OLD GREENWICH, Conn.--(BUSINESS WIRE)--Ellington Financial Inc. (NYSE: EFC) (the "Company†) today announced that it has priced its previously announced offering of $400 million in aggregate principal amount of 7.375% senior unsecured notes due 2030 (the "Notes†) through certain of its subsidiaries (such subsidiaries, the "Issuers†). The Notes will be senior unsecured obligations of the Issuers and will be fully and unconditionally guaranteed by the Company. The offering is expected to close on. ...

OLD GREENWICH, Conn.--(BUSINESS WIRE)--Ellington Financial Inc. (NYSE: EFC) (the "Company†) today announced that it plans to offer $400 million in aggregate principal amount of senior unsecured notes due 2030 (the "Notes†) through certain of its subsidiaries (such subsidiaries, the "Issuers†). The Notes will be senior unsecured obligations of the Issuers and will be fully and unconditionally guaranteed by the Company. The Company expects to use the net proceeds from the offering for general cor. ...

OLD GREENWICH, Conn.--(BUSINESS WIRE)--Ellington Financial Inc. (NYSE: EFC) ("we") today announced an estimated book value per share of common stock of $13.33 as of August 31, 2025. This estimate includes the effect of the previously announced monthly dividend of $0.13 per share of common stock, to be paid on September 30, 2025 to holders of record on August 29, 2025, with the same ex-dividend date. Cautionary Statement Regarding Forward-Looking Statements Estimated book value per common share. ...

Ellington Financial Inc. (NYSE:EFC) is included among the 10 Safest Monthly Dividend Stocks to Buy. Ellington Financial’s (EFC) Growth Strategy and its Place Among the Safest Monthly Dividend Stocks Image by Alexsander-777 from Pixabay Ellington Financial Inc. (NYSE:EFC), a Connecticut-based specialty finance firm, invests in a wide range of financial assets tied to mortgages, consumers, corporations, and other sectors. CEO Laurence Eric Penn called Q2 2025 an “excellent quarter,” citing solid results ...

Key Takeaways Mortgage rates dropped to 6.26%, boosting origination and refinancing volumes. Ellington Financial leverages diversification and hedging to drive stable growth. Annaly and Orchid will likely see growth in NII as lower rates will lift asset prices and spreads. Mortgage rates continue to ease, with the average 30-year fixed rate sliding to 6.26% in the week ended Sept. 18, 2025, according to the data from FreddieMac's report. This is the lowest rate since the same week in October 2024, when it w ...

Core Viewpoint - Ellington Financial (NYSE: EFC) is a mortgage REIT that is being revisited for analysis due to the impacts of President Trump's tariff policy and potential interest rate changes [1] Company Analysis - The company was rated a hold back in March, indicating a cautious approach towards its investment potential [1] - The analysis is based on value investing principles, an owner's mindset, and a long-term investment horizon [1] Investment Strategy - The analyst does not engage in writing sell articles, as they are considered short theses, and does not recommend shorting stocks [1]

Group 1 - Ellington Financial (EFC) is a real estate investment trust (REIT) primarily focused on mortgages, categorized as an mREIT [1] - The company offers an attractive dividend yield of 11.4%, appealing to income investors [1] Group 2 - The author has a background in history/political science and holds an MBA with a specialization in Finance and Economics [1] - The author has been investing since 2000 and currently targets two articles per week for publication [1]

FORM 10-Q Filing Information [Registrant Information](index=1&type=section&id=Registrant%20Information) Ellington Financial Inc. filed its Q2 2025 Form 10-Q, a Delaware corporation and Large Accelerated Filer - **Ellington Financial Inc.** is a Delaware corporation, registered under Commission file number 001-34569, and is classified as a Large Accelerated Filer[2](index=2&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) - As of August 8, 2025, the number of shares of common stock outstanding was **99,893,894**[5](index=5&type=chunk) Title of Each Class | Title of Each Class | | :------------------ | | Common Stock, $0.001 par value per share | | 6.750% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock | | 6.250% Series B Fixed-Rate Reset Cumulative Redeemable Preferred Stock | | 8.625% Series C Fixed-Rate Reset Cumulative Redeemable Preferred Stock | | 7.000% Series D Cumulative Perpetual Redeemable Preferred Stock | Part I. Financial Information [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements of Ellington Financial Inc. for the period ended June 30, 2025, including the balance sheets, statements of operations, changes in equity, and cash flows, along with comprehensive notes detailing the company's organization, significant accounting policies, valuation methodologies, and specific investment details [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and equity increased from Dec 2024 to June 2025, driven by loans and unconsolidated investments - Loans, at fair value, increased from **$14.00 billion** at December 31, 2024, to **$14.67 billion** at June 30, 2025[10](index=10&type=chunk) - HMBS-related obligations, at fair value, increased from **$9.15 billion** at December 31, 2024, to **$9.81 billion** at June 30, 2025[10](index=10&type=chunk) (In thousands) | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | **Assets** | | | | Total Assets | $17,071,895 | $16,317,028 | | **Liabilities**| | | | Total Liabilities | $15,382,385 | $14,726,206 | | **Equity** | | |\ | Total Equity | $1,689,510 | $1,590,822 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income attributable to common stockholders decreased in Q2 2025 due to lower other income and higher expenses - Net change from HECM reverse mortgage loans, at fair value, was **$168.82 million** for the three-month period ended June 30, 2025, and **$345.81 million** for the six-month period ended June 30, 2025[14](index=14&type=chunk) Three-Month Period Ended June 30 | (In thousands, except per share amounts) | Three-Month Period Ended June 30, 2025 | Three-Month Period Ended June 30, 2024 | | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Interest Income | $43,343 | $33,596 | | Total other income (loss) | $49,199 | $57,561 | | Total expenses | $57,066 | $42,985 | | Net Income (Loss) Attributable to Common Stockholders | $42,923 | $52,347 | | Net Income (Loss) per Share of Common Stock: Basic and Diluted | $0.45 | $0.62 | Six-Month Period Ended June 30 | (In thousands, except per share amounts) | Six-Month