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Portfolio Manager Gregory Borenstein explained that the slower recovery in AAA spreads is a technical factor driven by slightly reduced demand compared to earlier in the year, possibly due to rate cut expectations and some investor rotation. He noted that CLO AAAs were priced very tightly before and are now only about 10-15 basis points wider. Borenstein confirmed that if the new issue arbitrage remains challenging, the company would likely maintain its recent preference for CLO debt over equity.

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Portfolio Manager Gregory Borenstein explained that the lag in AAA spreads is a technical factor driven by slightly reduced demand compared to earlier in the year, possibly due to investor rotation ahead of potential rate cuts. He confirmed that if this arbitrage environment persists, where new issue CLO creation is less attractive, the company would likely maintain its recent focus on CLO debt over new issue CLO equity.

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Gregory Borenstein, Portfolio Manager, explained that reduced demand for floating-rate AAA CLOs, potentially due to rate cut expectations, has kept spreads wider compared to earlier in the year. He noted that while loans have rallied, fewer are trading above par than before. Borenstein confirmed that if the new issue arbitrage remains challenged by this dynamic, the company would likely continue to favor CLO debt over equity, focusing on opportunities in the secondary market.

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Portfolio Manager Gregory Borenstein explained that the lag in AAA CLO spreads is a technical issue driven by slightly lower relative demand compared to earlier in the year, possibly due to rate cut expectations. He noted that while loans have rallied, fewer are trading above par than before. Borenstein agreed that if the new issue arbitrage remains challenged, the company's allocation would likely continue to favor CLO debt over new issue equity.

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Gregory Borenstein, Portfolio Manager, explained that the lag in AAA spreads is a technical issue driven by slightly lower demand compared to earlier in the year, possibly due to expectations of a rate cut. He noted that CLO AAAs had been priced very tightly before. Borenstein agreed that if the new issue arbitrage remains challenged, the company would likely continue to favor CLO debt over new issue equity.

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CEO Laurence Penn confirmed that approximately 28% of capital would be freed up, viewing the current volatile market as a timely opportunity for deployment, with a full ramp-up expected by mid-year. Head of Corporate Credit Gregory Borenstein added that CLO equity prices have declined by several points, attributing it more to widening discount rates and technical factors than a significant increase in expected credit losses.

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CFO Christopher Smernoff acknowledged a minor $0.04 dilution from the ATM but noted it would be accretive to G&A ratios. CEO Laurence Penn added that the capital was raised at prices very close to book value, making it accretive to earnings. He stated that future use of the ATM is 'very price dependent' and would not be considered at the stock's current levels.

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CEO Laurence Penn identified issuing more long-term unsecured debt as the logical next step for EFC's capital structure. He explained this would replace shorter-term repo financing, enhance balance sheet stability, and allow for capital deployment into higher-yielding assets without increasing risk. Penn confirmed that the unsecured debt market is 'very deep' and accessible to the company.

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Mark Casale, Chairman & CEO, detailed that capital return is limited by cash flow from both U.S. Holdings and Essent Re, with a practical payout ratio likely not exceeding 100% of net income. He explained their capital framework extends beyond PMIERs to include rigorous stress tests (e.g., Moody's S4, GFC), ensuring they can withstand severe stress and remain opportunistic, justifying the current level of buybacks given the capital buildup and stock valuation.

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Chairman and CEO Mark Casale indicated that 2025 presents a 'decent opportunity' to return capital due to the growth pause, strong operating cash flow, and a robust capital position. He emphasized that the company feels confident about near-term credit performance and its ability to withstand a severe stress scenario, making capital return via buybacks and dividends a prudent strategy. He also mentioned the special dividend remains a tool.

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Mark Casale, Chairman and CEO, confirmed that there were no real changes to the claim rate assumptions in the quarter. He also noted that the vintage mix for new notices has remained 'pretty consistent.'

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CEO Thomas Capasse and CFO Andrew Ahlborn explained that SBA volume was constrained by pending warehouse capacity approvals from the SBA. They expect a full ramp-up in the second half of the year, driven by a capital markets transaction to clear existing warehouse lines. Regarding debt, Ahlborn stated that while the unsecured market will be used, the majority of the $650 million in maturing debt will likely be refinanced via secured issuances, acknowledging the higher cost will pressure earnings.

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Andrew Ahlborn, an executive, stated that he does not anticipate a material impact on the planned exits, as the company is already in purchase and sale agreements with parties who have completed due diligence. CEO Thomas Capasse added that the multifamily sector remains a relative outperformer with strong fundamentals and is attracting significant opportunistic capital, which supports an active secondary market for distressed bridge loan portfolios.

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CEO Thomas Capasse and Executive Andrew Ahlborn defended the UDF merger by highlighting the aggressive discount on the asset basis and the company's decade-long experience with similar pristine-performing loans in the same projects. Regarding credit risk, Chief Credit Officer Adam Zausmer explained the bifurcation of the portfolio into 'core' and 'non-core' assets. He detailed the strong credit metrics of the $6 billion core portfolio, including a 9.7% average debt yield, which Capasse noted is well above the 8% required for agency refinancing, suggesting a low risk of negative migration.

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Chief Credit Officer Adam Zausmer stated that while delinquency will remain volatile, it has likely peaked, emphasizing the 'denominator effect' where portfolio payoffs are outpacing new delinquencies. Executive Andrew Ahlborn added that declining short-term rates will benefit modified loans by improving debt service coverage, while elevated long-term rates could present a headwind for permanent takeouts via GSE financing.

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CFO Brian Brown explained that the MSR market has been muted but Rocket remains opportunistic, bidding on assets with high recapture potential. He noted the combined entity will have 'option value' and won't need to chase deals. CEO Varun Krishna addressed AI, stating he expects progress to 'geometrically accelerate' as they build a platform for 'infinite capacity' where scale is no longer constrained by cost or headcount, citing measurable results in operations and client experience.

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CEO Varun Krishna expressed strong optimism for the broker channel, outlining a three-pronged strategy: providing choice, empowering brokers with technology like the redesigned dashboard and ARIVE platform integration, and enabling their long-term business growth. He highlighted positive early results from these initiatives and stated that he expects momentum in the channel to accelerate in the coming months.

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CFO Brian Brown reported that the recapture performance for in-the-money loans within the acquired pools was better than their internal expectations. He expressed excitement about this outperformance, reinforcing the company's strategy to continue purchasing MSRs.

