Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Financial Third Quarter 2025 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in listen-only mode. The floor will be open for your questions following the presentation. If you would like to ask a question during that time, simply press star, then the number 1 on your telephone keypad. If at any time your question has been answered, you may remove yourself from the queue by pressing star 2. Lastly, if you should require operator assistance, please press star 0. It is now my pleasure to turn the call over to Aladeen Shillay. You may begin.

Thank you. Before we begin, I'd like to remind everyone that this conference call may include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and involve risks and uncertainties detailed in our annual and quarterly reports filed with the SEC. Actual results may differ materially from these statements, so they should not be considered to be predictions of future events. The company undertakes no obligation to update these forward-looking statements. Joining me today are Larry Penn, Chief Executive Officer of Ellington Financial, Mark Tkosky, Co-Chief Investment Officer, and J.R. Hurley, Chief Financial Officer. Our third quarter earnings conference call presentation is available on our website, EllingtonFinancial.com. Today's call will track that presentation, and all statements and references to figures are qualified by the important notice and endnotes in the presentation. With that, I'll hand it over to Larry. Thanks, Eladine.

Good morning, everyone, and thank you for joining us today. I'll begin on slide three of the presentation. Ellington Financial delivered another quarter of strong performance with strategic execution, highlighted by the continued growth of our adjustable distributable earnings, the continued growth of our investment portfolio, and the continued strengthening of our balance sheet. For the third quarter, we reported gap net income of $0.29 per share and ADE of $0.53 per share, which set a new quarterly high for this metric since we started reporting it in 2022 and which once again significantly exceeded our $0.39 per share dividends for the quarter. The increase in ADE over the past several quarters is the direct result of higher net interest income from our loan portfolios, reflecting both the growth of those portfolios and their strong ongoing credit performance, combined with sizable proprietary reverse mortgage securitization gains at Longbridge, where we're now completing roughly one reverse prop securitization per quarter. Our quarterly results also benefited from robust gains from securitizations of non-QM loans and closed-end second lien loans. We priced a total of seven securitizations during the quarter. That's a record for us. And including transactions completed subsequent to quarter end, have now priced a total of 20 securitizations year-to-date. That's more than triple last year's pace. The EFMT securitization franchise has become a a tremendous asset for Ellington Financial, allowing us to access liquidity from many of the largest fixed income investors in the world. Finally, in addition to all these drivers, we also had excellent performance in our securities businesses and strong earnings from our affiliate loan originators, such as Landshore. Shifting to our balance sheet, our total portfolio holdings grew by 12% during the quarter as we continue to deploy capital to our highest conviction loan businesses. Portfolio growth was led by non-QM, proprietary reverse mortgage, and commercial mortgage bridge loans, and complemented by opportunistic additions of other residential mortgage loans and CLOs as well. Notably, Longbridge delivered a record quarter for proprietary reverse origination volumes. Demand from borrowers for Longbridge's prop products continues to grow, but just as importantly, demand from investors remains strong for the resulting securitization debt tranches. I believe that Ellington Financial, with our Longbridge subsidiary and our securitization franchise, is uniquely positioned to profitably intermediate between proper-verse mortgage borrowers and investment-grade debt investors. Moving to the financing side, we further strengthen our balance sheet by increasing our long-term, non-mark-to-market financings in two key ways. First, by accelerating our pace of securitizations, and second, by expanding our access to long-term unsecured financing. First, as I mentioned earlier, we price seven securitizations during the quarter. Importantly, we are close to pricing our inaugural securitization of residential transition loans, which would reduce reliance on short-term financing and that strategy as well, unlock capital for redeployment, and create high-yielding retain tranches for our portfolio. Securitizations are important because they provide stable, non-mark-to-market funding while reducing reliance on repo. This greatly enhances capital efficiency, and I'll elaborate on that later in my concluding remarks. Securitizations also allow us to manufacture high-yielding retain tranches with valuable call options. These retained tranches are generating some of the most attractive registered returns across our platform, and they contribute strongly to ADE, even without repo financing. Second on the financing side, on the final day of the third quarter, we successfully priced $400 million of five-year senior unsecured notes, rated by Moody's and Fitch, and broadly distributed to institutional investors across more than 80 accounts. We utilized more than half the proceeds to reduce repo borrowings, with the remainder funding new, high-yielding investments. The unsecured notes priced at 7 3⁄8%, representing a 363 basis points spread over the five-year Treasury at the time. We were pleased with the execution and the strong investor demand, and encouraged to see the bonds trading well following issuance. We expect pricing to improve on future transactions as we become a more established unsecured note issuer and as we migrate a greater share of our borrowings to long-term financing, creating a virtuous cycle. With that, I'll turn the call over to JR to walk through our financial results in more detail.

