[Ellington Credit Company Q2 2024 Earnings Report](index=1&type=section&id=Ellington%20Credit%20Company%20Q2%202024%20Earnings%20Report) [Highlights](index=1&type=section&id=Highlights) The company reported a Q2 net loss of $0.8 million but generated positive Adjusted Distributable Earnings of $7.3 million while accelerating its strategic shift to CLOs Q2 2024 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Income (Loss) | $(0.8) million | | Net Income (Loss) per Share | $(0.04) | | Adjusted Distributable Earnings | $7.3 million | | Adjusted Distributable Earnings per Share | $0.36 | | Book Value per Share (June 30, 2024) | $6.91 | | Quarterly Dividends per Share | $0.24 | | Net Mortgage Assets-to-Equity Ratio | 4.0:1 | | Debt-to-Equity Ratio | 4.0:1 | - The company significantly increased its focus on corporate CLOs, with the portfolio size growing from **$45.1 million in Q1 to $85.1 million in Q2 2024**[2](index=2&type=chunk) - Capital allocation to corporate CLOs rose to **45%** as of June 30, 2024, up from 25% at the end of the previous quarter[2](index=2&type=chunk) [Strategic Transformation Update](index=1&type=section&id=Strategic%20Transformation%20Update) The company is shifting its focus to corporate CLOs, revoking its REIT status, and planning a conversion to a closed-end fund and RIC - On March 29, 2024, the Board approved a strategic transformation to focus on corporate CLOs, particularly **mezzanine debt and equity tranches**[3](index=3&type=chunk) - The company revoked its REIT election effective January 1, 2024, and intends to convert to a **closed-end fund** and be treated as a **regulated investment company (RIC)**[3](index=3&type=chunk)[4](index=4&type=chunk) - The CLO portfolio grew from $45.1 million at the end of Q1 to $85.1 million at the end of Q2, and further to **$108 million by August 9, 2024**, representing about **50% of capital allocation**[5](index=5&type=chunk)[6](index=6&type=chunk) [Second Quarter 2024 Results](index=2&type=section&id=Second%20Quarter%202024%20Results) A growing CLO portfolio drove Adjusted Distributable Earnings, while a modest loss in the MBS portfolio resulted in a slight overall net loss - The CLO portfolio generated positive net income and contributed significantly to adjusted distributable earnings, which **comfortably covered the dividend**[6](index=6&type=chunk) - The MBS portfolio generated a modest net loss due to intra-quarter interest rate and spread volatility, leading to an **overall slight net loss** for the company[7](index=7&type=chunk) - The CEO expects Q3 adjusted distributable earnings to decline from Q2's $0.36 per share level but remain above Q1's $0.27 per share, as the company terminates interest rate swaps associated with selling Agency MBS[8](index=8&type=chunk)[13](index=13&type=chunk) [Financial Results and Portfolio Composition](index=2&type=section&id=Financial%20Results%20and%20Portfolio%20Composition) The portfolio shifted towards CLOs, which grew 55%, while the Agency portfolio decreased by 28%, leading to reduced overall leverage Portfolio Composition (Fair Value, $ in thousands) | Portfolio | June 30, 2024 | March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Credit | $102,911 | $66,280 | +55.3% | | - CLOs | $85,088 | $45,088 | +88.7% | | Total Agency | $533,457 | $745,762 | -28.5% | | **Total Investments** | **$636,368** | **$812,042** | **-21.6%** | - The CLO portfolio consists of **$45.1 million in mezzanine debt notes** and **$40.0 million in equity tranches** as of June 30, 2024[10](index=10&type=chunk) - The debt-to-equity ratio, adjusted for unsettled trades, decreased to **3.7:1 from 4.9:1** in the prior quarter, driven by higher equity and lower leverage on the growing CLO portfolio[11](index=11&type=chunk) [Performance by Asset Class](index=4&type=section&id=Performance%20by%20Asset%20Class) The Credit portfolio generated a $1.8 million profit driven by CLOs, while the Agency RMBS portfolio recorded a $0.9 million net loss Profit (Loss) by Strategy ($ in thousands) | Strategy | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Total Credit | $1,768 | $3,499 | | - CLOs | $1,046 | $2,250 | | - Non-Agency RMBS | $722 | $1,249 | | Total Agency RMBS | $(935) | $2,027 | - The CLO strategy had positive performance led by strong interest income and net gains on mezzanine positions, partially offset by **mark-to-market losses on certain CLO equity positions** due to rapid loan prepayments[18](index=18&type=chunk) - The Agency portfolio generated a small net loss as losses on Agency RMBS **exceeded gains on interest rate hedges**, against a backdrop of a negative excess return for the U.S. Agency MBS Index[20](index=20&type=chunk) [General and Administrative Expenses](index=5&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased quarter-over-quarter due to higher professional fees and compensation related to the strategic transformation - General and administrative expenses were higher quarter over quarter due to **increased professional fees and compensation expense** related to the strategic transformation[20](index=20&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) The company reported a Q2 net loss of $0.8 million, with total assets decreasing to $933.5 million and book value per share declining to $6.91 [Consolidated Statement of Operations](index=7&type=section&id=Consolidated%20Statement%20of%20Operations) For Q2 2024, the company reported total net interest income of $3.9 million and a net loss of $815,000, or $(0.04) per share Q2 2024 Statement of Operations Highlights ($ in thousands) | Line Item | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Total Net Interest Income | $3,897 | $279 | | Total Expenses | $2,164 | $1,627 | | Total Other Income (Loss) | $(2,623) | $5,612 | | **Net Income (Loss)** | **$(815)** | **$3,961** | | **Net Income (Loss) Per Share** | **$(0.04)** | **$0.20** | [Consolidated Balance Sheet](index=8&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2024, total assets were $933.5 million, total liabilities were $787.3 million, and shareholders' equity was $146.1 million Balance Sheet Summary ($ in thousands) | Account | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $118,763 | $22,442 | | Securities, at fair value | $636,368 | $812,042 | | **Total Assets** | **$933,457** | **$963,956** | | Repurchase agreements | $578,503 | $683,171 | | **Total Liabilities** | **$787,328** | **$821,039** | | **Total Shareholders' Equity** | **$146,129** | **$142,917** | | **Book Value Per Share** | **$6.91** | **$7.21** | [Reconciliation of Adjusted Distributable Earnings to Net Income (Loss)](index=9&type=section&id=Reconciliation%20of%20Adjusted%20Distributable%20Earnings%20to%20Net%20Income%20(Loss)) The company reconciled a GAAP net loss of $0.8 million to non-GAAP Adjusted Distributable Earnings of $7.3 million, or $0.36 per share - Adjusted Distributable Earnings is a non-GAAP measure calculated by adjusting net income for unrealized gains/losses, certain non-recurring items, and other adjustments to better reflect **long-term performance and dividend-paying ability**[30](index=30&type=chunk)[31](index=31&type=chunk) Adjusted Distributable Earnings Reconciliation ($ in thousands) | Line Item | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Income (Loss) | $(815) | $3,961 | | Total Adjustments | $8,088 | $1,351 | | **Adjusted Distributable Earnings** | **$7,273** | **$5,312** |