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CFO Brian Brown responded that the focus is on growth and increasing operating leverage by growing into their existing cost base, rather than cutting costs, especially with a positive 2025 outlook. He stressed this strategy avoids the 'yo-yo effect' of hiring and firing common in the industry. CEO Varun Krishna stated that they believe their current capacity is 'perfect' and that ongoing technology investments will continue to enhance team member efficiency, allowing them to scale effectively.

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President, Chairman & CEO Anthony Hsieh explained the primary focus is on regaining scale to cover fixed costs and leveraging technology for efficiency, spearheaded by new leadership. Hsieh noted the direct lending channel is key for rapid scaling. He addressed the balance by highlighting the stability of their servicing and joint venture businesses, while identifying the direct lending channel as the main area for profitable growth, citing the company's past success in growing market share profitably.

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Chief Financial Officer David Hayes responded that the company plans to maintain heightened levels of liquidity, targeting around 5% of assets, which it considers an excess level in the current market. Regarding the MSR portfolio, Hayes stated that loanDepot views it as a strategic asset and intends to invest in and grow the portfolio, clarifying that past sales were to meet specific liquidity needs and are not the current strategy.

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President and CEO Frank Martell affirmed that based on MBA forecasts for a $2.3 trillion market in 2025, the company feels well-positioned for profitability, citing pent-up demand and operating leverage from cost-cutting efforts. Chief Investment Officer Jeffrey DerGurahian stated that servicing portfolio growth will be opportunistic, through both organic retention and potential MSR acquisitions, and financed using existing credit lines as needed to support business growth.

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CIO Josh Weinstein explained that a scarcity of quality assets and aggressive lending from both banks and non-banks have led to spread compression, though deal structures remain prudent. CEO Michael Sarner added that while spreads have compressed from around 8.50% to 7.50% over two years, they are finding deals around 7% and believe spreads may widen as SOFR declines, suggesting the market might be at a trough.

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CIO Josh Weinstein and CEO Michael Sarner described a competitive market driven by a scarcity of quality assets and aggressive lending from both banks and non-banks, which has compressed spreads. Weinstein noted that deal structures remain prudent despite the pressure. Sarner added that the weighted average spread is now around 7.5%, with recent deals near 7%, and suggested that spreads may have hit a trough and could widen as SOFR declines.

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CFO Michael Sarner stated that Capital Southwest expects to receive its second SBIC license imminently and anticipates a ramp-up period of 2.5 to 3 years, with borrowing costs likely between 4% and 5%. Regarding the convertible notes, Sarner explained the structure minimizes immediate dilution risk as the company can redeem them in cash or shares. He emphasized that the 5.125% coupon was significantly cheaper than a traditional bond, resulting in accretive interest savings for shareholders.

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CFO Michael Sarner stated that while the company has nearly $500 million in available capital, it is always opportunistically looking to raise more, particularly to refinance its 2026 debt maturities. He indicated plans to increase secured capacity, pursue unsecured debt activity in the next 6-9 months, and continue utilizing the ATM program to raise approximately $20 million to $40 million per quarter.

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Chairman, CEO & President Mat Ishbia described Mia as a 'huge success' that is actively making thousands of calls and setting appointments for brokers today, not just in theory. He clarified the derivative gain was purely opportunistic, executed to manage MSR valuation risk when interest rates dropped late in the quarter, and not a change in core strategy.

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Chairman and CEO Mathew Ishbia dismissed the question as not relevant to the core business strategy, stating that all financial ratios are in a 'great position' and that the focus should be on the company's market dominance and technology investments. He asserted that the company has ample room to grow and that metrics like leverage are not a concern.

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CEO Mathew Ishbia emphasized that liquidity is the most critical metric, which he stated is very strong due to cash reserves, credit lines, and the ability to sell MSRs. While not providing specific target ratios, he asserted that all financial ratios are strong and that the company is well-capitalized for current and future operations.

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Chairman and CEO Mathew Ishbia attributed the higher gain on sale margin primarily to UWM's capacity to handle volume surges when rates drop. He explained that when refi volume is high, the entire industry sees margin expansion because consumers are less price-sensitive and prioritize speed, and UWM is uniquely prepared to execute.

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President Jeffrey DiModica quantified the non-accrual assets at approximately $1.7 billion. He outlined a patient resolution strategy aimed at maximizing shareholder value, with a goal to resolve half the book by 2026. He stated this approach is preferable to selling at distressed prices. Regarding the Washington D.C. project, he confirmed it is currently in the permitting and final drawing phase, with construction not yet underway, and that the company still expects to recover its basis and more upon completion.

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President Jeff DiModica and Chairman & CEO Barry Sternlicht responded. DiModica detailed specific assets with resolution timelines expected in 2025, with a few potentially extending into 2026. He noted that a favorable forward interest rate curve aids refinancing efforts. Sternlicht added that the underlying assets are attractive at their current basis, especially given the anticipated slowdown in new multifamily supply. DiModica also expressed confidence in resolving three large office loan maturities occurring in 2025, citing strong leasing prospects and the company's financial capacity to optimize exit timing.

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Chairman and CEO Barry Sternlicht stated that the company would first use its excess liquidity and available borrowing capacity to fund new investments, as it is the most accretive method. He confirmed there would be no need to sell existing assets to fund new purchases in the foreseeable future, given the company's strong liquidity position of $1.8 billion and additional leverage capacity.

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President Jeff DiModica responded that the company has significant debt capacity, given its low leverage and $4.6 billion in unencumbered assets, making further debt issuance the likely path before considering equity. CFO Rina Paniry explained the Woodstar valuation is based on a 12-month lookback of comparable sales, which resulted in the disclosed cap rate.

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President and CFO Michael McGillis confirmed the $323 million liquidity figure includes the recent New York multifamily loan payoff. Priyanka Garg, EVP of Portfolio & Asset Management, noted that while capital markets are healing, future payoffs will likely be more 'regular way' as the company has already accelerated many resolutions. McGillis added that the primary focus for capital remains deleveraging and addressing the term loan, making stock buybacks a lower priority until financing is secured.

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EVP Priyanka Garg confirmed that the two multifamily loans, with maturities in July and August, are still tracking towards repayment, but noted that market volatility might require evaluating other options. President and CFO Michael McGillis addressed the Term Loan B, which matures in August 2026, stating that Claros Mortgage Trust is evaluating options including an amend-and-extend with a principal paydown or pursuing private credit solutions, which are becoming more attractive.

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Priyanka Garg, Executive Vice President, stated that they are in a cooperative, near-term resolution process for the California asset. She explained that for the New York asset, the general reserve was increased to match an agreed-upon discounted payoff. For the California asset, no additional reserve beyond the general reserve was deemed necessary due to its prime location and strong recent leasing activity.

