Core Viewpoint - Ellington Credit Company has declared a monthly common dividend of $0.08 per share, payable on April 30, 2026, to shareholders of record as of March 31, 2026 [1] Group 1: Dividend Announcement - The Board of Trustees of Ellington Credit Company announced a monthly common dividend of $0.08 per share [1] - The dividend is scheduled to be paid on April 30, 2026, to shareholders who are on record as of March 31, 2026 [1] Group 2: Financial Performance - As of December 31, 2025, the net asset value (NAV) per share was reported at $5.19, which includes distributions of $0.24 per share for the quarter [1] - The GAAP net income (loss) for the same period was $(21.1) million, equating to $(0.56) per share [1] - Net investment income (NII) was reported at $7.8 million, or $0.21 per share [1] Group 3: Tax Information - Information regarding the federal income tax treatment of distributions deemed paid in 2025 has been posted on the Fund's website [2] - The Fund operated as a taxable C-Corp from January 1, 2025, to March 31, 2025, and has been operating as a regulated investment company since April 1, 2025 [2]

Core Insights - The company faced significant challenges in the CLO equity market during Q4 2025, with a median CLO equity return of negative 9% for the quarter and negative 14% for the full year, marking it as one of the most difficult quarters in recent memory [1][4][7] - Active portfolio management and a strategic shift towards CLO mezzanine debt tranches helped the company limit losses to approximately 9% of net asset value (NAV) and outperform peers [3][7] Financial Performance - The company reported a GAAP net loss of $0.56 per share for Q4, with an NAV of $5.19 and a total return of negative 9.1% for the quarter [6][10] - The weighted average CLO portfolio yield decreased to 13.7% from 15.5% in the previous quarter, reflecting lower asset yields and portfolio turnover [6][9] Portfolio Positioning - The company increased its allocation to CLO mezzanine debt tranches to approximately 70% of post-conversion purchases, viewing them as offering a favorable balance of yield and downside protection [11] - During Q4, the company executed 47 unique CLO trades and made $66 million in new purchases, with CLO equity representing 52% of total CLO holdings at quarter-end [12][13] Risk Management - The company significantly increased credit hedges to roughly $175 million, or about 90% of NAV, to protect against market volatility [15] - Despite the drag on results from hedges, the company utilized various hedging tools to manage risk effectively [16] Market Outlook - Looking ahead to 2026, the company anticipates continued pressure on CLO equity but plans to increase mezzanine buying and explore potential long-term unsecured debt issuance for liquidity [19] - The company noted that more than three-quarters of its purchases in early 2026 have been mezzanine debt, particularly focusing on deleveraging double-B tranches [19]

Financial Data and Key Metrics Changes - For the fourth calendar quarter, the company reported a GAAP net loss of $0.56 per share, with a net asset value (NAV) total return of negative 9.1% [12][16] - The NAV per share at year-end was $5.19, with cash and cash equivalents totaling $24.3 million [16][22] Business Line Data and Key Metrics Changes - Significant mark-to-market losses on CLO equity drove the net loss for the quarter, while CLO mezzanine debt performed better [12][14] - The weighted average GAAP yield for the CLO portfolio decreased to 13.7%, down from 15.5% in the prior quarter [13] - CLO equity represented 52% of total CLO holdings, remaining roughly unchanged from the prior quarter [14] Market Data and Key Metrics Changes - The CLO equity market faced challenges, with a median CLO equity return of negative 9% for the quarter and negative 14% for the full year [5][12] - In the U.S. leveraged loan market, lower-rated CCC loans faced significant pressure, while premium-priced loans continued to refinance at par [12][13] Company Strategy and Development Direction - The company has increased its allocation to CLO mezzanine debt tranches, which are believed to offer a compelling balance of yield and downside protection [7][19] - The company executed 218 CLO trades during the nine-month period following its conversion to a CLO closed-end fund, reflecting a disciplined and active approach to portfolio management [23][22] Management Comments on Operating Environment and Future Outlook - The management noted that the fourth quarter was challenging for CLOs, but disciplined portfolio management helped cushion the impact and position the company for future opportunities [11][21] - Looking ahead, the company aims to rebuild net investment income and NAV by deploying capital into what appears to be a distressed market, viewing it as fertile ground for trading opportunities [26][27] Other Important Information - The company increased its credit hedge portfolio to approximately $175 million, representing about 90% of its NAV, providing significant protection against market volatility [10][11] - The company is exploring the potential issuance of long-term unsecured debt to enhance its capital position [27] Q&A Session Summary Question: What is the company's stance on the software sector amid negative headlines? - The management emphasized the importance of diversification by sector and name, noting that while there are concerns in the software sector, there will be both winners and losers [30][34] Question: Can the company quantify the proportion of loans that are triple C rated or lower? - The management indicated that the typical CCC bucket in a CLO is around 7.5%, estimating that their exposure is not far off from the CLO market average of 4.4% [38][43] Question: What is the drag from credit hedges on the portfolio? - The management stated that the drag from credit hedges is estimated to be around 1%-2% of fund NAV per annum, which is considered reasonable for the protection provided [51][52] Question: How do redemptions affect the CLO market? - The management noted that redemptions can create opportunities for active trading, as flows move between different funds and portfolios [64][65] Question: What is the recovery timeline and structure for potential defaults in the CLO market? - The management explained that recoveries from leveraged loans historically have been above zero, with an average par burn rate of about 75 basis points annually [67][69]

