Ellington Financial Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net income attributable to common stockholders was $40.4 million ($0.31 per share), compared to $54.4 million ($0.43 per share) in the second quarter of 2026.
• Adjusted Distributable Earnings (ADE) were $58.0 million ($0.45 per share), including $0.9 million in incentive fee expense, compared to $74.6 million ($0.59 per share) in the second quarter.
• Investment Portfolio segment contributed $61.1 million ($0.47 per share) to net income and $77.6 million ($0.60 per share) to ADE.
• Longbridge segment contributed $12.5 million ($0.10 per share) to net income and $8.6 million ($0.07 per share) to ADE.
• Corporate/Other segment reported a net loss of $33.2 million ($0.26 per share) and a negative ADE contribution of $28.2 million ($0.22 per share).
• Book value per common share was $13.53 as of September 30, 2026, including the effect of $0.39 per share in dividends.
• Recourse debt-to-equity ratio was 2.2:1 as of September 30, 2026, up from 1.9:1 as of June 30, 2026.
• Total debt-to-equity ratio (including all recourse and non-recourse borrowings) was 9.4:1 as of September 30, 2026, up from 9.2:1 as of June 30, 2026.
• Total unencumbered assets were $1.92 billion, consisting of $269.5 million in cash and $1.66 billion in other unencumbered assets.
• Net interest margin on the investment portfolio increased to 3.55% from 3.36% in the prior quarter.
• Total assets were $21.92 billion as of September 30, 2026, compared to $21.03 billion as of June 30, 2026.
• Total equity was $2.03 billion as of September 30, 2026, compared to $1.99 billion as of June 30, 2026.

Guidance and Future Outlook:

• Management expects the diversified business model, proprietary sourcing channels, flexible balance sheet, and disciplined risk management to position the company to capitalize on attractive investment opportunities developing following recent interest rate spikes and volatility.
• The company aims to advance its long-term strategy to reduce reliance on secured, mark-to-market financing.
• Management indicated that under normal market conditions, they would expect to take advantage of accretive stock repurchase opportunities if similar to those seen in the quarter.

Business Segments and Product Lines:

• Investment Portfolio:
  • The total adjusted long portfolio increased 4.5% sequentially to $4.70 billion.
  • Growth was driven by net purchases of residential transition loans, closed-end second lien loans, Agency-eligible residential mortgage loans, prime jumbo residential mortgage loans, commercial mortgage bridge loans, and a larger portfolio of retained RMBS.
  • Performance was led by retained tranches from non-QM and Agency-eligible securitizations, commercial mortgage bridge loans, and equity investments in loan originators, particularly LendSure.
  • Results were partially offset by negative performance in warehoused non-QM whole loans, residential transition loan retained tranches, CMBS, and residential and commercial REO.
  • Strong credit performance was noted with sequentially lower 90-day delinquency rates and continued low life-to-date realized loan losses.
• Longbridge:
  • Originated $676.3 million of loans, up 36% year over year.
  • The net Longbridge portfolio increased 59% sequentially to $1.0 billion as of September 30, 2026, though much of this increase was reversed upon the October settlement of a proprietary reverse mortgage loan securitization.
  • Achieved a quarterly record HMBS market share of 31%, ranking as the second-largest issuer in the market.
  • Positive contributions came from originations (driven by higher volumes) and servicing (steady base income and MSR hedge gains), partially offset by origination margin compression and a mark-to-market loss on the HMBS MSR.
  • Net unrealized losses occurred on retained tranches of consolidated proprietary reverse mortgage loan securitization trusts due to revised home price projections.
• Acquisitions:
  • Completed the acquisition of a controlling interest in Statebridge, a diversified loan servicer. As of September 30, 2026, Statebridge serviced approximately 14,700 loans with an aggregate unpaid principal balance of $1.9 billion.

Market and Competitive Landscape:

• The company benefited from strong institutional demand for its senior unsecured notes, with the September issuance priced at a yield spread approximately 70 basis points tighter than last year's issuance.
• Moody's changed the company's rating outlook to Positive, citing a stronger funding profile, solid earnings, and improving asset quality.
• The residential loan portal connected with 57 sellers, generating $1.6 billion in loan purchases during the quarter.
• Credit performance remained strong across the portfolio despite rising interest rates and widening yield spreads late in the quarter.

Risks and Challenges:

• Corporate/Other results included losses on fixed receiver interest rate swaps used to hedge fixed payments on unsecured notes, driven by higher interest rates.
• Longbridge results were impacted by narrower origination margins amid higher interest rates and reduced proprietary reverse mortgage securitization gains.
• Unrealized losses on retained tranches of consolidated proprietary reverse mortgage loan securitization trusts were driven by revised home price projections.
• The company faces risks related to interest rate volatility, credit performance, and the ability to maintain its exclusion from registration under the Investment Company Act of 1940 and qualification as a REIT.

Management Commentary and Tone:

• CEO Laurence Penn described the results as "strong" despite a "challenging market," noting the generation of an annualized economic return of 9.4% and the preservation of book value per share.
• Management highlighted that adjusted distributable earnings were in excess of dividends.
• The tone was confident regarding the company's ability to capitalize on market dislocations, citing ample liquidity and a flexible balance sheet.
• Management noted the timing of the $150 million senior notes offering provided "dry powder" ahead of a late-quarter market selloff.

Other Key Points:

• Issued 2,496,140 common shares under the ATM program at an average price of $13.61 per share during the quarter.
• Subsequent to quarter end, repurchased 329,045 shares at an average price of $11.44 per share (totaling just under $4 million).
• Issued $150 million of 7.375% senior unsecured notes due 2030 in an add-on offering, bringing the series to $550 million outstanding.
• Repaid $37.75 million of 6% unsecured notes which matured on August 1, 2026.
• 25% of total recourse borrowings are long-term and non-mark-to-market, while 17% are unsecured.
• The weighted average remaining term of repo borrowings is 8.9 months.
• The conference call to discuss results was scheduled for November 5, 2026, at 11:00 a.m. Eastern Time.