OLD GREENWICH, Conn.--(BUSINESS WIRE)--November 19, 2025--
Ellington Credit Company $(EARN)$ ("we") today reported financial results for the quarter ended September 30, 2025.
Highlights
-- Net asset value $(NAV)$ per share was $5.99 as of September 30, 2025, which includes the effects of distributions of $0.24 per share for the quarter. -- GAAP net income was $4.3 million or $0.11 per share. -- Net investment income ("NII") was $8.5 million, or $0.23 per share. -- Adjusted net investment income1 was $8.5 million, or $0.23 per share. -- CLO portfolio grew to $379.6 million as of September 30, 2025. -- CLO debt investments--$185.5 million -- CLO equity investments--$194.0 million -- Purchased $115.7 million of CLO investments and sold $29.2 million, across 92 trades. -- Weighted average GAAP yield for the quarter, based on amortized cost, was 15.5% on the total CLO portfolio. -- Received $16.2 million in recurring cash distributions2 from the investment portfolio, or $0.43 per share.
Management Commentary
"Our CLO portfolio ramp-up continued in the quarter, and our net investment income increased in tandem. I'm pleased to announce that Ellington Credit Company achieved full dividend coverage from net investment income in September," said Laurence Penn, Chief Executive Officer and President.
"Results were further enhanced by active trading--encompassing 92 distinct CLO trades during the quarter--as well as by several CLO note redemptions at par on discounted purchases. We actively repositioned our portfolio during the quarter, as we added mezzanine debt tranches offering attractive yields and downside protection, while moderating new-issue equity exposure amid less favorable pricing dynamics. We also took advantage of secondary market opportunities to rotate into higher-quality, longer-dated equity positions.
"Looking ahead, our balanced mix of mezzanine and equity tranches (nearly a 50/50 split at quarter end), together with our significant credit hedging portfolio, should position us for both upside and resilience as market conditions evolve. We expect elevated loan repricing activity and ongoing credit dispersion to continue to create opportunities for outperformance through active management, reinforcing our confidence in delivering strong total returns for shareholders."
Distributions
During and subsequent to the quarter ended September 30, 2025, our Board of Trustees declared the following distributions on our common shares.
Distribution
Declaration Date Record Date Payment Date Per Share
---------------- ---------------- ---------------- ---------------
July 8, 2025 July 31, 2025 August 29, 2025 $ 0.08
September 30,
August 7, 2025 August 29, 2025 2025 0.08
September 30, October 31,
September 8, 2025 2025 2025 0.08
November 28,
October 7, 2025 October 31, 2025 2025 0.08
December 31,
November 10, 2025 November 28, 2025 2025 0.08
Investment Portfolio
The following table summarizes the composition of the investment portfolio as of September 30, 2025.
% of Total
(In thousands) Amortized Cost Fair Value Investments
---------------- ------------ --------------
U.S. CLO debt $ 140,385 $ 142,007 37.3%
European CLO debt 41,770 43,541 11.5%
------------ -------- ---------
Total CLO debt 182,155 185,548 48.8%
------------ -------- ---------
U.S. CLO equity 185,970 184,838 48.6%
European CLO equity 9,468 9,208 2.4%
------------ -------- ---------
Total CLO equity 195,438 194,046 51.0%
------------ -------- ---------
Total CLO debt and
equity 377,593 379,594 99.8%
------------ -------- ---------
Other investments 635 678 0.2%
------------ -------- ---------
Total investments $ 378,228 $ 380,272 100.0%
============ ======== =========
Results of Operations
The following table summarizes our operating results for the quarter ended September 30, 2025:
Quarter Ended September 30, 2025
------------------------------------------------------------------------------
U.S. CLO European U.S. CLO European CLO Total Per
Debt CLO Debt Equity Equity Other(1) Total Share(2)
-------- ---------- -------- ------------ -------- -------- ------------
(In thousands,
except share
and per share
amounts)
Interest income $ 5,161 $ 1,256 $ 6,728 $ 420 $ 281 $13,846 $ 0.37
Other
investment
income -- -- 305 -- -- 305 0.01
------ ----- ------ ---- ------ ------ -----
Total
investment
income 5,161 1,256 7,033 420 281 14,151 0.38
------ ----- ------ ---- ------ ------ -----
Interest
expense (1,296) (208) (435) (25) -- (1,964) (0.05)
Other expenses -- -- -- -- (3,702) (3,702) (0.10)
------ ----- ------ ---- ------ ------ -----
Net
investment
income 3,865 1,048 6,598 395 (3,421) 8,485 0.23
------ ----- ------ ---- ------ ------ -----
Net realized
gain (loss) on
investments 907 223 235 (88) (16) 1,261 0.03
Change in net
unrealized
gain (loss) on
investments (61) (39) (3,638) (413) 54 (4,097) (0.11)
Credit and
foreign
currency
hedges, and
other
activities (1,369) (1,369) (0.04)
-------- ---------- -------- ------------ ------ ------ -----
Net income
(loss) $ 4,711 $ 1,232 $ 3,195 $ (106) $(4,752) $ 4,280 $ 0.11
====== ===== ====== ==== ====== ====== =====
Net income
(loss) per
share(2) $ 0.13 $ 0.03 $ 0.08 $ -- $ (0.13) $ 0.11
(1) Includes interest income and net realized and change in unrealized
gains (losses) associated with corporate debt and equity investments.
