Ellington Credit Company (EARN) Q4 2025 earnings summary

Executive summary

• Reported GAAP net loss of $21.1 million, or $0.56 per share, for Q4 2025, with a NAV-based total return of -9.1%, primarily due to CLO equity underperformance and market headwinds; active management and a shift toward mezzanine debt limited losses and outperformed peers.

• Net investment income was $7.8 million, or $0.21 per share, with adjusted net investment income matching this figure.

• Net asset value stood at $195.0 million, or $5.19 per share, as of December 31, 2025.

• CLO portfolio fair value was $369.5 million, with 77% of CLO debt and 97% of CLO equity investments in the U.S.; portfolio repositioned for better risk-adjusted returns through active trading and increased credit hedges.

• Declared monthly distributions of $0.08 per share, with a distribution rate of 20.0% based on the March 4, 2026 closing stock price.

Financial highlights

• GAAP net loss of $21.1 million for Q4 2025, driven by unrealized losses in CLO equity and drag from credit hedges.

• Net investment income of $7.8 million, or $0.21 per share; received $19.1 million in recurring cash distributions from the investment portfolio.

• Net asset value per share was $5.19 at December 31, 2025; cash and equivalents totaled $24.3 million.

• Weighted average GAAP yield for the quarter was 13.7% on the total CLO portfolio; weighted average projected yield was 14.6%.

• CLO portfolio decreased by 3% to $369.5 million; $66 million in new purchases (60% debt, 40% equity), $19 million in sales.

Outlook and guidance

• Entering 2026, more than 40% of US CLO portfolio deals are scheduled to exit non-call periods, enabling potential liability refinancings.

• Management expects to selectively increase CLO equity positions as market opportunities arise in 2026 and remains focused on rebuilding net investment income and NAV.

• Exploring issuance of long-term unsecured debt to provide additional capital.

• Active trading and disciplined risk management expected to add value in volatile markets.

• Monthly distributions of $0.08 per share declared through March 2026; future distributions not guaranteed.