Ellington Credit Company, formerly known as Ellington
Residential Mortgage REIT (NYSE: EARN) ("we", "us," or "our"),
today reported financial results for the quarter ended June 30,
2024.
Highlights
- Net income (loss) of $(0.8) million, or $(0.04) per share.
- Adjusted Distributable Earnings1 of $7.3 million, or $0.36 per
share.
- Book value of $6.91 per share as of June 30, 2024, which
includes the effects of dividends of $0.24 per share for the
quarter.
- Net interest margin2 of 13.41% on credit, 2.85% on Agency, and
4.24% overall.
- CLO portfolio increased to $85.1 million as of June 30, 2024,
as compared to $45.1 million as of March 31, 2024.
- Capital allocation3 to corporate CLOs was 45% as of June 30,
2024 as compared to 25% as of March 31, 2024.
- Weighted average constant prepayment rate ("CPR") for the
fixed-rate Agency specified pool portfolio of 6.74.
- Net mortgage assets-to-equity ratio of 4.0:15 as of June 30,
2024.
- Dividend yield of 14.1% based on the August 9, 2024 closing
stock price of $6.81, and monthly dividend of $0.08 per common
share declared on August 7, 2024.
- Debt-to-equity ratio of 4.0:1 as of June 30, 2024; adjusted for
unsettled purchases and sales, debt-to-equity ratio of 3.7:1 as of
June 30, 2024.
- Cash and cash equivalents of $118.8 million as of June 30,
2024, which includes $89.9 million of U.S. Treasury Bills held on
margin; unencumbered assets of $43.9 million. Excluding such U.S.
Treasury Bills, cash and cash equivalents were $28.8 million.
Strategic Transformation Update
On March 29, 2024, our Board of Trustees approved a strategic
transformation of our investment strategy to focus on corporate
CLOs, with an emphasis on mezzanine debt and equity tranches. In
connection with this transformation, we revoked our election to be
taxed as a REIT effective January 1, 2024, rebranded as Ellington
Credit Company, and updated our web address to
www.ellingtoncredit.com. We continue to be listed on the New York
Stock Exchange under our ticker symbol EARN.
On July 2, 2024, we filed our preliminary proxy statement in
anticipation of a shareholder vote at our annual meeting later this
year. We intend, subject to shareholder approval of certain matters
at such meeting, to convert to a closed-end fund registered under
the Investment Company Act of 1940, as amended (the "1940 Act")
that would be treated as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended, and complete
our transition from an MBS-focused company to a CLO-focused
company.
In the meantime, we are operating as a taxable C-Corp and taking
advantage of our significant existing net operating loss
carryforwards to offset the majority of any U.S. federal taxable
income we may generate pending our conversion to a closed-end
fund/RIC. During this interim phase, we continue to hold a core
portfolio of liquid Agency MBS pools to maintain our exemption from
the 1940 Act. Once we convert to a closed-end fund/RIC, we would
generally not be subject to corporate tax.
During the second quarter, we increased the size of the CLO
portfolio to $85.1 million, from $45.1 million as of the prior
quarter end. Towards the end of the quarter, in light of the change
in our investment strategy and the continued progress and success
we have achieved towards rotating our investment portfolio to CLOs,
the Board approved an update of our management agreement to more
closely align our fee structure with the advisory fee structures of
CLO-focused registered closed-end funds.
As of August 9, 2024, our CLO portfolio had increased to $108
million and represented approximately 50% of our capital
allocation3. We continue to target completion of the strategic
transformation prior to year end.
_________________
1
Adjusted Distributable Earnings is a
non-GAAP financial measure. See "Reconciliation of Adjusted
Distributable Earnings to Net Income (Loss)" below for an
explanation regarding the calculation of Adjusted Distributable
Earnings.