Also includes management fees, performance fees, and various other
operating expenses.
(2) Based on weighted average shares outstanding of 37,563,048 shares for
the quarter ended September 30, 2025.
The following table summarizes our operating results for the quarter ended June 30, 2025:
Quarter Ended June 30, 2025
----------------------------------------------------------------------------
U.S. U.S. European
CLO European CLO CLO CLO Total Per
Debt Debt Equity Equity Other(1) Total Share(2)
------- ------------ ------- ---------- -------- -------- ------------
(In thousands,
except share
and per share
amounts)
Interest income $3,314 $ 696 $6,076 $ 455 $ 1,045 $11,586 $ 0.31
Other
investment
income -- -- 84 -- -- 84 --
----- ---- ----- ----- ------ ------ -----
Total
investment
income 3,314 696 6,160 455 1,045 11,670 0.31
----- ---- ----- ----- ------ ------ -----
Interest
expense (774) (126) (262) (13) (540) (1,715) (0.05)
Other expenses -- -- -- -- (3,434) (3,434) (0.09)
----- ---- ----- ----- ------ ------ -----
Net
investment
income 2,540 570 5,898 442 (2,929) 6,521 0.17
----- ---- ----- ----- ------ ------ -----
Net realized
gain (loss) on
investments 318 (1) 176 (25) (239) 229 0.01
Change in net
unrealized
gain (loss) on
investments 1,684 199 2,507 (599) (14) 3,777 0.10
Credit and
foreign
currency
hedges, and
other
activities (322) (322) (0.01)
------- ------------ ------- ---------- ------ ------ -----
Net income
(loss) $4,542 $ 768 $8,581 $ (182) $(3,504) $10,205 $ 0.27
===== ==== ===== ===== ====== ====== =====
Net income
(loss) per
share(2) $ 0.12 $ 0.02 $ 0.23 $ (0.01) $ (0.09) $ 0.27
(1) Includes interest income and expense and net realized and change in
unrealized gains and (losses) associated with corporate debt and equity
and legacy mortgage--related investments (substantially all of which
were sold following the Company's conversion to a regulated investment
company). Also includes management fees, performance fees, and various
other operating expenses.
(2) Based on weighted average shares outstanding of 37,559,195 shares for
the quarter ended June 30, 2025.
CLO Performance
Credit markets generally rallied during the quarter ended September 30, 2025, supported by a dovish shift from the Federal Reserve, which delivered its first interest rate cut of the year in September. Despite increased dispersion in credit performance within the high-yield corporate bond market, corporate credit spreads tightened overall. Major equity indexes also rose on expectations of additional monetary easing.
In the U.S. leveraged loan market, overall index prices were roughly unchanged, but performance varied sharply by credit quality. Lower-quality CCC-rated loans fell several points amid idiosyncratic default concerns, while single-B-rated loans advanced on sustained CLO demand, further highlighting the theme of credit dispersion. Callable, higher-quality loans continued to be repriced at lower rates, with price premiums on those loans giving way to new issuance at par with tighter spreads. In Europe, credit dispersion was also significant, and leveraged loan prices lagged the U.S. largely due to more extensive repricing activity.
Despite mixed loan performance, U.S. and European CLO debt tranche spreads generally tightened over the quarter, supported by steady capital inflows into the sector and limited new issuance. Higher-quality, seasoned mezzanine debt outperformed as loan prepayment and repricing activity remained elevated. CLO equity also benefitted from the tightening in debt spreads, which allowed equity investors to refinance or reset liabilities at lower coupons, though this was partly offset in both the U.S. and Europe by continued loan repricings and isolated default concerns.
Our investment portfolio generated positive results for the quarter, driven by strong net investment income, and also reflecting net realized and unrealized gains on CLO mezzanine debt. Active trading as well as deal calls of mezzanine debt positions owned at discounts to par both continued to contribute to realized gains. Offsetting these gains were net realized and unrealized losses on CLO equity and on credit hedges designed to protect against downside risk. At September 30, 2025, our CLO portfolio had a fair value of $379.6 million and a weighted average projected yield of 13.4%, based on fair value, and we held cash and cash equivalents of $20.1 million.