Thanks, Larry. Good morning, everyone. For the third quarter, we reported gap net income of $0.29 per common share on a fully market-to-market basis, and ADE of 53 cents per share. On slide five of the deck, you can see the portfolio income breakdown by strategy, 42 cents per share from credit, 4 cents from agency, and 9 cents from Longbridge. And on slide six, you can see the ADE breakdown by segment, 59 cents per share from the investment portfolio segment, and 16 cents from the Longbridge segment. In the credit portfolio, net interest income grew sequentially, and we also had net realized and unrealized gains on residential transition loans and other loans in ADS. Partially offsetting higher net interest income were net realized and unrealized losses on non-QM retained tranches, COOs, Ford MSR-related investments, and residential REO. We continue to benefit from solid credit performance in our loan portfolios and from strong earnings that are affiliate loan originators. I'd like to highlight a new slide in the earnings presentation. Please turn to slide 15. This slide illustrates the strong credit performance of our loan portfolios over time, reflected in the exceptionally low realized credit losses across our residential and commercial loan strategies since each business's inception. Note that the realized credit loss rate is shown on a cumulative inception-to-date basis. If presented on an annualized basis, these percentages would be even lower. This metric captures the quality of our loan underwriting, incorporating both loans that performed as expected and paid off in maturity, and loans that require individual workout efforts. On the top right, you'll see just 13 basis points of cumulative realized credit losses on approximately $14.7 billion of residential mortgage loan fundings spanning non-QM, RTL, home equity, and proprietary reverse mortgages. And on the bottom right, cumulative losses total only 47 basis points on more than $2 billion of commercial mortgage bridge loan originations dating back to before COVID. The combination of the strong credit performance and the high yield of these loans has been a key driver of EFT's sustained growth in ADE over time. Moving to agency, that portfolio also generated strong results in the third quarter with net gains on both our long agency RMBS and associated interest rate hedges. Lower interest rates and reduced volatility, together with tightening agency yield spreads, created a favorable environment that was broadly supportive of portfolio performance. The Longbridge segment had another excellent quarter, with strong contributions from both originations and servicing. Origination profits were driven by higher origination volumes of prop reverse mortgage loans, higher origination margins for HECM reverse mortgage loans, and net gains related to the prop loan securization completed during the quarter. Meanwhile, base servicing net income, strong tail securitization executions, and a net gain on the HMBS MSR equivalent, primarily due to tighter HMBS yield spreads, drove the contribution from servicing. These gains were partially offset by a net unrealized loss on the retained tranches of prop reverse securitization due to faster prepayment speed assumptions, lower HPA projections, and higher applied discount rates. Turning now to portfolio changes during the quarter. Slide 7 shows an 11% increase in our adjusted long credit portfolio to 3.56% quarter over quarter. Our portfolios of non-QM loans, commercial mortgage bridge loans, other residential loans, and CLOs all expanded, as did our portfolio of retained non-QM RMBS, in that case from the securitizations we executed during the quarter. These increases were partially offset by the impact of loans sold into securitization, net sales of non-agency RMBS, and the smaller residential transition loan portfolio, with principal paydowns in that portfolio exceeding new purchases. For our RTL, commercial mortgage bridge, and consumer loan portfolios, we received total principal paydowns of $352 million during the third quarter, which represented 21% of the combined fair value of those portfolios coming into the quarter, as those short-duration portfolios continued to return capital steadily. On slide 8, you can see that our total long agency RMBS portfolio decreased by 18% to $221 million due to net sales. Slide 9 illustrates that our long-bridge portfolio increased by a substantial 37% to $750 million, driven by a record quarter of prop-reverse mortgage loan originations, partially offset by the impact of a prop-reverse securitization completed during the quarter. Please turn next to slide 10 for a summary of our borrowings. At September 30th, the total weighted average borrowing rate on recourse borrowings decreased by 8 basis points to 5.99% overall, with a notable 17 basis point decline on credit borrowings. Quarter over quarter, the net interest margin on our credit portfolio increased by 54 basis points, reflecting both that lower cost of funds as well as higher asset yield. while the NIM on agency decreased slightly by two basis points. At September 30th, our recourse debt-to-equity ratio was 1.8 to 1, up slightly from 1.7 to 1 as of June 30th, while our overall debt-to-equity ratio was down slightly to 8.6 to 1 from 8.7 to 1. During the quarter, we improved financing terms on two Longbridge-related facilities. On September 30th, we priced $400 million of five-year senior unsecured notes at a fixed coupon of 7.38%, which was a 363 basis point spread to the five-year U.S. Treasury at the time. Consistent with our goal of staying neutral to the path of interest rates, upon pricing, we immediately swapped the fixed coupon to a floating rate, thus locking in that 363 basis point spread. The notes issuance closed in early October and will appear on our balance sheet beginning in the fourth quarter. As of October 31st, nearly 20% of our recourse borrowings are unsecured, and of equal importance, the percentage of those borrowings subject to mark-to-market margining declined to 61% from 74% month over month. We expect our notes offering to increase our overall cost of funds by approximately 17 basis points. Keep in mind that this figure does not capture the expected accretive benefit of adding more assets that yields above the cost of this debt, as well as the release of capital reserves related to the repo paydown, which Larry will elaborate on later. In keeping with our mark-to-market philosophy, we'll elect the fair value option on these new unsecured notes, as we have for our other notes, and marked them to market through the income statement. As a result of this election, we expensed all associated yield costs in October