Period Ended June 30, 2025 | Six-Month Period Ended June 30, 2024 | | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Net Interest Income | $86,600 | $64,652 | | Total other income (loss) | $88,850 | $102,045 | | Total expenses | $109,050 | $86,640 | | Net Income (Loss) Attributable to Common Stockholders | $74,572 | $79,262 | | Net Income (Loss) per Share of Common Stock: Basic and Diluted | $0.80 | $0.94 | [Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased from Dec 2024 to June 2025, driven by net income and common stock issuance - Common stock shares issued and outstanding increased from **90,678,492** at December 31, 2024, to **97,891,157** at June 30, 2025[10](index=10&type=chunk)[16](index=16&type=chunk) (In thousands, except share amounts) | (In thousands, except share amounts) | BALANCE, December 31, 2024 | BALANCE, June 30, 2025 | | :--------------------------------- | :------------------------- | :--------------------- | | Total Equity | $1,590,822 | $1,689,510 | | Net income (loss) | N/A | $51,073 | | Net proceeds from the issuance of common stock | N/A | $44,520 | | Common dividends | N/A | $(37,655) | | Preferred dividends | N/A | $(7,036) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating and investing activities used cash, offset by financing, leading to a net cash increase - Proceeds from issuance of Other secured borrowings significantly increased to **$1.24 billion** in 2025 from **$784.87 million** in 2024[20](index=20&type=chunk) - Net proceeds from the issuance of common stock increased to **$95.55 million** in 2025 from **$26.90 million** in 2024[20](index=20&type=chunk) (In thousands) | (In thousands) | Six-Month Period Ended June 30, 2025 | Six-Month Period Ended June 30, 2024 | | :------------- | :----------------------------------- | :----------------------------------- | | Net cash provided by (used in) operating activities | $(336,913) | $(148,056) | | Net cash provided by (used in) investing activities | $(1,129,502) | $469,261 | | Net cash provided by (used in) financing activities | $1,488,097 | $(347,139) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $21,682 | $(25,934) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $230,630 | $204,611 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial statements, covering its organizational structure, investment objectives, significant accounting policies, and specific financial instrument details [1. Organization and Investment Objective](index=9&type=section&id=1.%20Organization%20and%20Investment%20Objective) The REIT aims for risk-adjusted returns through its Investment Portfolio and Longbridge reverse mortgage segments - Ellington Financial Inc. operates through its **99.1% owned** consolidated subsidiary, Ellington Financial Operating Partnership LLC, and has elected to be taxed as a REIT[26](index=26&type=chunk)[27](index=27&type=chunk) - The company has two reportable segments: the Investment Portfolio Segment, which invests in diverse financial assets like mortgage loans, RMBS, CMBS, and derivatives; and the Longbridge Segment, focused on origination and servicing of reverse mortgage loans (HECMs and Proprietary reverse mortgage loans)[30](index=30&type=chunk) - Longbridge Financial, LLC, a wholly owned subsidiary, is an approved issuer of HMBS and securitizes HECM loans into HMBS, selling them while retaining servicing rights[30](index=30&type=chunk) [2. Significant Accounting Policies](index=10&type=section&id=2.%20Significant%20Accounting%20Policies) Key accounting policies include fair value measurement, fair value option election, and REIT income tax treatment - The company applies ASC 820-10, Fair Value Measurement, using a three-level valuation hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable and significant inputs)[32](index=32&type=chunk)[34](index=34&type=chunk) - The company has elected the Fair Value Option (FVO) for most of its financial instruments, including securities, loans, MSRs, Forward MSR-related investments, loan commitments, and financial derivatives, to record changes in fair value in the Condensed Consolidated Statement of Operations[49](index=49&type=chunk)[53](index=53&type=chunk)[39](index=39&type=chunk)[66](index=66&type=chunk)[82](index=82&type=chunk) - As a REIT, the company is generally not subject to federal and state income tax if it distributes at least **90%** of its taxable income, but its taxable REIT subsidiaries (TRSs) are subject to corporate income taxes[109](index=109&type=chunk)[112](index=112&type=chunk) [3. Valuation](index=22&type=section&id=3.%20Valuation) Fair value measurements are categorized into Level 1, 2, and 3, with details on Level 3 inputs and transfers - For the three-month period ended June 30, 2025, the net change in unrealized gain (loss) for Level 3 financial instruments still held by the Company was **$210.73 million** for Loans, at fair value, and **$(142.21) million** for HMBS-related obligations, at fair value[124](index=124&type=chunk) - At June 30, 2025, the company transferred **$38.4 million** of assets from Level 3 to Level 2 and **$8.0 million** from Level 2 to Level 3, based on the availability of observable inputs[124](index=124&type=chunk) Fair Value Measurements (June 30, 2025) | Description | Level 1 (In thousands) | Level 2 (In thousands) | Level 3 (In thousands) | Total (In thousands) | | :---------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | **Assets (June 30, 2025):** | | | | | | Securities, at fair value | $290 | $520,115 | $309,626 | $830,031 | | Loans, at fair value | — | — | $14,668,365 | $14,668,365 | | Financial derivatives–assets | $5,119 | $155,435 | — | $160,554 | | Total assets | $5,409 | $683,574 | $15,509,523 | $16,198,506 | | **Liabilities (June 30, 2025):** | | | | | | Securities sold short | — | $(264,511) | — | $(264,511) | | Financial derivatives–liabilities | $(2,578) | $(78,860) | $(3) | $(81,441) | | Other secured borrowings, at fair value | — | — | $(2,127,225) | $(2,127,225) | | HMBS-related obligations, at fair value | — | — | $(9,814,811) | $(9,814,811) | | Unsecured borrowings, at fair value | — | — | $(249,036) | $(249,036) | | Total liabilities | $(2,578) | $(343,371) | $(12,191,075) | $(12,537,024) | [4. Investment in Securities](index=38&type=section&id=4.