Ownership and Acquisitions - As of March 31, 2025, Ellington Financial Inc. had an ownership interest of approximately 99.1% in its Operating Partnership[438]. - The company completed the acquisition of a controlling interest in Longbridge Financial, LLC on October 3, 2022, and a merger with Arlington Asset Investment Corp. on December 14, 2023[441]. Investment Portfolio - The Investment Portfolio Segment includes diverse financial assets such as residential and commercial mortgage loans, RMBS, CMBS, and CLOs[442]. - The targeted asset classes include Agency RMBS, CMBS, consumer loans, corporate CLOs, and non-agency RMBS, among others[446]. - The company has a history of investing in the Agency and credit markets through its external manager, Ellington Financial Management LLC[438]. - The company focuses on acquiring seasoned commercial mortgage loans, including non-performing and distressed loans, typically at a discount to their unpaid principal balances and underlying real estate values[455]. - The U.S. consumer loan portfolio includes unsecured loans and secured auto loans, with ongoing evaluations for new opportunities in the market[458]. - Non-Agency RMBS holdings include both performing and non-performing loans, with investment-grade and non-investment grade classes[462]. - The company is active in acquiring residential mortgage loans, including newly originated non-QM loans and residential transition loans, focusing on less-competitively-bid mixed legacy pools[466][468]. Longbridge Segment - The Longbridge Segment focuses on the origination and servicing of reverse mortgage loans, including HECM loans insured by the FHA[443]. - Longbridge, a subsidiary, consolidates reverse mortgage loans and has historically focused on home equity conversion mortgage loans (HECMs) insured by FHA[471]. - The Longbridge segment generated a small net loss for the quarter, as net losses on interest rate hedges exceeded positive contributions from originations and net gains on the HMBS MSR Equivalent[526]. - The total proprietary reverse mortgage loans increased to $866,425 as of March 31, 2025, compared to $728,959 as of December 31, 2024, indicating a growth of approximately 18.9%[523]. - The origination volume for the Longbridge segment decreased to $338,451 in the three-month period ended March 31, 2025, down from $419,904 in the previous quarter[527]. Financial Performance - The company aims to generate attractive, risk-adjusted total returns for stockholders by utilizing an opportunistic investment strategy[437]. - The company experienced higher net interest income and net gains from forward MSR-related investments, commercial mortgage loans, and non-QM retained tranches during the quarter[498]. - The company reported net income of $39.3 million for the period, contributing to the increase in equity[565]. - For the three-month period ended March 31, 2025, net income attributable to common stockholders was $31.6 million, an increase from $26.9 million in the same period of 2024[568]. - The company reported net income before income tax expense of $39.228 million for Q1 2025, compared to $34.105 million in Q1 2024, representing an increase of 15.5%[617]. Interest Income and Expenses - Interest income for the three-month period ended March 31, 2025, was $115.9 million, up from $101.5 million for the same period in 2024, reflecting an increase in coupon payments and interest on cash balances[569]. - Interest income from the investment portfolio segment increased to $93.3 million for the three-month period ended March 31, 2025, compared to $91.4 million in 2024[570]. - Interest income from the credit portfolio was $85.4 million for the three-month period ended March 31, 2025, compared to $80.6 million in 2024, driven by a larger average credit portfolio[572]. - Total interest expense for the three-month period ended March 31, 2025, was $72.7 million, slightly up from $70.5 million in 2024[578]. - Interest expense in the investment portfolio segment decreased to $51.6 million for the three-month period ended March 31, 2025, down from $57.3 million in 2024, due to lower financing rates[579]. Market Conditions - The S&P CoreLogic Case-Shiller US National Home Price NSA Index rose by 0.5% over the first two months of 2025, following a 3.9% increase in 2024[490]. - The Mortgage Bankers Association's Refinance Index rose by 80% quarter over quarter, indicating a pickup in refinancing activity amid slightly lower mortgage rates[490]. - U.S. real GDP contracted at an estimated annualized rate of 0.3% in the first quarter of 2025, after growing by 2.4% in the prior quarter[490]. - The unemployment rate increased from 4.0% in January to 4.2% in March 2025[490]. - The percentage of delinquent loans in the residential mortgage loan portfolio increased moderately during the quarter, while the commercial mortgage loan portfolio remained stable[499]. Debt and Liquidity - The total outstanding borrowings under repos and other secured borrowings were $4.8 billion as of March 31, 2025, with approximately 4% related to Agency RMBS holdings[531]. - The debt-to-equity ratio based on total recourse borrowings was 1.9:1 as of March 31, 2025, compared to 2.0:1 as of December 31, 2024[532]. - The overall debt-to-equity ratio decreased to 8.7:1 as of March 31, 2025, from 8.8:1 as of December 31, 2024[535]. - The company expects its liquidity sources, including cash flow from investments and borrowings, to be sufficient to meet both short-term and long-term liquidity needs[621]. Adjusted Distributable Earnings - Adjusted Distributable Earnings is calculated as U.S. GAAP net income adjusted for various factors, including realized and unrealized gains on securities and loans[610]. - The company believes Adjusted Distributable Earnings is a useful indicator of long-term financial performance and dividend-paying ability[612]. - For the three-month period ended March 31, 2025, total adjusted distributable earnings were $51.074 million, compared to $49.248 million for the same period in 2024, reflecting a year-over-year increase of 3.7%[617]. - The adjusted distributable earnings attributable to common stockholders for Q1 2025 were $50.701 million, compared to $49.032 million in Q1 2024, reflecting a year-over-year increase of 3.4%[617].

