Ellington Financial Inc. Reports Second Quarter 2024 Results
Ellington Financial (NYSE: EFC) reported Q2 2024 results. Net income attributable to common stockholders was $52.3 million or $0.62 per share. The investment portfolio contributed $69.1 million, while the credit strategy contributed $68.0 million. The book value per common share stood at $13.92. The company declared a monthly dividend of $0.13 per share, resulting in a 13.0% yield based on the August 5 closing price of $12.04 per share.
The recourse debt-to-equity ratio was 1.6:1, and cash and cash equivalents were $198.5 million. Notable performance was observed in the non-QM loan business and reverse mortgage platform Longbridge, contributing a non-annualized economic return of 4.5% for the quarter.
Key financial metrics include Adjusted Distributable Earnings of $28.3 million or $0.33 per share, a slight sequential increase in both adjusted distributable earnings and book value per share.
Ellington Financial (NYSE: EFC) ha riportato i risultati del secondo trimestre del 2024. L'utile netto attribuibile agli azionisti ordinari è stato di 52,3 milioni di dollari o 0,62 dollari per azione. Il portafoglio investimenti ha contribuito con 69,1 milioni di dollari, mentre la strategia di credito ha portato un contributo di 68,0 milioni di dollari. Il valore contabile per azione ordinaria si è attestato a 13,92 dollari. L'azienda ha dichiarato un dividendo mensile di 0,13 dollari per azione, risultando in un rendimento del 13,0% basato sul prezzo di chiusura dell'8 agosto di 12,04 dollari per azione.
Il rapporto debito-equity di riferimento era di 1,6:1, e il cash e gli equivalenti di cassa ammontavano a 198,5 milioni di dollari. Performance notevoli sono state osservate nel business dei prestiti non QM e nella piattaforma di mutui inversi Longbridge, contribuendo con un rendimento economico non annualizzato del 4,5% per il trimestre.
I principali indicatori finanziari includono utili distribuiti rettificati di 28,3 milioni di dollari, o 0,33 dollari per azione, con un leggero incremento sequenziale sia negli utili distribuiti rettificati che nel valore contabile per azione.
Ellington Financial (NYSE: EFC) reportó los resultados del segundo trimestre de 2024. El ingreso neto atribuible a los accionistas comunes fue de 52.3 millones de dólares o 0.62 dólares por acción. El portafolio de inversiones contribuyó con 69.1 millones de dólares, mientras que la estrategia de crédito aportó 68.0 millones de dólares. El valor contable por acción común se situó en 13.92 dólares. La compañía declaró un dividendo mensual de 0.13 dólares por acción, resultando en un rendimiento del 13.0% basado en el precio de cierre del 5 de agosto de 12.04 dólares por acción.
La relación de deuda a capital recursiva fue de 1.6:1, y el efectivo y equivalentes de efectivo alcanzaron 198.5 millones de dólares. Se observó un desempeño notable en el negocio de préstamos no QM y la plataforma de hipotecas inversas Longbridge, contribuyendo con un retorno económico no anualizado del 4.5% para el trimestre.
Los indicadores financieros clave incluyen Beneficios Distribuibles Ajustados de 28.3 millones de dólares o 0.33 dólares por acción, con un ligero aumento secuencial tanto en los beneficios distribuibles ajustados como en el valor contable por acción.
엘링턴 파이낸셜 (NYSE: EFC)이 2024년 2분기 실적을 발표했습니다. 보통주주에게 귀속된 순이익은 5230만 달러 또는 0.62 달러였습니다. 투자 포트폴리오는 6910만 달러를 기여했으며, 신용 전략은 6800만 달러를 기여했습니다. 보통주당 장부 가치는 13.92 달러였습니다. 회사는 주당 0.13 달러의 월 배당금을 선언하여 8월 5일 마감 가격 12.04 달러를 기준으로 13.0%의 수익률을 나타냈습니다.
자산담보부채비율은 1.6:1이었고, 현금 및 현금성 자산은 1억9850만 달러였습니다. 비정규 대출 사업과 반전세 플랫폼 롱브릿지에서 두드러진 성과가 관찰되었으며, 분기 동안 비연환산 경제적 수익률이 4.5%를 기록했습니다.
주요 재무 지표에는 조정 가능한 분배수익 2830만 달러 또는 0.33 달러가 포함되며, 조정된 분배 수익과 주당 장부 가치 모두에서 약간의 순증가가 있었습니다.
Ellington Financial (NYSE: EFC) a publié ses résultats du deuxième trimestre 2024. Le résultat net attribuable aux actionnaires ordinaires s'élevait à 52,3 millions de dollars ou 0,62 dollar par action. Le portefeuille d'investissement a contribué à hauteur de 69,1 millions de dollars, tandis que la stratégie de crédit a apporté 68,0 millions de dollars. La valeur comptable par action ordinaire était de 13,92 dollars. L'entreprise a déclaré un dividende mensuel de 0,13 dollar par action, résultant en un rendement de 13,0% basé sur le prix de clôture du 5 août de 12,04 dollars par action.
Le ratio de dette à capitaux propres recouvrables était de 1,6:1, et la trésorerie et les équivalents de trésorerie s'élevaient à 198,5 millions de dollars. Une performance notable a été observée dans le secteur des prêts non-QM et sur la plateforme de prêts hypothécaires inversés Longbridge, contribuant à un retour économique non annualisé de 4,5% pour le trimestre.
Les principaux indicateurs financiers comprennent des bénéfices distribuables ajustés de 28,3 millions de dollars ou 0,33 dollar par action, avec une légère augmentation séquentielle tant des bénéfices distribuables que de la valeur comptable par action.
Ellington Financial (NYSE: EFC) hat die Ergebnisse für das zweite Quartal 2024 bekannt gegeben. Der den Stammaktionären zurechenbare Nettogewinn betrug 52,3 Millionen Dollar oder 0,62 Dollar pro Aktie. Das Investitionsportfolio trug 69,1 Millionen Dollar bei, während die Kreditstrategie 68,0 Millionen Dollar beisteuerte. Der Buchwert pro Stammaktie lag bei 13,92 Dollar. Das Unternehmen erklärte eine monatliche Dividende von 0,13 Dollar pro Aktie, was auf der Grundlage des Schlusskurses am 5. August von 12,04 Dollar pro Aktie eine Rendite von 13,0% ergibt.
Das Verhältnis von Rückgriffsschulden zu Eigenkapital betrug 1,6:1, und Zahlungsmittel und Zahlungsmitteläquivalente beliefen sich auf 198,5 Millionen Dollar. Eine bemerkenswerte Leistung wurde im Geschäft mit Nicht-QM-Darlehen und der Reverse-Mortgage-Plattform Longbridge festgestellt, die für das Quartal eine nicht annualisierte wirtschaftliche Rendite von 4,5% erzielte.
