Executive Summary

Q1 delivered stable earnings and book value: GAAP diluted EPS $0.35, ADE $0.39 covered the $0.39 quarterly dividend; book value per share was $13.44 (down $0.08 QoQ) with low recourse leverage at 1.7x .
Versus estimates: EPS was essentially in line at $0.39 vs $0.391 consensus, while “Revenue” (S&P definition) missed $83.84M vs $106.04M consensus; five EPS and revenue estimates suggest modest coverage breadth. Expect estimate fine‑tuning toward mix/definition clarity for mortgage REITs [Functions.GetEstimates]*.
Portfolio execution remained a strength: five securitizations priced pre‑volatility, rotation out of Agency/non‑Agency RMBS/HELOCs/CLO notes at tight spreads, and two new financing facilities added. Credit hedges generated April profits that more than offset long‑side marks, leaving April economic return positive per management .
Longbridge posted a small GAAP loss on hedges despite stronger origination margins in proprietary reverse; ADE contribution remained positive and management reaffirmed a ~$0.09/share longer‑term ADE run‑rate for Longbridge, contingent on securitization cadence resuming shortly .
Potential catalysts: dividend coverage durability, continued securitization momentum, progress on commercial workouts (expect just one significant detractor by end‑Q2), and evidence that April’s positive return extended into Q2 .

What Went Well and What Went Wrong

What Went Well
- Strong capital markets execution: priced five securitizations early in the quarter, locking in long‑term, non‑mark‑to‑market financing and expanding high‑yielding retained tranches; also added two loan financing facilities and monetized gains via opportunistic asset sales at tight spreads .
- Hedging and liquidity posture: management “built up credit hedges considerably since mid‑2024,” and “profits on those credit hedges in April 2025 more than offset any valuation declines,” with a positive April economic return estimated; recourse leverage held at 1.7x .
- Agency/MSR and non‑QM ecosystems: Agency RMBS NIM rose to 2.46% (from 2.22%); MSRs delivered positive carry and mark‑to‑market gains; non‑QM origination partners stayed profitable and securitization execution remained attractive (priced again late April after spreads recovered) .
What Went Wrong
- Revenue shortfall vs consensus and lower credit NIM: S&P “Revenue” missed ($83.84M actual vs $106.04M est), and credit portfolio NIM compressed to 2.90% from 3.02% on higher cost of funds despite higher asset yields [Functions.GetEstimates]* .
- Mark‑to‑market drags and pockets of weakness: realized/unrealized losses in consumer loans, CLOs, non‑QM and RTL; net losses on residential/commercial REO; Agency also saw March spread widening after tightening earlier in the quarter .
- Longbridge GAAP loss on hedges: despite higher proprietary reverse origination margins and gains on HMBS MSR Equivalent, interest‑rate hedge losses led to a $(1.0)M segment GAAP loss in Q1 .

Financial Results

Trend Snapshot (GAAP EPS, ADE/share, Book, Leverage)

Metric	Q3 2024	Q4 2024	Q1 2025
GAAP Diluted EPS ($)	$0.19	$0.25	$0.35
Adjusted Distributable Earnings per share ($)	$0.40	$0.45	$0.39
Book Value per common share ($)	$13.66	$13.52	$13.44
Recourse D/E (ex‑UST, adj. unsettled)	1.8x	1.8x	1.7x
Overall D/E (ex‑UST, adj. unsettled)	8.3x	8.8x	8.7x

Estimate Comparison (S&P Global)

Metric	Q1 2025 Consensus	Q1 2025 Actual	Surprise
Primary EPS ($)	0.3910*	0.39*	−0.0010*
Revenue (US$)	106,038,800*	83,841,000*	−22,197,800*

Values retrieved from S&P Global via GetEstimates. Asterisk denotes S&P Global data without document citations.

Margins and NIM

Net Interest Margin	Q3 2024	Q4 2024	Q1 2025
Credit Portfolio NIM (%)	2.64%	3.02%	2.90%
Agency Portfolio NIM (%)	2.03%	2.22%	2.46%

Segment Contributions (per share, GAAP)

Segment	Q4 2024	Q1 2025
Credit	$0.32	$0.58
Agency	$(0.04)	$0.05
Longbridge	$0.30	$(0.01)
Corporate/Other	$(0.33)	$(0.27)
Total GAAP EPS	$0.25	$0.35

Portfolio and Balance Sheet KPIs

KPI	Q4 2024	Q1 2025
Adjusted Long Credit Portfolio ($B)	$3.422	$3.297
Long Agency RMBS ($M)	$296.7	$256.1
Longbridge Portfolio excl. non‑retained ($M)	$420.2	$549.0
Agency Specified Pool Pay‑ups (%)	0.67%	0.69%
Cash & Cash Equivalents ($M)	$192.4	$203.3
Unencumbered Assets ($M)	$619.8	$650.2
Total Equity ($B)	$1.591	$1.638

Longbridge Originations

Channel	Units (Q4 2024)	Volume $ (Q4 2024)	Units (Q1 2025)	Volume $ (Q1 2025)
Retail	613	104,917,000	554	96,776,000
Wholesale/Correspondent	1,626	314,987,000	1,267	241,675,000
Total	2,239	419,904,000	1,821	338,451,000

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Common dividend per share (monthly)	Ongoing (declared May 7, 2025)	$0.13	$0.13	Maintained
Longbridge ADE run‑rate (per share)	Longer term	~$0.09 (prior commentary)	Reaffirmed ~$0.09	Maintained
Commercial workout assets detracting from ADE	By end‑Q2 2025	“Handful” remaining	Expect just one significant remaining detractor	Improved
Securitizations cadence	Q2 2025	Active across products	Paused during early April volatility; priced late‑April non‑QM as spreads normalized	Clarified timing

Note: EFC does not provide formal revenue/EPS guidance; management commentary reflects qualitative outlook.

