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ADAMAS TRUST, INC. (ADAM)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 EAD per share was $0.24, up 9% QoQ and 140% YoY; GAAP EPS was $0.36. Dividend increased 15% QoQ to $0.23 per share; GAAP and Adjusted Book Value per share rose to $9.20 and $10.38, respectively .
  • Investment portfolio expanded by $1.8B (+20% QoQ) to $10.4B, driven by $1.8B of Agency RMBS purchases; net interest spread held at 1.50% with average financing cost improving to 4.83% .
  • Versus S&P Global consensus, the company posted a beat on “Primary EPS” (actual $0.24 vs. $0.218 estimate) and a significant revenue beat (actual $93.1M vs. $42.7M estimate). Drivers included higher adjusted net interest income from Agency RMBS ramp and consolidation of Constructive mortgage banking income* (Values retrieved from S&P Global).
  • Shares trade at a 33% discount to Adjusted Book Value ($6.97 vs. $10.38), and at a 17% discount to allocated Agency capital—management points to valuation upside as EAD scales .

What Went Well and What Went Wrong

What Went Well

  • Record investment activity: portfolio grew $1.8B, surpassing the 50% capital allocation target to agencies while strengthening earnings durability; “the third quarter was an active and strategically significant period… expanding the investment portfolio by $1.8 billion” .
  • EAD momentum: sixth consecutive quarter of EAD growth, up to $0.24; dividend raised 15% QoQ to $0.23, supported by adjusted net interest income expansion and improved financing cost .
  • BPL-Rental performance: UPB reached $1.16B; 60+ day delinquencies were 1.3%; portfolio quality anchored by DSCR and underwriting discipline .

What Went Wrong

  • Derivatives and realized losses: $13.0M net losses on derivatives (primarily swaps) and $5.6M net realized losses (foreclosures and discounted payoffs on non-performing bridge loans) pressured P&L .
  • Higher operating expenses: G&A rose to $23.3M (consolidation of Constructive and incentive comp); non-recurring financing transaction costs were $7.9M due to senior notes and securitizations expensed under fair value election .
  • Constructive segment loss during integration: mortgage banking income of $14.1M was offset by $3.8M loan origination costs and $8.0M G&A; segment reported a net loss of $3.8M as integration scales .

Financial Results

Consolidated Quarterly Performance

MetricQ3 2024Q4 2024Q1 2025Q2 2025Q3 2025
Net Income Attributable to Common ($000s)$32,410 $(41,828) $30,285 $(3,486) $32,702
EAD per Share ($)$0.10 $0.16 $0.20 $0.22 $0.24
Net Interest Income ($000s)$20,237 $26,711 $33,098 $36,447 $36,586
Yield on Avg Interest-Earning Assets (%)6.69% 6.57% 6.47% 6.48% 6.33%
Net Interest Spread (%)1.32% 1.37% 1.32% 1.50% 1.50%
GAAP Book Value/Share ($)$9.83 $9.28 $9.37 $9.11 $9.20
Adjusted Book Value/Share ($)$10.87 $10.35 $10.43 $10.26 $10.38

Q3 2025 vs. S&P Global Consensus

MetricConsensusActualBeat/(Miss)
Primary EPS ($)0.2180.240+0.022 (+10.2%)
Revenue ($)42.717M93.083M+50.366M (+117.9%)
*Values retrieved from S&P Global.

Segment Breakdown (Q3 2025)

SegmentTotal Net Interest Income (Loss) ($000s)Total Other Income (Loss) ($000s)Total G&A and Operating ($000s)Net Income Attrib. to Common ($000s)
Investment Portfolio$45,023 $41,720 $10,809 $77,079
Constructive$124 $12,162 $16,062 $(3,776)
Corporate/Other$(8,561) $(5,278) $14,954 $(40,601)
Total$36,586 $48,604 $41,825 $32,702

KPIs and Balance Sheet

KPIQ2 2025Q3 2025
EAD per Share ($)$0.22 $0.24
Adjusted Book Value/Share ($)$10.26 $10.38
Dividend per Share ($)$0.20 $0.23
Investment Portfolio Size ($B)$8.6 $10.4
Recourse Leverage Ratio (Company)3.8x 5.0x
Agency Leverage8.6x 7.8x