%20Investment%20in%20Securities) Securities portfolio fair value decreased, with details on interest income, gains/losses, and credit losses - As of June 30, 2025, the company had expected future credit losses of **$35.2 million** related to adverse changes in estimated future cash flows on its securities[175](index=175&type=chunk) Securities Portfolio Fair Value | ($ in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :--------------- | :----------------------- | :--------------------------- | | Agency RMBS | $268,507 | $296,717 | | Non-Agency RMBS | $223,468 | $123,591 | | CMBS | $33,797 | $36,715 | | CLOs | $44,161 | $67,418 | | ABS backed by consumer loans | $55,186 | $60,227 | | U.S. Treasury securities | $125,374 | $226,523 | | Total Long | $938,454 | $962,254 | Interest Income from Securities | (In thousands) | Three-Month Period Ended June 30, 2025 Interest Income | Three-Month Period Ended June 30, 2024 Interest Income | | :------------- | :----------------------------------------------------- | :----------------------------------------------------- | | Agency RMBS | $2,841 | $6,859 | | Non-Agency RMBS and CMBS | $7,606 | $5,561 | | CLOs | $1,361 | $2,624 | | Other securities | $4,316 | $4,703 | | Total | $16,124 | $19,747 | [5. Investment in Loans](index=42&type=section&id=5.%20Investment%20in%20Loans) Loan portfolio fair value increased, primarily driven by reverse mortgage loans, with credit loss details - As of June 30, 2025, reverse mortgage loans constituted the largest portion of the loan portfolio at **$11.11 billion**, with HECM loans collateralizing HMBS being the largest component[201](index=201&type=chunk) Loan Portfolio Fair Value | (In thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------- | :----------------------- | :--------------------------- | | Residential mortgage loans | $3,107,555 | $3,539,534 | | Commercial mortgage loans | $435,222 | $350,515 | | Consumer loans | $271 | $477 | | Corporate loans | $19,709 | $11,767 | | Reverse mortgage loans | $11,105,608 | $10,097,279 | | Total | $14,668,365 | $13,999,572 | Delinquent Loans (90+ days past due) | (In thousands) | June 30, 2025 Unpaid Principal Balance | June 30, 2025 Fair Value | | :------------- | :------------------------------------- | :----------------------- | | Residential mortgage loans (90+ days past due) | $264,168 | $247,030 | | Commercial mortgage loans (90+ days past due) | $54,689 | $54,680 | | Consumer loans (90+ days past due) | $30 | $13 | [6. Mortgage Servicing Rights](index=49&type=section&id=6.%20Mortgage%20Servicing%20Rights) Reverse MSRs fair value was $29.3 million, with net losses recognized for the periods ended June 30, 2025 - As of June 30, 2025, the company's Reverse MSRs related to underlying reverse mortgage loans with an aggregate unpaid principal balance of **$2.7 billion**, and the fair value was **$29.3 million**[212](index=212&type=chunk) - For the three-month period ended June 30, 2025, the company recognized a net loss of **$(0.3) million** related to its Reverse MSRs, and for the six-month period, a net loss of **$(0.5) million**[213](index=213&type=chunk) [7. Forward MSR-related Investments](index=50&type=section&id=7.%20Forward%20MSR-related%20Investments) Forward MSR-related investments had a fair value of $81.3 million, with mixed unrealized gains/losses - The company's Forward MSR-related investments allow it to participate in the economic returns of a portfolio of Forward MSRs, including receiving excess servicing spread and sale proceeds[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - As of June 30, 2025, the fair value of Forward MSR-related investments was **$81.3 million**, up from **$77.8 million** at December 31, 2024[219](index=219&type=chunk) Change in Unrealized Gain (Loss) | (In thousands) | Three-Month Period Ended June 30, 2025 | Six-Month Period Ended June 30, 2025 | | :------------- | :------------------------------------- | :----------------------------------- | | Change in unrealized gain (loss) | $(2,752) | $11,990 | [8. Investments in Unconsolidated Entities](index=51&type=section&id=8.%20Investments%20in%20Unconsolidated%20Entities) Investments in unconsolidated entities increased to $307.7 million, generating significant earnings - As of June 30, 2025, the aggregate fair value of the company's investments in unconsolidated entities was **$307.7 million**, an increase from **$220.1 million** at December 31, 2024[221](index=221&type=chunk) - For the six-month period ended June 30, 2025, the company recognized **$25.4 million** in earnings from investments in unconsolidated entities, compared to **$14.3 million** in the prior year period[222](index=222&type=chunk) Percentage Ownership in Unconsolidated Entities | Investment in Unconsolidated Entity | Percentage Ownership (June 30, 2025) | | :---------------------------------- | :----------------------------------- | | LendSure Mortgage Corp. | 62.8% | | Elizon DB 2015-1 LLC | 31.3% | | Elizon NM CRE 2020-1 LLC | 23.9% | | Elizon CH CRE 2021-1 LLC | 38.7% | [9. Real Estate Owned](index=52&type=section&id=9.%20Real%20Estate%20Owned) REO carrying value increased to $48.8 million, with a net loss from property sales - During the three-month period ended June 30, 2025, the company sold **53** REO properties, realizing a net loss of approximately **$(1.4) million**[230](index=230&type=chunk) - As of June 30, 2025, **$20.1 million** of the company's total REO holdings were measured at fair value on a non-recurring basis[230](index=230&type=chunk) Real Estate Owned Carrying Value | (In thousands) | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | | :------------- | :--------------------------- | :------------------------------- | | Ending Balance | $48,821 | $46,661 | [10. Financial Derivatives](index=53&type=section&id=10.%20Financial%20Derivatives) Net fair value of financial derivatives decreased to $78.8 million, used for risk management - For the three-month period ended June 30, 2025, the company reported net realized gains (losses) on financial derivatives of **$(0.52) million** and change in net unrealized gains (losses) of **$(25.61) million**[247](index=247&type=chunk) - The average notional value of interest rate swaps for the six-month period ended June 30, 2025, was **$9.60 billion**[249](index=249&type=chunk) Financial Derivatives Fair Value | (In thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------- | :----------------------- | :--------------------------- | | Total financial derivatives–assets | $160,584 | $184,395 | | Total financial derivatives–liabilities | $(81,812) | $(71,024) | | Total | $78,772 | $113,371 | [11. Other Assets](index=62&type=section&id=11.