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Priyanka Garg, EVP of Portfolio and Asset Management, responded that about half of the risk-rated 4 and 5 loans are in the multifamily sector, which the company views constructively. She stated that while they prefer to work with borrowers, they are prepared to take these assets REO. For non-multifamily assets, she noted significant progress on resolutions, with the decision to sell or foreclose being a dynamic capital allocation choice based on long-term value creation.

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President and CIO Sajal Srivastava stated that current prepayments are driven by robust equity fundraising and M&A activity among portfolio companies. He anticipates this will slow in 2026 as older portfolio vintages complete their prepayment cycle and newer fundings have a more delayed prepayment timeline, pushing activity into late 2026 and 2027.

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Executive Mike Wilhelms responded that TPVG's target leverage is 1.3x to 1.4x. He stated the company's clear intention is to reach this target by strategically growing the investment portfolio using debt capital, rather than through share repurchases.

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CEO Kyle Brown stated that Trinity has been laying the groundwork for its managed account business for over a year and is now beginning to see the results, with plans to launch a non-traded BDC soon. He emphasized this is a major part of their future strategy to generate accretive fee income for shareholders. COO Gerry Harder added that the recently approved SBIC fund will also be managed under the RIA, contributing to this growth.

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CEO Kyle Brown described the ATM program as an efficient, "just-in-time" financing tool used accretively when needed. CFO Michael Testa added that Trinity is focused on diversifying its capital sources, highlighting the recent launch of a debt ATM and a private placement debt issuance, to provide greater flexibility for growth and scaling the platform.

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CEO Kyle Brown described growing the RIA as a key strategic focus, with the goal of raising capital for both co-investment and vertical-specific funds. He reiterated that all resulting management and incentive fees will flow directly to the BDC, enhancing shareholder returns, though he cautioned that private capital raising is a lengthy process.

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President and CEO Phillip Kardis stated the company will balance reinvesting earnings for growth with dividend payouts. CFO Subra Viswanathan attributed the 60 basis point drop in financing rates to an increased allocation to lower-cost Agency RMBS financing. CIO Jack Macdowell reported that book value was down approximately 55 basis points quarter-to-date.

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Chief Investment Officer Jack Macdowell clarified that book value was down approximately 40 basis points quarter-to-date. He added that about one-third of the newly raised capital has been deployed, primarily into Agency MBS, with the remainder to be allocated over the next 4-8 weeks. CEO Phillip Kardis noted that it was premature to discuss the dividend given market volatility, but it would be a topic for board consideration in the coming month.

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President and CEO Phillip Kardis clarified the book value comment, stating most of Q3's gains had been reversed, bringing it closer to Q2 levels. He also explained that Chimera will develop a detailed allocation policy for the Palisades business to benefit all parties. CFO Subramaniam Viswanathan detailed the earnings sensitivity, noting that EAD would react positively to lower rates due to the $2.5 billion in floating-rate liabilities, partially offset by swaps, with further benefits from floating-rate preferreds and reinvestment opportunities.

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CFO Matthew Engel clarified that while the guidance was achievable without these actions, they provide a tailwind. He detailed a ~$10M annualized interest expense reduction from the debt restructuring and noted the share count impact would be seen in Q4 and 2026. CEO Graham Fleming confirmed the transactions to fund the buyback and a bondholder payment are planned for later in the year. Engel added that the near-term capital priority is retiring existing debt, with the new convertible note expected to eventually become equity.

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CEO & Director Bryan Donohoe acknowledged the quantitative appeal of repurchases but explained the current priority is investing in new loans to reposition the portfolio, regain scale, and improve expense efficiencies. He stated that recharacterizing the loan book is seen as more rewarding for shareholders in the long term.

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CEO Bryan Donohoe stated that the primary catalyst for new deployment is the continued reduction of risk-rated 4 and 5 loans. He noted the broader Ares platform remains active in originations, and ACRE is positioned to participate once its specific asset management goals are further advanced. Another executive added that the balance sheet is purposefully positioned to resolve these loans first before seeking accretive growth opportunities.

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CEO Bryan Donohoe and CFO Jeffrey Gonzales stated that the dividend is a regular discussion with the Board, which evaluates it quarterly. They emphasized that the company's strong liquidity profile provides flexibility and optionality, and their goal is to provide a stable dividend while maximizing total shareholder returns.

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EVP, CFO & Chief Risk Officer Nathan Colson explained that semi-annual dividends from the operating company are driven by strong financial results and organic capital generation, with prudent growth being the top priority. With growth opportunities limited, excess capital is generated. He noted that if current credit conditions and limited growth persist, elevated payout ratios, which exceeded 110% over the last four quarters, are expected to continue. Colson also mentioned that the contingency reserve balance acts as a natural governor on the size of capital returns over the long term, favoring a steady drawdown of excess capital over a large, one-time reset.

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Nathan Colson, EVP, CFO & Chief Risk Officer, explained that capital returns are driven by strong financial results and limited opportunities for prudent growth. He stated that if these conditions persist, elevated payout ratios can continue. Colson noted that while they have sufficient surplus, the contingency reserve balance acts as a natural governor on dividend capacity, and the company prefers a gradual, sustained approach to returning excess capital rather than a large, one-time reset.

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CEO Timothy Mattke described the current risk-return profile for NIW as 'very favorable,' consistent with what the company has experienced for the better part of the last year. He indicated that Q4 was a good environment for deploying capital into new business, though he declined to share specific pricing details, citing proprietary reasons.

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CEO Timothy Mattke responded that market share is viewed as an output of their disciplined approach to risk and returns, not a specific target. He characterized the market as highly competitive, leading to natural ebbs and flows quarter-to-quarter. Mattke confirmed they were not surprised by the share loss and do not see it as a trend, adding that the pullback was not concentrated in any one specific area.

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President & CFO Sumita Pandit stated that the holding company's $784 million in liquidity is considered well in excess of the necessary buffer, even after significant, accretive share repurchases. She noted that while no specific target has been set, the company is comfortable with current levels. CEO Rick Thornberry added that there is strong cash flow visibility, with a total of $795 million expected from Radian Guaranty in 2025. Regarding dividend sustainability, Sumita Pandit explained that the 2026 dividend from Radian Guaranty will be determined by its 2025 statutory net income, which serves as the best proxy for future capacity.