Wichtige Finanzkennzahlen umfassen angepasste ausschüttbare Erträge von 28,3 Millionen Dollar oder 0,33 Dollar pro Aktie, mit einem leichten sequenziellen Anstieg sowohl bei den angepassten ausschüttbaren Erträgen als auch beim Buchwert pro Aktie.
- Net income attributable to common stockholders of $52.3 million or $0.62 per share.
- Investment portfolio generated $69.1 million.
- Book value per common share of $13.92.
- Monthly dividend yield of 13.0%.
- Recourse debt-to-equity ratio of 1.6:1.
- Cash and cash equivalents of $198.5 million.
- Non-QM loan business and Longbridge contributed to a 4.5% non-annualized economic return.
- Total long credit portfolio decreased to $2.73 billion from $2.80 billion.
- Net interest margin on the credit portfolio decreased to 2.76% from 2.86%.
- Total long Agency RMBS portfolio decreased by 31% quarter over quarter to $457.7 million.
- HMBS liabilities increased to $8,832.1 million from $8,619.5 million.
Insights
Ellington Financial's Q2 2024 results show strong performance with net income of
- Book value per share increased to
$13.92 , up4.5% from Q1 - Adjusted Distributable Earnings of
$28.3 million ($0.33 per share) - Attractive dividend yield of
13.0%
The company's diversified portfolio strategy is paying off, with strong contributions from non-QM loans, reverse mortgages and other credit investments. The recourse debt-to-equity ratio improved to 1.6:1, indicating better balance sheet management. However, investors should monitor the slight increase in delinquencies in the residential mortgage portfolio.
Ellington's Q2 results reflect positive trends in the mortgage market. Key observations:
- Strong demand for non-QM loans, improving gain-on-sale margins
- Robust performance in proprietary reverse mortgage loans
- Successful securitization of reverse mortgage loans with improved execution
The company's strategic investments in loan originators are proving beneficial, contributing to both portfolio growth and profitability. The diverse investment approach across various mortgage-related assets provides resilience against market fluctuations. However, the reduction in Agency RMBS portfolio (
While Ellington's Q2 results are generally positive, there are some risk factors to consider:
- Slight increase in delinquencies in the residential mortgage portfolio
- Monitoring of non-performing commercial mortgage assets
- Reduction in Agency RMBS portfolio could impact diversification
The company's improved debt-to-equity ratio and strong cash position (
Highlights
-
Net income attributable to common stockholders of
$52.3 million $0.62 -
$69.1 million $0.81 -
$68.0 million $0.80 -
$1.1 million $0.01
-
-
$4.2 million $0.05
-
-
Adjusted Distributable Earnings2 of
$28.3 million $0.33 -
Book value per common share as of June 30, 2024 of
$13.92 $0.39 -
Dividend yield of
13.0% based on the August 5, 2024 closing stock price of$12.04 $0.13 - Recourse debt-to-equity ratio3 of 1.6:1 as of June 30, 2024, adjusted for unsettled purchases and sales. Including all non-recourse borrowings, which primarily consist of securitization-related liabilities, debt-to-equity ratio of 8.2:14.
-
Cash and cash equivalents of
$198.5 million $565.1 million
Second Quarter 2024 Results
"Driven by broad-based contributions from our diversified credit and Agency portfolios, as well as from our reverse mortgage platform Longbridge, Ellington Financial generated a non-annualized economic return of
"We had notably strong performance in our non-QM loan business, where tight yield spreads in our April securitization helped generate a significant gain in our portfolio, and where continued strong loan demand improved industrywide gain-on-sale margins and origination volumes, driving excellent results at our affiliate loan originators. Longbridge also contributed robust earnings for the quarter, led by the strong performance of proprietary reverse mortgage loans. Following quarter end, we successfully completed our second securitization of proprietary reverse mortgage loans originated by Longbridge, achieving incrementally stronger execution than our inaugural deal in the first quarter. Our second quarter results also significantly benefited from the performance of our residential transition and commercial mortgage loan strategies, as well as non-Agency RMBS.
"During the quarter, we added attractive investments in a wide array of our credit strategies, including HELOCs and closed-end second lien loans, proprietary reverse mortgage loans, commercial mortgage bridge loans, re-performing and non-performing residential mortgage loans, CMBS, and CLOs. At the same time, we continued to cull securities in lower-yielding sectors, including Agency and non-Agency RMBS.
"Looking forward, our investment pipeline across our diversified proprietary loan origination channels remains strong, and the loan originators in which we've invested are not only helping to feed that pipeline, but they're showing strong profitability as well. Combine that with our ability to access compelling term, non-mark-to-market financing in the securitization markets, and I believe Ellington Financial is well positioned for continued portfolio and earnings growth over the remainder of the year."
Financial Results
Investment Portfolio Summary
Our investment portfolio generated net income attributable to common stockholders of
Credit Performance
Our total long credit portfolio, excluding non-retained tranches of consolidated securitization trusts, decreased to
Strong net interest income5 and net gains from non-QM loans, retained non-QM RMBS, non-Agency RMBS, and commercial mortgage loans drove the positive results in our credit strategy in the second quarter. We also benefited from mark-to-market gains on our equity investments in the loan originators LendSure and American Heritage Lending, which reflected strong performance at those originators driven by increased origination volumes and strong gain-on-sale margins. With interest rates slightly higher quarter over quarter, we also had net gains on our interest rate hedges. Offsetting a portion of all these gains was a modest net loss in re-performing and non-performing residential mortgage loans.
In our residential mortgage loan portfolio, after excluding the impacts of the purchase of one non-performing loan portfolio and the consolidation of another non-performing loan portfolio, our percentage of delinquent loans increased only slightly quarter over quarter. In our commercial mortgage loan portfolio (including loans accounted for as equity method investments) the delinquency percentage ticked down sequentially. Both of these portfolios continue to experience low levels of realized credit losses and strong overall credit performance, though we are monitoring developments closely and diligently working out a handful of non-performing commercial mortgage assets.
The net interest margin6 on our credit portfolio decreased quarter over quarter, to
Agency Performance
Our total long Agency RMBS portfolio decreased by
In April, interest rates and volatility increased over renewed concerns about inflation and a more hawkish Federal Reserve, which pushed Agency RMBS yield spreads wider. In May and June, however, interest rates and volatility generally declined, and Agency RMBS yield spreads reversed most of their April widening. Overall for the second quarter, the
Average pay-ups on our specified pools increased modestly to
During the quarter, our Agency RMBS asset yields and our borrowing costs both declined, and we received a larger benefit from positive carry on our interest rate swap hedges, where we overall receive a higher floating rate and pay a lower fixed rate. As a result, the net interest margin6 on our Agency RMBS, excluding the Catch-up Amortization Adjustment, increased to
Longbridge Summary
Our Longbridge segment generated net income attributable to common stockholders of
Our Longbridge portfolio, excluding non-retained tranches of a consolidated securitization trust, increased by
Corporate/Other Summary
In addition to expenses not allocated to either the investment portfolio or Longbridge segments, our results for the quarter also reflect a net gain, driven by the increase in interest rates, on our senior notes. This gain was partially offset by a net loss, also driven by the increase in interest rates, on the fixed receiver interest rate swaps that we use to hedge the fixed payments on both our unsecured long-term debt and our preferred equity.