2
Net interest margin of a group of assets
represents the weighted average asset yield less the weighted
average cost of borrowings secured by those assets (including the
effect of net interest income (expense) related to U.S. Treasury
securities and actual and accrued payments on interest rate swaps
used to hedge such borrowings); net interest margin excludes the
effect of the Catch-up Amortization Adjustment.
3
Percentages shown are of net assets, as
opposed to gross assets, deployed in each strategy.
4
Excludes recent purchases of fixed rate
Agency specified pools with no prepayment history.
5
We define our net mortgage
assets-to-equity ratio as the net aggregate market value of our
mortgage-backed securities (including the underlying market values
of our long and short TBA positions) divided by total shareholder's
equity. As of June 30, 2024 the market value of our mortgage-backed
securities and our net long TBA position was $551.2 million and
$29.2 million, respectively, and total shareholders' equity was
$146.1 million.
Second Quarter 2024 Results
"During the second quarter we nearly doubled our CLO portfolio,
and including investment activity through August 9th, that
portfolio now stands at approximately $108 million. Despite some
underperformance in the CLO equity sector, our CLO portfolio still
generated positive net income for the quarter. Furthermore, thanks
to the growth of that portfolio combined with the wide net interest
margins on our CLOs, our CLO portfolio contributed significantly to
our adjusted distributable earnings for the quarter, which again
comfortably covered our dividend," said Laurence Penn, Chief
Executive Officer and President.
"Meanwhile, our MBS portfolio generated a modest net loss for
the quarter, caused primarily by intra-quarter interest rate and
spread volatility, and this drove our slight overall net loss for
the quarter. As we continue our rotation from MBS into CLOs, our
net interest margin continues to expand and our leverage ratios
continued to decline. Given the high liquidity of our Agency pools,
the cost to sell these investments remains low.
"I would note that we expect that the substantial sequential
increase in our adjustable distributable earnings, to $0.36 per
share in the second quarter, will be temporary. As we continue to
sell many Agency pools that we acquired in much lower interest rate
environments, we continue to terminate many interest rate swap
hedging positions that we also initiated in much lower interest
environments. As that swap termination activity continues, we
expect that our third quarter adjusted distributed earnings will
decline somewhat, while still exceeding our first quarter level of
$0.27 per share and, by extension, still comfortably covering our
dividend.
"We remain energized as we look forward to a successful
shareholder vote at our annual meeting later this year, whereupon
we can complete our conversion to a closed-end fund/RIC and
maximize long-term value for our shareholders."
Financial Results
The following table summarizes our portfolio of long investments
as of June 30, 2024 and March 31, 2024:
June 30, 2024
March 31, 2024
($ in thousands)
Current Principal
Fair Value
Average Price(1)
Cost
Average Cost(1)
Current Principal
Fair Value
Average Price(1)
Cost
Average Cost(1)
Credit Portfolio:
Dollar Denominated:
CLOs
CLO Notes
$
46,314
$
37,225
80.38
$
37,108
80.12
$
39,096
$
33,761
86.35
$
32,413
82.91
CLO Equity
n/a
33,228
n/a
34,779
n/a
n/a
6,715
n/a
6,839
n/a
Total
70,453
71,887
40,476
39,252
Non-Agency RMBS(2)
9,461
9,463
100.02
7,943
83.96
9,942
9,647
97.03
8,134
81.81
Non-Agency IOs
n/a
8,328
n/a
6,182
n/a
n/a
11,545
n/a
8,432
n/a
Corporate equity
n/a
32
n/a
43
n/a
n/a
—
n/a
—
n/a
Non-Dollar Denominated:
CLOs:
CLO Notes
7,872
7,874
100.03
7,800
99.09
—
—
—
—
—
CLO Equity
n/a
6,761
n/a
7,056
n/a
n/a
4,612
n/a
4,763
n/a
Total
14,635
14,856
4,612
4,763
Total Credit
102,911
100,911
66,280
60,581
Agency Portfolio:
Dollar Denominated:
Agency RMBS(2)
15-year fixed-rate mortgages
4,115
4,084
99.25
4,158
101.04
28,173
27,373
97.16
28,366
100.69
20-year fixed-rate mortgages
—
—
—
—
—
4,387
4,234
96.51
4,734
107.91
30-year fixed-rate mortgages
548,497
526,985
96.08
538,451
98.17
720,307
686,406
95.29
700,100
97.19
ARMs
—
—
—
—
—
7,043
7,039
99.94
7,831
111.19
Reverse mortgages
34
33
97.06
37
108.82
13,565
14,209
104.75
15,342
113.10
Total
552,646
531,102
96.10
542,646
98.19
773,475
739,261
95.58
756,373
97.79
Agency IOs
n/a
2,355
n/a
1,985
n/a
n/a
6,501
n/a
5,454
n/a
Total Agency
533,457
544,631
745,762
761,827
Total
$
636,368
$
645,542
$
812,042
$
822,408
(1)
Expressed as a percentage of current
principal balance.
