OLD GREENWICH, Conn.--(BUSINESS WIRE)--February 25, 2026--
$Ellington Financial Inc.(EFC-B)$ $(EFC)$ ("we") today reported financial results for the quarter ended December 31, 2025.
Highlights
-- Net income attributable to common stockholders of $14.7 million, or
$0.14 per common share.1
-- $42.2 million, or $0.39 per common share, from the investment
portfolio.
-- $38.1 million, or $0.35 per common share, from the credit
strategy.
-- $4.1 million, or $0.04 per common share, from the Agency
strategy.
-- $16.4 million, or $0.15 per common share, from Longbridge.
-- Adjusted Distributable Earnings of $51.4 million, or $0.47 per common
share.2
-- $66.4 million, or $0.61 per common share, from the investment
portfolio.
-- $14.6 million, or $0.13 per common share, from Longbridge.
-- Book value per common share as of December 31, 2025 of $13.16,
including the effects of dividends of $0.39 per common share for the
quarter.
-- Recourse debt-to-equity ratio3 of 1.9:1 as of December 31, 2025.
Including all recourse and non-recourse borrowings, which primarily
consist of securitization-related liabilities, debt-to-equity ratio of
9.0:13.
-- Increased long-term, non-mark-to-market financing through
completion of seven securitizations and closing of $400 million of
Moody's- and Fitch-rated senior unsecured notes.
-- Cash and cash equivalents of $201.9 million as of December 31, 2025, in
addition to other unencumbered assets of $1.57 billion.
Fourth Quarter 2025 Results
"Ellington Financial reported another quarter of positive results, driven by our loan origination and securitization businesses, and supported by strengthening credit performance across our diversified loan portfolios," said Laurence Penn, Chief Executive Officer and President. "Once again, our adjusted distributable earnings substantially exceeded our dividends, with particularly strong contributions from our Longbridge segment.
"On October 6(th) , we closed a $400 million unsecured notes offering--our largest such offering to date. During the quarter, we continued to fortify our balance sheet by utilizing a portion of the proceeds from that offering to replace short-term repo financing, while maintaining a robust and consistent pace of securitization activity. This activity was highlighted by the completion of our inaugural securitization of residential transition loans and, subsequent to year end, our first securitization of Agency-eligible loans. As a result of these actions, our balance sheet metrics strengthened meaningfully. The proportion of total recourse borrowings represented by long-term, non-mark-to-market borrowings almost doubled quarter over quarter, while unencumbered assets expanded by more than $500 million, collectively demonstrating the enhanced strength and flexibility of our balance sheet.
"We also took advantage of the notes offering to actively deploy capital into new investments, expanding our portfolio by 9% even after the impact of securitizations.(4) Our portfolio continues to benefit from strong origination and acquisition activity across non-QM loans, Agency-eligible loans, closed-end second lien loans, proprietary reverse mortgage loans, and commercial mortgage bridge loans. By year end, we had largely deployed the proceeds from the notes offering.
"As we move into 2026, we remain focused on maintaining strong credit performance and disciplined portfolio growth, while increasing market share in loan originations and scaling our securitization platform. We also continue to optimize our capital structure and balance sheet. Following year-end, we raised common equity on an accretive basis with a highly targeted use of proceeds, namely retiring our highest-cost preferred equity. We will monitor the preferred equity market with an eye toward potentially refinancing that capital at a lower cost. Meanwhile, moving to the debt side of our balance sheet, we expect over time to continue to increase the share of unsecured, non-mark-to-market, and long-term financings. We believe that all these actions will drive an increasingly resilient earnings and dividend stream for shareholders."
Financial Results
Investment Portfolio Segment
The investment portfolio segment generated net income of $43.0 million in the fourth quarter, consisting of $38.9 million from the credit strategy and $4.1 million from the Agency strategy.
Credit
The total adjusted long credit portfolio(5) increased by 15% to $4.11 billion as of December 31, 2025, compared to $3.56 billion as of September 30, 2025. The increase was driven by net purchases of non-QM loans, Agency-eligible loans, closed-end second lien loans, commercial mortgage bridge loans, ABS, and CLOs; and a larger portfolio of retained RMBS. These increases were partially offset by the impact of loans sold into securitizations.
Key Highlights(6) :
-- Overall positive performance driven by higher net interest income in
the credit portfolio, and net realized and unrealized gains on non-QM
retained tranches and forward-MSR related investments.
-- Partially offsetting higher net interest income were net realized and
unrealized losses on non-QM loans, commercial mortgage bridge loans,
closed-end second lien loans and related retained tranches, CLOs, CMBS,
ABS, and residential REO.
