Ellington Credit Company

For the quarter ended June 30, 2026, Ellington Credit reported GAAP net income of $0.33 per share, net investment income of $0.16 per share, and adjusted net investment income of $0.15 per share. NAV per share increased to $4.18 from $4.09 at March 31, and total NAV rose to $159.7 million from $153.8 million. The company said the quarter produced an economic return of 8.1% non-annualized, supported by $0.24 per share of distributions. The CLO portfolio increased to $334.1 million from $307.9 million, with purchase activity of $64.8 million and sales of $35.1 million. Cash and cash equivalents were $23.5 million, reverse repo borrowings were $151.9 million, unsecured notes remained $54 million, and debt-to-equity declined to 1.29x from 1.43x. Forward-looking, management said July adjusted NII was approximately $0.06 per share and July economic return was approximately 3.1%, or $0.13 per share, with NAV per share up about $0.05 using the midpoint of the reported range. Larry Penn reiterated comfort with the dividend level and said the company expects to get to the low 20s in adjusted net investment income over the next couple of quarters. Management also said it believes the portfolio can grow another 5% to 10% from June 30 levels, with leverage potentially moving back closer to the March 31 level.

Larry Penn said the second quarter was an inflection point because the market sell-off created an opportunity to issue debt, deploy capital quickly, and reposition the portfolio into higher-yielding and better-quality assets. He emphasized that EARN is building earnings capacity now and expects the coming quarters to convert that into higher NII without reaching for yield. His tone was constructive and confident, repeatedly pointing to active trading, liquidity, and balance-sheet flexibility as controllable drivers of growth.

Chris Smernoff highlighted the quarter’s reported figures: GAAP net income of $0.33 per share, NII of $0.16 per share, adjusted NII of $0.15 per share, and NAV per share of $4.18. He said the CLO portfolio’s weighted average GAAP yield was 11.9% for the quarter, while incremental purchases averaged about 14.9%; as of June 30, fair-value-based projected yield was about 16.6%, and third-quarter purchase yield so far was about 16.8%. He also noted that cash was $23.5 million, reverse repo borrowings fell to $151.9 million, unsecured notes stayed at $54 million, and debt-to-equity moved down to 1.29x, leaving more borrowing capacity.

The main analyst question focused on how quickly NII could ramp, whether the dividend is safe, how much more leverage the company might add, and what explained the July portfolio mix. Larry said he was comfortable with the dividend and repeated his prior view that adjusted NII can get into the low 20s over the next couple of quarters. On leverage, management said debt-to-equity could move back closer to 1.43x and that portfolio size could grow another 5% to 10% from June 30 levels. On the portfolio mix, Greg Borenstein said they are rotating out of positions with less total-return upside and into longer-dated, higher-cash-flow equity and cleaner BB mezzanine names.