Aug 12, 2026, 4:52 PM ETReal Estate

Ellington Credit Company — First Fiscal Quarter Ended June 30, 2026 Earnings Summary

EARNELLINGTON CREDIT CO

Financial Performance

GAAP net income was $12.3 million ($0.33 per share), a significant recovery from a net loss of $32.3 million ($0.86 per share) in the quarter ended March 31, 2026.
Net investment income (NII) was $6.1 million ($0.16 per share), up from $5.1 million ($0.13 per share) in the prior quarter.
Adjusted net investment income was $5.7 million ($0.15 per share), compared to $7.3 million ($0.19 per share) in the prior quarter.
Net asset value (NAV) per share was $4.18 as of June 30, 2026, including the effects of $0.24 per share in distributions for the quarter.
Total investment income was $11.96 million, with interest income of $11.76 million and other investment income of $0.20 million.
Interest expense was $3.01 million, compared to $2.30 million in the prior quarter.
Net realized loss on investments was $0.14 million, compared to a net realized gain of $0.03 million in the prior quarter.
Change in net unrealized gain on investments was $11.29 million, reversing a change in net unrealized loss of $37.13 million in the prior quarter.
Credit and foreign currency hedges resulted in a loss of $4.92 million, compared to a loss of $0.24 million in the prior quarter.
Total assets were $382.5 million; total liabilities were $222.8 million; net asset value was $159.7 million.
Cash and cash equivalents were $23.5 million.

Management expects net investment income to grow as excess liquidity is deployed, leverage is selectively increased, and the portfolio rotates toward higher-yielding investments.
The company anticipates that market dynamics including higher reinvestment yields, improving credit fundamentals, and a constructive technical backdrop will favor active portfolio management.
Management believes the firm is well-positioned to generate attractive risk-adjusted returns through active trading capabilities, a flexible balance sheet, and a disciplined hedging strategy.

The CLO portfolio totaled $334.1 million (fair value), consisting of $154.1 million in debt investments and $180.0 million in equity investments.
Portfolio composition included $120.7 million in U.S. CLO debt (36.1% of total), $33.4 million in European CLO debt (10.0%), $177.1 million in U.S. CLO equity (53.0%), and $2.8 million in European CLO equity (0.8%).
The company purchased $64.8 million of CLO investments and sold $35.1 million across 64 trades during the quarter.
Weighted average GAAP yield based on amortized cost was 11.9% on the total CLO portfolio; weighted average projected yield based on fair value was 16.6%.
Recurring cash distributions received from the CLO portfolio were $17.6 million ($0.47 per share).
Management rotated mezzanine debt out of lower-coupon, shorter-spread-duration positions into higher-coupon, wider-spread investments with stronger credit fundamentals.
In CLO equity, the company added longer-tenor, higher-cash-flow structures and reduced exposure to shorter-tenor positions sensitive to loan price volatility.
Several refinancings and resets of existing CLO equity positions enhanced near-term cash flows and long-term earnings power.

Leveraged loan and broader corporate credit markets improved significantly due to easing geopolitical tensions, improving investor sentiment, and reduced default concerns in the software sector.
Credit spreads tightened, supporting a sharp increase in new issue supply across investment grade, high yield, and leveraged loan markets.
The Morningstar LSTA US Leveraged Loan Index rose by $0.33 during the quarter; the European leveraged loan market generally outperformed the U.S. market.
The balance of loans in CLOs trading below $80 declined to 5.4% at quarter-end.
Slowing repricing activity among premium-priced loans moderated the compression of excess spreads, a recent headwind for CLO equity.

Net losses on credit hedges partially offset gains from the investment portfolio.
Forward-looking statements note risks including changes in interest rates, market volatility, changes in default rates on corporate loans, and the ability to borrow to finance assets.
Risks include deterioration in the market for collateralized loan obligations, regulatory changes associated with the conversion to a closed-end fund/RIC, and potential business disruption related to that conversion.
Economic risks include slower growth or recession, heightened inflation, increased tariffs, and currency fluctuations.

CEO Laurence Penn stated the second quarter validated actions taken in response to the first quarter market dislocation, noting the market selloff enhanced the CLO opportunity set.
Management reported a quarterly economic return of 8% (non-annualized) and noted that net investment income did not yet fully reflect the expanded and repositioned portfolio.
The tone was constructive, highlighting the ability to rapidly deploy proceeds from a March unsecured note offering and actively reposition the portfolio.
Management emphasized refining the portfolio to upgrade credit quality and improve long-term return potential as market conditions stabilized.

The company raised $2.6 million through the issuance of 579,416 common shares at a 5% weighted average premium to NAV per share.
Total outstanding debt was $205.9 million, comprising $151.9 million in reverse repurchase agreements and $54.0 million in unsecured borrowings.
Credit hedges were expressed as estimated notional equivalents of $(131.8) million of the Markit CDX North American High Yield Index.
The Board declared distributions of $0.08 per share for each of the quarters ended March 31, June 30, and subsequent months, with payment dates in May, June, July, August, and September 2026.
A conference call to discuss results was scheduled for August 13, 2026, at 11:00 a.m. Eastern Time.