Guidance Changes

MetricPeriodPrevious Guidance/Run-rateCurrent Guidance/Run-rateChange
Dividend per ShareQ3 vs Q2 2025$0.20 (Q2 actual) $0.23 (Q3 declared) Raised
Agency Leverage TargetOngoing~8.6x (Q2 actual) “Around 8x” management guide; 7.8x in Q3 Maintained target, leverage slightly lower
Agency Capital AllocationOngoing“Trend toward ~50%” (target discussed in Q2) Achieved >50%; growth to continue at measured pace Achieved/Measured growth
Adjusted Book Value Trend (Quarter-to-date)Q4-to-dateN/A+2.5%–3% as of Oct 28 Positive update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Current Period (Q3 2025)Trend
Agency RMBS strategyAgencies favored for liquidity; leverage ~8.6x; aim toward ~50% allocation Surpassed 50% allocation; record $1.8B agency purchases; leverage 7.8x; measured pace ahead Strategic expansion moderating
Financing cost / spreadsRepo/securitization execution improving; spread tailwinds discussed Avg financing cost down to 4.83%; current coupon spreads tightened 20bps to ~126bps Beneficial tailwind
Constructive (BPL originations)Acquisition closed mid-July; capital-light gain-on-sale strategy; 85% wholesale $439M Q3 originations; $14.1M mortgage banking income; integration costs drove segment loss Scaling, near-term cost drag
BPL-RentalPortfolio quality (DSCR focus); 2% 60+ DQ $1.16B UPB; DQ 60+ at 1.3%; 98% loans have prepay penalties Growing, resilient
BPL-BridgeCompetitive pressures tightening pass-through yields; selective acquisitions Portfolio down 4% to $919M; reducing delinquencies; expect near-term allocations to decline De-risking
Multi-familyJV equity exit anticipated; mezzanine payoff run-rate rising Completed JV equity exit; mezzanine payoff 32.4% annualized (vs. 25.8% historical) Rotation completed
Macro/ratesExpect steepening curve; rate volatility impacted volumes Fed eased in Sep; rates down; agency spreads tighter; positive ABV QTD Supportive backdrop

Management Commentary

  • CEO: “Expanding the investment portfolio by $1.8 billion… initiatives drove earnings available for distribution higher for the sixth consecutive quarter” .
  • CFO: “Adjusted net interest income per share rose… net interest spread remained stable at 150 bps… financing cost improved… $54.9M net unrealized gains offset by $13M derivative losses and $5.6M realized losses” .
  • President: “Current coupon agency spreads tightened by 20 bps to 126 bps… agency portfolio $6.7B; leverage declined to 7.8x… priced two securitizations ($370M re-perf/perf loans; $275M BPL rental)” .

Q&A Highlights

  • GSE reform and BPL positioning: Management is not planning for removal of guarantees but sees non-QM tailwinds if it occurs; Constructive could access new channels .
  • Constructive rationale: Full ownership to control underwriting/distribution and scale origination; capitalized by Adamas Trust .
  • Book value quarter-to-date: Adjusted book value up 2.5%–3% as of Oct 28, with gains from both agency and whole loan sides .
  • Leverage: Credit leverage below 1x viewed as low; agency leverage guided “around 8x” .
  • Capital allocation and buybacks: Opportunistic; buybacks used in prior quarters, Q3 capital prioritized to assets given accretive agency ROEs ~15% .

Estimates Context

  • Q3 2025 “Primary EPS” beat: $0.240 actual vs. $0.218 consensus (+10.2%); reflects EAD per share expansion from agency ramp and lower financing costs* (Values retrieved from S&P Global).
  • Q3 2025 revenue beat: $93.083M actual vs. $42.717M consensus (+117.9%); upside driven by consolidated mortgage banking income from Constructive, higher net interest income, and improved valuations supporting activity* (Values retrieved from S&P Global).
  • Implication: Consensus likely needs upward revisions to forward EAD/Primary EPS and revenue to reflect full-quarter agency income and integrated mortgage banking contribution; watch non-recurring cost normalization and derivative outcomes .

Key Takeaways for Investors

  • Earnings quality improving: EAD per share up for six straight quarters; net interest spread stable at 1.50% with lower financing costs—supports dividend durability and potential for incremental increases .
  • Agency engine in place: $1.8B quarterly agency purchases and $6.7B portfolio with 7.8x leverage provide scalable, liquid carry; spreads tightened and remain attractive on a hedged ROE basis .
  • Credit mix de-risking: BPL-Rental growth with 1.3% 60+ DQ and DSCR focus; BPL-Bridge shrinking and being de-risked amid competitive pressures .
  • Constructive adds fee income: $439M originations and $14.1M mortgage banking income in Q3; near-term integration costs a headwind but platform should be accretive as efficiencies materialize .
  • Valuation upside: Shares at a 33% discount to Adjusted Book Value and 17% discount to Agency capital—buybacks remain a flexible tool, but management is prioritizing accretive asset growth .
  • Watch Q4 setup: Full-quarter benefit of Q3 agency additions, potential further financing cost tailwinds, and ongoing securitization activity could support EAD trajectory; monitor derivative positioning and non-recurring costs .
  • Risk controls: Macro rate shifts, credit spreads, and derivative marks can swing GAAP results; however, EAD framework and agency/liquidity orientation mitigate earnings volatility .


*Values retrieved from S&P Global.