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President & CFO Sumita Pandit stated that the holding company's $784 million in liquidity is considered more than sufficient, even after significant opportunistic share repurchases. CEO Rick Thornberry added that with $400 million of an expected $795 million already dividended up from Radian Guaranty in the first half, cash flow visibility is strong. Regarding future dividends, Sumita Pandit explained that the 2026 dividend from the operating company will be determined by its 2025 statutory net income, which serves as the best proxy for future capacity.

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President & CFO Sumita Pandit stated that the current holding company liquidity of $784 million is strong and considered in excess of the necessary buffer, despite being lower due to opportunistic share repurchases. She explained that the 2026 dividend from Radian Guaranty will be determined by its 2025 statutory net income. CEO Rick Thornberry added that the company has strong cash flow visibility, having already received $400 million of the expected $795 million dividend for 2025.

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President & CFO Sumita Pandit explained that while there's no specific target, the current holding company liquidity of $784 million is considered more than sufficient, having been used for accretive share buybacks. She noted that the dividend from Radian Guaranty is based on the prior year's statutory net income, making 2025's performance a key indicator for 2026's dividend. CEO Rick Thornberry added that $400 million of the expected $795 million dividend for 2025 has already been received.

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President & CFO Sumita Pandit stated that while there is no specific target, the current holding company liquidity of $784 million is considered in excess of the appropriate buffer, and opportunistic share repurchases were made at accretive prices. CEO Rick Thornberry added that with $400 million of the expected $795 million dividend already received, there is strong visibility on future cash flow. Regarding sustainability, Sumita Pandit explained that the 2026 dividend capacity will be driven by the 2025 statutory net income, which is the best proxy.

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President & CFO Sumita Pandit explained that the holding company's Q2 liquidity of $784 million is considered more than sufficient, even after significant, accretive share repurchases. She noted a deliberate strategy to manage liquidity without setting a specific target. CEO Rick Thornberry added that with $400 million of the expected $795 million already received from Radian Guaranty in H1 2025, there is strong visibility on cash flows. Regarding dividend sustainability, Pandit clarified that the 2026 dividend from Radian Guaranty will be based on its 2025 statutory net income, making the current year's performance the best indicator.

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President and CFO Sumita Pandit explained that the current holding company liquidity of $834 million is 'much, much higher' than what is required to cover fixed charges and run the business. She emphasized that the company will continue to use this excess liquidity to return capital to shareholders when value is present. CEO Richard Thornberry added that the high transparency of future cash flows from the insurance subsidiary to the parent company provides significant strength and flexibility for capital management.

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CFO Sumita Pandit clarified that the 7.5% default-to-claim roll rate was a blended rate applied to all new defaults and was not split out for hurricane areas. Derek Brummer, President of Radian Mortgage Insurance, added that the company is not seeing any material changes in the credit characteristics or embedded equity of new defaults. CEO Rick Thornberry also highlighted the consistency of strong cure trends shown on Slide 18 of the presentation.

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CEO Jason Serrano described the 50% agency allocation as a medium-term strategy, confirming a continued core holding. President Nicholas Mah explained that while NYMT will keep buying some of Constructive's loans, the primary goal is to grow the platform's gain-on-sale income in a capital-light model. Mah also reported that adjusted book value was down 0% to 1% as of July 29th.

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CFO Kristine Nario stated that portfolio operating expenses decreased due to resolutions in the nonperforming loan book and projected a G&A run rate of $11 million to $11.5 million per quarter, with opportunities for further reduction. President Nicholas Mah reported that adjusted book value was up between 1% and 2% quarter-to-date.

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EVP, CFO & Treasurer Dean Mitchell stated that overall credit performance remains strong, supported by a resilient economy and significant embedded home price appreciation (HPA). While acknowledging softness in specific markets like Cape Coral, he explained that the company's risk-based pricing model adjusts for both current and future home price expectations. President & CEO Rohit Gupta added that borrowers highly value homeownership and prioritize mortgage payments, suggesting that slight regional price declines do not directly correlate to higher defaults, especially with a strong labor market.

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President and CEO Rohit Gupta responded that Enact's market participation has been stable and that market share is an outcome of its risk and return discipline, not a direct target. He noted that shifts can be caused not only by pricing but also by specific lender relationships and their origination mix, such as a focus on purchase versus refinance activity.

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President and CEO Rohit Gupta explained that Enact's market participation has remained stable, emphasizing that market share is an outcome of their risk and return discipline, not a primary target. He noted that shifts in market share across the industry can be influenced not only by pricing but also by the specific business mix and origination volumes of a company's lender partners, which can cause fluctuations independent of competitive positioning.

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Hardin Mitchell, Chief Financial Officer and Treasurer, stated that as the portfolio's average age approaches the 3-4 year mark, the rate of new delinquency formation is expected to slow, subject to macroeconomic conditions. He and Rohit Gupta, President and Chief Executive Officer, noted that while the 2023 vintage has different credit characteristics due to a higher mix of purchase loans (higher LTV, lower FICO), its performance is tracking in line with expectations with no signs of emerging deterioration.

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President and CEO Rohit Gupta responded that Enact finds the MI pricing environment to be both competitive and constructive. He stated that expected returns on new business remain attractive and within the company's risk appetite. Gupta emphasized satisfaction with the $13.5 billion of new insurance written in the quarter, highlighting its strong pricing and high underwriting quality.

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President, CEO & Director Stuart Rothstein explained that leasing at The Brook is progressing, with the asset expected to turn cash flow positive in early 2026. He confirmed the ultimate plan is to monetize the asset, likely through a sale or by bringing in a partner between Q1 and Q2 of next year, to redeploy the nearly $300 million of capital.

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Executive Stuart Rothstein stated that the credit market remains robust and he does not currently anticipate a slowdown in transaction activity. He identified hospitality as the most vulnerable asset class in a recession due to its short-term lease nature. Conversely, he views multifamily as resilient due to housing needs and noted that while a recession could slow office leasing decisions, activity currently remains encouraging. Rothstein also added that limited new construction supply should be a long-term positive for existing asset values.

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Executive Stuart Rothstein clarified that approximately $60 million in assets remain on the books from the hospital loan, including two closed hospitals and a note from a BBB+ rated entity. He stated he was not at liberty to disclose the specific guarantor payment amount. Regarding the German office loan, Rothstein explained it's a Berlin asset where leasing is slower than underwritten, but they still expect full recovery and are working with the sponsor.

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CFO Brooke Carillo attributed the loss primarily to older vintage multifamily bridge loans, reflecting near-term resolutions and challenged fundamentals. CEO Christopher Abate added that the marks reflect active resolution strategies and that the payback is rapid, driven by redeployment into accretive share buybacks and scaling the operating platforms. Carillo highlighted the EAD ROE on the legacy book was -22%, making redeployment into 20%+ ROE businesses highly attractive.

