Ellington Financial (EFC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $52.3 million ($0.62 per share), with a 4.5% non-annualized economic return and sequential growth in book value per share and adjusted distributable earnings (ADE) per share, which rose to $0.33.

• Strong performance from diversified credit and agency portfolios, with notable gains from non-QM loan business and the Longbridge reverse mortgage platform.

• Book value per common share increased to $13.92 as of June 30, 2024, after $0.39 in dividends declared for the quarter.

• Dividend yield was 13.0% based on the August 5, 2024 closing price, with a monthly dividend of $0.13 per share declared.

• Portfolio allocation: 81% credit, 6% agency, 13% Longbridge.

Financial highlights

• Long credit portfolio was $2.73 billion, down 2.5% from the prior quarter due to non-QM securitization and net sales.

• Longbridge portfolio increased 18% to $520.8 million, driven by proprietary reverse mortgage loan originations.

• Long agency portfolio was $457.7 million, a 31% decrease quarter-over-quarter, mainly from net sales.

• Cash and unencumbered assets rose to $764 million, including $198.5 million in cash and $565.1 million in other unencumbered assets.

• Total equity was $1.6 billion, with $1.2 billion common and $356 million preferred.

Outlook and guidance

• Management expects continued momentum in ADE and portfolio growth, leveraging ample cash and borrowing capacity, and a robust investment pipeline.

• Positioned to capitalize on wider spreads and price dislocations from recent market volatility.

• Focus remains on capital allocation to sectors with best relative value as market conditions evolve.

• Dividend expected to be maintained at $0.13 per month, with no near-term plans to increase.