%20Other%20Assets) Other assets include intangibles ($1.92 million) and lease right-of-use assets, with future amortization - The estimated future amortization expense on intangible assets is **$0.72 million**, with **$0.13 million** expected in 2025[258](index=258&type=chunk) Other Assets | Other Assets (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Prepaid expenses, advances, and deferred offering costs | $13,379 | $12,396 | | Leases—right of use assets | $4,132 | $5,161 | | Loan purchase commitments | $4,009 | — | | Intangible assets | $1,920 | $2,171 | | Total | $32,983 | $32,804 | Intangible Assets Net Carrying Value | Intangible Asset (In thousands) | June 30, 2025 Net Carrying Value | | :------------------------------ | :------------------------------- | | Internally developed software | $116 | | Trademarks/trade names | $1,200 | | Customer relationships | $604 | | Total identified intangible assets | $1,920 | [12. Consolidated VIEs](index=64&type=section&id=12.%20Consolidated%20VIEs) Consolidated VIEs had $4.66 billion in assets and $3.71 billion in liabilities as of June 30, 2025 - Loans, at fair value, within consolidated VIEs amounted to **$4.37 billion** as of June 30, 2025[260](index=260&type=chunk) - Repurchase agreements within consolidated VIEs were **$1.54 billion** as of June 30, 2025[260](index=260&type=chunk) Consolidated VIEs Financial Position | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Total Assets | $4,663,826 | $4,729,180 |\ | Total Liabilities | $3,708,350 | $3,753,659 | | Total Equity | $955,476 | $975,521 | [13. Securitization Transactions](index=64&type=section&id=13.%20Securitization%20Transactions) The company engages in various securitization transactions, consolidating some and retaining HMBS servicing rights - The company participates in CLO securitization transactions but is not deemed the primary beneficiary, limiting its maximum risk of loss to its investment in each CLO Issuer[261](index=261&type=chunk)[263](index=263&type=chunk) - For Consolidated non-QM Securitizations, the company is the primary beneficiary and consolidates the Issuing Entities, reflecting the loans on its balance sheet and the debt as Other secured borrowings, at fair value[270](index=270&type=chunk)[273](index=273&type=chunk) - Longbridge, as an approved HMBS issuer, pools HECM loans into HMBS, which are accounted for as secured borrowings (HMBS-related obligations, at fair value) rather than sales, with servicing rights retained[302](index=302&type=chunk) [14. Borrowings](index=71&type=section&id=14.%20Borrowings) Total secured borrowings increased to $14.6 billion, supplemented by unsecured notes - Total secured borrowings were **$14.6 billion** as of June 30, 2025, up from **$13.9 billion** at December 31, 2024[305](index=305&type=chunk) - Unsecured borrowings include **$210.0 million** of 5.875% Senior Notes due April 2027, **$37.8 million** of 6.00% Senior Notes due August 2026, and **$15.0 million** of Trust Preferred Debt[322](index=322&type=chunk)[324](index=324&type=chunk)[327](index=327&type=chunk) Outstanding Borrowings (June 30, 2025) | (In thousands) | June 30, 2025 Outstanding Borrowings | | :------------- | :----------------------------------- | | Repurchase agreements | $2,347,458 | | Other secured borrowings | $340,289 | | Other secured borrowings, at fair value | $2,127,225 | | HMBS-related obligations, at fair value | $9,814,811 | | Unsecured borrowings, at fair value | $249,036 | [15. Income Taxes](index=76&type=section&id=15.%20Income%20Taxes) As a REIT, the company recorded $1.5 million income tax expense and a $64.2 million valuation allowance - The company has elected to be taxed as a REIT, generally not subject to federal and state income tax on distributed income, provided it meets qualification requirements[331](index=331&type=chunk) - For the three-month period ended June 30, 2025, income tax expense was **$1.5 million**, and for the six-month period, it was **$1.4 million**[333](index=333&type=chunk) - A valuation allowance of **$64.2 million** was recorded against deferred tax assets of its TRSs, as recoverability was deemed unlikely[333](index=333&type=chunk) [16. Related Party Transactions](index=76&type=section&id=16.%20Related%20Party%20Transactions) Significant related party transactions include management fees, investments, and financing with affiliates - The company pays its Manager a base management fee of **1.50%** per annum of total equity and an incentive fee based on Adjusted Net Income exceeding a Hurdle Amount[335](index=335&type=chunk)[339](index=339&type=chunk)[342](index=342&type=chunk) - For the six-month period ended June 30, 2025, the total base management fee incurred was **$12.4 million** (net of **$0.1 million** in rebates), and an incentive fee of **$4.5 million** was incurred[338](index=338&type=chunk)[345](index=345&type=chunk) - The company has non-controlling equity investments in several loan originators (e.g., LendSure Mortgage Corp.) and co-investments with Ellington affiliates in entities holding commercial mortgage loans and REO, and participates in multi-borrower financing facilities[350](index=350&type=chunk)[352](index=352&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk)[363](index=363&type=chunk)[366](index=366&type=chunk) [17. Long-Term Incentive Plan Units](index=82&type=section&id=17.%20Long-Term%20Incentive%20Plan%20Units) OP LTIP Units, convertible to common stock, incurred $1.0 million expense in Q2 2025 - OP LTIP Units are convertible into OP Units, which are redeemable for common stock or cash, and costs are expensed ratably over the vesting period[376](index=376&type=chunk) - Total expense for OP LTIP Units was **$1.0 million** for the three-month period and **$1.3 million** for the six-month period ended June 30, 2025[376](index=376&type=chunk) - As of June 30, 2025, there were **363,262** unvested OP LTIP Units outstanding[377](index=377&type=chunk) [18. Non-controlling Interests](index=83&type=section&id=18.%20Non-controlling%20Interests) Non-controlling interests include convertible units and joint venture partner interests, totaling $15.4 million - Non-controlling interests include Convertible Non-controlling Interests (OP LTIP Units and OP Units) in the Operating Partnership and joint venture partners' interests in consolidated subsidiaries[103](index=103&type=chunk)[379](index=379&type=chunk)[381](index=381&type=chunk) - As of June 30, 2025, Convertible Non-controlling Interests comprised **1,087,022** OP LTIP Units and **46,360** OP Units, representing approximately **0.9%** ownership in the Operating Partnership, with a fair value of **$15.4 million**[380](index=380&type=chunk) - Joint venture partners' interests in subsidiaries were **$8.4 million** as of June 30, 2025, and are not convertible into common stock[382](index=382&type=chunk) [19. Equity](index=84&type=section&id=19.