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CEO Christopher Abate explained that their strategy involves rapid capital turnover, moving risk quickly through loan sales and securitizations, and utilizing non-marginable facilities, lessons learned from the COVID-19 period. He noted that while April was volatile, spreads have since normalized, and they remain confident in achieving margins at or above their 75-100 basis point target range for the year.

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CEO Christopher Abate stated the primary driver is the current interest rate environment and banks' dimmed prospects for origination growth, which makes holding fixed-rate mortgages less attractive. He noted that the potential for bank M&A is another catalyst, positioning the trend as a strategic risk/reward decision for banks rather than a reaction to potential regulatory changes.

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CFO Brooke Carillo explained the HEI income decline was due to moderating home price appreciation (HPA) assumptions compared to the first half of the year. CEO Christopher Abate acknowledged the 12% return, stating that while it is solid, they see significant long-term upside in the portfolio driven by the national housing undersupply and efficient financing.

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President & CEO Adam Pollitzer responded that NMIH is pleased with its execution, including the $23 million of shares repurchased in Q2. He stated that while there is no set schedule, a quarterly pace of roughly $25 million is a good baseline assumption. Pollitzer emphasized the program remains flexible, with the capacity to be more opportunistic or to slow down based on the risk environment, operating performance, and valuation.

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President and CEO Adam Pollitzer responded that the current repurchase program provides flexibility for both consistency and opportunistic increases. However, he stated that for now, the company expects to maintain a 'roughly similar cadence' for its buybacks.

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President and CEO Adam Pollitzer described the industry pricing environment as generally stable, rational, and balanced. He attributed quarter-to-quarter market share movements to natural fluctuations, such as the performance of specific lender customers and differing risk strategies among competitors. Pollitzer emphasized that, overall, the market remains disciplined and constructive.

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CEO Kort Schnabel explained that it's a continuous balance. He highlighted that raising capital through the ATM program at a premium to book value is accretive to NAV and strategically important for maintaining capital availability. He noted that operating with leverage around 1.0x provides significant financial flexibility to capitalize on market opportunities, especially since core earnings are stable and comfortably cover the dividend.

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Incoming CEO Kort Schnabel responded that the unrealized marks were more asset-specific and not indicative of a broader trend. He explained that the decline in dividend income was primarily due to a one-time special dividend from Ivy Hill in Q4 2024, which contributed about $0.01 of EPS in that quarter and did not recur.

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Then-CEO Robert DeVeer stated a preference for a higher leverage ratio to drive earnings, especially if rates fall, but noted there is no 'desperate need' given they are out-earning the dividend. Regarding the spillover income, he said the company chose not to pay a special dividend this year, feeling it was better to reserve the capital and reassess in 12 months.

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Nicholas Letica, VP & Chief Investment Officer, clarified that the 7x leverage is within their historical operating range of 5x to 8x and that they feel comfortable with the current level, noting it would be 6.3x without the loss reserve. He stated that leverage will continue to be managed based on market opportunities. William Greenberg, President & CEO, added that the quarter-to-date economic return through the previous Friday was approximately 1.5% on the new book value.

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President and CEO Bill Greenberg reported that book value was down approximately 3.5% through late April. Chief Investment Officer Nick Letica detailed the portfolio adjustments, explaining that the firm initially reduced its debt-to-equity ratio from 6.2x to the low 5s to lower risk, before increasing it back towards 6x to capitalize on wider spreads. Letica confirmed that the prospective return potential is now higher, estimating a $0.03 increase to the quarterly return range.

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Chief Investment Officer Nicholas Letica explained the lower return was due to tighter spreads and a portfolio shift towards more servicing assets. President and CEO Bill Greenberg provided a quarter-to-date book value estimate, noting a decline of 1.5% to 3% through October 18, with further widening since. Letica added that the subsequent reversal in rates and wider spreads would likely increase the return potential on the securities side.

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Chairman, President & CEO Michael Nierenberg positioned the SMA as a key strategic partnership to attract more third-party capital, explaining that Rithm must balance allocating assets to funds versus its own balance sheet. To scale the REIT, he ruled out a near-term equity raise and said growth would come from M&A, likely executed with large institutional partners, mirroring the strategy used to build New Residential.

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Michael Nierenberg, Chairman, President & CEO, explained that Rithm must utilize both its balance sheet and third-party funds to grow corporate earnings while expanding the asset management platform. He characterized the SMA as a key strategic partnership. To scale the REIT, he stated they would not raise equity at current prices but would instead seek to bring in third-party capital partners for large-scale transactions, mirroring the strategy used to build New Residential.

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Michael Nierenberg, Chairman, CEO, and President, identified MSRs, non-QM assets, and loans from Genesis Capital as key growth areas for the REIT. He asserted that Rithm is well-positioned for any potential GSE privatization. On capital needs, he stated that scaling could involve a combination of existing capital and new fundraising, noting the potential for M&A activity.

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Michael Nierenberg, Chairman, CEO, and President, responded that scaling the REIT would involve 'more of the same,' focusing on assets like MSRs, agency mortgages, and non-QM assets produced by Genesis. He noted that Rithm is well-positioned for any potential privatization of GSEs due to its capital base and mortgage company. Regarding capital, he stated that scaling could be done through a combination of existing capital and new raises, but emphasized that M&A in the REIT space is also a possibility.

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Daniel Perotti, Senior MD & CFO, explained that while rate volatility led to a minor fair value decline, the underlying income returns for non-agency subordinate MBS remained in the low-to-mid teens. He noted the higher retention on the jumbo deal was an opportunistic deployment of capital following a recent debt raise. David Spector, CEO & Chairman, added that the portfolio is managed dynamically, allowing the team to recycle capital from retained tranches as needed.

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CFO Daniel Perotti explained that while rate volatility caused a slight fair value decline, the underlying income from non-agency subordinate MBS remained in line with mid-teens return expectations. Regarding the jumbo deal, Perotti stated that retaining a senior mezzanine tranche was an opportunistic decision to deploy capital following a recent debt raise. CEO David Spector added that the portfolio is managed dynamically, allowing the team to recycle capital from these tranches if necessary.

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EVP & CFO Daniel Perotti affirmed the dividend is expected to remain stable at $0.40, attributing the run-rate decline to yield curve compression impacting interest rate-sensitive strategies, which he expects to normalize over time. He explained the run-rate is a moving target but confirmed that a steeper yield curve, either from higher long-term rates or lower short-term rates, would increase the expected return potential.

