Ellington Financial Inc. Reports First Quarter 2026 Results

Ellington Financial Inc. (NYSE:EFC) ("we") today reported financial results for the quarter ended March 31, 2026.

Highlights

• Net income attributable to common stockholders of $95.5 million, or $0.78 per common share.¹
  • $76.4 million, or $0.63 per common share, from the investment portfolio.
    • $74.7 million, or $0.61 per common share, from the credit strategy.
    • $1.7 million, or $0.02 per common share, from the Agency strategy.
  • $57.5 million, or $0.47 per common share, from Longbridge.
• Adjusted Distributable Earnings of $66.5 million, or $0.55 per common share.²
  • $70.8 million, or $0.58 per common share, from the investment portfolio.
  • $25.4 million, or $0.21 per common share, from Longbridge.
• Book value per common share as of March 31, 2026 of $13.56, including the effects of dividends of $0.39 per common share for the quarter.
• Recourse debt-to-equity ratio³ of 1.9:1 as of March 31, 2026. Including all recourse and non-recourse borrowings, which primarily consist of securitization-related liabilities, debt-to-equity ratio of 9.0:1³.
  • 30% of total recourse borrowings³ are long-term and non-mark-to-market
  • 18% of total recourse borrowings³ are unsecured
  • Weighted average remaining term of repo borrowings³ is 9.0 months
• Total unencumbered assets⁴ of $1.92 billion, consisting of cash and cash equivalents of $163.2 million and other unencumbered assets of $1.75 billion as of March 31, 2026.

First Quarter 2026 Results

"Ellington Financial delivered an exceptionally strong first quarter, generating excellent results even as market volatility rose," said Laurence Penn, Chief Executive Officer and President. "Broad-based contributions across our diversified portfolio drove robust GAAP net income, an annualized economic return of 26%, and book value per share appreciation of 3% net of dividends. Adjusted distributable earnings continued to outpace dividends, supported by high yields and steady credit performance from our loan portfolios, as well as securitization gains at Longbridge. Our Longbridge segment had a tremendous quarter, contributing $0.47 per share to net income and $0.21 per share to ADE for the quarter.

"Our securitization platform continued to operate at an energetic pace during the quarter, as we participated in seven transactions totaling more than $2.8 billion, well above the volume in the comparable period of 2025. Our shift to larger deal sizes, without compromising speed to market, reflects the ongoing scaling of our origination platform. This has translated directly into improved execution economics, as fixed transaction costs are spread across larger pool balances, and as bigger transactions attract a broader and deeper institutional investor base. Greater market presence also enables us to lock in attractive, long-term, non-mark-to-market financing at even more attractive terms.

"At the end of January, we raised common equity on an accretive basis with a highly targeted use of proceeds, namely retiring our highest-cost preferred equity. We will monitor the preferred equity market with an eye toward potentially issuing additional preferred equity at a lower cost. Meanwhile, following the successful completion of our inaugural Moody's- and Fitch-rated long-term debt deal in the fourth quarter of last year, we have meaningfully enhanced our ability to access the long-term institutional debt markets. Collectively, these actions have further strengthened our balance sheet and enhanced our financial flexibility, positioning us to act decisively, including capitalizing on the compelling investment opportunities emerging from the current environment."

Financial Results

Investment Portfolio Segment

The investment portfolio segment generated net income of $77.6 million in the first quarter, consisting of $75.8 million from the credit strategy and $1.7 million from the Agency strategy.

Credit

The total adjusted long credit portfolio⁵ increased by 4% sequentially to $4.27 billion as of March 31, 2026. The increase was driven by purchases of non-QM loans, Agency-eligible loans, and residential transition loans; and a larger portfolio of retained RMBS. These increases were partially offset by the impact of loans sold into securitizations.

Key Highlights⁶:

• Overall positive performance driven by higher net interest income in the credit portfolio, and net realized and unrealized gains on non-QM loans and retained tranches, closed-end second lien loans and retained tranches, and Agency-eligible loans; along with unrealized gains on commercial REO, and certain other investments.
• Partially offsetting higher net interest income were net realized and unrealized losses on CLOs, non-Agency RMBS, non-performing and re-performing residential mortgage loans, and residential REO.
• Strong credit performance across our loan businesses, including sequentially lower 90-day delinquency rates and continued low life-to-date realized credit losses in both our residential and commercial loan portfolios.
• Excellent overall results from equity investments in loan originators.