Financial Data and Key Metrics Changes - For the fourth calendar quarter, the company reported a GAAP net loss of $0.56 per share, with a net asset value (NAV) per share of $5.19, reflecting a total return of negative 9.1% for the quarter [12][16]. - The weighted average GAAP yield for the quarter on the CLO portfolio was 13.7%, down from 15.5% in the prior quarter [13]. Business Line Data and Key Metrics Changes - The company limited fund losses to approximately 9% of NAV, outperforming the overall peer set, despite the challenging market environment for CLO equity [4][5]. - CLO equity represented 52% of total CLO holdings, roughly unchanged from the prior quarter, while CLO mezzanine debt tranches proved more resilient [14]. Market Data and Key Metrics Changes - The CLO equity market faced significant challenges, with the median CLO equity return for the quarter at negative 9% and negative 14% for the full year [5]. - In the U.S. leveraged loan market, lower-rated CCC loans experienced significant pressure, while premium-priced loans continued to refinance at par [12]. Company Strategy and Development Direction - The company has increased its allocation to CLO mezzanine debt tranches, which are believed to offer a compelling balance of yield and downside protection, with approximately 70% of CLO purchases during the nine-month period being mezzanine debt tranches [7]. - The company is focused on rebuilding net investment income and NAV as it deploys capital into what is perceived as a distressed market, viewing it as fertile ground for active trading and disciplined risk management [26][27]. Management's Comments on Operating Environment and Future Outlook - Management noted that while the fourth quarter was challenging for CLOs, disciplined and active portfolio management cushioned the impact and positioned the company for future opportunities [11]. - The company believes that a substantial portion of recent price declines are reversible, as they reflect yield spread widening rather than fundamental credit impairment [26]. Other Important Information - The company executed 218 CLO trades during the nine-month period following its conversion to a CLO closed-end fund, comprising $272 million of purchases and $63 million of sales [23]. - The company maintained a credit hedge portfolio equal to roughly 90% of its NAV as of December 31st [10][15]. Q&A Session Summary Question: What is the company's stance on the software sector and other sectors of interest? - Management indicated that while there has been damage in the software sector, they believe there will be winners and losers, and they maintain a diversified portfolio to manage risk effectively [30][34]. Question: Can you quantify the proportion of loans underlying the portfolio that are triple C rated or lower? - Management estimated that the typical CCC bucket in a CLO is around 7.5%, and they believe their exposure is not far off from the CLO market average of about 4.4% [39][43]. Question: What is the drag from credit hedges on a go-forward basis? - Management noted that the drag from credit hedges amounts to approximately 1%-2% of fund NAV per annum, which they consider reasonable for the protection provided [51][52]. Question: How do redemptions affect conditions in the CLO market? - Management stated that redemptions can create opportunities for active trading, as flows move between different funds and portfolios [64][65]. Question: What is the timeline and structure for working through potential defaults in the CLO market? - Management explained that recoveries from leveraged loans historically have been well above zero, with an average par burn or loss rate of about 75 basis points annually [68].

