Ellington Financial reports Q4 EPS 18c, consensus 40c

“In the fourth quarter, we reported net income of $0.18 per share and adjusted distributable earnings of $0.27 per share. From an economic return perspective, strong performance from our residential transition loan portfolio and our Agency and non-Agency MBS didn’t quite offset merger-related dilution and expenses, and net losses from Longbridge and other positions, leading to a small negative economic return overall for the quarter,” said Laurence Penn, CEO. “In December, we completed the merger with Arlington, immediately adding scale and further strengthening our balance sheet. We promptly got to work freeing up capital in the Arlington portfolio, both monetizing Arlington’s liquid assets in a constructive market and adding modest leverage to the MSR portfolio. Since then, we have been rotating that capital into higher-yielding investments, which we expect to drive incremental value to shareholders in 2024. Despite incremental expansion of the portfolio in the fourth quarter, our recourse leverage ratio actually ticked down sequentially after absorbing Arlington’s low-leverage capital structure. In addition, in recent months we’ve been choosing to sell much of our non-QM loan portfolio instead of securitizing it, to take advantage of strong whole loan bids in the marketplace.”