(2)
Excludes IOs.
During the second quarter, the size of our CLO holdings
increased to $85.1 million as of June 30, 2024, compared to $45.1
million as of March 31, 2024, driven by a larger CLO equity
portfolio, and to a lesser degree, a larger CLO mezzanine
portfolio. During the quarter, rising CLO prepayment rates and
tightening mezzanine spreads had a few notable impacts on our
holdings. First, several of our CLO mezzanine positions were
called, which contributed positively to earnings but removed these
positions from our holdings. Second, we capitalized on trading
opportunities by selling several CLO mezzanine positions at net
gains, further decreasing our holdings. And third, tighter new
issue CLO debt spreads enhanced the attractiveness of new issue CLO
equity due to lower implied financing costs, prompting new
purchases by us. Tighter new issue CLO debt spreads also enabled
certain CLO equity holders to refinance existing deals, thereby
further increasing the relative appeal of CLO equity. While we also
added attractive incremental CLO mezzanine investments in the
quarter, the size of our CLO equity holdings increased
disproportionately as a result of these effects.
As of June 30, 2024, our CLO portfolio consisted of $45.1
million of CLO notes, specifically mezzanine debt tranches, of
which $37.2 million were dollar-denominated and $7.9 million were
non-dollar denominated; and $40.0 million of CLO equity tranches,
of which $33.2 million were dollar-denominated and $6.8 million
were non-dollar denominated. We intend to continue to invest in
both dollar-denominated and non-dollar denominated CLO investments,
based on relative value opportunities, but expect the majority of
our CLO investments will continue to be dollar-denominated.
During the second quarter, the size of our Agency RMBS holdings
decreased by 28% to $531.1 million as of June 30, 2024, compared to
$739.3 million as of March 31, 2024, as we continued to net sell
Agency RMBS and rotate the investment capital into CLOs. Costs to
liquidate our Agency RMBS continue to be low. Meanwhile, our
aggregate holdings of interest-only securities and non-Agency RMBS
decreased by 27% quarter over quarter.
Our debt-to-equity ratio, adjusted for unsettled purchases and
sales, decreased to 3.7:1 as of June 30, 2024, as compared to 4.9:1
as of March 31, 2024. The decline was driven by higher
shareholders' equity and less leverage on our CLO investments,
which constituted a significantly larger proportion of our overall
portfolio as of June 30, 2024, compared to March 31, 2024. Our net
mortgage assets-to-equity ratio also decreased over the same
period, to 4.0:1 from 5.4:1, driven by the increase in
shareholders' equity and a smaller Agency RMBS portfolio, partially
offset by a net long TBA position as of June 30, 2024, compared to
a net short TBA position as of March 31, 2024.
During the quarter, we continued to hedge interest rate risk
through the use of interest rate swaps and short positions in U.S.