Financial Data and Key Metrics Changes - For Q4 2025, the company reported a GAAP net loss of $0.56 per share, with a net asset value (NAV) per share of $5.19, reflecting a net quarterly loss overall due to significant mark-to-market losses on CLO equity [12][17] - The net asset value based total return for the quarter was negative 9.1%, with the company limiting fund losses to approximately 9% of NAV, outperforming the overall peer set [5][17] Business Line Data and Key Metrics Changes - The company increased its allocation to CLO mezzanine debt tranches, which represented approximately 70% of CLO purchases during the nine-month period following its conversion to a CLO closed-end fund [7] - CLO equity represented 52% of total CLO holdings, remaining roughly unchanged from the prior quarter, while CLO debt accounted for nearly 50% of the portfolio by year-end [14][17] Market Data and Key Metrics Changes - The CLO equity market faced significant challenges, with the median CLO equity return for Q4 being negative 9% and negative 14% for the full year, driven by elevated credit dispersion and ongoing coupon spread compression [6][12] - In the U.S. leveraged loan market, lower-rated CCC loans experienced significant pressure, while premium-priced loans continued to refinance at par, leading to a divergence in performance [12] Company Strategy and Development Direction - The company emphasized a disciplined and active portfolio management strategy, focusing on CLO mezzanine debt for better yield and downside protection, while avoiding new issue CLO equity due to unattractive pricing dynamics [7][19] - The company plans to explore the potential issuance of long-term unsecured debt to provide additional capital, viewing the current market environment as an opportunity-rich investment landscape [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market conditions for CLOs in Q4 but expressed confidence in the company's active trading approach and risk management, positioning it well for future opportunities [11][22] - The company believes that a substantial portion of recent price declines are reversible, as they reflect yield spread widening rather than fundamental credit impairment [27] Other Important Information - The company executed 218 CLO trades during the nine-month period following its conversion, comprising $272 million of purchases and $63 million of sales, indicating a highly active trading strategy [24] - The company maintained a significant credit hedge portfolio, equal to roughly 90% of its NAV, to protect against market volatility [10][17] Q&A Session Summary Question: What is the company's stance on the software sector amid negative headlines? - Management noted that while there has been damage in the software sector, the diversified nature of the CLO portfolio helps mitigate risks, and there will be both winners and losers within the sector [31][34] Question: Can the company quantify the proportion of loans that are triple C rated or lower? - Management indicated that the typical CCC bucket in a CLO is around 7.5%, and they believe their exposure is not far off from the CLO market average of about 4.4% [39][45] Question: What is the drag from credit hedges on the portfolio? - Management estimated that the drag from credit hedges amounts to about 1%-2% of fund NAV per annum, which they consider reasonable for the protection provided against larger market shocks [48][54] Question: How does the company view the relationship between redemptions and spread widening in the CLO market? - Management highlighted that redemptions create opportunities for active trading, as flows move between different funds, allowing for better price discovery [66] Question: What is the recovery rate for potential defaults in the CLO market? - Management stated that historically, recoveries in leveraged loans have been well above zero, with an average par burn or loss rate of about 75 basis points annually, indicating that recoveries can vary significantly based on deal specifics [70]

Earnings Conference Call March 5, 2026 Quarter Ended December 31, 2025 Important Notice Forward-Looking Statements This presentation 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 thei ...

Financial Performance - Net asset value (NAV) per share was $5.19 as of December 31, 2025, reflecting distributions of $0.24 per share for the quarter [8]. - GAAP net loss was $(21.1) million, or $(0.56) per share, indicating a significant drop in NAV due to challenges in the CLO equity market [8]. - Net investment income (NII) was $7.8 million, or $0.21 per share, with adjusted net investment income also reported at $7.8 million [8]. - For the quarter ended December 31, 2025, net investment income is $7,751,000, down from $8,485,000 in the previous quarter [30]. - Adjusted net investment income for the same quarter is $7,802,000, with an adjusted net investment income per share of $0.21 [30]. - The company incurred non-recurring expenses of $49,000 related to strategic transformation costs in the quarter ended December 31, 2025 [30]. Investment Portfolio - The CLO portfolio had a fair value of $369.5 million, with CLO debt investments totaling $176.9 million and CLO equity investments at $192.6 million [8]. - The company received $19.1 million in recurring cash distributions from the investment portfolio, equating to $0.51 per share [8]. - The investment portfolio generated negative results due to unrealized losses in CLO equity investments, with cash and cash equivalents of $24.3 million as of December 31, 2025 [20]. - The company executed 47 trades, purchasing $65.8 million of CLO investments and selling $17.4 million during the quarter [8]. - Total assets as of December 31, 2025, amount to $414,963,000, with investments at fair value of $369,885,000 [21]. Market Conditions and Strategy - The company plans to selectively increase its CLO equity position as market opportunities arise, following recent headwinds in the CLO equity market [5]. - Credit hedges amounted to $(174.8) million as of December 31, 2025, compared to $(90.6) million as of September 30, 2025 [11]. - The weighted average GAAP yield for the CLO portfolio was 13.7% for the quarter [8]. - The fund primarily invests in corporate collateralized loan obligations (CLOs), focusing on mezzanine debt and equity tranches [22]. - Forward-looking statements are subject to risks such as changes in interest rates and market volatility, which could impact future performance [24]. Shareholder Information - The weighted average shares outstanding for the quarter ended December 31, 2025, is 37,570,694 [30]. - Net asset value is reported at $195,034,000, resulting in a net asset value per common share of $5.19 [21]. - The company will host a conference call on March 5, 2026, to discuss financial results for the quarter ended December 31, 2025 [23]. - The company emphasizes the importance of adjusted net investment income as a useful indicator of long-term financial performance [27].