Ellington Financial (EFC) Q1 2025 Earnings Call May 08, 2025 11:00 AM ET Company Participants Alaael-Deen Shilleh - Associate General Counsel & SecretaryLaurence Penn - CEO, President & DirectorJR Herlihy - Chief Financial OfficerMark Tecotzky - Co-Chief Investment OfficerCrispin Love - DirectorTrevor Cranston - Managing DirectorRandy Binner - Managing DirectorFrancesco Labetti - Equity Research Associate Operator Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Ellington Financ ...

Financial Data and Key Metrics Changes - The company reported GAAP net income of $0.35 per share and adjusted distributable earnings (ADE) of $0.39 per share, which continue to cover dividends [5][13] - The recourse debt to equity ratio decreased to 1.7:1 from 1.8:1 quarter over quarter, indicating improved leverage management [10][18] - Book value per common share stood at $13.44, with a total economic return for the first quarter of 9.5% annualized [19] Business Line Data and Key Metrics Changes - The adjusted long credit portfolio decreased by 4% to $3.3 billion due to securitizations and a smaller residential transitional loan portfolio [17] - The Longbridge portfolio increased by 31% sequentially to $549 million, driven by proprietary reverse mortgage loan originations [17] - The agency RMBS portfolio declined by 14% to $256 million as the company rotated capital into higher yielding opportunities [18] Market Data and Key Metrics Changes - The weighted average borrowing rate on recourse borrowings decreased by 12 basis points to 6.09% [18] - The net interest margin (NIM) on the credit portfolio decreased by 12 basis points, while the NIM on agency increased by 24 basis points [18] Company Strategy and Development Direction - The company is focused on establishing joint ventures to secure consistent access to high-quality loans at attractive pricing [10] - The company is tightening underwriting guidelines to focus on higher FICO borrowers and loans with more extensive underwriting [23] - The company is actively developing proprietary tools to support loan origination and enhance operational efficiency [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to take advantage of heightened market volatility and recharged opportunity sets [30][34] - The company anticipates ongoing meaningful contributions to ADE from its mortgage servicing rights (MSR) portfolio [21] - Management noted that the current high levels of volatility are creating compelling trading opportunities [30] Other Important Information - The company completed five new securitization deals in the first quarter, taking advantage of tight spreads [7] - The company sold a variety of credit-sensitive securities to lock in gains and enhance liquidity [9] - The company expects to resolve remaining significant workout assets by the end of the second quarter [10] Q&A Session Summary Question: Have you been able to deploy a material amount of capital in attractive trading opportunities? - Management indicated that while there was not material growth in April, the portfolio has grown net relative to March 31, with growth in non-QM and non-agency MBS [38][39] Question: Can you provide more detail on the resolutions of commercial bridge loans? - Management clarified that one was a discounted payoff and another was an REO sale, freeing up $20 million to $25 million for reinvestment [44][46] Question: Does the high level of spread volatility impact your near-term appetite for loan acquisitions? - Management noted that they have been diligent about hedging spread widening risk and have found opportunities to buy loans as spreads tightened [56][58] Question: Can you share timing and size on potential joint ventures with originators? - Management stated that the investments would be under $5 million in total and are expected to close in the next quarter or two [69][74] Question: Is the $0.9 earnings run rate for the Longbridge segment still achievable? - Management confirmed that the $0.9 run rate is still achievable, with seasonal trends affecting volumes [86][89] Question: Can you discuss current performance and dynamics in the CLO market? - Management indicated that CLOs represent a small part of the portfolio and recent negative performance was due to spread widening rather than underlying credit issues [91][92]

Earnings Conference Call May 8, 2025 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statem ...