The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system. Unlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of 'buy' and 'sell' ratings for its entire universe of more than 4000 stock ...

After reaching an important support level, Ellington Credit (EARN) could be a good stock pick from a technical perspective. EARN surpassed resistance at the 20-day moving average, suggesting a short-term bullish trend. The 20-day simple moving average is a popular trading tool. It provides a look back at a stock's price over a 20- day period, and is beneficial to short-term traders since it smooths out price fluctuations and provides more trend reversal signals than longer-term moving averages. Similar to o ...

For those looking to find strong Finance stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Ellington Credit (EARN) been one of those stocks this year? A quick glance at the company's year-to-date performance in comparison to the rest of the Finance sector should help us answer this question. Innovative Industrial Properties, however, belongs to the REIT and Equity Trust - Other industry. Currently, this 95-stock industry is ranked #138. The industry has moved ...

Ellington Credit (EARN) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices. The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system ...

Ellington Credit Company (NYSE:EARN) Q1 2024 Earnings Conference Call May 15, 2024 11:00 AM ET Company Participants Alaael-Deen Shilleh - Associate General Counsel Larry Penn - CEO Chris Smernoff - CFO Mark Tecotzky - Co-CIO Gregory Borenstein - Co-Head of Corporate Credit Conference Call Participants Crispin Love - Piper Sandler Doug Harter - UBS Matthew Erdner - JonesTrading Operator Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Credit Company 2024 First Quarter Fi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35896 Ellington Credit Company (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Orga ...