%20Equity) Equity includes $345.0 million in preferred stock and 97.9 million common shares, managed via ATM and repurchases - As of June 30, 2025, the company had **13,800,089** shares of preferred stock outstanding across Series A, B, C, and D, with an aggregate liquidation preference of **$345.0 million**[10](index=10&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - Common stock outstanding increased to **97,891,157** shares as of June 30, 2025, from **90,678,492** shares at December 31, 2024[396](index=396&type=chunk) - Under the Common ATM Program, the company issued **7,178,788** shares of common stock for **$95.3 million** in net proceeds during the six-month period ended June 30, 2025. It also has a Common Share Repurchase Program with **$45.1 million** remaining authorization[397](index=397&type=chunk)[399](index=399&type=chunk) [20. Earnings Per Share](index=87&type=section&id=20.%20Earnings%20Per%20Share) Basic and diluted EPS were $0.45 for Q2 2025 and $0.80 for the six-month period - Basic EPS is computed using the two-class method, including Convertible Non-controlling Interests as participating securities[106](index=106&type=chunk) - Weighted average shares of common stock and Convertible Non-controlling Interest Units outstanding were **96,995,375** for the three-month period and **94,774,611** for the six-month period ended June 30, 2025[401](index=401&type=chunk) Earnings Per Share | (In thousands except share amounts) | Three-Month Period Ended June 30, 2025 | Six-Month Period Ended June 30, 2025 | | :---------------------------------- | :------------------------------------- | :----------------------------------- | | Net Income (Loss) Attributable to Common Stockholders | $42,923 | $74,572 | | Basic and Diluted EPS | $0.45 | $0.80 | [21. Restricted Cash](index=87&type=section&id=21.%20Restricted%20Cash) Restricted cash increased to $19.6 million, held for specific purposes like warehouse lines - Restricted cash was **$19.6 million** as of June 30, 2025, compared to **$16.6 million** as of December 31, 2024[402](index=402&type=chunk) - Restricted cash balances are primarily held under warehouse line of credit agreements and in securitization reserve funds[402](index=402&type=chunk) [22. Offsetting of Assets and Liabilities](index=87&type=section&id=22.%20Offsetting%20of%20Assets%20and%20Liabilities) Financial instruments are generally recorded gross, with some transactions allowing net settlement in specific events - The company generally records financial instruments at fair value on a gross basis on the Condensed Consolidated Balance Sheet[403](index=403&type=chunk) - The company has not entered into master netting agreements with any counterparties, but certain transactions allow for net settlement or offset in default/bankruptcy[404](index=404&type=chunk)[405](index=405&type=chunk) Offsetting of Assets and Liabilities (June 30, 2025) | Description (In thousands) | Amount of Assets (Liabilities) Presented in the Condensed Consolidated Balance Sheet (June 30, 2025) | | :------------------------- | :------------------------------------------------------------------------------------------------- | | Financial derivatives–assets | $160,584 | | Reverse repurchase agreements | $348,389 | | Financial derivatives–liabilities | $(81,812) | | Repurchase agreements | $(2,347,458) | [23. Counterparty Risk](index=89&type=section&id=23.%20Counterparty%20Risk) Counterparty risk is mitigated by diversification, with specific exposure limits noted - The company manages counterparty risk by diversifying its exposure among various counterparties[412](index=412&type=chunk) - As of June 30, 2025, the company had an aggregate amount at risk under its repos with **23** counterparties of approximately **$632.6 million**[705](index=705&type=chunk) Counterparty Exposure (June 30, 2025) | (In thousands) | Amount of Exposure (June 30, 2025) | Maximum Percentage of Exposure to a Single Counterparty | | :------------- | :--------------------------------- | :---------------------------------------------------- | | Cash and cash equivalents | $211,013 | 28.9% | | Collateral on repurchase agreements held by dealers | $2,979,858 | 14.7% | | Due from brokers | $45,973 | 59.5% | [24. Commitments and Contingencies](index=89&type=section&id=24.%20Commitments%20and%20Contingencies) Commitments include unfunded mortgage loans ($269.2 million), loan purchases ($470.5 million), and lease liabilities - Unfunded commitments for residential mortgage loans totaled **$269.2 million** as of June 30, 2025[420](index=420&type=chunk) - Loan purchase commitments amounted to **$470.5 million** as of June 30, 2025, with a fair value of **$4.0 million**[421](index=421&type=chunk) - Unfunded commitments related to reverse mortgage loans were **$2.2 billion** as of June 30, 2025, and operating lease liabilities were **$4.64 million**[431](index=431&type=chunk)[435](index=435&type=chunk) [25. Segment Reporting](index=91&type=section&id=25.%20Segment%20Reporting) Segment reporting shows Investment Portfolio net income of $57.4 million and Longbridge net income of $10.7 million - The company has two reportable segments: Investment Portfolio Segment and Longbridge Segment, with unallocable items in Corporate/Other[438](index=438&type=chunk)[440](index=440&type=chunk) Net Income (Loss) by Segment (Three-Month Period) | (In thousands) | Investment Portfolio Segment (3-Month) | Longbridge Segment (3-Month) | Corporate/Other (3-Month) | Total (3-Month) | | :------------- | :------------------------------------- | :--------------------------- | :------------------------ | :-------------- | | Net Income (Loss) | $57,433 | $10,681 | $(17,041) | $51,073 | Total Assets and Liabilities by Segment (June 30, 2025) | (In thousands) | Investment Portfolio Segment (June 30, 2025) | Longbridge Segment (June 30, 2025) | Corporate/Other (June 30, 2025) | Total (June 30, 2025) | | :------------- | :------------------------------------------- | :--------------------------------- | :------------------------------ | :-------------------- | | Total Assets | $5,322,931 | $11,521,278 | $227,686 | $17,071,895 | | Total Liabilities | $3,776,344 | $11,290,194 | $315,847 | $15,382,385 | [26. Subsequent Events](index=94&type=section&id=26.