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Executive Daniel Perotti noted that while non-agency securitizations can improve margins, the significant gain in Q4 was driven by a specific tightening of execution spreads. Executive David Spector added that the investor loan product is particularly strong because it has multiple execution paths: securitization, whole loan sales, and delivery to the GSEs, which provides valuable flexibility.

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Executive David Spector explained that for second liens, the whole loan bid from other market participants remains too strong, making securitization returns unattractive for now. He stated that capital from the runoff of CRT investments can be redeployed into new credit-sensitive strategies. He also expressed confidence in raising additional capital in the future as performance continues, which would support both securitization efforts and MSR investments.

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Michael Nierenberg, Chairman, President & CEO, explained that significant scale will be achieved through a large-scale transaction rather than incremental deals. He emphasized that such a transaction would likely involve bringing in third-party capital partners, as raising common equity at the current stock price is not a viable option for making a meaningful impact. He stressed patience and a thoughtful approach to deploying capital from the robust pipeline.

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Michael Nierenberg, Chairman, CEO, and President, acknowledged the significant discount of the stock price to its $5.40 book value is a primary concern. He suggested that future growth would most likely come from a third-party partnership or an M&A transaction to build scale. While not entirely ruling out an equity issuance for a highly accretive deal, he emphasized their preference to avoid dilution, pointing to the recent preferred stock offering as a strategic choice to protect shareholder value.

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CEO & Co-CIO David Finkelstein explained that Annaly entered the quarter with a strong liquidity position and low leverage, allowing them to manage rate exposure without being forced sellers. He emphasized that navigating uncertainty is now the base case and the focus is on keeping rate risk within a tight band. Finkelstein added that raising capital was more advantageous than increasing leverage during the uncertain period, a strategy that has led to smoother returns over the past several quarters.

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CEO David Finkelstein explained that a strong liquidity position allowed them to manage rate exposure closely while letting leverage drift higher. He emphasized that raising accretive capital was preferable to increasing leverage amid uncertainty, noting that the current low leverage provides flexibility and contributes to smoother returns.

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CEO David Finkelstein acknowledged the two opposing forces, stating that while wider spreads suggest adding leverage, high volatility warrants caution. He confirmed that leverage has increased modestly but will remain conservative and 'close to home' until volatility subsides. He emphasized that the portfolio is structured to provide rewarding returns if spreads tighten, while prioritizing risk management against further volatility.

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CEO David Finkelstein stated that while wider spreads are attractive, the accompanying high volatility makes increasing leverage risky. He confirmed that Annaly is maintaining a conservative posture with leverage inside 6x and will wait for volatility to subside before taking on more risk, noting the portfolio is already well-positioned to benefit from potential spread tightening.

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CEO David Finkelstein explained that while volatility can erode nominal returns in the Agency portfolio, their hedging strategy aims to minimize this impact, and the diversified model with Resi Credit and MSR provides a buffer. He expressed an encouraging outlook, seeing a range-bound rate market and significantly lower spread volatility in the Agency MBS market due to better supply-demand balance.

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CEO David Finkelstein explained that while volatility can erode nominal returns in the Agency portfolio, their objective is to minimize hedging costs. He noted the Residential Credit and MSR portfolios are less sensitive, and the diversified model provides a buffer. He sees a better outlook for rate volatility and significantly lower spread volatility compared to recent years.

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Co-Chief Investment Officer Desmond Macauley explained that the firm is comfortable with its current leverage and may modestly increase it due to historically attractive spreads. He stated that duration is managed dynamically, and they recently increased hedges in longer-duration assets to adjust for the steepening yield curve observed in Q2.

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Scott Ulm, an executive, emphasized that "liquidity is king" and is the firm's primary focus in volatile times. He noted that while leverage is monitored closely (running in the 7x to 8x range), it's more of an output than a direct input. Ulm acknowledged the temptation of attractive investment opportunities and share buybacks but reiterated that preserving liquidity is the priority over chasing returns or aggressively buying back stock.

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Executive Scott Ulm emphasized that 'liquidity is king' and is the company's primary focus during volatile periods. He noted that while leverage, currently in the 7x to 8x range, is a key metric, it's viewed more as an output of their strategy. Ulm explained that the core challenge is balancing the maintenance of a strong defensive position against the temptation of very attractive investment opportunities and share buybacks.

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Sergey Losyev, an executive at ARMOUR, responded that the company has seen a decline in both rate and spread volatility, which serves as a tailwind for the MBS market. He anticipates this trend will continue, with the Federal Reserve on hold leading to a more range-bound rate environment, which is favorable for generating consistent returns.

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CFO Daniel Perotti stated there are no concerns with the current leverage level, explaining that the higher ratio is expected due to the increased emphasis on the MSR asset in the current rate environment. CEO David Spector added that while the company is always mindful of leverage, the current level was anticipated and is being managed carefully without constraining the business.

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Executive David Spector confirmed a strong focus on driving down costs through technology, particularly AI, highlighting partnerships with Google and Amazon and an internal AI team. He cited specific examples of current AI-driven savings, such as the 'Mac Chat' system saving over $2 million annually in servicing and automated document processing saving $7 per loan for consumers in the TPO channel. Spector expressed confidence that these efforts will continue to yield benefits and improve customer experience.

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Daniel Perotti, an executive at PFSI, explained that while the hedge performed largely as expected, the company adjusted its hedge ratio back to a 90-100% target as interest rates rose. He noted that the net negative result was influenced by costs from option-based hedges and higher-than-modeled prepayment activity flowing from the third quarter's lower rates.

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David Spector (executive) acknowledged that consumer direct lock volume was down approximately 30% from its recent highs but noted that the company had already increased capacity and views maintaining some excess capacity as a cost-effective alternative to hedging the MSR. Daniel Perotti (executive) added that loan officers can pivot to second lien opportunities in a higher rate environment, providing another lever for managing capacity and activity.

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Peter Federico, President, CEO & CIO, explained that AGNC has a favorable outlook and will take a patient, measured approach to deploying its existing capital. He stated that the company has the capacity both to raise more accretive capital and to operate with slightly higher leverage, supported by a strong unencumbered cash position of 65% of equity. The ultimate decision on which lever to pull will be dictated by market developments.

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Peter Federico, President, CEO, and CIO, acknowledged the risk of further widening but stated that current mortgage-versus-swap spreads are at unsustainable levels driven by technicals, not fundamentals. He said AGNC is prepared for more volatility. Regarding hedges, he mentioned that while the current mix is about 60% swaps, a more balanced 50/50 mix of swaps and treasuries might be a better long-term base case for diversification.

