |
|
|
||
|
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
425 |
|
|
426 |
|
100.24 |
|
|
426 |
|
100.24 |
Total |
|
|
$ |
683,915 |
|
|
|
$ |
697,947 |
|
|
|
|
|
$ |
618,797 |
|
|
|
$ |
611,230 |
|
|
||
(1) |
Expressed as a percentage of current principal balance. |
(2) |
Excludes IOs. |
CLO Holdings
Our CLO holdings grew by
Agency RMBS and Non-Agency Holdings
Our Agency RMBS holdings increased by
Leverage and Hedging
Our debt-to-equity ratio (adjusted for unsettled trades) increased to 2.9:1 as of December 31, 2024, compared to 2.5:1 at the end of the third quarter, driven by an increase in borrowings on our larger CLO and Agency RMBS portfolios, partially offset by higher shareholders’ equity. Meanwhile, our net mortgage assets-to-equity ratio declined to 2.6:1 from 3.0:1, driven by the increase in shareholders’ equity and a net short TBA position at the end of the fourth quarter in contrast to a net long TBA position at the end of the third quarter.
We hedged our interest rate risk using interest rate swaps and short positions in TBAs,
Net Interest Margin and Adjusted Distributable Earnings
In the fourth quarter, the net interest margins on our credit and Agency portfolios decreased to
The decline in net interest margin also led to a small decrease in our adjusted distributable earnings per share to
The following table summarizes our operating results by strategy for the three-month periods ended December 31, 2024 and September 30, 2024:
|
|
Three-Month
|
|
Per Share |
|
Three-Month
|
|
Per Share |
||||||||
(In thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
||||||||
Credit: |
|
|
|
|
|
|
|
|
||||||||
CLOs |
|
|
|
|
|
|
|
|
||||||||
Interest and other income(1) |
|
$ |
5,651 |
|
|
$ |
0.20 |
|
|
$ |
4,388 |
|
|
$ |
0.17 |
|
Interest expense |
|
|
(671 |
) |
|
|
(0.02 |
) |
|
|
(506 |
) |
|
|
(0.02 |
) |
Realized gain (loss), net |
|
|
867 |
|
|
|
0.03 |
|
|
|
399 |
|
|
|
0.02 |
|
Unrealized gain (loss), net |
|
|
(2,803 |
) |
|
|
(0.10 |
) |
|
|
(1,187 |
) |
|
|
(0.05 |
) |
Credit hedges and other activities, net(2) |
|
|
(223 |
) |
|
|
(0.01 |
) |
|
|
(19 |
) |
|
|
— |
|
Total CLO profit (loss) |
|
|
2,821 |
|
|
|
0.10 |
|
|
|
3,075 |
|
|
|
0.12 |
|
Non-Agency RMBS(3) |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
|
62 |
|
|
|
— |
|
|
|
473 |
|
|
|
0.02 |
|
Interest expense |
|
|
(26 |
) |
|
|
— |
|
|
|
(132 |
) |
|
|
(0.01 |
) |
Realized gain (loss), net |
|
|
1,696 |
|
|
|
0.06 |
|
|
|
2,531 |
|
|
|
0.10 |
|
Unrealized gain (loss), net |
|
|
(1,604 |
) |
|
|
(0.06 |
) |
|
|
(2,062 |
) |
|
|
(0.08 |
) |
Interest rate hedges, net |
|
|
29 |
|
|
|
— |
|
|
|
(33 |
) |
|
|
— |
|
Total non-Agency RMBS profit (loss) |
|
|
157 |
|
|
|
— |
|
|
|
777 |
|
|
|
0.03 |
|
Total Credit profit (loss) |
|
|
2,978 |
|
|
|
0.10 |
|
|
|
3,852 |
|
|
|
0.15 |
|
Agency RMBS(3): |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
|
6,454 |
|
|
|
0.22 |
|
|
|
6,851 |
|
|
|
0.27 |
|
Interest expense |
|
|
(5,651 |
) |
|
|
(0.20 |
) |
|
|
(6,651 |
) |
|
|
(0.26 |
) |
Realized gain (loss), net |
|
|
(545 |
) |
|
|
(0.02 |
) |
|
|
(3,730 |
) |
|
|
(0.15 |
) |
Unrealized gain (loss), net |
|
|
(15,347 |
) |
|
|
(0.53 |
) |
|
|
19,199 |
|
|
|
0.75 |
|
Interest rate hedges and other activities, net(4) |
|
|
11,754 |
|
|
|
0.41 |
|
|
|
(11,216 |
) |
|
|
(0.44 |
) |
Total Agency RMBS profit (loss) |
|
|
(3,335 |
) |
|
|
(0.12 |
) |
|
|
4,453 |
|
|
|
0.17 |
|
Total Credit and Agency RMBS profit (loss) |
|
|
(357 |
) |
|
|
(0.02 |
) |
|
|