1 Includes
2 Adjusted Distributable Earnings is a non-GAAP financial measure. See "Reconciliation of Net Income (Loss) to Adjusted Distributable Earnings" below for an explanation regarding the calculation of Adjusted Distributable Earnings.
3 Excludes
4 Excludes
5 Excludes any interest income and interest expense items from interest rate hedges, net credit hedges and other activities, net.
6 Net interest margin represents the weighted average asset yield less the weighted average secured financing cost of funds on such assets. It also includes the effect of actual and accrued periodic payments on interest rate swaps used to hedge the assets.
Credit Portfolio(1)
The following table summarizes our credit portfolio holdings as of June 30, 2024 and March 31, 2024:
|
|
June 30, 2024 |
|
March 31, 2024 |
||||||||
($ in thousands) |
|
Fair Value |
|
% |
|
Fair Value |
|
% |
||||
Dollar denominated: |
|
|
|
|
|
|
|
|
||||
CLOs(2) |
|
$ |
75,719 |
|
1.8 |
% |
|
$ |
59,243 |
|
1.4 |
% |
CMBS |
|
|
42,842 |
|
1.0 |
% |
|
|
22,393 |
|
0.5 |
% |
Commercial mortgage loans and REO(3)(4) |
|
|
362,914 |
|
8.8 |
% |
|
|
366,320 |
|
8.7 |
% |
Consumer loans and ABS backed by consumer loans(2) |
|
|
85,802 |
|
2.1 |
% |
|
|
83,194 |
|
2.0 |
% |
Corporate debt and equity and corporate loans |
|
|
32,100 |
|
0.8 |
% |
|
|
31,140 |
|
0.8 |
% |
Debt and equity investments in loan origination-related entities(6) |
|
|
37,381 |
|
0.9 |
% |
|
|
35,967 |
|
0.9 |
% |
Forward MSR-related investments |
|
|
158,031 |
|
3.8 |
% |
|
|
160,009 |
|
3.8 |
% |
Home equity line of credit and closed-end second lien loans |
|
|
62,737 |
|
1.5 |
% |
|
|
— |
|
— |
% |
Non-Agency RMBS |
|
|
143,690 |
|
3.5 |
% |
|
|
210,132 |
|
5.0 |
% |
Non-QM loans and retained non-QM RMBS(7) |
|
|
1,802,847 |
|
43.5 |
% |
|
|
1,989,390 |
|
47.3 |
% |
Other loans and ABS(5) |
|
|
23,533 |
|
0.6 |
% |
|
|
19,674 |
|
0.5 |
% |
Residential transition loans and other residential mortgage loans and REO(3) |
|
|
1,234,796 |
|
29.8 |
% |
|
|
1,199,246 |
|
28.5 |
% |
Non-Dollar denominated: |
|
|
|
|
|
|
|
|
||||
CLOs(2) |
|
|
6,973 |
|
0.2 |
% |
|
|
5,496 |
|
0.1 |
% |
Corporate debt and equity |
|
|
219 |
|
— |
% |
|
|
185 |
|
— |
% |
RMBS(8) |
|
|
18,138 |
|
0.4 |
% |
|
|
20,423 |
|
0.5 |
% |
Other residential mortgage loans |
|
|
52,368 |
|
1.3 |
% |
|
|
— |
|
— |
% |
Total long credit portfolio |
|
$ |
4,140,090 |
|
100.0 |
% |
|
$ |
4,202,812 |
|
100.0 |
% |
Less: Non-retained tranches of consolidated securitization trusts |
|
|
1,414,389 |
|
|
|
|
1,407,035 |
|
|
||
Total long credit portfolio excluding non-retained tranches of consolidated securitization trusts |
|
$ |
2,725,701 |
|
|
|
$ |
2,795,777 |
|
|
||
(1) |
This information does not include |
(2) |
Includes equity investments in securitization-related vehicles. |
(3) |
In accordance with |
(4) |
Includes equity investments in unconsolidated entities holding commercial mortgage loans and REO. |
(5) |
Includes equity investment in an unconsolidated entity which held certain other loans for securitization. |
(6) |
Includes corporate loans to certain loan origination entities in which we hold an equity investment. |
(7) |
Retained non-QM RMBS represents RMBS issued by non-consolidated Ellington-sponsored non-QM loan securitization trusts, and interests in entities holding such RMBS. |
(8) |
Includes an equity investment in an unconsolidated entity holding European RMBS. |
Agency RMBS Portfolio
The following table(1) summarizes our Agency RMBS portfolio holdings as of June 30, 2024 and March 31, 2024:
|
|
June 30, 2024 |
|
March 31, 2024 |
||||||||
($ in thousands) |
|
Fair Value |
|
% |
|
Fair Value |
|
% |
||||
Long Agency RMBS: |
|
|
|
|
|
|
|
|
||||
Fixed rate |
|
$ |
413,686 |
|
90.4 |
% |
|
$ |
609,806 |
|
92.0 |
% |
Floating rate |
|
|
— |
|
— |
% |
|
|
5,043 |
|
0.8 |
% |
Reverse mortgages |
|
|
33,853 |
|
7.4 |
% |
|
|
36,912 |
|
5.6 |
% |
IOs |
|
|
10,162 |
|
2.2 |
% |
|
|
10,811 |
|
1.6 |
% |
Total long Agency RMBS |
|
$ |
457,701 |
|
100.0 |
% |
|
$ |
662,572 |
|
100.0 |
% |
| (1) |
This information does not include |
||
Longbridge Portfolio
Longbridge originates reverse mortgage loans, including home equity conversion mortgage loans, or "HECMs," which are insured by the FHA and which are eligible for inclusion in GNMA-guaranteed HECM-backed MBS, or "HMBS." Upon securitization, the HECMs remain on our balance sheet under GAAP, and Longbridge retains the mortgage servicing rights associated with the HMBS, or the "HMBS MSR Equivalent." Longbridge also originates "proprietary reverse mortgage loans," which are not insured by the FHA, and Longbridge has typically retained the associated MSRs. We have securitized some of the proprietary reverse mortgage loans originated by Longbridge, and we have retained certain of the securitization tranches in compliance with credit risk retention rules. The following table(1) summarizes loan-related assets in the Longbridge segment as of June 30, 2024 and March 31, 2024:
|
|
June 30, 2024 |
|
March 31, 2024 |
||||
|
|
(In thousands) |
||||||
HMBS assets(2) |
|
$ |
8,926,658 |
|
|
$ |
8,713,835 |
|
Less: HMBS liabilities |
|
|
(8,832,058 |
) |
|
|
(8,619,463 |
) |
HMBS MSR Equivalent |
|
|
94,600 |
|
|
|
94,372 |
|
Unsecuritized HECM loans(3) |
|
|
103,668 |
|
|
|
111,617 |
|
Proprietary reverse mortgage loans(4) |
|
|
449,968 |
|
|
|
365,372 |
|
Reverse MSRs |
|
|
29,538 |
|
|
|
29,889 |
|
Unsecuritized REO |
|
|
1,375 |
|
|
|
2,228 |
|
Total |
|
|
679,149 |
|
|
|
603,478 |
|
Less: Non-retained tranches of consolidated securitization trust |
|
|
158,397 |
|
|
|
162,482 |
|
Total, excluding non-retained tranches of consolidated securitization trust |
|
$ |
520,752 |
|
|