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Peter Federico, Director, President and CEO, stated that the dividend is evaluated against a total cost of capital hurdle rate of approximately 16.5-16.7%. He noted that current expected gross ROEs of 17-18.5% align well with this hurdle, supporting the dividend. He added that AGNC's outlook is for lower interest rate volatility, which should translate to lower hedging costs going forward.

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Peter Federico, President and CEO, stated that while he doesn't anticipate adjusting leverage, the company will be more active with delta hedging to manage its duration gap. Regarding hedges, he confirmed a long-term expectation to revert to a higher mix of swap-based hedges (from 60% today to a more typical 70-80%), but this move is delayed due to current market focus on government deficits, making Treasury hedges more prudent for now.

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CIO T.J. Connelly stated that banks would likely need to see actual Fed rate cuts before re-engaging significantly, while money managers are already overweight the sector. He emphasized the growing role of mortgage REITs as a source of capital. Regarding swap spreads, he noted their negative levels add to returns, which Co-CEO Smriti Popenoe affirmed as a favorable long-term risk-return trade-off.

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Chief Financial Officer Robert Colligan confirmed the book value estimate included the accrued dividend. Co-CEO and President Smriti Popenoe explained that while returns are attractive, the bar to add risk and increase leverage is high due to the volatile environment. She added that their disciplined ATM strategy depends on accretive risk-adjusted returns, which is evaluated against changes in stock price and book value.

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Co-CEO Smriti Popenoe stated that capital growth is contingent on an accretive investment environment and highlighted the benefits of scale, such as a 70 basis point improvement in the G&A ratio. Regarding GSE reform, she conveyed that the market is pricing in a very low probability of significant change, noting that while a private GSE structure is possible, the path to achieving it is difficult and the benefits are unclear.

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Co-CEO Smriti Popenoe explained that the dividend was raised based on strong confidence in forward returns, which exceed the new dividend level, and that the discipline for raising capital remains unchanged. CFO Rob Colligan added that the ATM program will likely be the primary source for capital, but attractive block trades would be considered. He noted the stock's proximity to book value removes any negative stigma from raising capital to build scale.

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Co-CEO Kenneth Leonard confirmed a strong Q1 with new investment spreads around 5.49% over SOFR. He noted that despite a Q2 market slowdown due to macro uncertainty, KBDC expects net positive portfolio growth, is still finding opportunities with spreads of 5.00% to 6.00% over SOFR, and remains optimistic about achieving its target leverage range within the next two quarters.

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Co-CEO Kenneth Leonard stated that while a specific quarter is hard to predict, the company is on a positive trajectory to reach its target leverage in the 'coming quarters.' He highlighted strong Q4 origination activity, a substantial pipeline, and a bullish outlook for 2025 driven by pent-up M&A demand, a strong economy, and other macroeconomic factors.

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Arthur Penn, Chairman and CEO, described the joint venture as very helpful for generating strong returns and stated that the company's strategy could be an 'and both' approach: growing the current JV and potentially adding another one over time. He emphasized that finding the right partner with a compatible credit philosophy is crucial and noted it is 'quite conceivable' that PFLT will add another JV partner in the future.

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Chairman and CEO Arthur Penn outlined the key considerations for the dividend. Potential headwinds include declining interest rates, which would impact a floating-rate portfolio, and any unforeseen credit quality issues. Positive drivers for earnings include the opportunity to increase leverage from the current 1.35x to the 1.5x target, realizing gains from the rotation of equity co-investments, and expanding the highly successful joint venture (JV), which generates mid-to-upper teens returns without an additional management fee.

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Brian Norris, Chief Investment Officer, explained that leverage was reduced by about 0.5x due to increased uncertainty regarding monetary, fiscal, and trade policy, which could delay demand for mortgages. He noted that while they let leverage drift, it reached the high end of their range, prompting a gradual reduction. Norris also stated that levered ROEs on higher coupon investments are currently in the low 20s.

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Chief Investment Officer Brian Norris explained that while Agency CMBS was attractive early in Q4, the current environment favors Agency RMBS as spreads have compressed and volatility has declined. CEO John M. Anzalone addressed the dividend, stating the board's decision considers current and projected ROEs, historical performance, and the competitive landscape, with a formal decision to be made in the next month.

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CEO John M. Anzalone responded that the dividend is determined by the Board and is primarily driven by the return on equity (ROE) available on target assets. He mentioned it was too early to make a decision for the next quarter but that they also balance the decision with the need to remain competitive and meet investor expectations.

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CFO Shai Vichness responded by reaffirming NCDL's commitment to its target debt-to-equity range of 1.0x to 1.25x. While comfortable operating at the upper end of this range due to the portfolio's high quality and senior loan focus, he stated they do not intend to increase leverage beyond it. Vichness clarified that the company has sufficient dry powder to be opportunistic through the ongoing rotation out of upper middle market assets and the redeployment of cash from loan repayments.

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CFO Shai Vichness confirmed that NCDL will adhere to its IPO guidance, planning to distribute approximately 50% of excess earnings above the base dividend through a supplemental program. He explained this approach balances shareholder returns with the need to retain capital for NAV growth, and noted that gains from equity realizations could fund additional special dividends or top-ups.

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Shaul Vichness, CFO and Treasurer, explained that it is still early in the process for the two new nonaccruals, but the firm is actively working with sponsors to maximize value, without providing a specific timeline. Regarding the portfolio rotation, Vichness stated they are 'well on our way,' citing the robust pipeline of traditional middle market deals and the higher yield on new investments in Q2 as evidence of this strategy's execution. Kenneth Kencel, CEO, added that the core middle market focus provides the most attractive risk-adjusted returns.

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Chief Financial Officer Tom Raterman explained that past yield spikes were due to high prepayment levels. He anticipates fewer prepayments going forward, which will lead to a more stable, albeit potentially lower, yield as accelerated income from fees is reduced. Raterman indicated the current core yield, absent prepayment spikes, is a reasonable expectation for the portfolio.

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CEO T.J. Durkin stated the loan is expected to enter a pre-negotiated forbearance with a full payoff anticipated within 2025, which would release approximately $16 million in equity capital. CIO Nick Smith added that MITT has a good amount of runway to rotate capital and increase leverage for new investments in the Home Equity space over the next few quarters.