rather than amortizing them over the life of the notes.

At September 30th, combined cash and unencumbered assets were about $1.2 billion, or about two-thirds of our total equity. Book value per share was $13.40, an economic return for the third quarter, was 9.2% annualized. With that, I'll pass it over to Mark.

Thanks, JR. This was an important quarter in EFC's evolution. As Larry mentioned, we continued to grow ADE, and we made our company more resilient. To be clear, repo financing markets have been functioning extremely well, with both ample liquidity and competitive terms. But EFC's balance sheet is stronger when we diversify our funding sources and rely less on short-term repo. Our debt deal was a significant step in that direction, as were our seven securitizations where we replaced repo funding with non-market-to-market debt. Our resiliency is also a function of the downside protections we put in place, including our credit hedges. While these hedges were a drag on returns this quarter, we continue to maintain them as an important safeguard, especially as some signs of potential cracks in the economy have surfaced. For example, there were two recent well-publicized bankruptcies in the corporate credit markets, and job formation has weakened substantially compared with earlier this year. These are the kinds of market risks that, should they become more widespread, our credit hedges are designed to protect against. In addition, our focus on higher FICO, lower LTV loans, and our purchase activity further enhances the resilience of our portfolio. We continue to invest in proprietary technologies that enable our affiliate loan originators and other partners to originate and deliver loans more efficiently to us. Those technology investments are paying off through higher purchase volumes as we have greatly expanded the breadth of originators who sell loans to us. We're also optimistic about the potential for technology to both automate and improve many aspects of loan underwriting. These technology initiatives helped facilitate our 12% quarter-over-quarter portfolio growth, which was driven by the growth in our loan strategies and our ability to efficiently securitize our loans. With rates moving slightly lower, this trend should continue if not accelerate. In addition to increasing our loan purchasers, we are also expanding our reach. We have recently begun purchasing two particular types of loans that are eligible for purchase by Fannie Mae and Freddie Mac, but which instead have been increasingly purchased by private investors. We expect to launch a securitization of these loans in coming months. This agency-eligible mortgage space is particularly interesting as the current administration appears comfortable with private capital stepping into areas once dominated by the GSEs. This could be a unique moment and a potentially very large opportunity for EFC. Another current focus area for us is buying seasoned mortgage loan portfolios from banks. With rates lower and spreads tighter, many bank portfolios that used to be significantly underwater are now much less so, and this is enticing many banks to shed what they consider to be non-core assets. Since the start of the fourth quarter, we have seen more loan packages come to market from bank sellers, and so far, we have acquired two such packages. We think this could become a significant area of growth for us going forward. In general, we are following the same EFC playbook while expanding it. Our approach is to use proprietary switching models to buy a broad range of mortgage products, term out the financing through securitizations, and then retain in our portfolio high-yielding tranche investments along with potentially very valuable call options. We started doing this in 2017 with non-QM deals, then added second liens and prop reverse. And now we are in the market with an RTL deal and plan to securitize agency-eligible mortgages on the horizon as well. Meanwhile, as we expand the array of products that we're buying and securitizing, we're also providing our affiliate loan originators more ways to make money by expanding the product sets that they can offer to their customers. The synergistic relationships help drive our portfolio growth while also increasing our affiliate loan originators' profits, which then further enhances our earnings and our book value per share through the equity stakes we hold in these originators. This playbook is the main driver of the strong ADE growth this year, especially with the significant contributions to ADE we've seen from both our retained tranches and our stakes and originators, including Longbridge, of course. The process of expanding our footprint in the securitization markets has itself become a virtuous cycle. We have built our EFMT securitization brand over the past eight years, dating back to our first deal in 2017, and each new transaction and loan product further cements our stature in the market and builds our investor base, contributing to better execution levels. Looking ahead, we actually see a richer opportunity set than we did in the first half of the year. Loan volumes have increased with mortgage rates now more than 80 basis points lower than earlier in the year. With an expanding footprint in a larger market, our securitization volumes are up significantly. However, the overall credit backdrop has weakened. HPA has stalled, more consumers are under financial strain, and many corporations aren't just slowing their hiring but are actively reducing headcount. We will continue to rely on a data-driven, model-based investment approach to pursue high returns while limiting downside risk. Now back to Larry.