8,305 |
|
|
|
0.32 |
|
Other interest income (expense), net |
|
|
440 |
|
|
|
0.02 |
|
|
|
328 |
|
|
|
0.01 |
|
Income tax (expense) benefit |
|
|
181 |
|
|
|
0.01 |
|
|
|
(463 |
) |
|
|
(0.02 |
) |
General and administrative expenses |
|
|
(2,269 |
) |
|
|
(0.08 |
) |
|
|
(2,725 |
) |
|
|
(0.10 |
) |
Net income (loss) |
|
$ |
(2,005 |
) |
|
$ |
(0.07 |
) |
|
$ |
5,445 |
|
|
$ |
0.21 |
|
Weighted average shares outstanding |
|
|
28,733,893 |
|
|
|
|
|
25,591,607 |
|
|
|
||||
(1) |
Includes distributions from fee rebate agreements which are included in Other, net on the Consolidated Statement of Operations. |
(2) |
Other activities includes currency hedges as well as net realized and unrealized gains (losses) on foreign currency. |
(3) |
Includes IOs. |
(4) |
Includes |
CLO Performance
In the fourth quarter, the
In the
In
As with the prior two quarters,
Our CLO strategy delivered positive results in the fourth quarter, driven by higher net interest income and net gains in
Agency and Non-Agency Performance
In the fourth quarter, rising interest rates and intra-quarter volatility contributed to the underperformance of Agency RMBS relative to hedging instruments. Overall for the fourth quarter, the
Average pay-ups on our specified pool portfolio decreased to
Meanwhile, our non-Agency RMBS portfolio generated positive results for the fourth quarter, driven by net interest income and profitable sales. We sold effectively all of our remaining non-Agency RMBS and interest-only securities during the quarter.
General and Administrative Expenses
Quarterly expenses declined quarter over quarter due to lower professional fees, compensation expense, and other operating expenses.
About Ellington Credit Company
Ellington Credit Company (the "Company"), formerly known as Ellington Residential Mortgage REIT, was initially formed as a real estate investment trust ("REIT") that invested primarily in residential mortgage-backed securities ("MBS"). On March 29, 2024, the Company's Board of Trustees approved a strategic transformation of the Company's investment strategy to focus on corporate CLOs, with an emphasis on mezzanine debt and equity tranches. In connection with this transformation, the Company revoked its election to be taxed as a REIT effective January 1, 2024, and rebranded as Ellington Credit Company. At a special meeting on January 17, 2025, the Company's shareholders approved proposals related to the RIC Conversion. The Company expects the conversion to take effect on April 1, 2025.
Conference Call
We will host a conference call at 11:00 a.m. Eastern Time on Thursday, March 13, 2025 to discuss our financial results for the quarter ended December 31, 2024. To participate in the event by telephone, please dial (800) 225-9448 at least 10 minutes prior to the start time and reference the conference ID: EARNQ424. International callers should dial (203) 518-9708 and reference the same conference ID. The conference call will also be webcast live over the Internet and can be accessed via the "For Investors" section of our web site at www.ellingtoncredit.com. To listen to the live webcast, please visit www.ellingtoncredit.com at least 15 minutes prior to the start of the call to register, download, and install necessary audio software. In connection with the release of these financial results, we also posted an investor presentation, that will accompany the conference call, on our website at www.ellingtoncredit.com under "For Investors—Presentations."
