Financial Data and Key Metrics Changes - GAAP net loss for Q3 2025 was $22 million or $0.27 per share, with GAAP book value at $20.24 per share [11] - Economic return on GAAP book value was negative 1.4% for Q3, while year-to-date return was 8.3% [11] - Economic net interest income for Q3 was $69 million, with a yield on average interest-earning assets of 5.9% and an average cost of funds of 4.5% [11] Business Line Data and Key Metrics Changes - Home Express originated $2.4 billion by UPB in Q3, up 36% year-over-year, with expectations of around $1 billion in Q4 originations [9][10] - For 2026, projected originations are between $4 billion and $4.4 billion, with pre-tax earnings of $62 million to $80 million [10] Market Data and Key Metrics Changes - The non-QM market share is expected to grow from 1.1% in 2021 to 5.1% or more than $100 billion in 2025, indicating a five-fold increase [5] - Primary mortgage rates declined approximately 35 basis points to 6.32%, leading to a rise in refinance activity [18] Company Strategy and Development Direction - The acquisition of Home Express for $267 million is aimed at enhancing earnings, diversifying revenue streams, and supporting long-term growth [9][10] - The company is focused on building a balanced and diversified portfolio, reducing reliance on residential credit [21] Management's Comments on Operating Environment and Future Outlook - The U.S. economy remains mixed but resilient, with growth supported by non-residential investment and gradual cooling in labor conditions [17] - The Federal Reserve has shifted to a more growth-oriented policy, cutting rates to support employment [17] Other Important Information - The company ended Q3 with $752 million in total cash and unencumbered assets, up from $561 million at the end of Q2 [12] - The acquisition of Home Express is expected to create synergies and enhance the company's asset management capabilities [25] Q&A Session Summary Question: Can you walk through the change in book value? - Management explained that the change was due to a lag in the timing of spreads changing in the securitization markets compared to the loan market, along with the steepening yield curve affecting securitized debt more significantly [29][30] Question: What is the update on book value for the quarter? - Management reported a 2.4% increase in book value through October 31 [31] Question: Is Goodwill $120 million from the acquisition? - Management confirmed that the total premium was above the $120 million book value, with ongoing evaluations for purchase accounting [32] Question: How will Home Express's earnings impact dividends? - Management indicated that the board will consider various factors regarding the retention of earnings for growth versus dividend payouts [36][37] Question: What are the near-term expectations for loan retention and securitization? - Management stated the intent to retain loans without disrupting existing partnerships, with expectations of one securitization per quarter [40][42]

Financial Data and Key Metrics Changes - The company reported GAAP net income of $17.6 million, or $0.13 per fully converted common share, with distributable earnings of $26.7 million, or $0.22 per fully converted share [11] - Distributable earnings included $1.7 million of realized losses related to a REO sale, which adjusted the distributable earnings to $0.23 per fully converted share when excluding this loss [11] - Book value at quarter end was $14.29 per fully converted share, with a decrease attributed to dividend undercoverage and the NewPoint acquisition [11] Business Line Data and Key Metrics Changes - NewPoint contributed $9.3 million to distributable earnings in its first full quarter, with a record volume of $2.2 billion in originations [6][13] - The core portfolio size declined slightly, ending the quarter at $4.4 billion across 147 loans, with multifamily assets making up 75% of the portfolio [18] - The company originated approximately $304 million in new loan commitments during the quarter, funding $196 million primarily in multifamily [6] Market Data and Key Metrics Changes - The CRE market is seeing a reset, with borrowers and lenders adjusting asset valuations, particularly outside of the office sector [18] - The average cost of debt on the core portfolio was SOFR +231 basis points, with net leverage at 2.55 times and recourse leverage at 0.84 times [14] - The company expects to return its core portfolio to a target size of at least $5 billion over the next few quarters [7] Company Strategy and Development Direction - The company is focused on integrating NewPoint, redeploying liquidity, and leveraging expanded capabilities to grow earnings and book value [10] - The integration of NewPoint is expected to generate $0.04 to $0.06 per fully converted share annually to earnings once the migration of loan servicing is complete [16] - The company is exploring additional investment opportunities outside of whole loans, including CMBS B-pieces and CRE CLO bond investments [19] Management's Comments on Operating Environment and Future Outlook - Management views the third quarter as transitional but believes it sets the stage for stronger results ahead [9] - The company is optimistic about the contribution from NewPoint growing over time, with expectations for it to be accretive to GAAP earnings and book value per share in the first half of 2026 [17] - Management noted that while the market is competitive, they continue to find attractive