%20Subsequent%20Events) Subsequent events include common stock dividends, ATM issuance, and a new management agreement - On July 8, 2025, and August 7, 2025, the Board approved common stock dividends of **$0.13** per share[446](index=446&type=chunk) - Subsequent to June 30, 2025, the company issued **2,002,737** shares of common stock under the Common ATM Program, providing **$26.1 million** in net proceeds[447](index=447&type=chunk) - A Ninth Amended and Restated Management Agreement was entered into and became effective on August 11, 2025, clarifying definitions of 'Hurdle Amount' and 'Stockholders' Common Equity'[448](index=448&type=chunk)[449](index=449&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=96&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A discusses financial condition, operations, market trends, financing, and liquidity, highlighting opportunistic strategy [Executive Summary](index=96&type=section&id=Executive%20Summary) The company, a REIT, pursues risk-adjusted returns through its Investment Portfolio and Longbridge segments - The company's primary objective is to generate attractive, risk-adjusted total returns for stockholders through an opportunistic investment strategy[453](index=453&type=chunk) - All operations are conducted through Ellington Financial Operating Partnership LLC, with the company holding approximately **99.1%** ownership[454](index=454&type=chunk) - The company operates two reportable segments: Investment Portfolio (investing in diverse financial assets) and Longbridge (origination and servicing of reverse mortgage loans)[458](index=458&type=chunk)[459](index=459&type=chunk) [Our Targeted Asset Classes](index=98&type=section&id=Our%20Targeted%20Asset%20Classes) The company targets diverse asset classes including RMBS, CMBS, various loans, and derivatives, using hedging strategies - Targeted asset classes include Agency RMBS (whole pool, partial pool, CMOs), CMBS, commercial mortgage loans, consumer loans, ABS, corporate CLOs, non-Agency RMBS, residential mortgage loans (non-QM, transition, NPLs, RPLs, HELOCs), reverse mortgage loans, MSRs, strategic investments in loan originators, TBAs, and other mortgage-related derivatives[463](index=463&type=chunk)[464](index=464&type=chunk) - The company uses various hedging instruments, such as interest rate swaps, TBAs, U.S. Treasury securities, futures, and forward currency contracts, to mitigate interest rate, credit, and foreign currency risks[495](index=495&type=chunk)[498](index=498&type=chunk)[500](index=500&type=chunk) - Longbridge, a consolidated subsidiary, acquires HECM loans (FHA-insured, securitized into HMBS) and proprietary reverse mortgage loans, retaining servicing rights[487](index=487&type=chunk)[488](index=488&type=chunk) [Trends and Recent Market Developments](index=103&type=section&id=Trends%20and%20Recent%20Market%20Developments) Q2 2025 saw volatile interest rates, strong equity markets, and growth in Investment Portfolio and Longbridge segments - The Federal Reserve maintained the federal funds rate at **4.25%–4.50%** in May and June 2025, while reducing the pace of balance sheet contraction for U.S. Treasury securities[502](index=502&type=chunk) - Interest rates were volatile in Q2 2025, with the 10-year U.S. Treasury yield ending up **2** basis points to **4.23%**. Mortgage rates increased, and SOFR rates remained generally unchanged[503](index=503&type=chunk) - U.S. equity markets rallied in Q2 2025, with NASDAQ up **17.7%** and S&P 500 up **10.6%**, both reaching all-time highs. The company's total adjusted long credit portfolio increased by **1%** to **$3.32 billion**, and the Longbridge segment reported net gains from originations and servicing[505](index=505&type=chunk)[513](index=513&type=chunk)[542](index=542&type=chunk) [Financing—Overall](index=111&type=section&id=Financing%E2%80%94Overall) Total borrowings reached $14.9 billion, with a recourse debt-to-equity ratio of 1.7:1 and 5.25% average cost of funds - The company's financing includes secured borrowings (repos, secured lines of credit, securitization debt, HMBS-related obligations) and unsecured borrowings (senior notes, subordinated notes)[546](index=546&type=chunk)[547](index=547&type=chunk) - The average cost of funds (secured and unsecured) decreased to **5.25%** for the three-month period ended June 30, 2025, from **5.32%** in the prior quarter[555](index=555&type=chunk) Borrowings and Debt-to-Equity Ratios | ($ in thousands) | June 30, 2025 | March 31, 2025 | | :--------------- | :------------ | :------------- | | Total recourse borrowings | $2,950,497 | $3,099,550 | | Debt-to-equity ratio based on total recourse borrowings | 1.7:1 | 1.9:1 | | Total non-recourse borrowings | $11,942,036 | $11,421,843 | | Debt-to-equity ratio based on total recourse and non-recourse borrowings | 8.8:1 | 8.9:1 | [Critical Accounting Estimates](index=113&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include valuation, VIE consolidation, investment income recognition, and REIT income taxes - Valuation is a critical estimate, with the company electing the fair value option for most financial instruments and relying on a mix of quoted market prices, third-party valuations, and discounted cash flow methodologies, especially for instruments not traded in active markets[557](index=557&type=chunk)[558](index=558&type=chunk) - Determining the primary beneficiary of Variable Interest Entities (VIEs) involves significant qualitative and quantitative analysis and judgment[561](index=561&type=chunk) - Accounting for purchases and sales of investments and investment income involves estimates for future cash flows, prepayment rates, default rates, and loss severities, which are subject to significant uncertainties and can lead to Catch-up Amortization Adjustments[563](index=563&type=chunk)[564](index=564&type=chunk)[565](index=565&type=chunk) [Financial Condition](index=115&type=section&id=Financial%20Condition) Total assets grew to $17.1 billion, equity to $1.69 billion, with a debt-to-equity ratio of 8.8:1 - The net fair value of financial derivatives decreased to **$78.8 million** as of June 30, 2025, from **$113.4 million** at December 31, 2024[574](index=574&type=chunk)[576](index=576&type=chunk)[577](index=577&type=chunk) - The debt-to-equity ratio was **8.8:1** as of June 30, 2025, compared to **8.9:1** at December 31, 2024[587](index=587&type=chunk) Financial Position | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Total Long Investments | $16,069,447 | $15,331,504 | | Total Short Investments | $(264,511) | $(293,574) | | Total Assets | $17,071,895 | $16,317,028 | | Total Liabilities | $15,382,385 | $14,726,206 | | Total Equity | $1,689,510 | $1,590,822 | [Results of Operations](index=118&type=section&id=Results%20of%20Operations) Net income attributable to common stockholders decreased due to lower other income and higher expenses - Longbridge segment's other income (loss) for the six-month period ended June 30, 2025, was **$70.3 million**, primarily