Financial Performance - Ellington Financial generated net income of $31.6 million, or $0.35 per common share, and adjusted distributable earnings of $35.5 million, or $0.39 per common share for Q1 2025[8]. - Longbridge's net income attributable to common stockholders for the three-month period ended March 31, 2025, was $31,649, compared to a net loss of $24,443 for the previous period[30]. - Net income for the three-month period ended March 31, 2025, was $39,324 thousand, a significant recovery from a loss of $995 thousand in the previous quarter[50]. - Common stockholders reported earnings per share of $0.55, a decrease of 21% compared to the previous period's $0.70[51]. Investment Portfolio - The investment portfolio segment produced net income of $57.4 million, with $53.2 million from the credit strategy and $4.2 million from the Agency strategy[7]. - The total adjusted long credit portfolio decreased by 4% to $3.30 billion as of March 31, 2025, compared to $3.42 billion as of December 31, 2024[9]. - The long Agency RMBS portfolio decreased by 14% quarter over quarter to $256.1 million as of March 31, 2025, driven by net sales[10]. - The company reported a total unrealized loss of $22,631,000, primarily due to market fluctuations in its investment portfolio[32]. - The company’s financial derivatives included realized and unrealized gains and losses, impacting overall financial performance[52]. Longbridge Segment - The Longbridge segment reported a net loss of $(1.0) million for Q1 2025, while the Longbridge portfolio increased by 31% sequentially to $549.0 million[11]. - As of March 31, 2025, Longbridge's HMBS assets increased to $9,597,451, up from $9,245,834 as of December 31, 2024, representing a growth of approximately 3.8%[23]. - The total volume of proprietary reverse mortgage loans increased to $866,425 as of March 31, 2025, from $728,959 as of December 31, 2024[23]. - The net change from reverse mortgage loans and HMBS obligations contributed $20,080,000 to the total income for the quarter[32]. Cash and Assets - Cash and cash equivalents totaled $203.3 million as of March 31, 2025, alongside other unencumbered assets of $650.2 million[8]. - Total assets increased to $16,644,228 thousand as of March 31, 2025, up from $16,317,028 thousand on December 31, 2024, representing a growth of 2%[42]. - Cash and cash equivalents rose to $203,288 thousand, compared to $192,387 thousand, reflecting an increase of approximately 5%[42]. Equity and Liabilities - The recourse debt-to-equity ratio was 1.7:1 as of March 31, 2025, while the total debt-to-equity ratio, including all borrowings, was 8.7:1[8]. - The total outstanding borrowings as of March 31, 2025, were $14,521,393, with a debt-to-equity ratio of 8.9:1, unchanged from December 31, 2024[27]. - Longbridge's total equity increased to $1,637,616 as of March 31, 2025, compared to $1,590,822 as of December 31, 2024[27]. - Total liabilities increased to $15,006,612 thousand as of March 31, 2025, up from $14,726,206 thousand, marking an increase of approximately 2%[42]. Dividends and Earnings - Book value per common share as of March 31, 2025, was $13.44, including dividends of $0.39 per common share for the quarter[8]. - The dividend yield was 12.2% based on the closing stock price of $12.75 per share on May 6, 2025[8]. - Adjusted Distributable Earnings for the three-month period ended March 31, 2025, was $43,260 thousand, compared to $53,941 thousand for the previous quarter, indicating a decrease of about 20%[50]. Market Conditions and Risks - Forward-looking statements indicate potential risks including changes in interest rates and market conditions that could affect future performance[36]. - The net change in fair value of the HMBS MSR Equivalent and Reverse MSRs was influenced by market conditions and model assumptions[54]. Conference Call - The company plans to host a conference call on May 8, 2025, to discuss financial results for the quarter ended March 31, 2025[35].