-- Strong credit performance across our loan businesses, including
sequentially lower 90-day delinquency rates and continued low
life-to-date realized credit losses in both our residential and
commercial loan portfolios.
-- Strong results from equity investments in loan originators.
During the quarter, the net interest margin(7) on our credit portfolio decreased to 3.37% from 3.65%, with lower asset yields more than offsetting a slightly lower cost of funds. Asset yields declined primarily due to a higher proportion of loans held in warehouses pending securitization; this larger warehouse portfolio was the result of the deployment of the proceeds from the notes offering. We continued to benefit from positive carry on our interest rate swap hedges, where we overall receive a higher floating rate and pay a lower fixed rate.
Agency
The long Agency RMBS portfolio decreased slightly quarter over quarter to $218.4 million as of December 31, 2025, compared to $220.7 million as of September 30, 2025.
Key Highlights(6) :
-- Strong results driven by net interest income, net gains on Agency RMBS
and net gains on interest rate hedges. Declining interest rate volatility
and tightening Agency yield spreads were supportive of our portfolio.
-- Pay-ups on our specified pools decreased to 0.79% as of December 31,
2025, from 0.81% as of September 30, 2025.
The net interest margin(7) on our Agency portfolio (excluding the Catch-up Amortization Adjustment) decreased to 2.18% as of December 31, 2025, from 2.27% as of September 30, 2025, driven by a decrease in asset yields. We continued to benefit from positive carry on our interest rate swap hedges, where we overall receive a higher floating rate and pay a lower fixed rate.
Longbridge Segment
The Longbridge segment reported net income of $16.4 million for the fourth quarter. The Longbridge portfolio (excluding non-retained tranches of consolidated securitization trusts) decreased by 18% sequentially to $617.2 million as of December 31, 2025, as continued strong proprietary reverse mortgage loan origination volume was more than offset by the completion of two securitizations.
Key Highlights(6) :
-- Positive contribution from originations, supported by sequentially
higher overall origination volumes, continued strong origination margins,
and net gains related to the proprietary reverse mortgage loan
securitizations completed during the quarter.
-- Strong positive contribution from servicing, reflecting strong tail
securitization executions, a net gain on the HMBS MSR Equivalent, driven
primarily by improved profits from tail securitizations, along with
steady base servicing net income.
-- Net gains on interest rate hedges.
Corporate/Other Summary
Results also reflect: (i) an increase in the unrealized loss on our unsecured debt, driven by credit spread tightening during the quarter, (ii) debt issuance costs related to our October unsecured notes offering, which were fully expensed at issuance, and (iii) higher corporate-level interest expense due to a larger amount of unsecured notes outstanding.
_________________________
(1) Represents $58.5 million of aggregate net income from the investment
portfolio and Longbridge segments, less $43.9 million of preferred
dividends accrued and certain corporate/other income and expense items
not attributed to either the investment portfolio or Longbridge
segments.
(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. Represents $81.1 million of aggregate Adjusted
Distributable Earnings from the investment portfolio and Longbridge
segments, less $29.7 million of certain corporate/other items not
attributed to either the investment portfolio or Longbridge segments.
(3) Excludes borrowings collateralized by U.S. Treasury securities.
(4) Excludes U.S. Treasury securities and non-retained tranches of
consolidated securitization trusts.
(5) Excludes non-retained tranches of consolidated securitization trusts.
(6) Sector-level results include associated financing costs and hedging
gains/losses where applicable.
(7) Net interest margin represents the weighted average asset yield less the
weighted average secured financing cost of funds on such assets. It also
includes the effect of actual and accrued periodic payments on interest
rate swaps used to hedge the assets.