Treasury securities and futures. We ended the quarter with a net
long TBA position. We also selectively hedge our corporate CLO and
non-Agency RMBS investments; as of June 30, 2024, our credit hedge
portfolio was relatively small.
The net interest margins on both our Agency and credit
portfolios increased quarter over quarter, driven by incrementally
higher average asset yields. In the second quarter, the net
interest margins (excluding the Catch-up Amortization Adjustment)
on our credit and Agency portfolios increased to 13.41% and 2.85%,
respectively, as compared to 9.65% and 2.46% in the prior quarter.
Our cost of funds and net interest margin continue to benefit from
positive carry on our interest rate swaps, where we receive a
higher floating rate and pay a lower fixed rate. As we continue to
sell Agency pools and terminate associated interest rate swap
hedges, we expect that the net interest margin on our Agency
portfolio will decline. As a result, we expect that our third
quarter adjusted distributed earnings will decline somewhat from
the second quarter level of $0.36 per share, while still exceeding
the first quarter level of $0.27 per share.
The following table summarizes our operating results by strategy
for the three-month periods ended June 30, 2024 and March 31,
2024:
Three-Month Period Ended June
30, 2024
Per Share
Three-Month Period Ended March
31, 2024
Per Share
(In thousands, except share amounts and
per share amounts)
Credit:
CLOs
Interest income
$
3,519
$
0.18
$
1,244
$
0.06
Interest expense
(350
)
(0.02
)
(67
)
—
Realized gain (loss), net
482
0.02
142
0.01
Unrealized gain (loss), net
(2,644
)
(0.13
)
1,008
0.05
Credit hedges and other activities,
net(1)
39
—
(77
)
—
Total CLO profit (loss)
1,046
0.05
2,250
$
0.12
Non-Agency RMBS(2)
Interest income
528
0.03
564
$
0.03
Interest expense
(278
)
(0.01
)
(178
)
(0.01
)
Realized gain (loss), net
1,424
0.07
42
—
Unrealized gain (loss), net
(959
)
(0.05
)
795
0.04
Interest rate hedges
7
—
26
—
Total Non-Agency RMBS profit (loss)
722
0.04
1,249
$
0.06
Total Credit profit (loss)
1,768
0.09
3,499
$
0.18
Agency RMBS(2):
Interest income
8,337
0.41
7,403
$
0.38
Interest expense
(8,163
)
(0.40
)
(9,091
)
(0.47
)
Realized gain (loss), net
(9,851
)
(0.48
)
(10,709
)
(0.55
)
Unrealized gain (loss), net
4,892
0.24
(43
)
—
Interest rate hedges and other activities,
net(3)
3,850
0.18
14,467
0.74
Total Agency RMBS profit (loss)
(935
)
(0.05
)
2,027
$
0.10
Total Credit and Agency RMBS profit
(loss)
833
0.04
5,526
$
0.28
Other interest income (expense), net
441
0.02
365
$
0.02
Income tax (expense) benefit
75
—
(303
)
(0.02
)
General and administrative expenses
(2,164
)
(0.10
)
(1,627
)
(0.08
)
Net income (loss)
$
(815
)
$
(0.04
)
$
3,961
$
0.20
Weighted average shares
outstanding
20,354,062
19,548,408
(1)
Other activities includes currency hedges
as well as net realized and unrealized gains (losses) on foreign
currency.
(2)
Includes IOs.
(3)
Includes U.S. Treasury securities.
CLO Performance
In the second quarter, the CLO market continued to benefit from
strengthening fundamentals, robust demand for leveraged loans, and
continued capital inflows, despite periods of elevated market
volatility. Net demand for leveraged loans remained strong as a
result of strong capital inflows into retail loan funds,
significant primary CLO issuance volumes, and rapid repayments of
existing leveraged loan facilities as corporate borrowers continued
to lower their financing costs. Loan prepayment rates increased
further, reaching their highest level on a trailing-twelve-month
basis since February 2022. These higher prepayments, and more
generally broader access to capital markets, contributed to a lower
trailing-twelve-month default rate for the Morningstar LSTA US
Leveraged Loan Index, and led to substantial deleveraging in
seasoned CLOs.