A dial-in replay of the conference call will be available on Thursday, March 13, 2025, at approximately 2:00 p.m. Eastern Time through Thursday, March 20, 2025 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 839-8318. International callers should dial (402) 220-6071. A replay of the conference call will also be archived on our web site at www.ellingtoncredit.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Actual results may differ from our beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are based on our beliefs, assumptions and expectations of our future operations, business strategies, performance, financial condition, liquidity and prospects, taking into account information currently available to us. These beliefs, assumptions, and expectations are subject to numerous risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations and strategies may vary materially from those expressed or implied in our forward-looking statements or from our beliefs, expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as "believe," "expect," "anticipate," "estimate," "project," "plan," "continue," "intend," "should," "would," "could," "goal," "objective," "will," "may," "seek," or similar expressions or their negative forms, or by references to strategy, plans, or intentions. The following factors are examples of those that could cause actual results to vary from those stated or implied by our forward-looking statements: changes in interest rates and the market value of our investments, market volatility, changes in mortgage default rates and prepayment rates, our ability to borrow to finance our assets, our ability to pivot our investment strategy to focus on CLOs, a deterioration in the CLO market, our ability to utilize our NOLs, our ability to convert to a closed end fund/RIC, changes in government regulations affecting our business, our ability to maintain our exclusion from registration under the Investment Company Act of 1940, and other changes in market conditions and economic trends, such as changes to fiscal or monetary policy, heightened inflation, slower growth or recession, and currency fluctuations. Furthermore, as stated above, forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A of our Annual Report on Form 10-K, which can be accessed through the link to our SEC filings under "For Investors" on our website (at www.ellingtoncredit.com) or at the SEC's website (www.sec.gov). Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected or implied may be described from time to time in reports we file with the SEC, including reports on Forms 10-Q, 10-K, and 8-K. New risks and uncertainties emerge from time to time, and it is not possible for us to predict or assess the impact of every factor that may cause our actual results to differ from those contained in any forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
ELLINGTON CREDIT COMPANY CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) |
||||||||||||
|
|
Three-Month Period Ended |
|
Year Ended |
||||||||
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
||||||
(In thousands except share amounts and per share amounts) |
|
|
|
|
|
|
||||||
INTEREST INCOME (EXPENSE) |
|
|
|
|
|
|
||||||
Interest income |
|
$ |
12,849 |
|
|
$ |
12,504 |
|
|
$ |
49,863 |
|
Interest expense |
|
|
(6,707 |
) |
|
|
(7,752 |
) |
|
|
(34,794 |
) |
Total net interest income (expense) |
|
|
6,142 |
|
|
|
4,752 |
|
|
|
15,069 |
|
EXPENSES |
|
|
|
|
|
|
||||||
Management fees to affiliate |
|
|
729 |
|
|
|
721 |
|
|
|
2,539 |
|
Professional fees |
|
|
417 |
|
|
|
661 |
|
|
|
2,107 |
|
Compensation expense |
|
|
355 |
|
|
|
501 |
|
|
|
1,555 |
|
Insurance expense |
|
|
91 |
|
|
|
93 |
|
|
|
370 |
|
Other operating expenses |
|
|
677 |
|
|
|
749 |
|
|
|
2,213 |
|
Total expenses |
|
|
2,269 |
|
|
|
2,725 |
|
|
|
8,784 |
|
OTHER INCOME (LOSS) |
|
|
|
|
|
|
||||||
Net realized gains (losses) on securities |
|
|
1,118 |
|
|
|
(1,377 |
) |
|
|
(18,068 |
) |
Net realized gains (losses) on financial derivatives |
|
|
4,578 |
|
|
|
23,885 |
|
|
|
38,487 |
|
Change in net unrealized gains (losses) on securities |
|
|
(19,362 |
) |
|
|
16,057 |
|
|
|
(364 |
) |
Change in net unrealized gains (losses) on financial derivatives |
|
|
8,847 |
|
|
|
(35,274 |
) |
|
|
(18,579 |
) |
Other, net |
|
|
(1,240 |
) |
|
|
590 |
|
|
|
(665 |
) |
Total other income (loss) |
|
|
(6,059 |
) |
|
|
3,881 |
|
|
|
811 |
|
Net income (loss) before income taxes |
|
|
(2,186 |
) |
|
|
5,908 |
|
|
|
7,096 |
|
