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EFC Second-Quarter Earnings Beat Estimates on Longbridge Strength
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Key Takeaways
EFC's adjusted earnings rose 27.7% as revenues jumped 66.8% year over year to $72.3 million.
Longbridge originations climbed 38% to $589.7 million, with HMBS market share reaching a record 29%.
EFC's adjusted long investment portfolio grew 1% to $4.50 billion, driven by residential and commercial loans.
Ellington Financial Inc. (EFC - Free Report) reported second-quarter 2026 adjusted earnings of 60 cents per share, up 27.7% from 47 cents a year ago. The figure surpassed the Zacks Consensus Estimate of 46 cents by 30.4%. Revenues of $72.3 million jumped 66.8% year over year and topped the consensus estimate of $66.8 million by 8.2%. However, the stock has seen limited movement since the earnings release on Aug. 7.
Results benefited from stronger net interest income, solid credit performance and contributions from Longbridge. Longbridge loan originations rose 38% year over year to $589.7 million, while its HMBS market share reached a record 29% during the quarter.
EFC's Interest Income Growth Supports Results
Interest income was $170.8 million in the second quarter, up from $115.5 million in the year-ago period. Interest expenses increased to $98.6 million from $72.1 million, reflecting higher financing costs. Total expenses rose to $76.0 million from $57.1 million.
The investment portfolio's net interest margin edged down to 3.36% from 3.37% in the prior quarter. Slightly higher asset yields were more than offset by a modest increase in funding costs. Positive carry from interest-rate swaps continued to support results, although the benefit moderated sequentially.
The investment portfolio segment generated $119.9 million of interest and other income during the quarter. Net income attributable to common stockholders from the segment totaled $74.2 million, while Adjusted Distributable Earnings amounted to $75.7 million.
The adjusted long investment portfolio increased roughly 1% sequentially to $4.50 billion. Growth was driven by residential transition loans, commercial mortgage bridge loans and retained RMBS. EFC securitized $1.87 billion of unpaid principal balance across non-QM, Agency-eligible and closed-end second-lien loans through seven transactions.
EFC's Longbridge Business Maintains Momentum
Longbridge recorded $53.4 million of interest and other income and generated net income attributable to common stockholders of $30.2 million. Adjusted Distributable Earnings from the segment totaled $28.9 million.
Originations included $316.2 million of proprietary reverse mortgage loans and $273.5 million of HECM loans. The company completed two proprietary reverse mortgage securitizations. These securitizations more than offset new portfolio growth, reducing the net Longbridge portfolio 7% sequentially to $649.3 million.
Ellington Financial Faces Higher Costs and Corporate Drag
Compensation and benefits increased to $28.4 million from $21.3 million a year earlier. Investment and transaction-related costs also remained meaningful, including servicing expenses of $7.9 million and other investment-related expenses of $14.5 million.
Corporate/Other results were pressured by a substantial unrealized loss on unsecured debt, which more than offset a significantly lower incentive-fee accrual. Credit-spread tightening drove much of the debt valuation loss, while higher interest rates produced losses on fixed-receiver swaps used to hedge unsecured notes and preferred equity.
EFC's Liquidity Remains Solid
The recourse debt-to-equity ratio remained 1.9:1, while the overall debt-to-equity ratio increased to 9.2:1 from 9.0:1 sequentially amid higher non-recourse securitization-related borrowings. Unencumbered assets totaled $1.86 billion, including $247.5 million of cash and cash equivalents.
Of total recourse borrowings, 29% were long-term and non-mark-to-market, while 17% were unsecured. The weighted average remaining term of repo borrowings was 9.3 months, providing a relatively diversified funding structure for the portfolio.
Management noted that the first-half 2026 performance produced a 20% annualized economic return. Adjusted Distributable Earnings totaled $1.15 per share during the first six months, compared with dividends of 78 cents per share, while book value per share increased 45 cents over the period.
Digital Realty Trust (DLR - Free Report) reported second-quarter 2026 core FFO per share, excluding net promote of $2.13, up 13.9% from the year-ago level. The figure surpassed the Zacks Consensus Estimate by 7.6%. Strong bookings, a record backlog and sharp renewal rent increases supported the quarter.