Investment-grade CLO spreads generally tightened throughout the
quarter, while CLO mezzanine tranches showed mixed performance,
with higher-quality tranches tightening and lower-quality tranches
widening. The European CLO market also experienced tightening
spreads, particularly in high-quality tranches.
For CLO equity, tightening debt spreads allowed some deals to
refinance their debt or reset their debt (which also includes an
extension of reinvestment period), which drove strong returns for
CLO equity in deals with more optionality (namely, those with
better-performing portfolios and higher debt costs). However,
higher prepayment speeds in the loan market led to both overall
declines in loan prices and compression in loan floating rate
spreads, as large volumes of loans trading at premiums to par were
refinanced at par and replaced with lower-spread loans; these
effects triggered mark-to-market losses in some CLO equity profiles
as both their interest payments (due to lower excess interest in
the CLO) and underlying asset values declined in tandem.
Our CLO strategy had positive performance for the quarter, led
by strong interest income, which increased sequentially due to the
resolution of several discounted positions. Further, net gains on
our CLO mezzanine portfolio were supported by both opportunistic
sales and discount positions being called. These gains were
partially offset by mark-to-market losses on certain CLO equity
positions, where rapid prepayments drove mark-to-market losses and
reduced floating rate spreads on the underlying loan collateral as
described above.
Non-Agency Performance
Our non-Agency RMBS portfolio and interest-only securities
generated strong results for the quarter, driven by net interest
income and net gains associated with several profitable sales.
Agency Performance
In April, interest rates and volatility increased over renewed
concerns about inflation and a more hawkish Federal Reserve, which
pushed Agency RMBS yield spreads wider. In May and June, however,
interest rates and volatility generally declined, and Agency RMBS
yield spreads reversed most of their April widening. Overall for
the second quarter, the U.S. Agency MBS Index generated a negative
excess return of (0.09)%. Against this backdrop, EARN's Agency
portfolio generated a small net loss for the quarter, as net losses
on our Agency RMBS exceeded net gains on our interest rate
hedges.
Average pay-ups on our specified pool portfolio decreased to
0.63% as of June 30, 2024, as compared to 0.85% as of March 31,
2024.
General and Administrative Expenses
General and administrative expenses were higher quarter over
quarter as a result of increased professional fees and compensation
expense related to the strategic transformation.
About Ellington Credit Company
Ellington Credit Company (the "Company"), formerly known as
Ellington Residential Mortgage REIT, was initially formed as a real
estate investment trust ("REIT") that invested primarily in
residential mortgage-backed securities ("MBS"). On March 29, 2024,
the Company's Board of Trustees approved a strategic transformation
of the Company's investment strategy to focus on corporate CLOs,
with an emphasis on mezzanine debt and equity tranches. In
connection with this transformation, the Company revoked its
election to be taxed as a REIT effective January 1, 2024, and
rebranded as Ellington Credit Company. Later in 2024, the Company
intends, subject to shareholder approval of certain matters, to
convert to a closed-end fund and complete its transition from an
MBS-focused company to a CLO-focused company.
Conference Call
We will host a conference call at 11:00 a.m. Eastern Time on
Tuesday, August 13, 2024, to discuss its financial results for the
quarter ended June 30, 2024. To participate in the event by
telephone, please dial (800) 579-2543 at least 10 minutes prior to
the start time and reference the conference ID: EARNQ224.
International callers should dial (785) 424-1789 and reference the
same conference ID. The conference call will also be webcast live
over the Internet and can be accessed via the "For Investors"
section of our web site at www.ellingtoncredit.com. To listen to
the live webcast, please visit www.ellingtoncredit.com at least 15
minutes prior to the start of the call to register, download, and
install necessary audio software. In connection with the release of
these financial results, we also posted an investor presentation,
that will accompany the conference call, on our website at
www.ellingtoncredit.com under "For Investors—Presentations."