Credit Portfolio(1)
The following table summarizes our credit portfolio holdings as of December 31, 2025 and September 30, 2025:
December 31, 2025 September 30, 2025
--------------------- ---------------------
($ in thousands) Fair Value % Fair Value %
---------- --------- ---------- ---------
Dollar denominated:
Agency-eligible
residential mortgage
loans(2) $ 243,615 4.4% $ 89,239 1.8%
CLOs 111,808 2.0% 72,456 1.5%
CMBS 26,550 0.5% 31,115 0.6%
Commercial mortgage
loans(3)(5) 765,059 13.8% 661,271 13.7%
Consumer loans and
ABS backed by
consumer loans(6) 143,648 2.6% 97,346 2.0%
Corporate debt and
equity and corporate
loans 29,147 0.5% 26,444 0.5%
Debt and equity
investments in loan
origination-related
entities(7) 95,688 1.7% 84,229 1.7%
Forward MSR-related
investments 77,852 1.4% 74,694 1.5%
Home equity line of
credit and
closed-end second
lien loans and
retained RMBS(6)(8) 364,838 6.6% 313,548 6.5%
Non-Agency RMBS 95,240 1.7% 90,383 1.9%
Non-QM loans and
retained
RMBS(3)(6)(8) 2,624,068 47.4% 2,372,070 49.0%
Other
investments(9)(10) 70,466 1.3% 60,840 1.3%
Residential
transition loans and
other residential
mortgage
loans(2)(3)(4) 839,456 15.1% 816,158 16.9%
Non-Dollar denominated:
CLOs 13,232 0.2% 9,969 0.2%
Corporate debt and
equity -- --% 186 --%
RMBS(11)(12) 16,953 0.3% 13,626 0.3%
Other residential
mortgage loans 27,536 0.5% 29,761 0.6%
--------- ----- --------- -----
Total long credit
portfolio $5,545,156 100.0% $4,843,335 100.0%
========= ===== ========= =====
Adjustments:
Less:
Non-retained
tranches of
consolidated
securitization
trusts 1,433,814 1,281,857
--------- ---------
Total adjusted long
credit portfolio $4,111,342 $3,561,479
========= =========
(1) This information does not include U.S. Treasury securities, securities
sold short, or financial derivatives.
(2) Conformed to current period presentation.
(3) Includes related REO. In accordance with U.S. GAAP, REO is not
considered a financial instrument and as a result is included at the
lower of cost or fair value.
(4) Other residential mortgage loans include secondary market purchases of
non-performing and re-performing mortgage loans.
(5) Includes equity investments in unconsolidated entities holding
commercial mortgage loans and REO and corporate loans secured by
commercial mortgage loans.
(6) Includes equity investments in securitization-related vehicles.
(7) Includes corporate loans made to certain loan origination entities in
which we hold an equity investment.
(8) Retained RMBS represents RMBS issued by non-consolidated
Ellington-sponsored loan securitization trusts, and interests in
entities holding such RMBS.
(9) Includes equity investment in Ellington affiliate.
(10) Includes equity investment in an unconsolidated entity which purchases
certain other loans for eventual securitization.
(11) Includes loan to an entity which purchases residential mortgage loans
for eventual securitization.
(12) Includes equity investment in an unconsolidated entity holding
European RMBS.
Agency RMBS Portfolio
The following table(1) summarizes our Agency RMBS portfolio holdings as of December 31, 2025 and September 30, 2025:
December 31, 2025 September 30, 2025
----------------------- ------------------------
($ in thousands) Fair Value % Fair Value %
------------ --------- ------------- ---------
Long Agency RMBS:
Fixed rate $ 203,077 93.0% $ 207,161 93.9%
Reverse
mortgages 556 0.3% 915 0.4%
IOs 14,734 6.7% 12,667 5.7%
-------- ----- --- -------- -----
Total long Agency
RMBS $ 218,367 100.0% $ 220,743 100.0%
======== ===== === ======== =====
(1) This information does not include U.S. Treasury securities, securities
sold short, or financial derivatives.
Longbridge Portfolio
Longbridge originates reverse mortgage loans, including (i) home equity conversion mortgage loans, or "HECMs," which are insured by the FHA, and (ii) "proprietary reverse mortgage loans," which are not insured by the FHA. HECMs are eligible for inclusion in GNMA-guaranteed HECM-backed MBS, or "HMBS." Upon securitization, the HECMs remain on our balance sheet under GAAP. 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. Longbridge has typically retained the MSRs associated with the loans it has originated. Longbridge also originates home equity lines of credit, or "HELOCs," designed for homeowners aged 62 or older.
The following table summarizes loan-related assets(1) in the Longbridge segment as of December 31, 2025 and September 30, 2025:
December 31, 2025 September 30, 2025
------------------- ----------------------
(In thousands)
HMBS assets(2) $ 10,524,652 $ 10,232,166
Less: HMBS liabilities (10,406,332) (10,117,649)
-------------- ---------------
HMBS MSR Equivalent 118,320 114,517
-------------- ---------------
Unsecuritized HECM loans(3) 174,046 143,165
Proprietary reverse
mortgage loans(4)(5) 1,687,801 1,387,511
Reverse MSRs 28,913 29,055
Unsecuritized REO(5) 4,742 3,596
-------------- ---------------
Total 2,013,822 1,677,844
-------------- ---------------
Less: Non-retained tranches
of consolidated
securitization trusts 1,396,607 927,852
-------------- ---------------
Total, excluding
non-retained tranches
of consolidated
securitization trusts $ 617,215 $ 749,992
============== ===============
(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 December 31, 2025, includes $28.5 million of active HECM buyout
loans, $19.0 million of inactive HECM buyout loans, and $6.1 million of
other inactive HECM loans. As of September 30, 2025, includes $19.6
million of active HECM buyout loans, $17.3 million of inactive HECM
buyout loans, and $5.7 million of other inactive HECM loans.
