Ellington Financial Inc.

For the second quarter, Ellington Financial reported GAAP net income of $0.43 per common share on a fully marked-to-market basis and adjusted distributable earnings of $0.60 per share. Book value per share increased by $0.05 to $13.61 after $0.39 per share in dividends, and annualized economic return was 13.6%. Longbridge originated approximately $590 million of loans, up 38% year over year; prop reverse was 54% of volume and HECMs were 46%. Management said net interest margin was 336 basis points and the weighted average borrowing rate on recourse borrowings was 5.5%, essentially unchanged quarter over quarter. Looking ahead, management said Longbridge submission trends point to a positive Q3 setup, but did not provide formal quarterly margin guidance; they also said they are comfortable with a high-40s ADE run rate and that the $0.13 monthly dividend remains appropriate.

Larry Penn framed the quarter as a continuation of multi-year momentum, saying Ellington was still “firing on all cylinders.” He emphasized the company’s integrated model—research, originations, securitization, servicing, and hedging—arguing these pieces reinforce one another and support resilient earnings. He also highlighted 8 straight quarters of covering the dividend and said management prefers to keep building book value rather than raise the payout immediately.

J.R. Herlihy focused on the financial drivers behind the quarter: higher net interest income, strong earnings from unconsolidated entities, and excellent credit performance across the loan businesses. He highlighted a 336 basis point net interest margin, 5.5% weighted average recourse borrowing rate, 29% of recourse borrowings as long-term non-mark-to-market debt, 17% as unsecured debt, and a 9.3-month weighted average repo term. He also noted better unsecured debt market reception, securitization activity of approximately $4 billion UPB in the first half of 2026, and book value per share of $13.61 after dividends.

Analysts pressed on the pending residential servicer acquisition, and management said it is a small servicer with single-digit billions of servicing rights, some sub-servicing contracts, and a close expected in September/Q3. They stressed the goal is not immediate earnings contribution but building a stronger special-servicing platform as third-party capabilities shrink. Questions also focused on Longbridge trends; management pointed to Q2 submissions of $870 million versus under $750 million in Q1, said that supports Q3 volumes, and added that prop reverse is less rate-sensitive than HECM. They also said stronger non-QM issuance and continued market entry by sophisticated investors suggest the asset class remains attractively priced, while hedging remains focused on protecting deal execution and book value.