During the quarter, the net interest margin⁷ on our credit portfolio increased modestly to 3.46% from 3.38%⁸, as slightly higher asset yields were partially offset by a slightly higher cost of funds. We continued to benefit from positive carry on our interest rate swap hedges, where we overall receive a higher floating rate and pay a lower fixed rate.

Agency

The long Agency RMBS portfolio decreased by 3% sequentially to $197.3 million as of March 31, 2026.

Key Highlights⁶:

• Positive results driven by net interest income and net gains on interest rate hedges, due to the increase in interest rates quarter over quarter. These gains were partially offset by net losses on our Agency RMBS, with spreads on many Agency RMBS wider during the quarter.
• Pay-ups on our specified pools increased to 0.83% as of March 31, 2026, from 0.79% as of December 31, 2025.

The net interest margin⁷ on our Agency portfolio (excluding the Catch-up Amortization Adjustment) decreased to 1.47% as of March 31, 2026, from 1.90%⁸ as of December 31, 2025, driven by a higher cost of funds. We continued to benefit from positive carry on our interest rate swap hedges, where we overall receive a higher floating rate and pay a lower fixed rate, but that benefit declined during the quarter, contributing to the higher cost of funds.

Longbridge Segment

The Longbridge segment reported net income of $57.5 million for the first quarter. The Longbridge portfolio (excluding non-retained tranches of consolidated securitization trusts) increased by 13% sequentially to $695.1 million as of March 31, 2026, driven by continued strong proprietary reverse mortgage loan origination volumes, partially offset by the impact of a securitization of proprietary reverse mortgage loans completed during the quarter. Longbridge originated $515.4 million of new loans during the quarter, which was a 52% increase from the same period in 2025.

Key Highlights⁶:

• Strong contribution from originations, supported by continued robust origination volumes and margins, and net gains related to the proprietary reverse mortgage loan securitization completed during the quarter.
• Positive contribution from servicing, reflecting: (i) strong tail securitization executions; (ii) a net gain on the HMBS MSR, driven primarily by tighter HMBS yield spreads; and (iii) steady base servicing net income.
• Income related to the settlement of a lawsuit, pursuant to which Longbridge received a payment of $17.0 million.
• Net gains on interest rate hedges.

Corporate/Other Summary

Results for the quarter also reflect a significant unrealized gain on our unsecured debt, driven by credit spread widening during the quarter, partially offset by an incentive fee accrued during the first quarter.

Credit Portfolio⁽¹⁾

The following table summarizes our credit portfolio holdings as of March 31, 2026 and December 31, 2025:

Agency RMBS Portfolio

The following table⁽¹⁾ summarizes our Agency RMBS portfolio holdings as of March 31, 2026 and December 31, 2025:

Longbridge Portfolio

Longbridge originates reverse mortgage loans, including (i) home equity conversion mortgage loans, or "HECMs," which are insured by the FHA, and (ii) "proprietary reverse mortgage loans," which are not insured by the FHA. HECMs are eligible for inclusion in GNMA-guaranteed HECM-backed MBS, or "HMBS." Upon securitization, the HECMs remain on our balance sheet under GAAP. We have securitized some of the proprietary reverse mortgage loans originated by Longbridge, and we have retained certain of the securitization tranches in compliance with credit risk retention rules. Longbridge has typically retained the MSRs associated with the loans it has originated. Longbridge also originates home equity lines of credit, or "HELOCs," designed for homeowners aged 62 or older.

The following table summarizes loan-related assets⁽¹⁾ in the Longbridge segment as of March 31, 2026 and December 31, 2025:

The following table summarizes Longbridge's origination volumes by channel for the three-month periods ended March 31, 2026 and December 31, 2025:

Financing

Key Highlights:

• Recourse Debt-to-Equity Ratio, excluding borrowings collateralized by U.S. Treasury securities, adjusted for unsettled purchases and sales: 1.9:1 as of both March 31, 2026 and December 31, 2025, as an increase in repo borrowings on our larger credit and Longbridge portfolios was roughly offset by higher total equity.
• Overall Debt-to-Equity Ratio, excluding borrowings collateralized by U.S. Treasury securities, adjusted for unsettled purchases and sales: 9.0:1 as of both March 31, 2026 and December 31, 2025.