(4) As of December 31, 2025, includes $1.4 billion of securitized
proprietary reverse mortgage loans and related REO, $26.0 million of
cash held in a securitization reserve fund, and $19.9 million of
investment related receivables. As of September 30, 2025, includes
$953.2 million of securitized proprietary reverse mortgage loans, $19.2
million of cash held in a securitization reserve fund, and $6.6 million
of investment related receivables.
(5) In accordance with U.S. GAAP, REO is not considered a financial
instrument and as a result is included at the lower of cost or fair
value.
The following table summarizes Longbridge's origination volumes by channel for the three-month periods ended December 31, 2025 and September 30, 2025:
($ In thousands) December 31, 2025 September 30, 2025
---------------------------------- -----------------------------------
New Loan % of New Loan New Loan % of New Loan
Origination Origination Origination Origination
Channel Units Volume(1) Volume Units Volume(1) Volume
----------------- ----- ------------ ------------- ----- ------------ --------------
Wholesale and
correspondent 1,668 $ 382,613 72% 1,485 $ 354,121 71%
Retail 824 147,119 28% 739 144,456 29%
----- ----------- --- ------- ----- ----------- --- --------
Total 2,492 $ 529,732 100% 2,224 $ 498,577 100%
===== =========== === ======= ===== =========== === ========
(1) Represents initial borrowed amounts on reverse mortgage loans.
Financing
Key Highlights:
-- Recourse Debt-to-Equity Ratio: 1.9:1 as of December 31, 2025, compared
to 1:8.1 as of September 30, 2025. We issued $400 million of unsecured
notes during the quarter, a portion of which replaced repo borrowings;
however, the overall ratio increased slightly as the remaining proceeds
from that offering, along with incremental borrowings, funded new
investments, outweighing the combined impact of repo paydowns,
securitizations, and higher total equity.
-- Overall Debt-to-Equity Ratio: 9.0:1 and 8.6:1 as of December 31, 2025
and September 30, 2025, respectively.
The following table summarizes our outstanding borrowings and debt-to-equity ratios as of December 31, 2025 and September 30, 2025:
December 31, 2025 September 30, 2025
------------------------------ ------------------------------
Outstanding Debt-to-Equity Outstanding Debt-to-Equity
Borrowings(1) Ratio(2) Borrowings(1) Ratio(2)
-------------- -------------- -------------- --------------
(In thousands) (In thousands)
Recourse
borrowings(3) $ 3,614,592 1.9:1 $ 3,252,917 1.8:1
Non-recourse
borrowings(3) 13,351,910 7.1:1 12,331,643 6.9:1
------------- -------------- ------------- --------------
Total
Borrowings $ 16,966,502 9.1:1 $ 15,584,560 8.7:1
============= -------------- ============= --------------
Total Equity $ 1,871,155 $ 1,795,820
Recourse 1.9:1 1.8:1
borrowings
excluding
borrowings
collateralized
by U.S.
Treasury
securities,
adjusted for
unsettled
purchases and
sales
Total borrowings 9.0:1 8.6:1
excluding
borrowings
collateralized
by U.S.
Treasury
securities,
adjusted for
unsettled
purchases and
sales
(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) 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).