$ |
440,996 |
|
(1) |
This information does not include financial derivatives or loan commitments. |
(2) |
Includes HECM loans, related REO, and claims or other receivables. |
(3) |
As of June 30, 2024, includes |
(4) |
As of June 30, 2024, includes |
The following table summarizes Longbridge's origination volumes by channel for the three-month periods ended June 30, 2024 and March 31, 2024:
($ In thousands) |
|
June 30, 2024 |
|
March 31, 2024 |
||||||||||||
Channel |
|
Units |
|
New Loan Origination Volume(1) |
|
% of New Loan Origination Volume |
|
Units |
|
New Loan Origination Volume(1) |
|
% of New Loan Origination Volume |
||||
Retail |
|
408 |
|
$ |
60,601 |
|
20 |
% |
|
381 |
|
$ |
51,639 |
|
25 |
% |
Wholesale and correspondent |
|
1,298 |
|
|
243,937 |
|
80 |
% |
|
983 |
|
|
153,246 |
|
75 |
% |
Total |
|
1,706 |
|
$ |
304,538 |
|
100 |
% |
|
1,364 |
|
$ |
204,885 |
|
100 |
% |
| (1) | Represents initial borrowed amounts on reverse mortgage loans. |
Financing
Our recourse debt-to-equity ratio3, adjusted for unsettled purchases and sales, decreased to 1.6:1 at June 30, 2024 from 1.8:1 at March 31, 2024. The decline was primarily driven by the completion of a non-QM securitization in the second quarter, a decline in borrowings on our smaller Agency RMBS portfolio, and an increase in shareholders' equity. Our overall debt-to-equity ratio4, adjusted for unsettled purchases and sales, also decreased during the quarter, to 8.2:1 as of June 30, 2024, as compared to 8.3:1 as of March 31, 2024.
The following table summarizes our outstanding borrowings and debt-to-equity ratios as of June 30, 2024 and March 31, 2024:
|
|
June 30, 2024 |
|
March 31, 2024 |
||||||
|
|
Outstanding Borrowings(1) |
|
Debt-to-Equity
|
|
Outstanding Borrowings(1) |
|
Debt-to-Equity
|
||
|
|
(In thousands) |
|
|
|
(In thousands) |
|
|
||
Recourse borrowings(3)(4) |
|
$ |
2,816,882 |
|
1.8:1 |
|
$ |
2,996,346 |
|
1.9:1 |
Non-recourse borrowings(4) |
|
|
10,417,896 |
|
6.6:1 |
|
|
10,188,612 |
|
6.6:1 |
Total Borrowings |
|
$ |
13,234,778 |
|
8.4:1 |
|
$ |
13,184,958 |
|
8.5:1 |
Total Equity |
|
$ |
1,573,859 |
|
|
|
$ |
1,553,156 |
|
|
Recourse borrowings excluding |
|
|
|
1.6:1 |
|
|
|
1.8:1 |
||
Total borrowings excluding |
|
|
|
8.2:1 |
|
|
|
8.3:1 |
||
(1) Includes borrowings under repurchase agreements, other secured borrowings, other secured borrowings, at fair value, and unsecured debt, at par. |
||||||||||
(2) Recourse and overall debt-to-equity ratios are computed by dividing outstanding recourse and overall borrowings, respectively, by total equity. Debt-to-equity ratios do not account for liabilities other than debt financings. |
||||||||||
(3) Excludes repo borrowings at certain unconsolidated entities that are recourse to us. Including such borrowings, our debt-to-equity ratio based on total recourse borrowings is 1.9:1 and 2.0:1 as of June 30, 2024 and March 31, 2024, respectively. |
||||||||||
(4) All of our non-recourse borrowings are secured by collateral. In the event of default under a non-recourse borrowing, the lender has a claim against the collateral but not any of the other assets held by us or our consolidated subsidiaries. In the event of default under a recourse borrowing, the lender's claim is not limited to the collateral (if any). |
||||||||||
The following table summarizes our operating results by strategy for the three-month period ended June 30, 2024:
|
|
Investment Portfolio |
|
Longbridge |
|
Corporate/Other |
|
Total |
|
Per Share |
||||||||||||||||||
(In thousands except per share amounts) |
|
Credit |
|
Agency |
|
Investment Portfolio Subtotal |
|
|
|
|
||||||||||||||||||
Interest income and other income(1) |
|
$ |
81,983 |
|
|
$ |
6,858 |
|
|
$ |
88,841 |
|
|
$ |
13,592 |
|
|
$ |
1,915 |
|
|
$ |
104,348 |
|
|
$ |
1.22 |
|
Interest expense |
|
|
(43,531 |
) |
|
|
(6,207 |
) |
|
|
(49,738 |
) |
|
|
(8,754 |
) |
|
|
(4,631 |
) |
|
|
(63,123 |
) |
|
|
(0.74 |
) |
Realized gain (loss), net |
|
|
(11,208 |
) |
|
|
(14,200 |
) |
|
|
(25,408 |
) |
|
|
(24 |
) |
|
|
— |
|
|
|
(25,432 |
) |
|
|
(0.29 |
) |
Unrealized gain (loss), net |
|
|
30,143 |
|
|
|
9,140 |
|
|
|
39,283 |
|
|
|
3,683 |
|
|
|
1,868 |
|
|
|
44,834 |
|
|
|
0.52 |
|
Net change from reverse mortgage loans and HMBS obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,034 |
|
|
|
— |
|
|
|
19,034 |
|
|
|
0.22 |
|
Earnings in unconsolidated entities |
|
|
12,042 |
|
|
|
— |
|
|
|
12,042 |
|
|
|
— |
|
|
|
— |
|
|
|
12,042 |
|
|
|
0.14 |
|
Interest rate hedges and other activity, net(2) |
|
|
4,292 |
|
|
|
5,507 |
|
|
|
9,799 |
|
|
|
3,487 |
|
|
|
(1,759 |
) |
|
|
11,527 |
|
|
|
0.13 |
|
Credit hedges and other activities, net(3) |
|
|
(31 |
) |
|
|
— |
|
|
|
(31 |
) |
|
|
— |
|
|
|
— |
|
|
|
(31 |
) |
|
|
— |
|
Income tax (expense) benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(142 |
) |
|
|
(142 |
) |
|
|
— |
|
Investment related expenses |
|
|
(3,306 |
) |
|
|
— |
|
|
|
(3,306 |
) |
|
|
(7,781 |
) |
|
|
— |
|
|
|
(11,087 |
) |
|
|
(0.13 |
) |
Other expenses |
|
|
(2,006 |
) |
|
|
— |
|
|
|
(2,006 |
) |
|
|
(19,028 |
) |
|
|
(10,864 |
) |
|
|
(31,898 |
) |
|
|
(0.37 |
) |
Net income (loss) |
|
|
68,378 |
|
|
|
1,098 |
|
|
|
69,476 |
|
|
|
4,209 |
|
|
|
(13,613 |
) |
|
|
60,072 |
|
|
|
0.70 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,825 |
) |
|
|
(6,825 |
) |
|
|
(0.08 |
) |
Net (income) loss attributable to non-participating non-controlling interests |
|
|
(382 |
) |
|
|
— |
|
|
|
(382 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
(386 |
) |
|
|
— |
|
Net income (loss) attributable to common stockholders and participating non-controlling interests |
|
|
67,996 |
|
|
|
1,098 |
|
|
|
69,094 |
|
|
|
4,209 |
|
|
|