Core Viewpoint - Ellington Credit Company has provided information regarding the federal income tax treatment of distributions for its common shares, indicating a transition in its operational structure from a taxable C-Corp to a regulated investment company in 2025 [1]. Group 1: Company Overview - Ellington Credit Company is a non-diversified closed-end fund focused on providing attractive current yields and risk-adjusted total returns through investments primarily in corporate collateralized loan obligations (CLOs) [2]. - The Fund emphasizes mezzanine debt and equity tranches in its investment strategy [2]. - It is externally managed and advised by an affiliate of Ellington Management Group, L.L.C., which has been a prominent fixed-income investment manager since its founding in 1994 [2]. - The Fund leverages Ellington's extensive experience and expertise in portfolio management, credit analysis, and risk management [2].

Core Viewpoint - Ellington Credit (EARN) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure that affects stock prices [4]. Company Performance and Outlook - The upgrade for Ellington Credit reflects an improvement in the company's underlying business, which is expected to drive the stock price higher as investors respond positively to this trend [5]. - For the fiscal year ending December 2025, Ellington Credit is projected to earn $0.90 per share, with a 4.7% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of generating significant returns, particularly for Zacks Rank 1 stocks [7]. - The upgrade to Zacks Rank 2 places Ellington Credit in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Financial Data and Key Metrics Changes - For calendar Q3, the company reported GAAP net income of $0.11 per share and net investment income of $0.23 per share, with a weighted average GAAP yield for the CLO portfolio at 15.5% [9][10] - The NAV as of September 30th was $5.99 per share, with cash and cash equivalents totaling $20.1 million, resulting in a NAV-based total return for the quarter of 9.6% annualized [13][21] Business Line Data and Key Metrics Changes - The CLO portfolio increased by 20% to $380 million, with new purchases totaling $116 million, of which 62% was in CLO debt and 38% in CLO equity [11][12] - CLO equity represented 51% of total CLO holdings, down from 53% at the beginning of the quarter, while European CLO investments accounted for 14%, roughly unchanged quarter-over-quarter [11][12] Market Data and Key Metrics Changes - The credit markets rallied during the third calendar quarter, supported by a dovish shift from the Federal Reserve, leading to tightened corporate credit and CLO spreads [4][5] - In the U.S. leveraged loan market, lower quality CCC-rated loans fell several points amid default concerns, while single B-rated loans advanced due to sustained CLO demand [10] Company Strategy and Development Direction - The company is focusing on increasing its portfolio allocation to mezzanine debt to gain more attractive yields while reducing exposure to new issue equity [6][7] - The strategy emphasizes active trading to capitalize on mispricings and manage risk effectively, with a preference for secondary market acquisitions over new issues [6][16] Management's Comments on Operating Environment and Future Outlook - Management noted that volatility and credit dispersion remain defining features of the corporate credit markets, with concerns about idiosyncratic volatility highlighted by recent bankruptcies [19][20] - The company expects elevated repricing activity and ongoing credit dispersion to create opportunities for outperformance through active portfolio management [23] Other Important Information - The company increased its credit hedge portfolio to approximately $90 million by the end of the quarter, equating to about 40% of its NAV, to provide downside protection [21] - Following the quarter end, the synthetic short position in credit hedges reached over $150 million in high-yield equivalents [21] Q&A Session Summary Question: What drove the increase in credit hedges from the end of September to the end of October? - The increase was primarily due to the growth in portfolio size and leverage, ensuring liquidity during market downturns [26][27] Question: Was the decrease in the CLO portfolio a more cautious view on credits? - The decrease was not necessarily a reflection of a cautious view but may have been due to distributions and markdowns in prices during the quarterly payment date [30][31] Question: Can you discuss the appetite for leverage and potential unsecured debt issuance? - The company is close to being fully invested and could potentially increase leverage to around $400 million, constrained by regulatory restrictions [40][41] Question: What are the predictions for CLO supply next year? - Predictions are uncertain, but there may be more reset and refinancing activities rather than new issues, depending on loan supply and market conditions [44][46] Question: How does AI impact the CLO market? - AI will affect the loan market, creating winners and losers, which raises concerns about credit dispersion and overall portfolio performance [48][50]