Prologis (PLD - Free Report) reported second-quarter 2026 core FFO per share of $1.63, outpacing the Zacks Consensus Estimate of $1.53. Results reflected strengthening demand, disciplined execution and expanding capabilities across logistics, data centers and energy.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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EFC Second-Quarter Earnings Beat Estimates on Longbridge Strength
Key Takeaways
Ellington Financial Inc. (EFC - Free Report) reported second-quarter 2026 adjusted earnings of 60 cents per share, up 27.7% from 47 cents a year ago. The figure surpassed the Zacks Consensus Estimate of 46 cents by 30.4%. Revenues of $72.3 million jumped 66.8% year over year and topped the consensus estimate of $66.8 million by 8.2%. However, the stock has seen limited movement since the earnings release on Aug. 7.
Results benefited from stronger net interest income, solid credit performance and contributions from Longbridge. Longbridge loan originations rose 38% year over year to $589.7 million, while its HMBS market share reached a record 29% during the quarter.
EFC's Interest Income Growth Supports Results
Interest income was $170.8 million in the second quarter, up from $115.5 million in the year-ago period. Interest expenses increased to $98.6 million from $72.1 million, reflecting higher financing costs. Total expenses rose to $76.0 million from $57.1 million.
The investment portfolio's net interest margin edged down to 3.36% from 3.37% in the prior quarter. Slightly higher asset yields were more than offset by a modest increase in funding costs. Positive carry from interest-rate swaps continued to support results, although the benefit moderated sequentially.
Ellington Financial's Investment Portfolio Expands
The investment portfolio segment generated $119.9 million of interest and other income during the quarter. Net income attributable to common stockholders from the segment totaled $74.2 million, while Adjusted Distributable Earnings amounted to $75.7 million.
The adjusted long investment portfolio increased roughly 1% sequentially to $4.50 billion. Growth was driven by residential transition loans, commercial mortgage bridge loans and retained RMBS. EFC securitized $1.87 billion of unpaid principal balance across non-QM, Agency-eligible and closed-end second-lien loans through seven transactions.
EFC's Longbridge Business Maintains Momentum
Longbridge recorded $53.4 million of interest and other income and generated net income attributable to common stockholders of $30.2 million. Adjusted Distributable Earnings from the segment totaled $28.9 million.
Originations included $316.2 million of proprietary reverse mortgage loans and $273.5 million of HECM loans. The company completed two proprietary reverse mortgage securitizations. These securitizations more than offset new portfolio growth, reducing the net Longbridge portfolio 7% sequentially to $649.3 million.
Ellington Financial Faces Higher Costs and Corporate Drag
Compensation and benefits increased to $28.4 million from $21.3 million a year earlier. Investment and transaction-related costs also remained meaningful, including servicing expenses of $7.9 million and other investment-related expenses of $14.5 million.
Corporate/Other results were pressured by a substantial unrealized loss on unsecured debt, which more than offset a significantly lower incentive-fee accrual. Credit-spread tightening drove much of the debt valuation loss, while higher interest rates produced losses on fixed-receiver swaps used to hedge unsecured notes and preferred equity.
EFC's Liquidity Remains Solid
The recourse debt-to-equity ratio remained 1.9:1, while the overall debt-to-equity ratio increased to 9.2:1 from 9.0:1 sequentially amid higher non-recourse securitization-related borrowings. Unencumbered assets totaled $1.86 billion, including $247.5 million of cash and cash equivalents.
Ellington Financial's Funding Profile Adds Flexibility
Of total recourse borrowings, 29% were long-term and non-mark-to-market, while 17% were unsecured. The weighted average remaining term of repo borrowings was 9.3 months, providing a relatively diversified funding structure for the portfolio.
Management noted that the first-half 2026 performance produced a 20% annualized economic return. Adjusted Distributable Earnings totaled $1.15 per share during the first six months, compared with dividends of 78 cents per share, while book value per share increased 45 cents over the period.
EFC’s Zacks Rank
Ellinton Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ellington Financial Inc. Price, Consensus and EPS Surprise
Ellington Financial Inc. price-consensus-eps-surprise-chart | Ellington Financial Inc. Quote
Performance of Other REITs
Digital Realty Trust (DLR - Free Report) reported second-quarter 2026 core FFO per share, excluding net promote of $2.13, up 13.9% from the year-ago level. The figure surpassed the Zacks Consensus Estimate by 7.6%. Strong bookings, a record backlog and sharp renewal rent increases supported the quarter.
Prologis (PLD - Free Report) reported second-quarter 2026 core FFO per share of $1.63, outpacing the Zacks Consensus Estimate of $1.53. Results reflected strengthening demand, disciplined execution and expanding capabilities across logistics, data centers and energy.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.