A dial-in replay of the conference call will be available on
Tuesday, August 13, 2024, at approximately 2:00 p.m. Eastern Time
through Tuesday, August 20, 2024 at approximately 11:59 p.m.
Eastern Time. To access this replay, please dial (800) 753-8878.
International callers should dial (402) 220-0688. A replay of the
conference call will also be archived on our web site at
www.ellingtoncredit.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release constitute
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. 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 statements are based on our
beliefs, assumptions and expectations of our future operations,
business strategies, performance, financial condition, liquidity
and prospects, taking into account information currently available
to us. These beliefs, assumptions, and expectations are subject to
numerous risks and uncertainties and can change as a result of many
possible events or factors, not all of which are known to us. If a
change occurs, our business, financial condition, liquidity,
results of operations and strategies may vary materially from those
expressed or implied in our forward-looking statements or 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 statements are not
historical in nature and can be identified by words such as
"believe," "expect," "anticipate," "estimate," "project," "plan,"
"continue," "intend," "should," "would," "could," "goal,"
"objective," "will," "may," "seek," or similar expressions or their
negative forms, or by references to strategy, plans, or intentions.
The following factors are examples of those that could cause actual
results to vary from those stated or implied by our forward-looking
statements: changes in interest rates and the market value of our
investments, market volatility, changes in mortgage default rates
and prepayment rates, our ability to borrow to finance our assets,
our ability to pivot our investment strategy to focus on CLOs, a
deterioration in the CLO market, our ability to utilize our NOLs,
our ability to convert to a closed end fund/RIC, including our
ability to obtain shareholder approval of certain matters related
to such conversion, changes in government regulations affecting our
business, our ability to maintain our exclusion from registration
under the Investment Company Act of 1940, and other changes in
market conditions and economic trends, such as changes to fiscal or
monetary policy, heightened inflation, slower growth or recession,
and currency fluctuations. Furthermore, as stated above,
forward-looking statements are subject to risks and uncertainties,
including, among other things, those described under Item 1A of our
Annual Report on Form 10-K, which can be accessed through the link
to our SEC filings under "For Investors" on our website (at
www.ellingtoncredit.com) or at the SEC's website (www.sec.gov).
Other risks, uncertainties, and factors that could cause actual
results to differ materially from those projected or implied may be
described from time to time in reports we file with the SEC,
including reports on Forms 10-Q, 10-K, and 8-K. New risks and
uncertainties emerge from time to time, and it is not possible for
us to predict or assess the impact of every factor that may cause
our actual results to differ from those contained in any
forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
This press release is not an offer to sell any securities and is
not soliciting an offer to buy any securities. The information
contained in this press release does not constitute or form part of
any offer for sale or subscription of or solicitation or invitation
of any offer to buy or subscribe for any securities, nor shall it
or any part of it form the basis of or be relied on in connection
with any contract or commitment whatsoever.
In addition, this press release is not a solicitation of votes
or proxies. Any such solicitation will only be made pursuant to a
proxy statement or other appropriate proxy materials filed with the
SEC and labeled as such.