Income tax expense (benefit) |
|
|
(181 |
) |
|
|
463 |
|
|
|
510 |
|
NET INCOME (LOSS) |
|
$ |
(2,005 |
) |
|
$ |
5,445 |
|
|
$ |
6,586 |
|
NET INCOME (LOSS) PER COMMON SHARE: |
|
|
|
|
|
|
||||||
Basic and Diluted |
|
$ |
(0.07 |
) |
|
$ |
0.21 |
|
|
$ |
0.28 |
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
28,733,893 |
|
|
|
25,591,607 |
|
|
|
23,576,696 |
|
CASH DIVIDENDS PER SHARE: |
|
|
|
|
|
|
||||||
Dividends declared |
|
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
0.96 |
|
ELLINGTON CREDIT COMPANY CONSOLIDATED BALANCE SHEET (UNAUDITED) |
||||||||||||
|
|
As of |
||||||||||
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
||||||
(In thousands except share amounts and per share amounts) |
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
31,840 |
|
|
$ |
25,747 |
|
|
$ |
38,533 |
|
Securities, at fair value |
|
|
683,915 |
|
|
|
618,797 |
|
|
|
773,548 |
|
Due from brokers |
|
|
21,517 |
|
|
|
9,341 |
|
|
|
3,245 |
|
Financial derivatives–assets, at fair value |
|
|
41,867 |
|
|
|
48,010 |
|
|
|
74,279 |
|
Reverse repurchase agreements |
|
|
23,000 |
|
|
|
109 |
|
|
|
— |
|
Receivable for securities sold |
|
|
11,077 |
|
|
|
45,915 |
|
|
|
51,132 |
|
Interest and principal receivable |
|
|
10,536 |
|
|
|
4,132 |
|
|
|
4,522 |
|
Other assets |
|
|
340 |
|
|
|
252 |
|
|
|
431 |
|
Total Assets |
|
$ |
824,092 |
|
|
$ |
752,303 |
|
|
$ |
945,690 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||||||
LIABILITIES |
|
|
|
|
|
|
||||||
Repurchase agreements |
|
$ |
562,974 |
|
|
$ |
486,921 |
|
|
$ |
729,543 |
|
Payable for securities purchased |
|
|
1,997 |
|
|
|
34,469 |
|
|
|
12,139 |
|
Due to brokers |
|
|
30,671 |
|
|
|
21,832 |
|
|
|
54,476 |
|
Financial derivatives–liabilities, at fair value |
|
|
5,681 |
|
|
|
9,856 |
|
|
|
7,329 |
|
|
|
|
22,578 |
|
|
|
109 |
|
|
|
— |
|
Dividend payable |
|
|
2,372 |
|
|
|
2,237 |
|
|
|
1,488 |
|
Accrued expenses and other liabilities |
|
|
1,488 |
|
|
|
2,561 |
|
|
|
1,153 |
|
Management fee payable to affiliate |
|
|
729 |
|
|
|
721 |
|
|
|
513 |
|
Interest payable |
|
|
1,876 |
|
|
|
1,968 |
|
|
|
2,811 |
|
Total Liabilities |
|
|
630,366 |
|
|
|
560,674 |
|
|
|
809,452 |
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||||||
Preferred shares, par value |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
Common shares, par value |
|
|
297 |
|
|
|
280 |
|
|
|
186 |
|
Additional paid-in-capital |
|
|
348,587 |
|
|
|
337,523 |
|
|
|
274,698 |
|
Accumulated deficit |
|
|
(155,159 |
) |
|
|
(146,174 |
) |
|
|
(138,646 |
) |
Total Shareholders' Equity |
|
|
193,726 |
|
|
|
191,629 |
|
|
|
136,238 |
|
Total Liabilities and Shareholders' Equity |
|
$ |
824,092 |
|
|
$ |
752,303 |
|
|
$ |
945,690 |
|
SUPPLEMENTAL PER SHARE INFORMATION |
|
|
|
|
|
|
||||||
Book Value Per Share |
|
$ |
6.53 |
|
|
$ |
6.85 |
|
|
$ |
7.32 |
|
(1) |
Derived from audited financial statements as of December 31, 2023. |
(2) |
Following the special meeting of shareholders held on January 17, 2025, we fully redeemed the 1,000 Series A Preferred Shares in accordance with the terms of the previously announced Subscription and Investment Representation Agreement entered into on December 9, 2024. |
(3) |
Common shares issued and outstanding at December 31, 2024, includes 1,655,230 common shares issued under our at-the market common share offering program and 32,341 of restricted common shares issued under our 2023 Equity Incentive Plan during the fourth quarter. |
Reconciliation of Adjusted Distributable Earnings to Net Income (Loss)
We calculate Adjusted Distributable Earnings as net income (loss) adjusted for: (i) net realized and change in net unrealized gains and (losses) on securities, financial derivatives, and foreign currency transactions; (ii) net realized and change in net unrealized gains (losses) associated with periodic settlements on interest rate swaps; (iii) other income or loss items that are of a non-recurring nature, if any (iv) Catch-up Amortization Adjustment (as defined below); and (v) provision for income taxes. The Catch-up Amortization Adjustment is a quarterly adjustment to premium amortization or discount accretion triggered by changes in actual and projected prepayments on our Agency RMBS (accompanied by a corresponding offsetting adjustment to realized and unrealized gains and losses). The adjustment is calculated as of the beginning of each quarter based on our then-current assumptions about cashflows and prepayments, and can vary significantly from quarter to quarter.