opportunities for risk-adjusted returns [19] Other Important Information - The company has resumed share repurchases, buying back 540,000 shares for approximately $6 million, with $25.6 million remaining on the buyback allocation [9] - The company sold two properties from its REO portfolio during the quarter and has more slated to close in Q4 [8] Q&A Session Summary Question: What led to the higher origination volumes and expectations for Q4? - Management indicated that they cultivated the balance sheet and converted loans from floating rates into CMBS products, leading to a strong Q4 outlook [29] Question: What should be expected regarding the compensation and benefits expense line item? - Management stated that expenses will trend with volume and will be variable, making it difficult to extrapolate from Q3 alone [32] Question: Are repayments expected to remain elevated in Q4? - Management expects repayments to be in line with previous quarters, noting variability as year-end approaches [38] Question: What is the target size for the core portfolio? - The company is targeting a stabilized portfolio size of between $5 billion and $5.5 billion [40] Question: Is the record quarter for NewPoint a sustainable run rate? - Management cautioned that while it was a great quarter, it may not be repeatable every quarter and advised looking at overall annual guidance [43]

Financial Data and Key Metrics Changes - The book value per share decreased by 3% from the prior quarter to $18.45, while earnings available for distribution per share increased by $0.01 to $0.73, exceeding the dividend for the quarter [20][21] - The economic return for Q2 was 0.7%, marking the seventh consecutive quarter of positive economic returns, with a year-to-date economic return of 3.7% and total shareholder return exceeding 10% [9][20] - The investment portfolio yield increased to 5.41% from 5.23% in the prior quarter, while average repo rates decreased to 4.53% [21][22] Business Line Data and Key Metrics Changes - The Agency portfolio's market value rose to nearly $80 billion, a 6% increase quarter-over-quarter, with a $4.5 billion growth in notional terms [10][11] - The residential credit portfolio remained stable at $6.6 billion in market value, with Onslow Bay achieving record securitization activity of $3.6 billion across seven transactions [13][14] - The Mortgage Servicing Rights (MSR) portfolio ended the quarter unchanged at $3.3 billion, with solid performance metrics including a three-month CPR of 4.6% and serious delinquencies unchanged at 50 basis points [17][18] Market Data and Key Metrics Changes - The U.S. economy is projected to grow at around 1% annualized for the first half of the year, with an unemployment rate of 4.1% [6][8] - Inflation is expected to run at the slowest level in the past three quarters, with the Fed anticipated to deliver two interest rate cuts in 2025 [7][8] - Agency MBS spreads widened by 5 to 10 basis points during the quarter, despite improvements in market sentiment [9][10] Company Strategy and Development Direction - The company aims to maintain a strong focus on the agency sector while strategically growing its residential credit and MSR portfolios [18] - The management is optimistic about the agency sector fundamentals and potential catalysts for improvement, including GSE reform [12][18] - The company has diversified its funding sources significantly, enhancing liquidity and operational flexibility [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to cover and potentially out-earn the dividend for the remainder of the year, citing a conducive environment for achieving close to the dividend yield [28][29] - The company is well-positioned to navigate macroeconomic uncertainties, with a focus on managing rate risk and maintaining low leverage [34][40] - The outlook remains positive, with expectations for continued strong risk-adjusted returns in the current environment [18][19] Other Important Information - The company raised over $750 million of accretive capital in Q2, predominantly deployed in the agency sector, leading to a modest increase in leverage to 5.8 turns [9][10] - The MSR portfolio's valuation improved modestly due to a steepening yield curve and lower implied volatility [17][18] Q&A Session Summary Question: Update on book value quarter to date - The pre-dividend accrual book was up about 0.5%, indicating a 1.5% economic return [27] Question: Comfort level with the dividend - Management expressed confidence in covering the dividend, with expectations to out-earn it for the remainder of the year [28] Question: Managing the portfolio through volatility - The company maintained a good liquidity position and managed exposure carefully, allowing leverage to drift higher while focusing on rate risk [33][34] Question: Expectations for GSE reform - Management expects GSE reform to be prioritized, which could create opportunities for the company in the origination space [56] Question: Demand for Agency MBS - Demand from fixed income funds has been strong, with expectations for MBS spreads to tighten even without additional demand from banks [75][76] Question: Outlook for residential credit issuance - The company anticipates robust issuance in the second half of the year, tracking to be the highest since 2021 [81] Question: Impact of tariffs on inflation - Management acknowledged that inflation will pass through due to tariffs, but they remain optimistic about achieving the expected Fed cuts [92][96]