Operating Results
The following table summarizes our operating results by strategy for the three-month period ended December 31, 2025:
Investment Portfolio
---------------------------------- ---
(In thousands Investment
except per share Portfolio
amounts) Credit Agency Subtotal Longbridge Corporate/Other Total Per Share
--------- -------- ------------- ------------ ------------------- --------- ---------
Interest income and
other income(1) $ 99,886 $ 2,462 $102,348 $ 42,510 $ 1,795 $146,653 $ 1.34
Interest expense (46,514) (1,436) (47,950) (24,371) (10,983) (83,304) (0.76)
Realized gain
(loss), net 2,291 (29) 2,262 60 -- 2,322 0.02
Unrealized gain
(loss), net (19,319) 1,769 (17,550) 8,927 (7,905) (16,528) (0.15)
Net change from
reverse mortgage
loans and HMBS
obligations -- -- -- 31,900 -- 31,900 0.29
Earnings in
unconsolidated
entities 18,203 -- 18,203 -- -- 18,203 0.17
Interest rate
hedges and other
activity, net(2) (402) 1,339 937 1,767 (661) 2,043 0.02
Credit hedges and
other activities,
net(3) (4,413) -- (4,413) (435) -- (4,848) (0.05)
Income tax
(expense) benefit -- -- -- -- (1,353) (1,353) (0.01)
Investment and
transaction
related expenses (8,213) -- (8,213) (16,506) (5,962) (30,681) (0.28)
Other expenses (2,663) -- (2,663) (27,491) (11,639) (41,793) (0.38)
------- ------ ------- ------- --- --------- ------- -----
Net income (loss) 38,856 4,105 42,961 16,361 (36,708) 22,614 0.21
------- ------ ------- --- ------- --- --------- ------- -----
Dividends on
preferred stock -- -- -- -- (6,981) (6,981) (0.06)
Net (income) loss
attributable to
non-participating
non-controlling
interests (805) -- (805) -- (4) (809) (0.01)
------- ------ ------- ------- --- --------- ------- -----
Net income (loss)
attributable to
common
stockholders and
participating
non-controlling
interests 38,051 4,105 42,156 16,361 (43,693) 14,824 0.14
------- ------ ------- --- ------- --- --------- ------- -----
Net (income) loss
attributable to
participating
non-controlling
interests -- -- -- -- (157) (157) --
------- ------ ------- --- ------- --- --------- ------- -----
Net income (loss)
attributable to
common
stockholders $ 38,051 $ 4,105 $ 42,156 $ 16,361 $ (43,850) $ 14,667 $ 0.14
======= ====== ======= === ======= === ========= ======= =====
Net income (loss)
attributable to
common
stockholders per
share of common
stock $ 0.35 $ 0.04 $ 0.39 $ 0.15 $ (0.40) $ 0.14
Weighted
average shares
of common
stock and
convertible
units(4)
outstanding 109,652
Weighted
average shares
of common
stock
outstanding 108,491
(1) Other income primarily consists of rental income on real estate owned,
loan origination fees, and servicing income.
(2) Includes U.S. Treasury securities, if applicable.
(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 September 30, 2025:
Investment Portfolio
---------------------------------- ---
(In thousands Investment
except per share Portfolio
amounts) Credit Agency Subtotal Longbridge Corporate/Other Total Per Share
--------- -------- ------------- ------------ ------------------- --------- ---------
Interest income and
other income(1) $ 88,204 $ 2,872 $ 91,076 $ 35,981 $ 1,589 $128,646 $ 1.25
Interest expense (43,443) (1,963) (45,406) (20,403) (3,965) (69,774) (0.68)
Realized gain
(loss), net 8,486 (158) 8,328 220 -- 8,548 0.08
Unrealized gain
(loss), net (8,629) 3,012 (5,617) 246 (2,890) (8,261) (0.08)
Net change from
reverse mortgage
loans and HMBS
obligations -- -- -- 34,954 -- 34,954 0.34
Earnings in
unconsolidated
entities 13,074 -- 13,074 -- -- 13,074 0.13
Interest rate
hedges and other
activity, net(2) (222) 706 484 (3,409) (452) (3,377) (0.03)
Credit hedges and
other activities,
net(3) (6,737) -- (6,737) (1,243) -- (7,980) (0.08)
Income tax
(expense) benefit -- -- -- -- (1,060) (1,060) (0.01)
Investment and
transaction
related expenses (5,677) -- (5,677) (12,136) -- (17,813) (0.17)
Other expenses (1,828) -- (1,828) (25,586) (11,785) (39,199) (0.38)
------- ------ ------- ------- --- --------- ------- -----
Net income (loss) 43,228 4,469 47,697 8,624 (18,563) 37,758 0.37
------- ------ ------- --- ------- --- --------- ------- -----
Dividends on
preferred stock -- -- -- -- (7,074) (7,074) (0.07)
Net (income) loss
attributable to
non-participating
non-controlling
interests (846) -- (846) -- (4) (850) (0.01)
------- ------ ------- ------- --- --------- ------- -----
Net income (loss)
attributable to
common
stockholders and
participating
non-controlling
interests 42,382 4,469 46,851 8,624 (25,641) 29,834 0.29
------- ------ ------- --- ------- --- --------- ------- -----
Net (income) loss
attributable to
participating
non-controlling
interests -- -- -- -- (330) (330) --
------- ------ ------- --- ------- --- --------- ------- -----
Net income (loss)
attributable to
common
stockholders $ 42,382 $ 4,469 $ 46,851 $ 8,624 $ (25,971) $ 29,504 $ 0.29
======= ====== ======= === ======= === ========= ======= =====
Net income (loss)
attributable to
common
stockholders per
share of common
stock $ 0.42 $ 0.04 $ 0.46 $ 0.09 $ (0.26) $ 0.29
Weighted
average shares
of common
stock and
convertible
units(4)
outstanding 102,726
Weighted
average shares
of common
stock
outstanding 101,589
(1) Other income primarily consists of rental income on real estate owned,
loan origination fees, and servicing income.