ELLINGTON CREDIT COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
Three-Month Period
Ended
Six-Month Period Ended
June 30, 2024
March 31, 2024
June 30, 2024
(In thousands except share amounts and per
share amounts)
INTEREST INCOME (EXPENSE)
Interest income
$
14,132
$
10,379
$
24,511
Interest expense
(10,235
)
(10,100
)
(20,335
)
Total net interest income
(expense)
3,897
279
4,176
EXPENSES
Management fees to affiliate
550
538
1,088
Professional fees
690
339
1,029
Compensation expense
431
270
701
Insurance expense
93
94
187
Other operating expenses
400
386
786
Total expenses
2,164
1,627
3,791
OTHER INCOME (LOSS)
Net realized gains (losses) on
securities
(7,985
)
(9,823
)
(17,808
)
Net realized gains (losses) on financial
derivatives
6,565
3,459
10,024
Change in net unrealized gains (losses) on
securities
1,180
1,760
2,940
Change in net unrealized gains (losses) on
financial derivatives
(2,367
)
10,216
7,849
Other, net
(16
)
—
(16
)
Total other income (loss)
(2,623
)
5,612
2,989
Net income (loss) before income
taxes
(890
)
4,264
3,374
Income tax expense (benefit)
(75
)
303
228
NET INCOME (LOSS)
$
(815
)
$
3,961
$
3,146
NET INCOME (LOSS) PER COMMON
SHARE:
Basic and Diluted
$
(0.04
)
$
0.20
$
0.16
WEIGHTED AVERAGE SHARES
OUTSTANDING
20,354,062
19,548,408
19,951,235
CASH DIVIDENDS PER SHARE:
Dividends declared
$
0.24
$
0.24
$
0.48
ELLINGTON CREDIT COMPANY
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As of
June 30, 2024
March 31, 2024
December 31,
2023(1)
(In thousands except share amounts and per
share amounts)
ASSETS
Cash and cash equivalents
$
118,763
$
22,442
$
38,533
Securities, at fair value
636,368
812,042
773,548
Due from brokers
4,892
5,261
3,245
Financial derivatives–assets, at fair
value
80,834
82,330
74,279
Reverse repurchase agreements
16,405
—
—
Receivable for securities sold
71,673
36,474
51,132
Interest receivable
3,983
4,642
4,522
Other assets
539
765
431
Total Assets
$
933,457
$
963,956
$
945,690
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Repurchase agreements
$
578,503
$
683,171
$
729,543
Payable for securities purchased
33,866
68,179
12,139
Due to brokers
146,010
58,238
54,476
Financial derivatives–liabilities, at fair
value
6,720
5,746
7,329
U.S. Treasury securities sold short, at
fair value
16,199
—
—
Dividend payable
1,691
1,586
1,488
Accrued expenses
1,688
1,702
1,153
Management fee payable to affiliate
550
538
513
Interest payable
2,101
1,879
2,811
Total Liabilities
787,328
821,039
809,452
SHAREHOLDERS' EQUITY
Preferred shares, par value $0.01 per
share, 100,000,000 shares authorized; (0 shares issued and
outstanding, respectively)
—
—
—
Common shares, par value $0.01 per share,
500,000,000 shares authorized; (21,134,976, 19,819,610 and
18,601,464 shares issued and outstanding, respectively)(2)
211
198
186
Additional paid-in-capital
291,114
282,161
274,698
Accumulated deficit
(145,196
)
(139,442
)
(138,646
)
Total Shareholders' Equity
146,129
142,917
136,238
Total Liabilities and Shareholders'
Equity
$
933,457
$
963,956
$
945,690
SUPPLEMENTAL PER SHARE
INFORMATION
Book Value Per Share
$
6.91
$
7.21
$
7.32
(1)
Derived from audited financial statements
as of December 31, 2023.
(2)
Common shares issued and outstanding at
June 30, 2024, includes 1,315,366 common shares issued during the
second quarter under our at-the-market common share offering
program.
Reconciliation of Adjusted Distributable Earnings to Net Income
(Loss)
We calculate Adjusted Distributable Earnings as net income
(loss) adjusted for: (i) net realized and change in net unrealized
gains and (losses) on securities, financial derivatives, and
foreign currency transactions; (ii) net realized and change in net
unrealized gains (losses) associated with periodic settlements on
interest rate swaps; (iii) other income or loss items that are of a
non-recurring nature, if any (iv) Catch-up Amortization Adjustment
(as defined below); and (v) provision for income taxes. The
Catch-up Amortization Adjustment is a quarterly adjustment to
premium amortization or discount accretion triggered by changes in
actual and projected prepayments on our Agency RMBS (accompanied by
a corresponding offsetting adjustment to realized and unrealized
gains and losses). The adjustment is calculated as of the beginning
of each quarter based on our then-current assumptions about
cashflows and prepayments, and can vary significantly from quarter
to quarter.