driven by gains from HECM reverse mortgage loans at fair value (**$345.8 million**) and net gains on securities and loans (**$30.1 million**), partially offset by HMBS obligations at fair value (**$(289.7) million**)[674](index=674&type=chunk) Three-Month Period Ended June 30 | (In thousands, except per share amounts) | Three-Month Period Ended June 30, 2025 | Three-Month Period Ended June 30, 2024 | | :------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Income (Loss) Attributable to Common Stockholders | $42,923 | $52,347 | | Net Interest Income | $43,343 | $33,596 | | Total other income (loss) | $49,199 | $57,561 | | Total expenses | $57,066 | $42,985 | Six-Month Period Ended June 30 | (In thousands, except per share amounts) | Six-Month Period Ended June 30, 2025 | Six-Month Period Ended June 30, 2024 | | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Net Income (Loss) Attributable to Common Stockholders | $74,572 | $79,262 | | Net Interest Income | $86,600 | $64,652 | | Total other income (loss) | $88,850 | $102,045 | | Total expenses | $109,050 | $86,640 | [Adjusted Distributable Earnings](index=132&type=section&id=Adjusted%20Distributable%20Earnings) ADE, a non-GAAP measure, was $53.2 million for Q2 2025, assessing performance and dividend capacity - Adjusted Distributable Earnings (ADE) is a non-GAAP measure that adjusts U.S. GAAP net income for realized/unrealized gains/losses on various financial instruments, incentive fees, Catch-up Amortization Adjustment, non-cash equity compensation, income taxes, and non-capitalized transaction costs[680](index=680&type=chunk) - ADE is considered a useful indicator for current and projected long-term financial performance and dividend-paying ability, but it is not a substitute for U.S. GAAP net income and differs from REIT taxable income[681](index=681&type=chunk)[682](index=682&type=chunk)[683](index=683&type=chunk) Adjusted Distributable Earnings | (In thousands) | Three-Month Period Ended June 30, 2025 | Six-Month Period Ended June 30, 2025 | | :------------- | :------------------------------------- | :----------------------------------- | | Total Adjusted Distributable Earnings | $53,159 | $96,418 | | Adjusted Distributable Earnings Attributable to Common Stockholders, per share | $0.47 | $0.86 | [Liquidity and Capital Resources](index=137&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by $211.0 million cash, $2.3 billion repos, and active ATM/repurchase programs - Liquidity is met through cash on hand, cash flow from investments, borrowings (repos, other secured), and proceeds from equity/debt offerings[694](index=694&type=chunk) - As of June 30, 2025, cash and cash equivalents were **$211.0 million**, and repurchase agreements outstanding were **$2.3 billion** with a weighted average remaining term of **135** days[695](index=695&type=chunk)[700](index=700&type=chunk) - The company has active Common ATM and Preferred ATM Programs, with **$203.8 million** and **$99.5 million** remaining authorization, respectively, and a Common Share Repurchase Program with **$45.1 million** remaining authorization[709](index=709&type=chunk)[710](index=710&type=chunk)[712](index=712&type=chunk) [Contractual Obligations and Commitments](index=142&type=section&id=Contractual%20Obligations%20and%20Commitments) Contractual obligations include management fees, borrowings, derivatives, and various unfunded commitments - Contractual obligations include management fees, outstanding borrowings, and financial derivatives[723](index=723&type=chunk)[724](index=724&type=chunk) - Other commitments include unfunded commitments for residential mortgage loans and loan originators, loan purchase commitments, and operating lease obligations[420](index=420&type=chunk)[422](index=422&type=chunk)[421](index=421&type=chunk)[433](index=433&type=chunk) - The company has mandatory repurchase obligations for HECM loans that reach **98%** of their maximum claim amount from HMBS pools[432](index=432&type=chunk) [Off-Balance Sheet Arrangements](index=142&type=section&id=Off-Balance%20Sheet%20Arrangements) No material off-balance sheet arrangements, with Longbridge holding $97.4 million in custodial funds - As of June 30, 2025, the company had no material off-balance sheet arrangements with unconsolidated entities or financial partnerships[725](index=725&type=chunk) - Longbridge holds **$97.4 million** in escrow balances and other custodial funds, which are not reflected on the Condensed Consolidated Balance Sheet as they do not represent company assets or liabilities[726](index=726&type=chunk) [Inflation](index=142&type=section&id=Inflation) Performance is driven by interest rates, with long-term inflation posing risks to real income and cash flow - Interest rates and other factors generally influence the company's performance more than inflation, though inflation can impact interest rates and monetary policy[728](index=728&type=chunk) - Elevated, long-term inflation could adversely impact the investment portfolio by reducing borrowers' real income and declining net cash flow from commercial mortgage loans[729](index=729&type=chunk) Part II. Other Information [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=143&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Market risks include credit, prepayment, and interest rate risks, managed through hedging and capital levels - Primary market risks include credit risk (default and severity), prepayment risk, and interest rate risk[730](index=730&type=chunk)[735](index=735&type=chunk)[739](index=739&type=chunk)[740](index=740&type=chunk) - Credit risk arises from assets like non-Agency RMBS, residential/commercial mortgage loans, consumer loans, and corporate investments, with mitigation efforts including credit default swaps and reliance on third-party servicers[731](index=731&type=chunk)[736](index=736&type=chunk)[737](index=737&type=chunk) Estimated Change in Portfolio Value Due to Interest Rate Shifts | (In thousands) | Estimated Change for a Decrease in Interest Rates by 50 Basis Points | Estimated Change for an Increase in Interest Rates by 50 Basis Points | | :------------- | :--------------------------------------------------- | :-------------------------------------------------- | | Agency RMBS | $6,628 | $(7,151) | | Non-Agency RMBS, CMBS, ABS, Loans, and MSRs | $26,457 | $(33,686) | | U.S. Treasury Securities and Interest Rate Swaps, Options, and Futures | $(31,328) | $30,568 | | Total | $(3,118) | $(4,776) | [Item 4. Controls and Procedures](index=147&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of June 30, 2025, with no material changes in internal control - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[750](index=750&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[751](index=751&type=chunk) [Item 1. Legal Proceedings](index=148&type=section&id=Item%201.