(20,442 |
) |
|
|
52,861 |
|
|
|
0.62 |
|
Net (income) loss attributable to participating non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(514 |
) |
|
|
(514 |
) |
|
|
— |
|
Net income (loss) attributable to common stockholders |
|
$ |
67,996 |
|
|
$ |
1,098 |
|
|
$ |
69,094 |
|
|
$ |
4,209 |
|
|
$ |
(20,956 |
) |
|
$ |
52,347 |
|
|
$ |
0.62 |
|
Net income (loss) attributable to common stockholders per share of common stock |
|
$ |
0.80 |
|
|
$ |
0.01 |
|
|
$ |
0.81 |
|
|
$ |
0.05 |
|
|
$ |
(0.24 |
) |
|
$ |
0.62 |
|
|
|
||
Weighted average shares of common stock and convertible units(4) outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
85,880 |
|
|
|
||||||||||||
Weighted average shares of common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
85,045 |
|
|
|
||||||||||||
(1) Other income primarily consists of rental income on real estate owned, loan origination fees, and servicing income. |
||||||||||||||||||||||||||||
(2) Includes |
||||||||||||||||||||||||||||
(3) Other activities include certain equity and other trading strategies and related hedges, and net realized and unrealized gains (losses) on foreign currency. |
||||||||||||||||||||||||||||
(4) Convertible units include Operating Partnership units attributable to participating non-controlling interests. |
||||||||||||||||||||||||||||
The following table summarizes our operating results by strategy for the three-month period ended March 31, 2024:
|
|
Investment Portfolio |
|
Longbridge |
|
Corporate/Other |
|
Total |
|
Per Share |
||||||||||||||||||
(In thousands except per share amounts) |
|
Credit |
|
Agency |
|
Investment Portfolio Subtotal |
|
|
|
|
||||||||||||||||||
Interest income and other income(1) |
|
$ |
84,269 |
|
|
$ |
7,069 |
|
|
$ |
91,338 |
|
|
$ |
12,132 |
|
|
$ |
1,877 |
|
|
$ |
105,347 |
|
|
$ |
1.24 |
|
Interest expense |
|
|
(43,121 |
) |
|
|
(9,763 |
) |
|
|
(52,884 |
) |
|
|
(8,558 |
) |
|
|
(4,597 |
) |
|
|
(66,039 |
) |
|
|
(0.77 |
) |
Realized gain (loss), net |
|
|
(6,379 |
) |
|
|
(12,154 |
) |
|
|
(18,533 |
) |
|
|
— |
|
|
|
— |
|
|
|
(18,533 |
) |
|
|
(0.22 |
) |
Unrealized gain (loss), net |
|
|
3,466 |
|
|
|
797 |
|
|
|
4,263 |
|
|
|
(8,356 |
) |
|
|
1,829 |
|
|
|
(2,264 |
) |
|
|
(0.03 |
) |
Net change from reverse mortgage loans and HMBS obligations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
27,515 |
|
|
|
— |
|
|
|
27,515 |
|
|
|
0.32 |
|
Earnings in unconsolidated entities |
|
|
2,226 |
|
|
|
— |
|
|
|
2,226 |
|
|
|
— |
|
|
|
— |
|
|
|
2,226 |
|
|
|
0.03 |
|
Interest rate hedges and other activity, net(2) |
|
|
8,259 |
|
|
|
16,123 |
|
|
|
24,382 |
|
|
|
15,712 |
|
|
|
(5,538 |
) |
|
|
34,556 |
|
|
|
0.41 |
|
Credit hedges and other activities, net(3) |
|
|
(4,449 |
) |
|
|
— |
|
|
|
(4,449 |
) |
|
|
(592 |
) |
|
|
— |
|
|
|
(5,041 |
) |
|
|
(0.06 |
) |
Income tax (expense) benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(61 |
) |
|
|
(61 |
) |
|
|
— |
|
Investment related expenses |
|
|
(2,973 |
) |
|
|
— |
|
|
|
(2,973 |
) |
|
|
(10,263 |
) |
|
|
— |
|
|
|
(13,236 |
) |
|
|
(0.16 |
) |
Other expenses |
|
|
(170 |
) |
|
|
— |
|
|
|
(170 |
) |
|
|
(18,836 |
) |
|
|
(11,413 |
) |
|
|
(30,419 |
) |
|
|
(0.36 |
) |
Net income (loss) |
|
|
41,128 |
|
|
|
2,072 |
|
|
|
43,200 |
|
|
|
8,754 |
|
|
|
(17,903 |
) |
|
|
34,051 |
|
|
|
0.40 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,654 |
) |
|
|
(6,654 |
) |
|
|
(0.08 |
) |
Net (income) loss attributable to non-participating non-controlling interests |
|
|
(185 |
) |
|
|
— |
|
|
|
(185 |
) |
|
|
(38 |
) |
|
|
(4 |
) |
|
|
(227 |
) |
|
|
— |
|
Net income (loss) attributable to common stockholders and participating non-controlling interests |
|
|
40,943 |
|
|
|
2,072 |
|
|
|
43,015 |
|
|
|
8,716 |
|
|
|
(24,561 |
) |
|
|
27,170 |
|
|
|
0.32 |
|
Net (income) loss attributable to participating non-controlling interests |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(255 |
) |
|
|
(255 |
) |
|
|
— |
|
Net income (loss) attributable to common stockholders |
|
$ |
40,943 |
|
|
$ |
2,072 |
|
|
$ |
43,015 |
|
|
$ |
8,716 |
|
|
$ |
(24,816 |
) |
|
$ |
26,915 |
|
|
$ |
0.32 |
|
Net income (loss) attributable to common stockholders per share of common stock |
|
$ |
0.48 |
|
|
$ |
0.03 |
|
|
$ |
0.51 |
|
|
$ |
0.10 |
|
|
$ |
(0.29 |
) |
|
$ |
0.32 |
|
|
|
||
Weighted average shares of common stock and convertible units(4) outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
85,269 |
|
|
|
||||||||||||
Weighted average shares of common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
84,468 |
|
|
|
||||||||||||
(1) Other income primarily consists of rental income on real estate owned, loan origination fees, and servicing income. |
||||||||||||||||||||||||||||
(2) Includes |
||||||||||||||||||||||||||||
(3) Other activities include certain equity and other trading strategies and related hedges, and net realized and unrealized gains (losses) on foreign currency. |
||||||||||||||||||||||||||||
(4) Convertible units include Operating Partnership units attributable to participating non-controlling interests. |
||||||||||||||||||||||||||||
About Ellington Financial
Ellington Financial invests in a diverse array of financial assets, including residential and commercial mortgage loans and mortgage-backed securities, reverse mortgage loans, mortgage servicing rights and related investments, consumer loans, asset-backed securities, collateralized loan obligations, non-mortgage and mortgage-related derivatives, debt and equity investments in loan origination companies, and other strategic investments. Ellington Financial is externally managed and advised by Ellington Financial Management LLC, an affiliate of Ellington Management Group, L.L.C.