Company Overview - Ellington Financial Inc. (NYSE: EFC) is a mortgage REIT that manages a portfolio of loans and mortgage securities [1] - The company currently offers a yield of 11%, which is attractive to income investors [1] Investment Philosophy - The investment approach focuses on long-term ownership rather than short-term price predictions [1] - The analyst emphasizes valuations over target prices and has shifted to a simplified "Buy or Don't Buy" strategy [1] Historical Context - The company has a history of dividend cuts, which may be a concern for potential investors [1]

Mergers and Acquisitions - Ellington Financial Inc. completed the merger with Arlington Asset Investment Corp. on December 14, 2023, enhancing its capital base and investment portfolio[22]. Asset Management - As of December 31, 2024, Ellington managed approximately $13.7 billion in assets, with $7.4 billion in leveraged accounts and $6.2 billion in non-leveraged accounts[27]. - As of December 31, 2024, Ellington manages approximately $12.1 billion in assets, including $6.2 billion in accounts that do not employ financial leverage[61]. - The company has consolidated Longbridge, resulting in two reportable segments: the Investment Portfolio Segment and the Longbridge Segment[19]. Investment Strategy - Ellington's strategy focuses on generating attractive, risk-adjusted returns through investments in mortgage-related, consumer-related, corporate-related, and other financial assets[28]. - The credit portfolio, excluding Agency RMBS, has historically driven risk and return, and this trend is expected to continue in the near to medium term[23]. - Ellington focuses on structured products, seeking investments across various sectors without restrictions on ratings or capital structure, aiming for better and more consistent returns for investors[32]. - The company emphasizes opportunistic investments in underserved niche market segments, leveraging deep industry relationships to source new loan investments[33]. - Ellington's investment strategy is supported by a management team with extensive experience in trading and analyzing complex structured products and loans[34]. Risk Management - The company utilizes derivatives and hedging instruments to manage interest rate risk, yield spread risk, credit risk, and foreign currency risk[18]. - The company employs a variety of hedging instruments to manage risks, including interest rate swaps and credit hedging positions, to protect against adverse credit events[39][41]. - Ellington's risk management infrastructure includes a proprietary portfolio management system, enhancing its ability to assess both portfolio and operational risks[39]. - The company uses leverage to enhance returns, which increases potential losses during adverse market conditions, particularly with rising interest rates[88]. - The company employs various hedging strategies to mitigate risks from credit events, interest rate changes, and foreign currency fluctuations, but these strategies may not prevent losses or eliminate value fluctuations in the portfolio[197]. Management and Operations - The management team is responsible for day-to-day operations, including asset selection, financing, and risk management activities[48]. - The company does not maintain an office or personnel but relies on the Manager for operations, paying all direct operating expenses except those borne by the Manager[57]. - The management agreement includes a base management fee of 1.50% per annum of the equity of the Operating Partnership, calculated at the end of each fiscal quarter[51]. - The management agreement with the Manager expires on December 31, 2025, and will automatically renew annually unless a non-renewal notice is given 180 days prior[58]. Financial Performance and Incentives - The incentive fee structure allows for a payment equal to 25% of the excess of Adjusted Net Income over specified hurdle amounts, incentivizing performance[52]. - The incentive fee calculation includes a Hurdle Amount based on a combination of a 9% or 3% threshold plus the 10-year U.S. Treasury rate, weighted average gross proceeds per share, and retained earnings[55]. - The payment of the incentive fee will be in a combination of common shares and cash, with at least 10% of any quarterly payment made in common shares[56]. Regulatory Environment - The company is subject to extensive regulations, including the Truth in Lending Act and the Fair Credit Reporting Act, impacting its mortgage loan origination and servicing activities[77]. - The CFPB has rulemaking authority over federal consumer protection laws applicable to mortgage servicers, which directly affects the company's operations[79]. - The company must comply with various federal and state laws, including the California Consumer Privacy Act and anti-money laundering provisions, which impose additional operational requirements[85]. - The company faces risks related to maintaining its exclusion from registration as an investment company, which could materially affect its business and financial condition[75]. - The company is actively monitored for compliance with evolving regulations, particularly in response to the COVID-19 pandemic and related forbearance programs[81]. Market Risks - Challenging conditions in the mortgage and real estate markets, including elevated interest rates and declining property values, could adversely affect the value of investments and financial performance[88]. - Significant credit risks are present through investments in residential