%20Legal%20Proceedings) No material legal proceedings, but future inquiries are possible in highly regulated markets - Neither the company nor its subsidiaries or affiliates are currently subject to any legal proceedings considered material[753](index=753&type=chunk) - The company operates in highly regulated markets and may face future inquiries, investigations, enforcement actions, or litigation[753](index=753&type=chunk)[754](index=754&type=chunk) [Item 1A. Risk Factors](index=148&type=section&id=Item%201A.%20Risk%20Factors) Refers to the Annual Report's 'Risk Factors' and 'Forward-Looking Statements' for potential impacts - Readers are directed to the 'Risk Factors' in the Annual Report on Form 10-K for factors affecting operations, financial condition, and liquidity[755](index=755&type=chunk) - Information regarding forward-looking statements is also referenced for potential risks and uncertainties[755](index=755&type=chunk) [Item 6. Exhibits](index=148&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including management agreement and CEO/CFO certifications - The Ninth Amended and Restated Management Agreement (Exhibit 10.2) was entered into and effective as of August 11, 2025[756](index=756&type=chunk) - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 are included as Exhibits 31.1, 31.2, 32.1, and 32.2[756](index=756&type=chunk) - Various Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbases) and the Cover Page Interactive Data File are also filed[756](index=756&type=chunk)

Financial Data and Key Metrics Changes - Ellington Financial reported GAAP net income of $0.45 per share, with an annualized economic return of nearly 14% and book value per share increasing to $13.49 [4][15] - Adjusted distributable earnings (ADE) per share increased by $0.08 to $0.47, significantly exceeding the $0.39 dividends per share [4][10] - The total economic return for the second quarter was 3.3% non-annualized [15] Business Line Data and Key Metrics Changes - The Longbridge segment contributed $0.13 to ADE, driven by strong performance in origination profits and servicing income [7][12] - The credit portfolio saw net interest income grow sequentially, with positive results from equity investments and loan originators [11] - The adjusted long credit portfolio increased by 1% to $3.32 billion, with growth in commercial mortgage bridge loans and non-QM loans [13] Market Data and Key Metrics Changes - The agency portfolio experienced a modest loss due to volatile yield spreads, while the Longbridge portfolio decreased by 1% sequentially [11][14] - The weighted average borrowing rate on recourse borrowings decreased by two basis points to 6.07% [14] Company Strategy and Development Direction - The company is focused on vertical integration and expanding partnerships with mortgage originators to secure a steady pipeline of high-quality loans [18][19] - Ellington Financial aims to strengthen its liability structure through additional securitizations and increasing unsecured borrowings over time [29][68] - The company is exploring opportunities in new loan sectors as GSEs potentially shrink their footprint [22][79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the third quarter, citing strong performance across investment portfolios and origination platforms [27] - There is a cautious outlook on home price appreciation, with expectations for muted growth nationally [42][43] - The company is monitoring economic indicators closely and adjusting lending guidelines in response to market conditions [25] Other Important Information - The company completed six securitizations in the second quarter, a record for Ellington Financial, enhancing the stability of its balance sheet [20] - The Longbridge HELOC for Seniors program was launched, which management believes could become a meaningful contributor to earnings [28][64] Q&A Session Summary Question: Outlook for Longbridge and impact of declining rates - Management indicated that declining rates would increase the attractiveness of reverse mortgages, leading to higher origination volumes [33][34] Question: Impact of increased volumes in other mortgage asset types - Management noted that originators are primarily focused on non-QM and residential transition lending, with potential shifts depending on market conditions [38] Question: Outlook on home prices and credit spreads - Management observed a broadening weakness in home prices and is pricing for risk accordingly, with expectations for muted home price appreciation [42][43] Question: Opportunities in mortgage originator space - Management is focused on making equity investments in platforms they know well, securing volume with smaller investments [48][49] Question: Credit quality and workouts - Management reported one significant workout remaining, with overall resolutions moving through the pipeline quickly and minimal drag on earnings [54][57] Question: Long-term run rate earnings contribution from Longbridge - Management expressed optimism about Longbridge's contributions exceeding previous expectations, particularly with the new HELOC product [63][64] Question: Thoughts on dividend trajectory - Management is confident that earnings will continue to cover the dividend, with potential for an increase in the future [100][102]

Financial Performance - Net income was $42.9 million, or $0.45 per share[11] - Economic return was 3.3% for the quarter (non-annualized)[11] - Adjusted Distributable Earnings were $45.0 million, or $0.47 per share[11] - The company declared total dividends of $0.39 for the quarter, resulting in a book value per common share of $13.49[11] Portfolio Composition and Strategy - The adjusted long credit portfolio increased by 1% to $3.32 billion as of June 30, 2025, compared to $3.30 billion as of March 31, 2025[11, 18] - The long Agency portfolio increased by 5% to $268.5 million, driven by net purchases[11, 26] - The Longbridge portfolio decreased by 1% to $545.6 million, as a securitization slightly exceeded new originations[11, 29] - 87% of deployed capital was allocated to credit, 2% to agency, and 11% to Longbridge[12] Leverage and Capital Structure - Recourse debt-to-equity ratio was 1.7:1[11] - Total debt-to-equity ratio was 8.7:1, including non-recourse borrowings[11] - Total stockholders' equity was $1.67 billion, including $1.33 billion of common equity and $332 million of preferred equity[11]