Strategic Transformation - EARN intends to transition its investment strategy to focus on corporate CLOs and convert to a registered closed-end fund/RIC later this year[6] - The company expects to maintain its monthly dividend of $0.08 per common share[22] - The company revoked its REIT election and will operate as a C-Corp pending RIC conversion[9, 40] Financial Performance (Q1 2024) - Net income was $4 million, or $0.20 per share[44] - Adjusted Distributable Earnings were $53 million, or $0.27 per share[44] - The company's book value per share was $721[44] Portfolio Composition - The CLO portfolio increased to $451 million as of March 31, 2024, compared to $174 million as of December 31, 2023[32] - Agency RMBS holdings increased slightly to $7393 million as of March 31, 2024, compared to $728 million at year end[32] - The company's debt-to-equity ratio was 48:1[44]

Financial Performance - Ellington Credit Company reported net income of $4.0 million, or $0.20 per share, and adjusted distributable earnings of $5.3 million, or $0.27 per share for Q1 2024[6]. - For the three-month period ended March 31, 2024, total net income was $3,961,000, or $0.20 per share, compared to $12,439,000, or $0.75 per share for the period ended December 31, 2023[26]. - Net income for the first quarter of 2024 was $3,961,000, a decrease of 68.2% from $12,439,000 in the previous quarter[36]. - Adjusted Distributable Earnings for the three-month period ended March 31, 2024, was $5,312,000, up from $4,558,000 for the period ended December 31, 2023, representing a 16.5% increase[36]. Portfolio Growth - The company's CLO portfolio grew to $45.1 million as of March 31, 2024, more than doubling from $17.4 million at the end of 2023[10]. - The company plans to grow its CLO portfolio above $100 million while maintaining a core portfolio of liquid Agency MBS pools during the transition[7]. Income and Expenses - Total interest income for the quarter was $10,379,000, down from $11,888,000 in the previous quarter, while total interest expense decreased from $11,511,000 to $10,100,000[26]. - Total expenses for the quarter were $1,627,000, up from $1,374,000 in the previous quarter, with management fees increasing to $538,000 from $512,000[26]. Asset and Liability Management - Total assets increased to $963,956,000 as of March 31, 2024, compared to $945,690,000 as of December 31, 2023, reflecting a growth of 1.3%[29]. - Total liabilities rose to $821,039,000 as of March 31, 2024, compared to $809,452,000 as of December 31, 2023, indicating a 1.6% increase[29]. Shareholder Information - The book value per share was reported at $7.21 as of March 31, 2024, which includes dividends of $0.24 per share for the quarter[6]. - Book value per share decreased to $7.21 as of March 31, 2024, down from $7.32 as of December 31, 2023[29]. - Common shares outstanding increased to 19,819,610 as of March 31, 2024, from 18,601,464 shares as of December 31, 2023, due to the issuance of 1,218,146 shares during the first quarter[30]. - The weighted average shares outstanding for the first quarter of 2024 was 19,548,408, compared to 16,662,407 in the previous quarter[36]. Strategic Changes - The strategic transformation to focus on corporate CLOs was approved by the Board of Trustees on March 29, 2024, with plans to convert to a closed-end fund later in the year[3]. - The company has transformed its investment strategy to focus on corporate CLOs, revoking its REIT status effective January 1, 2024[21]. - The company plans to convert to a closed-end fund later in 2024, subject to shareholder approval[21]. Profitability by Segment - The total profit from Credit strategies was $3,499,000, significantly up from $772,000 in the previous quarter, with a notable increase in CLO profit to $2,250,000 from $313,000[26]. - Non-Agency RMBS profit increased to $1,249,000 from $459,000, driven by net interest income and mark-to-market gains[26]. - Agency RMBS generated a profit of $2,027,000, down from $12,419,000, impacted by higher interest rates and negative excess returns[26]. Financial Ratios - The debt-to-equity ratio decreased to 4.9:1 as of March 31, 2024, down from 5.3:1 at the end of 2023, reflecting higher shareholders' equity[11]. - The net mortgage assets-to-equity ratio was reported at 5.4:1 as of March 31, 2024, down from 5.8:1 at the end of 2023[11]. Cash and Equivalents - As of March 31, 2024, cash and cash equivalents totaled $22.4 million, alongside other unencumbered assets of $57.1 million[6].

Klaus Vedfelt In my latest article regarding the pending merger of the Apollo funds, AIF and AFT, with and into the BDC, MidCap Financial Investment Corp. (MFIC), I discussed how those 2 CEFs will be integrated into a new asset class and that this situation represents a unique opportunity. I find it rather interesting that Apollo wants to dissolve the two CEFs, while some other fund managers are finding ways to start new ones. A new opportunity has emerged that involves a transformation from an REIT to ...