Net Asset Value Summary
The following table summarizes our assets and liabilities as of September 30, 2025:
(In thousands, except share and per share amounts) September 30, 2025
--------------------
Assets
Investments, at fair value $ 380,272
Cash and cash equivalents 20,085
Other assets 15,383
----------------
Total assets 415,740
----------------
Liabilities
Reverse repurchase agreements 175,333
Other liabilities 15,320
----------------
Total liabilities 190,653
----------------
Net asset value $ 225,087
================
Common shares outstanding 37,567,849
Net asset value per common share $ 5.99
About Ellington Credit Company
Ellington Credit Company (the "Fund") is a non-diversified closed-end fund that seeks to provide attractive current yields and risk-adjusted total returns by investing primarily in corporate collateralized loan obligations ("CLOs"), with a focus on mezzanine debt and equity tranches. The Fund is externally managed and advised by an affiliate of Ellington Management Group, L.L.C., a leading fixed-income investment manager founded in 1994. The Fund benefits from Ellington's extensive experience and deep expertise in portfolio management, credit analysis, and risk management.
Conference Call
We will host a conference call at 11:00 a.m. Eastern Time on Thursday, November 20, 2025 to discuss our financial results for the quarter ended September 30, 2025. To participate in the event by telephone, please dial (800) 343-4136 at least 10 minutes prior to the start time and reference the conference ID: EARNQ226. International callers should dial (203) 518-9843 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, November 20, 2025, at approximately 2:00 p.m. Eastern Time through Thursday, November 27, 2025 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 839-6911. International callers should dial (402) 220-6059. A replay of the conference call will also be archived on our web site at www.ellingtoncredit.com.
Cautionary Statement Regarding Forward-Looking Statements
This release may contain 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 and can be identified by words such as "anticipate," "estimate," "will," "should," "may," "expect," "project," "believe," "intend," "seek, " "plan" and 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 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. 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 the default rates on corporate loans, our ability to borrow to finance our assets, changes in government regulations affecting our business, a deterioration in the market for collateralized loan obligations, our ability to adapt to the new regulatory regime associated with our conversion to a closed-end fund/RIC, potential business disruption related to our conversion to a closed-end fund/RIC, ability to achieve the anticipated benefits of our conversion to a closed-end fund/RIC, and other changes in market conditions and economic trends, such as changes to fiscal or monetary policy, heightened inflation, increased tariffs, slower growth or recession, and currency fluctuations. Furthermore, as stated above, forward-looking statements are subject to numerous risks and uncertainties, including, among other things, those described under the heading "Risk Factors" in our Registration Statement on Form N-2, 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, and is not possible for us to predict or identify them all. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
This release and the information contained herein do not constitute an offer of any securities or solicitation of an offer to purchase securities.
Reconciliation of Adjusted Net Investment Income to Net Investment Income
We calculate Adjusted Net Investment Income as net investment income adjusted for non-recurring expenses. Adjusted Net Investment Income is a supplemental non-GAAP financial measure. We believe that the presentation of Adjusted Net Investment Income provides information useful to investors, because 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 expenses that we believe are less useful in forecasting long-term performance and distribution-paying ability.
Our calculation of Adjusted Net Investment Income 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. In addition, because Adjusted Net Investment Income is an incomplete measure of our financial results and differs from net investment income computed in accordance with U.S. GAAP, it should be considered supplementary to, and not as a substitute for, net investment income computed in accordance with U.S. GAAP.
In setting our distributions, 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 quarters ended September 30, 2025 and June 30, 2025, our Adjusted Net Investment Income to the line on our Consolidated Statement of Operations entitled Net Investment Income, which we believe is the most directly comparable U.S. GAAP measure:
(In thousands except share Quarter Ended Quarter Ended
amounts and per share amounts) September 30, 2025 June 30, 2025
--------------------- ----------------
Net Investment Income $ 8,485 $ 6,521
----------------- ------------
Adjustment:
Non-recurring
expenses--Strategic
transformation costs 35 75
----------------- ------------
Adjusted Net Investment Income $ 8,520 $ 6,596
================= ============
Weighted Average Shares
Outstanding 37,563,048 37,559,195
Adjusted Net Investment Income
Per Share $ 0.23 $ 0.18
___________________________________
(1) Adjusted net investment income is a non-GAAP financial measure. See
"Reconciliation of Adjusted Net Investment Income to Net Investment
Income" below for an explanation regarding the calculation of Adjusted
net investment income.
(2) "Recurring cash distributions" primarily includes distributions
received from our CLO investments but excludes cash received from CLO
redemptions or sales during the quarter.
View source version on businesswire.com: https://www.businesswire.com/news/home/20251119186373/en/
CONTACT: 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
(END) Dow Jones Newswires
November 19, 2025 16:57 ET (21:57 GMT)
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