(2) Includes U.S. Treasury securities, if applicable.
(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 Thursday, February 26, 2026, to discuss our financial results for the quarter ended December 31, 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 EFCQ425. 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.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 Thursday, February 26, 2026, at approximately 2:00 p.m. Eastern Time through Thursday, March 5, 2026 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 753-0348. International callers should dial (402) 220-2672. 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 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.
This release and the information contained herein do not constitute an offer of any securities or solicitation of an offer to purchase securities.
ELLINGTON FINANCIAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three-Month Period Ended Year Ended
---------------------------- ---------------
December 31, September 30, December 31,
2025 2025 2025
------------- ------------- ---------------
(In thousands,
except per share
amounts)
NET INTEREST INCOME
Interest income $ 140,260 $ 122,846 $ 494,490
Interest expense (86,623) (73,126) (304,533)
-------- -------- --------
Total net interest
income 53,637 49,720 189,957
-------- -------- --------
Other Income (Loss)
Realized gains
(losses) on
securities and
loans, net 4,263 9,335 11,706
Realized gains
(losses) on
financial
derivatives,
net (8,467) (8,335) (5,680)
Realized gains
(losses) on real
estate owned,
net (1,968) (3,402) (7,661)
Realized gains
(losses) on
unsecured
borrowings, at
fair value -- -- (1,383)
Unrealized gains
(losses) on
securities and
loans, net 3,671 24,416 134,005
Unrealized gains
(losses) on
financial
derivatives,
net 5,385 (3,197) (50,535)
Unrealized gains
(losses) on real
estate owned,
net (1,215) 736 (5,186)
Unrealized gains
(losses) on
other secured
borrowings, at
fair value, net (14,371) (21,144) (92,723)
Unrealized gains
(losses) on
unsecured
borrowings, at
fair value (7,905) (2,890) (11,468)
Net change from
HECM reverse
mortgage loans,
at fair value 156,532 205,973 708,312
Net change
related to HMBS
obligations, at
fair value (124,632) (171,019) (585,333)
Other, net 13,308 2,563 52,433
-------- -------- --------
Total other income
(loss) 24,601 33,036 146,487
-------- -------- --------
EXPENSES
Base management
fee to
affiliate, net
of rebates 6,869 6,173 25,404
Incentive fee to
affiliate -- -- 4,533
Investment and
transaction
related
expenses:
Servicing
expense 7,123 7,198 28,560
Debt issuance
costs
related to
Other
secured
borrowings,
at fair
value 6,462 1,397 10,139
Debt issuance
costs
related to
unsecured
borrowings,
at fair
value 5,962 -- 5,962
Other 11,134 9,218 36,108
Professional fees 3,333 2,862 13,055
Compensation and
benefits 23,643 21,716 83,633
Other expenses 7,948 8,448 31,142
-------- -------- --------
Total expenses 72,474 57,012 238,536
-------- -------- --------
Net Income (Loss)
before Income Tax
Expense (Benefit)
and Earnings from
Investments in
Unconsolidated
Entities 5,764 25,744 97,908
-------- -------- --------
Income tax
expense
(benefit) 1,353 1,060 3,792
Earnings (losses)
from investments
in
unconsolidated
entities 18,203 13,074 56,653
-------- -------- --------
Net Income (Loss) 22,614 37,758 150,769
-------- -------- --------
Net Income (Loss)
attributable to
non-controlling
interests 966 1,180 3,900
Dividends on
preferred stock 6,981 7,074 28,126
-------- -------- --------
Net Income (Loss)
Attributable to
Common Stockholders $ 14,667 $ 29,504 $ 118,743
======== ======== ========
Net Income (Loss)
per Common Share:
Basic and Diluted $ 0.14 $ 0.29 $ 1.19
Weighted average
shares of common
stock outstanding 108,491 101,589 99,438
Weighted average
shares of common
stock and
convertible units
outstanding 109,652 102,726 100,529
ELLINGTON FINANCIAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
As of
------------------------------------------
(In thousands, except share December 31, September December 31,
and per share amounts) 2025 30, 2025 2024(1)
------------ ------------ --------------
ASSETS
Cash and cash equivalents $ 201,893 $ 184,809 $ 192,387
Restricted cash 136,297 20,769 16,561
Securities, at fair value 1,034,882 909,851 962,254
Loans, at fair value 16,640,647 15,531,299 13,999,572
Loan commitments, at fair
value 9,124 8,827 6,692
Forward MSR-related
investments, at fair
value 77,852 74,694 77,848
Mortgage servicing rights,
at fair value 28,913 29,055 29,766
Investments in
unconsolidated entities,
at fair value 312,421 287,686 220,078
Real estate owned 75,548 52,083 46,661
Financial
derivatives--assets, at
fair value 142,723 151,155 184,395
