Financial Data and Key Metrics Changes - GAAP net income for Q4 2025 was $7 million or $0.08 per share, while full-year net income was $144 million or $1.72 per share [10] - GAAP book value at the end of Q4 was $19.70 per share, with an economic return on GAAP book value of -0.9% for Q4 and +7.4% for the full year [11] - Earnings available for distribution (EAD) for Q4 was $45 million or $0.53 per share, and for the full year, it was $141 million or $1.68 per share [11] Business Line Data and Key Metrics Changes - The investment portfolio segment reported economic net interest income of $65 million for Q4, with a yield on average interest-earning assets of 5.9% and a net interest spread of 1.4% [12] - HomeXpress funded $1 billion in production during Q4 with a gain-on-sale premium of 358 basis points, and its EBITDA was $11 million for the quarter [13] Market Data and Key Metrics Changes - The company ended the year with $528 million in total cash and unencumbered assets, down from $752 million at the end of Q3 [14] - Agency swap OAS tightened by approximately 22 basis points in Q4, while generic non-QM AAAs firmed by 5 basis points [20] Company Strategy and Development Direction - The company aims to build a hybrid REIT focused on diversification, liquidity, and fee-based income, with a clear plan to grow Agency RMBS and acquire MSRs [5][9] - The acquisition of HomeXpress is expected to enhance capabilities and reach, contributing to a diversified residential platform [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, focusing on unlocking capital and redeploying into earnings-accretive investments [24] - The company anticipates strong demand for non-QM loans and related securitized products, projecting significant growth in the market [25] Other Important Information - Compensation, general, and administrative expenses increased by $22 million year-over-year due to staffing costs related to acquisitions [16] - The company generated over $600 million of capital through portfolio and capital markets activity, supporting its portfolio realignment [18] Q&A Session Summary Question: Update on HomeXpress volume and gain on sale - Management noted typical seasonal reduction in volume but expects a strong first quarter compared to last year, with good gain on sale premiums [32][33] Question: Context for dividend increase - The company balanced dividend size with the need to retain capital for growth, ensuring sufficient EAD coverage [40][41] Question: Originating second liens and non-QM volume outlook - Currently not originating second mortgages but sees significant growth potential in non-QM loans, projecting a 20%-25% market growth in 2026 [46][48] Question: Change in book value and securitized debt - The decline in book value is attributed to faster increases in the value of securitized debt compared to loan values, but this does not affect economic risk [49][50] Question: Credit enhancement levels in securitization trusts - Management does not expect a material decline in credit enhancement levels, viewing securitization as an economic consideration [53][54]

Financial Data and Key Metrics Changes - GAAP net income for Q4 2025 was $7 million or $0.08 per share, while for the full year it was $144 million or $1.72 per share [10] - GAAP book value at the end of Q4 was $19.70 per share, with an economic return on GAAP book value of -0.9% for the quarter and +7.4% for the full year [11] - Earnings available for distribution (EAD) for Q4 was $45 million or $0.53 per share, and for the full year, it was $141 million or $1.68 per share [11] Business Line Data and Key Metrics Changes - The investment portfolio segment reported economic net interest income of $65 million in Q4, with a yield on average interest-earning assets of 5.9% and a net interest spread of 1.4% [12] - Home Express funded $1 billion in production in Q4 with a gain-on-sale premium of 358 basis points, and its EBITDA was $11 million for the quarter [13] Market Data and Key Metrics Changes - The company ended the year with $528 million in total cash and unencumbered assets, down from $752 million at the end of Q3 [14] - Agency swap OAS tightened by approximately 22 basis points in Q4, while generic non-QM AAAs firmed by 5 basis points [20] Company Strategy and Development Direction - The company aims to build a hybrid REIT focused on diversification, liquidity, and fee-based income, with a clear plan to grow Agency RMBS and acquire MSRs [5][9] - The acquisition of Home Express is expected to enhance capabilities and reach, contributing to a diversified residential platform [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, focusing on unlocking capital and redeploying into earnings-accretive investments [24] - The company anticipates strong demand for non-QM loans and related securitized products, projecting significant growth in the non-QM market [25][48] Other Important Information - Compensation, general, and administrative expenses increased by $22 million year-over-year due to staffing costs related to acquisitions [16] - The company generated over $600 million of capital through portfolio and capital markets activity, supporting its portfolio realignment [18][19] Q&A Session Summary Question: Update on HomeXpress volume and gain on sale - Management noted typical seasonal reduction in volume post-holidays but remains optimistic about Q1 2026 performance compared to last year [33] Question: Relative value between adding more agencies versus securitizations - Management emphasized the importance of portfolio construction and maintaining a balance between agency and credit components [35] Question: Context for dividend increase - The company aims to balance dividend payouts with sufficient EAD coverage to support growth in operating aspects of the business [40] Question: Non-QM volume outlook for 2026 - Management anticipates significant growth in the non-QM market, projecting origination volumes to increase by 20%-25% [46][48] Question: Change in book value and securitized debt - Management explained that while loan values increased, the faster increase in securitized debt value led to a reduction in reported book value [49][50]

Financial Data and Key Metrics Changes - GAAP net income for Q4 2025 was $7 million or $0.08 per share, while for the full year it was $144 million or $1.72 per share [11] - GAAP book value at the end of Q4 was $19.70 per share, with an economic return on GAAP book value of -0.9% for the quarter and +7.4% for the full year [12] - Earnings available for distribution (EAD) for Q4 was $45 million or $0.53 per share, and for the full year, it was $141 million or $1.68 per share [12] Business Line Data and Key Metrics Changes - The investment portfolio segment reported an economic net interest income of $65 million for Q4, with a yield on average interest-earning assets of 5.9% and a net interest spread of 1.4% [13] - Home Express funded $1 billion in production during Q4 with a gain-on-sale premium of 358 basis points, and its EBITDA was $11 million for the quarter [13][27] - The company ended the year with a total leverage of 5.1-to-1, compared to the REIT average of 2.4-to-1 [13] Market Data and Key Metrics Changes - Agency swap OAS tightened by approximately 22 basis points in Q4, while generic non-QM AAAs firmed by 5 basis points [19] - Treasury yields had a tightening bias, with the two-year, ten-year Treasury spread ending the year at 69 basis points, approximately 37 wider than at the beginning of the year [20] - Mortgage rates decreased by approximately 70 basis points for the year, ending at 6.15% [20] Company Strategy and Development Direction - The company aims to build a diversified residential platform capable of generating long-term value, focusing on portfolio diversification, liquidity expansion, and fee-based income growth [10] - The acquisition of Home Express is a key part of the strategy to enhance capabilities and reach within the residential mortgage market [6][10] - The company is committed to maintaining a long-term orientation while adapting to market conditions and evolving its operational capabilities [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter of 2026, expecting strong revenue and gain on sale premiums despite typical seasonal reductions in volume [33] - The company anticipates continued growth in the non-QM and business purpose loan markets, projecting a market growth of 20%-25% in 2026 [46] - Management emphasized the importance of capital allocation and the balance between dividend payouts and reinvestment for growth [39] Other Important Information - The company raised approximately $120 million in unsecured debt, with the majority of funding for transformation coming from its own portfolio [6] - Compensation, general, and administrative expenses increased by $22 million year-over-year, primarily due to staffing costs related to acquisitions [16] - The company is focused on managing capital at risk and evaluating cash flow generating capital rather than short-term valuation movements [50] Q&A Session Summary Question: Update on Home Express volume and gain on sale - Management noted a typical seasonal reduction in volume but expressed optimism for Q1 2026, expecting good revenue compared to the previous year [33] Question: Relative value between adding more agencies versus securitizations - Management highlighted the importance of portfolio construction and maintaining a balance between agency and credit components, with a focus on MSR allocation [34][35] Question: Context of dividend increase - Management explained that the dividend increase was sized to ensure sufficient EAD coverage while allowing for growth in operating aspects of the business [39] Question: Originating second liens and non-QM volume outlook - Management confirmed they are not currently originating second mortgages but anticipate significant growth in the non-QM market in 2026 [46] Question: Change in book value and securitized debt - Management clarified that the reduction in book value was due to the faster increase in the value of securitized debt compared to loan values, emphasizing the focus on managing capital at risk [49][50]