Conference Call
We will host a conference call at 11:00 a.m. Eastern Time on Wednesday, August 7, 2024, to discuss our financial results for the quarter ended June 30, 2024. To participate in the event by telephone, please dial (800) 579-2543 at least 10 minutes prior to the start time and reference the conference ID EFCQ224. International callers should dial (785) 424-1789 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.ellingtonfinancial.com. To listen to the live webcast, please visit www.ellingtonfinancial.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.ellingtonfinancial.com under "For Investors—Presentations."
A dial-in replay of the conference call will be available on Wednesday, August 7, 2024, at approximately 2:00 p.m. Eastern Time through Wednesday, August 14, 2024 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 695-0974. International callers should dial (402) 220-1459. A replay of the conference call will also be archived on our web site at www.ellingtonfinancial.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains 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. Our 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 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. 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 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. The following factors are examples of those that could cause actual results to vary from 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, changes in government regulations affecting our business, our ability to maintain our exclusion from registration under the Investment Company Act of 1940, our ability to maintain our qualification as a real estate investment trust, or "REIT," 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, 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 our website at www.ellingtonfinancial.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 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
ELLINGTON FINANCIAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
|||||||||||
|
Three-Month Period Ended |
|
Six-Month Period Ended |
||||||||
|
June 30, 2024 |
|
March 31, 2024 |
|
June 30, 2024 |
||||||
(In thousands, except per share amounts) |
|
|
|
|
|
||||||
NET INTEREST INCOME |
|
|
|
|
|
||||||
Interest income |
$ |
100,470 |
|
|
$ |
101,520 |
|
|
$ |
201,990 |
|
Interest expense |
|
(66,874 |
) |
|
|
(70,464 |
) |
|
|
(137,338 |
) |
Total net interest income |
|
33,596 |
|
|
|
31,056 |
|
|
|
64,652 |
|
Other Income (Loss) |
|
|
|
|
|
||||||
Realized gains (losses) on securities and loans, net |
|
(22,968 |
) |
|
|
(17,208 |
) |
|
|
(40,176 |
) |
Realized gains (losses) on financial derivatives, net |
|
6,313 |
|
|
|
3,478 |
|
|
|
9,791 |
|
Realized gains (losses) on real estate owned, net |
|
(1,877 |
) |
|
|
(1,372 |
) |
|
|
(3,249 |
) |
Unrealized gains (losses) on securities and loans, net |
|
40,271 |
|
|
|
5,573 |
|
|
|
45,844 |
|
Unrealized gains (losses) on financial derivatives, net |
|
7,902 |
|
|
|
30,365 |
|
|
|
38,267 |
|
Unrealized gains (losses) on real estate owned, net |
|
882 |
|
|
|
(679 |
) |
|
|
203 |
|
Unrealized gains (losses) on other secured borrowings, at fair value, net |
|
(1,516 |
) |
|
|
(12,524 |
) |
|
|
(14,040 |
) |
Unrealized gains (losses) on unsecured borrowings, at fair value |
|
1,868 |
|
|
|
1,829 |
|
|
|
3,696 |
|
Net change from HECM reverse mortgage loans, at fair value |
|
146,706 |
|
|
|
205,497 |
|
|
|
352,202 |
|
Net change related to HMBS obligations, at fair value |
|
(127,672 |
) |
|
|
(177,982 |
) |
|
|
(305,654 |
) |
Other, net |
|
7,652 |
|
|
|
7,508 |
|
|
|
15,161 |
|
Total other income (loss) |
|
57,561 |
|
|
|
44,485 |
|
|
|
102,045 |
|
EXPENSES |
|
|
|
|
|
||||||
Base management fee to affiliate, net of rebates |
|
5,811 |
|
|
|
5,730 |
|
|
|
11,541 |
|
Investment related expenses: |
|
|
|
|
|
||||||
Servicing expense |
|
5,782 |
|
|
|
5,688 |
|
|
|
11,470 |
|
Debt issuance costs related to Other secured borrowings, at fair value |
|
— |
|
|
|
3,113 |
|
|
|
3,113 |
|
Other |
|
5,305 |
|
|
|
4,435 |
|
|
|
9,740 |
|
Professional fees |
|
2,438 |
|
|
|
2,970 |
|
|
|
5,407 |
|
Compensation and benefits |
|
16,353 |
|
|
|
14,643 |
|
|
|
30,996 |
|
Other expenses |
|
7,296 |
|
|
|
7,076 |
|
|
|
14,373 |
|
Total expenses |
|
42,985 |
|
|
|
43,655 |
|
|
|
86,640 |
|
Net Income (Loss) before Income Tax Expense (Benefit) and Earnings from Investments in Unconsolidated Entities |
|
48,172 |
|
|
|
31,886 |
|
|
|
80,057 |
|
Income tax expense (benefit) |
|
142 |
|
|
|
61 |
|
|
|
202 |
|
Earnings (losses) from investments in unconsolidated entities |
|
12,042 |
|
|
|
2,226 |
|
|
|
14,268 |
|
Net Income (Loss) |
|
60,072 |
|
|
|
34,051 |
|
|
|
94,123 |
|
Net Income (Loss) attributable to non-controlling interests |
|
900 |
|
|
|
482 |
|
|
|
1,382 |
|
Dividends on preferred stock |
|
6,825 |
|
|
|
6,654 |
|
|
|
13,479 |
|
Net Income (Loss) Attributable to Common Stockholders |
$ |
52,347 |
|
|
$ |
26,915 |
|
|
$ |
79,262 |
|
Net Income (Loss) per Common Share: |
|
|
|
|
|