Reverse repurchase
agreements 453,037 365,716 336,743
Due from brokers 35,919 40,714 22,186
Investment related
receivables 177,208 159,614 189,081
Other assets 26,446 28,276 32,804
---------- ---------- ----------
Total Assets $19,352,910 $17,844,548 $16,317,028
========== ========== ==========
LIABILITIES
Securities sold short, at
fair value $ 272,702 $ 234,046 $ 293,574
Repurchase agreements 2,655,444 2,800,964 2,584,040
Financial
derivatives--liabilities,
at fair value 53,073 60,763 71,024
Due to brokers 48,104 43,001 55,429
Investment related payables 36,092 41,321 22,714
Other secured borrowings 296,398 189,203 253,300
Other secured borrowings,
at fair value 2,945,578 2,213,994 1,934,309
HMBS-related obligations,
at fair value 10,406,332 10,117,649 9,150,883
Unsecured borrowings, at
fair value 659,832 251,927 281,912
Base management fee payable
to affiliate 6,869 6,173 5,888
Dividends payable 19,428 18,597 16,611
Interest payable 26,798 20,612 17,956
Accrued expenses and other
liabilities 55,105 50,478 38,566
---------- ---------- ----------
Total Liabilities 17,481,755 16,048,728 14,726,206
---------- ---------- ----------
EQUITY
Preferred stock, par value
$0.001 per share,
100,000,000 shares
authorized; 13,800,089,
13,800,089, and 13,800,089
shares issued and
outstanding, and $345,002,
$345,002, and $345,002
aggregate liquidation
preference, respectively 331,958 331,958 331,958
Common stock, par value
$0.001 per share,
300,000,000 shares
authorized, respectively;
113,138,860, 106,066,429,
and 90,678,492 shares
issued and outstanding,
respectively(2) 113 106 91
Additional paid-in-capital 1,915,152 1,818,381 1,613,540
Retained earnings
(accumulated deficit) (412,964) (384,724) (375,113)
---------- ---------- ----------
Total Stockholders' Equity 1,834,259 1,765,721 1,570,476
---------- ---------- ----------
Non-controlling interests 36,896 30,099 20,346
---------- ---------- ----------
Total Equity 1,871,155 1,795,820 1,590,822
---------- ---------- ----------
TOTAL LIABILITIES AND EQUITY $19,352,910 $17,844,548 $16,317,028
========== ========== ==========
SUPPLEMENTAL PER SHARE
INFORMATION:
Book Value Per Common Share
(3) $ 13.16 $ 13.40 $ 13.52
(1) Derived from audited financial statements as of December 31, 2024.
(2) Common shares issued and outstanding at December 31, 2025 includes
7,064,774 shares of common stock issued under our ATM program during
the three-month period ended December 31, 2025.
(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 U.S. GAAP net income (loss) as adjusted for: (i) realized and unrealized gain (loss) on securities and loans, REO, mortgage servicing rights, financial derivatives (excluding periodic settlements on interest rate swaps), any borrowings carried at fair value, and foreign currency transactions; (ii) incentive fee to affiliate; (iii) Catch-up Amortization Adjustment (as defined below); (iv) non-cash equity compensation expense; (v) provision for income taxes; (vi) certain non-capitalized transaction costs; and (vii) other income or loss items that are of a non-recurring nature. For certain investments in unconsolidated entities, we include the relevant components of net operating income in Adjusted Distributable Earnings. The Catch-up Amortization Adjustment is a quarterly adjustment to premium amortization or discount accretion triggered by changes in actual and projected prepayments on our Agency RMBS (accompanied by a corresponding offsetting adjustment to realized and unrealized gains and losses). The adjustment is calculated as of the beginning of each quarter based on our then-current assumptions about cashflows and prepayments, and can vary significantly from quarter to quarter. Non-capitalized transaction costs include expenses, generally professional fees, incurred in connection with the acquisition of an investment or issuance of long-term debt. We also include in Adjusted Distributable Earnings, for all loans that we originate through Longbridge, any realized and unrealized gains (losses) on such loans up to the point of loan sale or securitization, net of sale or securitization costs.
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 (a) by our investment portfolio, after the effects of financial leverage, and (b) 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 U.S. GAAP, it should be considered supplementary to, and not as a substitute for, net income (loss) computed in accordance with U.S. GAAP.
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 90% of our annual REIT taxable income (subject to certain adjustments) to our stockholders, in order to maintain our qualification as a REIT, is not based on whether we distributed 90% of our Adjusted Distributable Earnings.