Adjusted Distributable Earnings is a supplemental non-GAAP financial measure. We believe that the presentation of Adjusted Distributable Earnings provides information useful to investors, because: (i) we believe that it is a useful indicator of both current and projected long-term financial performance, in that it excludes the impact of certain current-period earnings components that we believe are less useful in forecasting long-term performance and dividend-paying ability; (ii) we use it to evaluate the effective net yield provided by our portfolio, after the effects of financial leverage; and (iii), we believe that presenting Adjusted Distributable Earnings assists investors in measuring and evaluating our operating performance, and comparing our operating performance to that of our peers. Our calculation of Adjusted Distributable Earnings may differ from the calculation of similarly titled non-GAAP financial measures by our peers, with the result that these non-GAAP financial measures might not be directly comparable; adjusted Distributable Earnings excludes certain items, such as most realized and unrealized gains and losses, that may impact the amount of cash that is actually available for distribution.
In addition, because Adjusted Distributable Earnings is an incomplete measure of our financial results and differs from net income (loss) computed in accordance with
In setting our dividends, our Board of Trustees considers our earnings, liquidity, financial condition, distribution requirements, and financial covenants, along with other factors that the Board of Trustees may deem relevant from time to time.
The following table reconciles, for the three-month periods ended December 31, 2024 and September 30, 2024, our Adjusted Distributable Earnings to the line on our Consolidated Statement of Operations entitled Net Income (Loss), which we believe is the most directly comparable
|
|
Three-Month Period Ended |
||||||
(In thousands except share amounts and per share amounts) |
|
December 31, 2024 |
|
September 30, 2024 |
||||
Net Income (Loss) |
|
$ |
(2,005 |
) |
|
$ |
5,445 |
|
Income tax expense (benefit) |
|
|
(181 |
) |
|
|
463 |
|
Net Income (Loss) before income taxes |
|
|
(2,186 |
) |
|
|
5,908 |
|
Adjustments: |
|
|
|
|
||||
Net realized (gains) losses on securities |
|
|
(1,118 |
) |
|
|
1,377 |
|
Change in net unrealized (gains) losses on securities |
|
|
19,362 |
|
|
|
(16,057 |
) |
Net realized (gains) losses on financial derivatives |
|
|
(4,578 |
) |
|
|
(23,885 |
) |
Change in net unrealized (gains) losses on financial derivatives |
|
|
(8,847 |
) |
|
|
35,274 |
|
Net realized gains (losses) on periodic settlements of interest rate swaps |
|
|
4,814 |
|
|
|
6,969 |
|
Change in net unrealized gains (losses) on accrued periodic settlements of interest rate swaps |
|
|
(1,412 |
) |
|
|
(2,278 |
) |
Strategic Transformation costs and other adjustments(1) |
|
|
1,807 |
|
|
|
106 |
|
Negative (positive) component of interest income represented by Catch-up Amortization Adjustment |
|
|
— |
|
|
|
(173 |
) |
Subtotal |
|
|
10,028 |
|
|
|
1,333 |
|
Adjusted Distributable Earnings |
|
$ |
7,842 |
|
|
$ |
7,241 |
|
Weighted Average Shares Outstanding |
|
|
28,733,893 |
|
|
|
25,591,607 |
|
Adjusted Distributable Earnings Per Share |
|
$ |
0.27 |
|
|
$ |
0.28 |
|
(1) |
For the three-month period ended December 31, 2024, includes |
| __________________________________ | |
1 |
Adjusted Distributable Earnings is a non-GAAP financial measure. See "Reconciliation of Adjusted Distributable Earnings to Net Income (Loss)" below for an explanation regarding the calculation of Adjusted Distributable Earnings. |
2 |
Net interest margin of a group of assets represents the weighted average asset yield less the weighted average cost of borrowings secured by those assets (including the effect of net interest income (expense) related to |
3 |
Percentages shown are of net assets, as opposed to gross assets, deployed. |
4 |
We define our net mortgage assets-to-equity ratio as the net aggregate market value of our mortgage-backed securities (including the underlying market values of our long and short TBA positions) divided by total shareholder's equity. As of December 31, 2024 the market value of our mortgage-backed securities and our net short TBA position was |
5 |
Excludes recent purchases of fixed rate Agency specified pools with no prepayment history. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20250312407684/en/
Investors:
Ellington Credit Company
Investor Relations
(203) 409-3773
info@ellingtoncredit.com
or
Media:
Amanda Shpiner/Grace Cartwright
Gasthalter & Co.
for Ellington Credit Company
(212) 257-4170
Ellington@gasthalter.com
Source: Ellington Credit Company