Adjusted Distributable Earnings is a supplemental non-GAAP
financial measure. We believe that the presentation of Adjusted
Distributable Earnings provides information useful to investors,
because: (i) we believe that it is a useful indicator of both
current and projected long-term financial performance, in that it
excludes the impact of certain current-period earnings components
that we believe are less useful in forecasting long-term
performance and dividend-paying ability; (ii) we use it to evaluate
the effective net yield provided by our portfolio, after the
effects of financial leverage; and (iii), we believe that
presenting Adjusted Distributable Earnings assists investors in
measuring and evaluating our operating performance, and comparing
our operating performance to that of our peers. Our calculation of
Adjusted Distributable Earnings may differ from the calculation of
similarly titled non-GAAP financial measures by our peers, with the
result that these non-GAAP financial measures might not be directly
comparable; adjusted Distributable Earnings excludes certain items,
such as most realized and unrealized gains and losses, that may
impact the amount of cash that is actually available for
distribution.
In addition, because Adjusted Distributable Earnings is an
incomplete measure of our financial results and differs from net
income (loss) computed in accordance with U.S. GAAP, it should be
considered supplementary to, and not as a substitute for, net
income (loss) computed in accordance with U.S. GAAP.
In setting our dividends, our Board of Trustees considers our
earnings, liquidity, financial condition, distribution
requirements, and financial covenants, along with other factors
that the Board of Trustees may deem relevant from time to time.
The following table reconciles, for the three-month periods
ended June 30, 2024 and March 31, 2024, our Adjusted Distributable
Earnings to the line on our Consolidated Statement of Operations
entitled Net Income (Loss), which we believe is the most directly
comparable U.S. GAAP measure:
Three-Month Period
Ended
(In thousands except share amounts and per
share amounts)
June 30, 2024
March 31, 2024
Net Income (Loss)
$
(815
)
$
3,961
Income tax expense (benefit)
(75
)
303
Net Income (Loss) before income
taxes
(890
)
4,264
Adjustments:
Net realized (gains) losses on
securities
7,985
9,823
Change in net unrealized (gains) losses on
securities
(1,180
)
(1,760
)
Net realized (gains) losses on financial
derivatives
(6,565
)
(3,459
)
Change in net unrealized (gains) losses on
financial derivatives
2,367
(10,216
)
Net realized gains (losses) on periodic
settlements of interest rate swaps
9,524
5,812
Change in net unrealized gains (losses) on
accrued periodic settlements of interest rate swaps
(4,211
)
(111
)
Strategic Transformation costs and other
adjustments(1)
464
75
Negative (positive) component of interest
income represented by Catch-up Amortization Adjustment
(221
)
884
Subtotal
8,163
1,048
Adjusted Distributable Earnings
$
7,273
$
5,312
Weighted Average Shares
Outstanding
20,354,062
19,548,408
Adjusted Distributable Earnings Per
Share
$
0.36
$
0.27
(1)
For the three-month period ended June 30,
2024, includes $0.5 million of non-capitalized expenses incurred in
connection with our strategic transformation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240812112152/en/
Investors: Ellington Credit Company Investor Relations (203)
409-3773 info@ellingtoncredit.com or Media: Amanda Shpiner/Grace
Cartwright Gasthalter & Co. for Ellington Credit Company (212)
257-4170 Ellington@gasthalter.com
Grafico Azioni Ellington Credit (NYSE:EARN)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Ellington Credit (NYSE:EARN)
Storico
Da Gen 2024 a Gen 2025