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 December 31, 2025 and September 30, 2025, 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 U.S. GAAP measure:
Three-Month Period Ended
------------------------------------------------------------------------------------------------------------------------
December 31, 2025 September 30, 2025
---------------------------------------------------------- ------------------------------------------------------------
(In thousands, except Investment Investment
per share amounts) Portfolio Longbridge Corporate/Other Total Portfolio Longbridge Corporate/Other Total
------------ ------------ ------------------- --------- ------------ ------------ ------------------- -----------
Net Income (Loss) $ 42,961 $ 16,361 $ (36,708) $ 22,614 $ 47,697 $ 8,624 $ (18,563) $ 37,758
Income tax expense
(benefit) -- -- 1,353 1,353 -- -- 1,060 1,060
------- ------- --- --------- --- ------- ------- ------- --- --------- --- -------
Net income (loss) before
income tax expense
(benefit) 42,961 16,361 (35,355) 23,967 47,697 8,624 (17,503) 38,818
------- ------- --- --------- ------- ------- ------- --- --------- -------
Adjustments:
Realized (gains)
losses, net(1) 10,992 -- (1,122) 9,870 12,330 -- -- 12,330
Unrealized (gains)
losses, net(2) 16,277 11,919 8,351 36,547 (194) 20,005 2,652 22,463
Unrealized (gains)
losses on reverse
MSRs, net of
hedging (gains)
losses(3) -- (3,004) -- (3,004) -- (6,831) -- (6,831)
Negative (positive)
component of
interest income
represented by
Catch-up
Amortization
Adjustment 35 -- -- 35 (23) -- -- (23)
Adjustment related
to consolidated
proprietary reverse
mortgage loan
securitizations(4) -- (11,647) -- (11,647) -- (6,682) -- (6,682)
Non-capitalized
transaction costs
and other expense
adjustments(5) 4,550 995 5,952 11,497 1,758 1,006 912 3,676
(Earnings) losses
from investments in
unconsolidated
entities (18,203) -- -- (18,203) (13,074) -- -- (13,074)
Adjusted
distributable
earnings from
investments in
unconsolidated
entities(6) 10,655 -- -- 10,655 12,027 -- -- 12,027
------- ------- --- --------- --- ------- ------- ------- --- --------- --- -------
Total Adjusted
Distributable Earnings $ 67,267 $ 14,624 $ (22,174) $ 59,717 $ 60,521 $ 16,122 $ (13,939) $ 62,704
------- ------- --- --------- ------- ------- ------- --- --------- -------
Dividends on preferred
stock -- -- 6,981 6,981 -- -- 7,074 7,074
Adjusted Distributable
Earnings attributable
to non-controlling
interests 824 -- 550 1,374 861 -- 606 1,467
------- ------- --- --------- --- ------- ------- ------- --- --------- --- -------
Adjusted Distributable
Earnings Attributable
to Common Stockholders $ 66,443 $ 14,624 $ (29,705) $ 51,362 $ 59,660 $ 16,122 $ (21,619) $ 54,163
======= ======= === ========= ======= ======= ======= === ========= =======
Adjusted Distributable
Earnings Attributable
to Common Stockholders,
per share $ 0.61 $ 0.13 $ (0.27) $ 0.47 $ 0.59 $ 0.16 $ (0.22) $ 0.53
(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 (including interest rate swaps, futures,
and short U.S. Treasury securities), which are components of realized
and/or unrealized gains (losses) on financial derivatives, net,
realized and/or unrealized gains (losses) on securities and loans, net,
interest income, and interest expense on the Condensed Consolidated
Statement of Operations.
(4) Represents the effect of replacing mortgage loan interest income (net
of securitization debt expense) with interest income of the retained
tranches.
(5) For the three-month period ended December 31, 2025, includes $6.0
million of debt issuances costs related to unsecured borrowings, at
fair value, $1.9 million of debt issuance costs related to Other
secured borrowings, at fair value, $2.1 million of other
non-capitalized transaction costs, $1.2 million of non-cash equity
compensation and depreciation expense, and $0.3 million of various
other expenses. For the three-month period ended September 30, 2025,
includes $2.2 million of non-capitalized transaction costs, $1.3
million of non-cash equity compensation and depreciation expense, and
$0.2 million of various other expenses.
(6) Includes the Company's proportionate share of net interest income, net
loan origination income (expense), and operating expenses for certain
investments in unconsolidated entities, including certain of its
non-consolidated equity investments in loan originators that have been
making (or are expected to make) distributions to the Company.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260225633966/en/
CONTACT: 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
(END) Dow Jones Newswires
February 25, 2026 18:47 ET (23:47 GMT)
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