and commercial mortgage loans, MBS, CRTs, and CLOs, with borrower delinquencies and defaults potentially leading to losses[88]. - The performance of MSR-related investments is highly sensitive to interest rates, with falling rates potentially accelerating mortgage prepayments and reducing future servicing income[90]. - Access to financing is contingent on the creditworthiness of collateral and lender willingness, with disruptions in capital markets potentially restricting investment funding[88]. - The valuation of investments is uncertain, as many assets are illiquid and subject to significant fluctuations due to market volatility and changing credit conditions[88]. Economic Factors - Economic factors such as high unemployment and elevated inflation may impair borrowers' abilities to repay mortgage loans, leading to increased defaults[104]. - Several regional bank failures in the U.S. during 2023 may lead to a recessionary environment, adversely impacting commercial mortgage loans and the company's ability to pay dividends[157]. - Distress in the commercial real estate sector has led to low occupancy rates and tenant defaults, potentially impacting the company's commercial mortgage loans and CMBS[159]. Loan Performance and Risks - The company may incur losses if securities or loans are prepaid faster than expected, leading to adverse impacts on profitability[116]. - The company’s portfolio includes residential mortgage whole loans that do not conform to Fannie Mae or Freddie Mac underwriting guidelines, increasing credit risk exposure[103]. - Legislative changes may make the foreclosure process more difficult and expensive, impacting the company's anticipated returns on foreclosed mortgage loans[105]. - The company may need to foreclose on loans, which can be a lengthy and costly process, potentially leading to losses if liquidation proceeds do not cover the cost basis[164]. Financing and Capital Structure - The company utilizes leverage to finance its assets, with no set minimum or maximum leverage requirements, allowing for flexibility in its investment strategy[46]. - The company may need to rely on additional equity issuances to meet capital and financing needs, which could be dilutive to stockholders[184]. - The company is currently party to short-term borrowings and may face difficulties in rolling these borrowings continuously, which could lead to asset disposals at depressed prices[180]. - The company bears the risk of losses on retained interests in securitizations, which could be less liquid than the underlying assets[188]. Derivative and Hedging Risks - The market value of the company's derivative contracts may decline, leading to margin calls and potential liquidity issues[182]. - Derivative instruments used for hedging may not be traded on regulated exchanges, exposing the company to risks and costs that could lead to material losses[201]. - Hedging transactions can limit potential gains if portfolio values increase and may result in significant losses if not managed correctly[198].

Financial Data and Key Metrics Changes - In Q4 2024, the company reported net income of $0.25 per share and adjusted distributable earnings (ADE) of $0.45 per share, an increase of $0.05 per share sequentially, comfortably covering quarterly dividends of $0.39 per share [7][19][44] - The adjusted loan credit portfolio increased by 5% to $3.42 billion, driven by net purchases of various loan types [24] - The total weighted average borrowing rate on recourse borrowings decreased by 56 basis points to 6.21% [25] Business Line Data and Key Metrics Changes - The Longbridge reverse mortgage segment performed excellently, contributing $0.30 per share to net income, with originations increasing 18% sequentially [19][21] - The credit portfolio generated $0.32 per share in net income, driven by higher net interest income and net gains from various investments [19][20] - The agency strategy reported a modest loss due to rising interest rates and market volatility [22] Market Data and Key Metrics Changes - The company noted an uptick in residential loan delinquencies, particularly in the non-QM portfolio, attributed to larger loan sizes and higher mortgage rates [38] - The commercial mortgage sector faced challenges, with three significant loans in default, but progress is being made towards resolution [36] Company Strategy and Development Direction - The company aims to continue expanding its loan portfolios and sourcing channels while strengthening its financing and balance sheet [6][14] - Strategic use of securitizations is viewed as a core competitive advantage, expected to drive strong earnings and cover dividends [14][58] - The focus remains on vertical integration and partnerships with mortgage originators to enhance loan quality and market share [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum heading into 2025, with expectations for continued growth in adjusted distributable earnings [43][44] - The company is cautious about rising delinquencies but believes most loans are well-secured and manageable [39][46] - Diversification across various mortgage sectors is emphasized as a key to mitigating risks and enhancing performance [46][48] Other Important Information - The company completed four securitization transactions in Q4, capitalizing on favorable market conditions [10][12] - The total economic return for Q4 was reported at 1.8% non-annualized [27] Q&A Session Summary Question: Can you talk about originator investments and appetite for non-QM given