||||||
Basic and Diluted |
$ |
0.62 |
|
|
$ |
0.32 |
|
|
$ |
0.94 |
|
Weighted average shares of common stock outstanding |
|
85,045 |
|
|
|
84,468 |
|
|
|
84,756 |
|
Weighted average shares of common stock and convertible units outstanding |
|
85,880 |
|
|
|
85,269 |
|
|
|
85,574 |
|
ELLINGTON FINANCIAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
|||||||||||
|
As of |
||||||||||
(In thousands, except share and per share amounts) |
June 30, 2024 |
|
March 31, 2024 |
|
December 31, 2023(1) |
||||||
ASSETS |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
198,513 |
|
|
$ |
187,467 |
|
|
$ |
228,927 |
|
Restricted cash |
|
6,098 |
|
|
|
6,343 |
|
|
|
1,618 |
|
Securities, at fair value |
|
1,127,684 |
|
|
|
1,328,848 |
|
|
|
1,518,377 |
|
Loans, at fair value |
|
12,846,106 |
|
|
|
12,644,232 |
|
|
|
12,306,636 |
|
Loan commitments, at fair value |
|
5,623 |
|
|
|
3,917 |
|
|
|
2,584 |
|
Forward MSR-related investments, at fair value |
|
158,031 |
|
|
|
160,009 |
|
|
|
163,336 |
|
Mortgage servicing rights, at fair value |
|
29,538 |
|
|
|
29,889 |
|
|
|
29,580 |
|
Investments in unconsolidated entities, at fair value |
|
163,182 |
|
|
|
125,366 |
|
|
|
116,414 |
|
Real estate owned |
|
25,248 |
|
|
|
19,999 |
|
|
|
22,085 |
|
Financial derivatives–assets, at fair value |
|
162,165 |
|
|
|
150,343 |
|
|
|
143,996 |
|
Reverse repurchase agreements |
|
85,671 |
|
|
|
183,607 |
|
|
|
173,145 |
|
Due from brokers |
|
22,036 |
|
|
|
17,099 |
|
|
|
51,884 |
|
Investment related receivables |
|
195,557 |
|
|
|
200,059 |
|
|
|
480,249 |
|
Other assets |
|
67,201 |
|
|
|
75,422 |
|
|
|
77,099 |
|
Total Assets |
$ |
15,092,653 |
|
|
$ |
15,132,600 |
|
|
$ |
15,315,930 |
|
LIABILITIES |
|
|
|
|
|
||||||
Securities sold short, at fair value |
$ |
51,858 |
|
|
$ |
165,118 |
|
|
$ |
154,303 |
|
Repurchase agreements |
|
2,301,976 |
|
|
|
2,517,747 |
|
|
|
2,967,437 |
|
Financial derivatives–liabilities, at fair value |
|
44,064 |
|
|
|
40,425 |
|
|
|
61,776 |
|
Due to brokers |
|
74,946 |
|
|
|
62,646 |
|
|
|
62,442 |
|
Investment related payables |
|
38,977 |
|
|
|
32,329 |
|
|
|
37,403 |
|
Other secured borrowings |
|
217,225 |
|
|
|
180,918 |
|
|
|
245,827 |
|
Other secured borrowings, at fair value |
|
1,585,838 |
|
|
|
1,569,149 |
|
|
|
1,424,668 |
|
HMBS-related obligations, at fair value |
|
8,832,058 |
|
|
|
8,619,463 |
|
|
|
8,423,235 |
|
Unsecured borrowings, at fair value |
|
269,069 |
|
|
|
270,936 |
|
|
|
272,765 |
|
Base management fee payable to affiliate |
|
5,811 |
|
|
|
5,730 |
|
|
|
5,660 |
|
Dividend payable |
|
15,158 |
|
|
|
15,168 |
|
|
|
11,528 |
|
Interest payable |
|
17,174 |
|
|
|
25,177 |
|
|
|
22,933 |
|
Accrued expenses and other liabilities |
|
64,640 |
|
|
|
74,638 |
|
|
|
90,341 |
|
Total Liabilities |
|
13,518,794 |
|
|
|
13,579,444 |
|
|
|
13,780,318 |
|
EQUITY |
|
|
|
|
|
||||||
Preferred stock, par value |
|
355,551 |
|
|
|
355,551 |
|
|
|
355,551 |
|
Common stock, par value |
|
85 |
|
|
|
85 |
|
|
|
83 |
|
Additional paid-in-capital |
|
1,541,002 |
|
|
|
1,540,857 |
|
|
|
1,514,797 |
|
Retained earnings (accumulated deficit) |
|
(343,853 |
) |
|
|
(363,034 |
) |
|
|
(353,360 |
) |
Total Stockholders' Equity |
|
1,552,785 |
|
|
|
1,533,459 |
|
|
|
1,517,071 |
|
Non-controlling interests |
|
21,074 |
|
|
|
19,697 |
|
|
|
18,541 |
|
Total Equity |
|
1,573,859 |
|
|
|
1,553,156 |
|
|
|
1,535,612 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
15,092,653 |
|
|
$ |
15,132,600 |
|
|
$ |
15,315,930 |
|
SUPPLEMENTAL PER SHARE INFORMATION: |
|
|
|
|
|
||||||
Book Value Per Common Share (3) |
$ |
13.92 |
|
|
$ |
13.69 |
|
|
$ |
13.83 |
|
(1) Derived from audited financial statements as of December 31, 2023. |
|||||||||||
(2) Common shares issued and outstanding at June 30, 2024 exclude 14,735 common shares repurchased during the quarter. |
|||||||||||
(3) Based on total stockholders' equity less the aggregate liquidation preference of our preferred stock outstanding. |
|||||||||||
Reconciliation of Net Income (Loss) to Adjusted Distributable Earnings
We calculate Adjusted Distributable Earnings as
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 investment portfolio, after the effects of financial leverage and by Longbridge, to reflect the earnings from its reverse mortgage origination and servicing operations; 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 residential mortgage REIT and mortgage originator peers. Please note, however, that: (I) 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; and (II) Adjusted Distributable Earnings excludes certain items 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
Furthermore, Adjusted Distributable Earnings is different from REIT taxable income. As a result, the determination of whether we have met the requirement to distribute at least
In setting our dividends, our Board of Directors considers our earnings, liquidity, financial condition, REIT distribution requirements, and financial covenants, along with other factors that the Board of Directors may deem relevant from time to time.