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CFO Anthony Rossiello confirmed the prepayment assumption was the "majority of the driver" for the EAD decrease. CIO Nicholas Smith added that securitization is the predominant financing method, with typical deal sizes ranging from $275 million to $500 million. Smith clarified that MITT is focused on traditional lending products like closed-end seconds and HELOCs, not home equity appreciation products.

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CEO and President T.J. Durkin stated the rotation would likely take two to three quarters following the September convertible note maturity. He clarified that the agency portfolio is a temporary, lower-leverage strategy to earn carry, while core originations target mid-to-high teens gross ROEs. Durkin also noted that the reduced leverage on agency assets mutes book value risk compared to a fully levered strategy.

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CFO Michael Roper and CEO Craig Knutson stated that loan resolutions are generally occurring at or near their marked values, emphasizing that the significant fair value write-downs took place in prior quarters. President and CIO Bryan Wulfsohn explained that new BPL originations are primarily focused on ground-up construction and bridge loans, as the opportunity for quick flips has diminished.

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President & CIO Bryan Wulfsohn explained that these asset classes are inherently riskier, leading to higher delinquencies. He noted that while historical net losses were minimal due to significant home price appreciation (HPA), the company now expects future losses to normalize towards their underwriting assumption of 50 to 100 basis points as HPA flattens.

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CFO Brandon Filson explained that while the deal was executed during volatility, requiring a wider spread on the AAA tranche to 180 over, it was still accretive. He noted the expected yield is now in the 13% to 17% range, slightly lower than the typical 15-20%, but it successfully freed up capital to purchase new, higher-coupon loans.

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CFO Brandon Filson stated that while issuing more debt is a possibility, the company is focused on prudent growth and is currently deploying capital from its recent raise. Filson noted that about $200 million in committed loan purchases are in progress and that while the balance sheet could support more debt, they will wait for the right timing, potentially capitalizing on recent rate moves for better pricing.

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CEO Scott Bluestein explained that the firm continuously evaluates all capital options to drive shareholder return, noting that leverage remains at the low end of their target range (under 100% GAAP) despite significant portfolio growth. CFO Seth Meyer added that maintaining lower leverage is a deliberate strategy to stay opportunistic, a posture they've held since March 2023. While they intend to keep leverage at the lower end in the current market, they are prepared to increase it for the right investment opportunities.

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CEO & CIO Scott Bluestein stated the primary goal is maximizing total shareholder return, noting leverage remains at the low end of their target range. CFO Seth Meyer added that in the current environment, they prefer maintaining lower leverage to stay opportunistic but are prepared to increase it for the right investments, a strategy they've held since March 2023.

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CEO Scott Bluestein expressed optimism for new commitments and fundings but noted that net portfolio growth on the BDC's balance sheet is highly dependent on the level of early loan repayments, which are expected to remain high. He added that the private fund business continues to operate robustly, citing strong funding volumes in recent quarters.

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CFO Tony Marone explained the reserve is calculated as of March 31 and is not designed to capture short-term volatility, so he doesn't anticipate dramatic changes from April's market moves. CEO Katharine Keenan specified the two loan resolutions in process total around $200 million. Regarding REO, she clarified the strategy is to maximize value over time, which may involve longer holds to execute business plans rather than quick dispositions.

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EVP of Investments Austin Pena stated that levered spreads remain consistent with historical levels, around 900-1,000 basis points over, as tighter liability spreads have offset tighter asset spreads. CEO Katharine Keenan reaffirmed the company's target leverage range of 3x to 4x debt-to-equity, noting they are currently at the mid-to-lower end of this range and comfortable growing within it.

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CEO Katie Keenan detailed that 2024 originations feature attractive credit metrics like 60% LTV and over 9% debt yields, generating a return on investment (ROI) of approximately 1,000 basis points over the base rate, which translates to a mid-teens return on equity. She stated that on a same-store basis, these risk-adjusted returns are better than historical levels, especially given they are based on reset property values.

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CEO Katie Keenan responded that while the company has maintained near-record liquidity, it is no longer the best use of capital given increased market visibility and investment opportunities. She expects liquidity to normalize from these elevated levels as the firm reinvests, even when factoring in potential credit migration scenarios.

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Chief Financial Officer Daniel Trolio explained that the path to covering the dividend relies on two main factors: harvesting prepayments and growing the balance sheet. He noted that Q4 was light on prepayments and associated fee income, which impacted NII. Trolio stated that a normalized level of accelerated fee income from prepayments would be approximately $2 million to $4 million per quarter.

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Daniel Devorsetz, COO & CIO, explained that resolutions are ongoing, with some completed in Q3 and others expected in Q4 2024 or H1 2025. He detailed the Nexii resolution, where assets were sold to a third party. Gerald Michaud, President, added that for Evelo, assets were placed in a holding company for monetization, with proceeds flowing to Horizon to pay down its loan.

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CEO Jeffrey Levin reiterated the target leverage range of 1.0x to 1.25x debt-to-equity, which the company successfully entered in Q4. However, he stressed that MSDL prioritizes credit quality and capital preservation over strictly maintaining a leverage target in the short term. Levin stated that if deal flow is poor or repayments are high, the company will not deploy capital into unattractive opportunities simply to hit a leverage multiple, emphasizing a long-term investment perspective.

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Chief Investment Officer Angie Long confirmed it is fair to assume leverage could drift lower as the company will be patient and wait for more attractive yields rather than actively deleveraging. She emphasized that a key advantage of their strategy is not having a prescribed mix, which allows them the flexibility to shift between public and private credit to capture the best opportunities as they arise.

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President Matt Bloomfield explained that while there is no 'hard cap' on private credit, the firm intends to maintain a significant liquid pool for opportunistic investments. He noted that the private credit allocation could continue its recent growth cadence. Regarding underwriting, Bloomfield stated that high demand for floating-rate loans gives borrowers an advantage in both markets, leading to a low hit ratio for PSBD. He stressed the firm's prudent and careful approach in the current tight-spread environment, seeking value in both primary and secondary markets.

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Matthew Bloomfield, President, responded that there is no 'hard cap' on private credit allocation as decisions are based on relative value, though the firm intends to maintain a significant liquid portfolio. He noted that while credit quality has been 'okay,' the firm is being prudent and disciplined in the current tight-spread environment, leading to a low 'hit ratio' for new deals in both private and syndicated markets.

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President Mike Weinbach explained that the company has maintained buffer capacity to handle rate dips and highlighted the significant growth opportunity in home equity loans to utilize current capacity. CEO Jay Bray added that significant investments in componentizing the origination platform over the last few years have made the business's ability to scale 'night and day' compared to two years ago, allowing them to ramp up quickly and efficiently.

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