delinquencies? - Management discussed their strategy of making small investments in platforms with aligned credit quality and underwriting standards, noting that delinquencies have increased but are manageable [62][66] Question: Contextualize Longbridge's earnings expectations moving forward? - Management indicated a target of around $0.09 per share per quarter from Longbridge, with recent performance exceeding this expectation [68][70] Question: Why isn't the agency portfolio more attractive at current valuations? - The company prefers a credit-focused strategy, believing it offers better long-term returns compared to agency investments, which are seen as less capital-intensive [76][80] Question: Is there an expectation to buy loans out of the securitization trust due to delinquencies? - Management clarified that they expect to work through the loans in the securitization rather than buy them out, maintaining risk retention [82][84] Question: What is the outlook for net interest income going forward? - Management believes the current net interest income is a good run rate, supported by ongoing improvements in liability management [88][92] Question: Any impact from HUD staffing cuts on Longbridge? - Management acknowledged the uncertainty but emphasized that the proprietary business is driving earnings, and they will monitor the situation closely [121][123]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported net income of $0.25 per share and adjusted distributable earnings (ADE) of $0.45 per share, which comfortably covered the quarterly dividend of $0.39 per share [7][19] - The ADE increased from $0.28 per share in Q1 2024 to $0.45 per share in Q4 2024, reflecting a 25% year-over-year growth in the credit portfolio [44] Business Line Data and Key Metrics Changes - The Longbridge reverse mortgage segment performed excellently, contributing $0.30 per share to net income, while the credit portfolio generated $0.32 per share [19] - The credit portfolio increased by 5% to $3.42 billion, driven by net purchases of closed-end seconds, HELOCs, commercial mortgage bridge loans, and non-agency RMBS [24] - The Longbridge portfolio decreased by 15% sequentially to $420 million due to the impact of proprietary reverse mortgage securitization [25] Market Data and Key Metrics Changes - The agency strategy generated a modest loss due to rising interest rates and volatility around the presidential election, impacting Agency RMBS performance [22] - The overall debt-to-equity ratio increased to 8.8:1 from 8.3:1, while the recourse debt-to-equity ratio remained unchanged at 1.8:1 [26] Company Strategy and Development Direction - The company aims to continue leveraging its vertical integration to grow its loan origination business and maintain a focus on credit investments rather than agency securities [30][79] - The strategic use of securitizations is viewed as a core competitive advantage, expected to drive strong earnings and support dividend coverage [14][58] Management's Comments on Operating Environment and Future Outlook - Management noted an uptick in residential loan delinquencies, particularly in the non-QM portfolio, but does not expect material losses due to strong underlying real estate security [39] - The company remains optimistic about the demand for proprietary reverse mortgage products and anticipates continued ADE growth to cover dividends moving forward [45] Other Important Information - The company completed four securitization transactions in Q4, capitalizing on favorable market conditions, which included two non-QM deals and a proprietary reverse mortgage securitization [10][12] - The total weighted average borrowing rate on recourse borrowings decreased by 56 basis points to 6.21% due to lower short-term interest rates and tighter financing spreads [25] Q&A Session Summary Question: Can you talk about some of the originator investments and the appetite for non-QM given the commentary around delinquencies? - Management indicated that they have been making small investments in platforms where they have established relationships and can help lower warehousing costs and improve underwriting processes [63][64] Question: Can you contextualize the earnings expectations for Longbridge? - Management suggested a long-term run rate target of approximately $0.09 per share per quarter for Longbridge, with Q4 exceeding this expectation [68][70] Question: Why isn't the agency portfolio more attractive at current valuations? - Management explained that while the agency sector has been good, they believe their capital can be better utilized in credit-focused investments that leverage their vertical integration [76][79] Question: Is there an expectation from investors to buy loans out of the securitization trust? - Management clarified that they expect to work out and resolve loans while they remain in the securitization, rather than buying them out [84] Question: What is the current run rate for net interest income? - Management indicated that the net interest income seen in Q4 is a good run rate moving forward, supported by ongoing improvements in liability management [91][92] Question: What is the impact of staffing cuts at HUD on Longbridge? - Management acknowledged the uncertainty but emphasized that their proprietary business has been driving earnings, and they will have to wait and see how regulatory changes unfold [121][123]

Earnings Conference Call February 28, 2025 Q4 2024 Q4 2024 EARNINGS Important Notice Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as pred ...