The following table summarizes our outstanding borrowings and debt-to-equity ratios as of March 31, 2026 and December 31, 2025:

Operating Results

The following table summarizes our operating results by strategy for the three-month period ended March 31, 2026:

The following table summarizes our operating results by strategy for the three-month period ended December 31, 2025:

About Ellington Financial

Ellington Financial invests in a diverse array of financial assets, including residential and commercial mortgage loans and mortgage-backed securities, reverse mortgage loans, mortgage servicing rights and related investments, consumer loans, asset-backed securities, collateralized loan obligations, non-mortgage and mortgage-related derivatives, debt and equity investments in loan origination companies, and other strategic investments. Ellington Financial is externally managed and advised by Ellington Financial Management LLC, an affiliate of Ellington Management Group, L.L.C.

Conference Call

We will host a conference call at 11:00 a.m. Eastern Time on Wednesday, May 6, 2026, to discuss our financial results for the quarter ended March 31, 2026. To participate in the event by telephone, please dial (800) 343-4136 at least 10 minutes prior to the start time and reference the conference ID EFCQ126. International callers should dial (203) 518-9843 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.ellingtonfinancial.com. To listen to the live webcast, please visit www.ellingtonfinancial.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.ellingtonfinancial.com under "For Investors—Presentations."

A dial-in replay of the conference call will be available on Wednesday, May 6, 2026, at approximately 2:00 p.m. Eastern Time through Wednesday, May 13, 2026 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 677-6124. International callers should dial (402) 220-0664. A replay of the conference call will also be archived on our web site at www.ellingtonfinancial.com.

Cautionary Statement Regarding Forward-Looking Statements

This release 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 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. 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 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. The following factors are examples of those that could cause actual results to vary from 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, changes in government regulations affecting our business, our ability to maintain our exclusion from registration under the Investment Company Act of 1940, our ability to maintain our qualification as a real estate investment trust, or "REIT," 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, 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 our website at www.ellingtonfinancial.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 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

This release and the information contained herein do not constitute an offer of any securities or solicitation of an offer to purchase securities.

Reconciliation of Net Income (Loss) to Adjusted Distributable Earnings

We calculate Adjusted Distributable Earnings as U.S. GAAP net income (loss) as adjusted for: (i) realized and unrealized gain (loss) on securities and loans, REO, mortgage servicing rights, financial derivatives (excluding periodic settlements on interest rate swaps), any borrowings carried at fair value, and foreign currency transactions; (ii) incentive fee to affiliate; (iii) Catch-up Amortization Adjustment (as defined below); (iv) non-cash equity compensation expense; (v) provision for income taxes; (vi) certain non-capitalized transaction costs; and (vii) other income or loss items that are of a non-recurring nature. For certain investments in unconsolidated entities, we include the relevant components of net operating income in Adjusted Distributable Earnings. 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. Non-capitalized transaction costs include expenses, generally professional fees, incurred in connection with the acquisition of an investment or issuance of long-term debt. We also include in Adjusted Distributable Earnings, for all loans that we originate through Longbridge, any realized and unrealized gains (losses) on such loans up to the point of loan sale or securitization, net of sale or securitization costs; and any realized and unrealized gains (losses) on HECM buyout loans and REO related to Longbridge's servicing activities.

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 (a) by our investment portfolio, after the effects of financial leverage, and (b) by Longbridge, to reflect the earnings from its reverse mortgage origination and servicing operations; 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 residential mortgage REIT and mortgage originator peers. Please note, however, that: (I) 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; and (II) Adjusted Distributable Earnings excludes certain items 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.

Furthermore, Adjusted Distributable Earnings is different from REIT taxable income. As a result, the determination of whether we have met the requirement to distribute at least 90% of our annual REIT taxable income (subject to certain adjustments) to our stockholders, in order to maintain our qualification as a REIT, is not based on whether we distributed 90% of our Adjusted Distributable Earnings.

In setting our dividends, our Board of Directors considers our earnings, liquidity, financial condition, REIT distribution requirements, and financial covenants, along with other factors that the Board of Directors may deem relevant from time to time.

The following table reconciles, for the three-month periods ended March 31, 2026 and December 31, 2025, our Adjusted Distributable Earnings to the line on our Condensed Consolidated Statement of Operations entitled Net Income (Loss), which we believe is the most directly comparable U.S. GAAP measure:

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Investors:

Ellington Financial

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(203) 409-3575

info@ellingtonfinancial.com



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