Earnings report highlights gains in Q2 2024
Ellington Financial reported solid financial results for the second quarter of 2024, with the company’s non-qualified mortgage (non-QM) lending and reverse mortgage operations delivering particularly strong performances.
The specialty finance company reported net income attributable to common stockholders of $52.3 million, or $0.62 per share, for the quarter ended June 30.
“Driven by broad-based contributions from our diversified credit and agency portfolios, as well as from our reverse mortgage platform Longbridge, Ellington Financial generated a non-annualized economic return of 4.5% for the second quarter and grew adjusted distributable earnings and book value per share sequentially,” Ellington president and CEO Laurence Penn explained.
On the non-QM side, the company’s credit strategy, which includes non-QM loans, generated $68 million in net income.
Penn noted in Ellington’s Q2 financial report that “tight yield spreads in our April securitization helped generate a significant gain in our portfolio, and where continued strong loan demand improved industrywide gain-on-sale margins and origination volumes, driving excellent results at our affiliate loan originators.”
Longbridge, Ellington’s reverse mortgage business, generated $4.2 million in earnings, driven by the strong performance of its proprietary reverse mortgage loans. The company successfully completed its second securitization of Longbridge-originated reverse mortgages after the quarter ended, achieving “incrementally stronger execution” than its inaugural deal.
In addition to the non-QM and reverse mortgage segments, Ellington also cited the residential transition and commercial mortgage loan strategies, as well as non-agency RMBS, as contributing to its profits.
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Ellington’s investment portfolio generated net income of $69.1 million in Q2, with $68 million coming from the credit strategy and $1.1 million from the agency strategy. The company added investments in HELOCs, closed-end second lien loans, and commercial mortgage bridge loans, while reducing its holdings in lower-yielding sectors.
“Looking forward, our investment pipeline across our diversified proprietary loan origination channels remains strong, and the loan originators in which we’ve invested are not only helping to feed that pipeline, but they’re showing strong profitability as well,” Penn added. “Combine that with our ability to access compelling term, non-mark-to-market financing in the securitization markets, and I believe Ellington Financial is well positioned for continued portfolio and earnings growth over the remainder of the year.”
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