Earnings Call Themes & Trends

Topic	Q3 2024 (Q‑2)	Q4 2024 (Q‑1)	Q1 2025 (Current)	Trend
Securitization momentum	Strong non‑QM/prop reverse execution; portfolio growth	Four securitizations across three lines; gains and term funding	Five deals in Q1; late‑April non‑QM after spread recovery	Sustained momentum; opportunistic timing
Credit hedging	Building hedges; corporate focus implied	N/A	Built “considerably” since mid‑2024; April profits offset marks	Hedging more material to returns/risk mgmt
Commercial workouts	Working through non‑performers	Progress implied	One resolved Q1; one REO sale scheduled; expect one significant left by end‑Q2	Improving, earnings drag fading
Longbridge performance	GAAP loss on hedges; origination profits in prop reverse	Strong quarter; ADE support	Slight GAAP loss on hedges; margins improved; ADE +$0.07; run‑rate $0.09 reaffirmed	Mixed GAAP; steady ADE contribution
Agency strategy	Positive Q3; NIM 2.03%	Loss in Q4; NIM 2.22%	Positive; NIM 2.46%; pay‑ups up	Improving
Macro/tariffs	Fed cuts theme; spreads tightened	Rate volatility	Tariff uncertainty widened spreads in March/April; hedges buffered	Volatility higher; active hedging
Technology initiatives	N/A	N/A	“Developing more proprietary tools to support loan origination”	Increasing focus

Management Commentary

“We were able to price five separate securitization transactions before the recent market volatility and yield spread widening, thus locking in long‑term, non‑market‑to‑market financing at attractive economics, while also expanding our portfolio of high‑yielding retained tranches.” — Laurence Penn, CEO .
“We had already built up our credit hedges considerably since mid‑2024, and profits on those credit hedges in April 2025 more than offset any valuation declines we saw in the long portfolio…our economic return was still positive for the month.” — Laurence Penn, CEO .
“One highlight for the quarter was our portfolio of agency mortgage servicing rights, where we not only had substantial positive carry, but a substantial mark‑to‑market gain as well.” — Mark Tecotzky, Co‑CIO .
“Our recourse leverage remained low at just 1.7:1…we continue to see better investment opportunities. So it’s great to have made more room to add leverage from here.” — Laurence Penn, CEO .

Q&A Highlights

Deployment and opportunities amid April volatility: portfolio grew modestly; added non‑agency MBS opportunistically; securitization AAAs widened ~70 bps at peak and later recovered, underpinning selective buying and late‑April issuance .
Commercial workout resolutions: one discounted payoff, one REO sale closing, and one CapEx/lease‑up; roughly half of $50–60M FV resolved by Q1/Q2, freeing $20–25M for redeployment and reducing ADE drag .
Originator JV pipeline: two JV term sheets targeted; small equity checks (<$5M each) but outsized loan flow potential; timing next 1–2 quarters .
Longbridge ADE run‑rate: reaffirmed ~$0.09/share longer‑term; Q1 ADE $0.07 on seasonally lower HECM volumes; prop reverse securitization expected “shortly” to “ring the cash register” .
CLO exposure: non‑core, small (~$28M vs $3.3B adj. credit portfolio); recent weakness tied to spread widening more than credit impairment .

Estimates Context

EPS: Q1 “Primary EPS” was essentially in line at $0.39 vs $0.391 consensus; note EFC’s reported GAAP diluted EPS was $0.35, while ADE/share was $0.39, highlighting metric definition differences common in mortgage REIT coverage [Functions.GetEstimates]* .
Revenue: Q1 S&P “Revenue” missed ($83.84M actual vs $106.04M est). Given EFC’s mix of net interest income, fair‑value gains/losses, and securitization/servicing accounting, estimate models may recalibrate toward ADE drivers and margin/NIM sensitivities [Functions.GetEstimates]*.
Coverage breadth: ~7 EPS and ~5 revenue estimates suggest moderate analyst coverage; look for revisions tying to NIMs, securitization cadence, and hedge gains’ persistence [Functions.GetEstimates]*.

Values retrieved from S&P Global via GetEstimates.

Key Takeaways for Investors

Dividend coverage intact: ADE/share $0.39 covered $0.39 dividends; book value stable at $13.44 with conservative 1.7x recourse leverage .
Capital markets advantage: five Q1 securitizations at attractive spreads plus added facilities underpin ROE resilience; management paused during early‑April volatility and resumed issuance as conditions normalized .
Risk management working: credit hedges mitigated April spread shock, with positive April economic return; sets EFC to play offense into volatility .
Mix + margin watch: Credit NIM dipped 12 bps QoQ to 2.90% while Agency NIM rose to 2.46%; sustained Agency/MSR contribution and non‑QM retained tranches are supportive, but cost of funds path matters .
Longbridge: near‑term GAAP noise from hedges, but ADE support continues; upcoming prop reverse securitization is a near‑term catalyst for distributable earnings .
Workouts nearing endgame: expectation to have only one significant commercial workout detractor by end‑Q2 removes a tail drag on ADE and frees capital .
Trading lens: In‑line EPS (ADE) and revenue miss versus S&P estimates plus management’s April positive return tilt the narrative toward defensive execution and dividend durability; watch securitization prints, NIMs, and BV updates for momentum cues [Functions.GetEstimates]* .

Footnote: Asterisked figures are from S&P Global Market Intelligence (GetEstimates).

Ellington Financial Inc. (EFC)·Q1 2025 Earnings Summary