Q1 2024 Ellington Financial Inc Earnings Call Transcript
Key Points
- Ellington Financial Inc reported a net income of $0.32 per share and adjusted distributable earnings of $0.28 per share for the first quarter.
- The credit strategy was the primary contributor to quarterly results, generating $0.48 per share of net income, driven by strong performance in non-QM and residential transition loan businesses.
- Successful completion of the inaugural securitization of proprietary reverse mortgage loans, converting repo financing into non-mark-to-market financing at an attractive cost of funds.
- Expansion of the credit portfolio, driven by a larger residential transition loan portfolio and opportunistic corporate CLO purchases.
- Strong origination flow from affiliate Sheraton Capital, sourcing a couple of non-performing loans (NPLs) for Ellington Financial in 2024.
- Longbridge's adjusted earnings were slightly negative for the quarter, weighing down overall adjusted distributable earnings for Ellington Financial.
- Agency strategy contributed only modestly with $0.03 per share as agency MBS lagged the broader rally in credit.
- Increase in delinquencies in the residential loan portfolio, driven by higher non-QM delinquencies in line with broader market trends.
- Net losses on credit hedges and negative operating income on certain commercial non-performing mortgage loans and REO.
- Challenges in the commercial real estate sector, with borrowers becoming more realistic about property valuations, impacting loan origination volumes in previous quarters.
Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Ellington Financial first- quarter 2024 earnings conference call. Today's call is being recorded. (Operator Instructions)
It is now my pleasure to turn the call over to Alaael-Deen Shilleh. You may begin.
Thank you. Before we start, I would like to remind everyone that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements are not historical in nature as described under Item 1A of our Annual Report on Form 10K and Part two Item 1A of our quarterly report on Form 10 Q.
Forward-looking statements are subject to a variety of risks and uncertainties that could cause the Company's actual results to differ from its beliefs, expectations, estimates, and projections. Consequently, you should not
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