The following table reconciles, for the three-month periods ended June 30, 2024 and March 31, 2024, our Adjusted Distributable Earnings to the line on our Condensed Consolidated Statement of Operations entitled Net Income (Loss), which we believe is the most directly comparable
:
|
|
Three-Month Period Ended |
||||||||||||||||||||||||||||||
|
|
June 30, 2024 |
|
March 31, 2024 |
||||||||||||||||||||||||||||
(In thousands, except per share amounts) |
|
Investment Portfolio |
|
Longbridge |
|
Corporate/Other |
|
Total |
|
Investment Portfolio |
|
Longbridge |
|
Corporate/Other |
|
Total |
||||||||||||||||
Net Income (Loss) |
|
$ |
69,476 |
|
|
$ |
4,209 |
|
|
$ |
(13,613 |
) |
|
$ |
60,072 |
|
|
$ |
43,200 |
|
|
$ |
8,754 |
|
|
$ |
(17,903 |
) |
|
$ |
34,051 |
|
Income tax expense (benefit) |
|
|
— |
|
|
|
— |
|
|
|
142 |
|
|
|
142 |
|
|
|
— |
|
|
|
— |
|
|
|
61 |
|
|
|
61 |
|
Net income (loss) before income tax expense (benefit) |
|
|
69,476 |
|
|
|
4,209 |
|
|
|
(13,471 |
) |
|
|
60,214 |
|
|
|
43,200 |
|
|
|
8,754 |
|
|
|
(17,842 |
) |
|
|
34,112 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Realized (gains) losses, net(1) |
|
|
34,875 |
|
|
|
— |
|
|
|
1,059 |
|
|
|
35,934 |
|
|
|
29,254 |
|
|
|
— |
|
|
|
1,620 |
|
|
|
30,874 |
|
Unrealized (gains) losses, net(2) |
|
|
(50,663 |
) |
|
|
1,441 |
|
|
|
(2,679 |
) |
|
|
(51,901 |
) |
|
|
(25,945 |
) |
|
|
449 |
|
|
|
(106 |
) |
|
|
(25,602 |
) |
Unrealized (gains) losses on reverse MSRs, net of hedging (gains) losses(3) |
|
|
— |
|
|
|
(394 |
) |
|
|
— |
|
|
|
(394 |
) |
|
|
— |
|
|
|
(13,943 |
) |
|
|
— |
|
|
|
(13,943 |
) |
Negative (positive) component of interest income represented by Catch-up Amortization Adjustment |
|
|
(720 |
) |
|
|
— |
|
|
|
— |
|
|
|
(720 |
) |
|
|
1,297 |
|
|
|
— |
|
|
|
— |
|
|
|
1,297 |
|
Non-capitalized transaction costs and other expense adjustments(4) |
|
|
1,081 |
|
|
|
181 |
|
|
|
321 |
|
|
|
1,583 |
|
|
|
923 |
|
|
|
4,068 |
|
|
|
500 |
|
|
|
5,491 |
|
(Earnings) losses from investments in unconsolidated entities |
|
|
(12,042 |
) |
|
|
— |
|
|
|
— |
|
|
|
(12,042 |
) |
|
|
(2,226 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,226 |
) |
Adjusted distributable earnings from investments in unconsolidated entities(5) |
|
|
3,272 |
|
|
|
— |
|
|
|
— |
|
|
|
3,272 |
|
|
|
816 |
|
|
|
— |
|
|
|
— |
|
|
|
816 |
|
Total Adjusted Distributable Earnings |
|
$ |
45,279 |
|
|
$ |
5,437 |
|
|
$ |
(14,770 |
) |
|
$ |
35,946 |
|
|
$ |
47,319 |
|
|
$ |
(672 |
) |
|
$ |
(15,828 |
) |
|
$ |
30,819 |
|
Dividends on preferred stock |
|
|
— |
|
|
|
— |
|
|
|
6,825 |
|
|
|
6,825 |
|
|
|
— |
|
|
|
— |
|
|
|
6,654 |
|
|
|
6,654 |
|
Adjusted Distributable Earnings attributable to non-controlling interests |
|
|
486 |
|
|
|
23 |
|
|
|
278 |
|
|
|
787 |
|
|
|
216 |
|
|
|
(2 |
) |
|
|
225 |
|
|
|
439 |
|
Adjusted Distributable Earnings Attributable to Common Stockholders |
|
$ |
44,793 |
|
|
$ |
5,414 |
|
|
$ |
(21,873 |
) |
|
$ |
28,334 |
|
|
$ |
47,103 |
|
|
$ |
(670 |
) |
|
$ |
(22,707 |
) |
|
$ |
23,726 |
|
Adjusted Distributable Earnings Attributable to Common Stockholders, per share |
|
$ |
0.53 |
|
|
$ |
0.06 |
|
|
$ |
(0.26 |
) |
|
$ |
0.33 |
|
|
$ |
0.56 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.28 |
|
(1) |
Includes realized (gains) losses on securities and loans, REO, financial derivatives (excluding periodic settlements on interest rate swaps), and foreign currency transactions which are components of Other Income (Loss) on the Condensed Consolidated Statement of Operations. |
(2) |
Includes unrealized (gains) losses on securities and loans, REO, financial derivatives (excluding periodic settlements on interest rate swaps), borrowings carried at fair value, MSR-related investments, and foreign currency translations which are components of Other Income (Loss) on the Condensed Consolidated Statement of Operations. |
(3) |
Represents net change in fair value of the HMBS MSR Equivalent and Reverse MSRs attributable to changes in market conditions and model assumptions. This adjustment also includes net (gains) losses on certain hedging instruments, which are components of realized and/or unrealized gains (losses) on financial derivatives, net on the Condensed Consolidated Statement of Operations. |
(4) |
For the three-month period ended June 30, 2024, includes |
(5) |
Includes net interest income and operating expenses for certain investments in unconsolidated entities. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240806005948/en/
Investors:
Ellington Financial
Investor Relations
(203) 409-3575
info@ellingtonfinancial.com
or
Media:
Amanda Shpiner/Grace Cartwright
Gasthalter & Co.
for Ellington Financial
(212) 257-4170
ellington@gasthalter.com
Source: Ellington Financial Inc.
FAQ
What were Ellington Financial's earnings for Q2 2024?
How much did Ellington Financial's investment portfolio generate in Q2 2024?
What is the book value per share for Ellington Financial as of June 30, 2024?
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What was the recourse debt-to-equity ratio for Ellington Financial in Q2 2024?