Thanks, Mark. To sum up, this was an excellent quarter for Ellington Financial on a number of fronts. We achieved earnings growth and meaningful portfolio expansion, and we marked a significant inflection point in evolving our financing base, all of which we think position us well for continued earning strength and dividend coverage in the quarters ahead. I'm pleased to report that this momentum has continued into the fourth quarter, with securitization activity remaining robust and origination volume strong at Longbridge and at our non-QM loan originator affiliates, Lendsure and American Heritage Lending. Of course, we've also been hard at work deploying the proceeds from our unsecured note issuance. We've used a chunk of the proceeds to grow the investment portfolio by more than 5% in October alone. And we've used most of the remainder of the proceeds to pay down repo as planned. Our ADE generation power is very strong. So it's good that we have some ADE to spare going into the fourth quarter, as we expect to experience a modest near-term drag on ADE as we deploy the proceeds from our notes issuance. But even after we deploy those proceeds, we expect to realize additional, more subtle benefits from our notes issuance over time, as I'll now explain. The first additional benefit is through increased capital efficiency, which is a byproduct of replacing mark-to-market financing, like short-term repo, with long-term, non-mark-to-market financing. Specifically, and consistent with our disciplined risk management approach, we maintain extra cash and capital reserves against our repo and other mark-to-market facilities to guard against potential market shocks. We can reduce those reserves when we replace repo with long-term unsecured notes, which frees up capital that can be redeployed into higher-yielding assets, thereby further amplifying long-term earnings potential. As an aside, similar benefits apply to our securitization financings. The second additional benefit from our notes offering is a much longer-term benefit. We view our shift toward a greater proportion of long-term unsecured ad securitization financing and a lesser proportion of shorter-term repo financing as a fundamental evolution of our capital structure. This shift is fortifying our balance sheet, enhancing risk management, and supporting earning stability. Including our existing $263 million of unsecured notes, nearly 20% of our recourse borrowings are now unsecured as of October 31st, and we intend to increase that proportion over time. And as this evolution progresses, we expect that we'll see upgrades in our credit ratings, which should enable us to issue more unsecured debt at even more attractive economic terms, setting off a virtuous cycle. As a result of these multifaceted dynamics, I believe that our unsecured notes program will enable us to both build a more resilient balance sheet and expand our earnings power. As always, our goal is to deliver durable, high-risk adjusted returns to shareholders across market cycles. Looking ahead, with conservative leverage, ample liquidity from a recent unsecured notes issuance, and a steady pace of securitizations, we believe that Ellington Financial is well-positioned to continue delivering strong and sustainable dividend coverage. With that, let's open the floor to Q&A. Operator, please go ahead.

At this time, if you would like to ask a question, simply press star, then the number one on your telephone keypad. You may remove yourself from the queue by pressing star, too. We will go first to Crispin Love with Piper Sandler.

Thank you. Good morning. First, just on the loan originator platforms, we've started to see a more conducive mortgage rate environment. Can you just discuss how this has changed valuations in your stakes and then overall operating performance, increased flow to Ellington? And then are there any other areas where you're looking to add capacity in other platforms or new platforms from an originator level?

Okay, JR, you want to talk about valuations, sort of generally speaking, how we value and how, you know, the recent tailwinds are helping valuations?

Yeah, sure. Thanks, Kristen. So the stakes are third-party valued twice a year, and then the other two times we adjust based on interim P&L. And the valuation providers are typically looking at, broadly speaking, three data points, trailing earnings, forward earnings, and then multiples relative to the market. And so, you know, I think there are a few factors at play. There have been some publicized trades in the market at multiples to book, premiums to book. But at the same time, book value has built up because earnings have been so powerful. And in many of these cases, we're also getting distributions of those earnings. So we get to return cash and then redeploy it. And so I'd say that the strong earnings performance has reflected through higher book value, but has also led to some more liquidity for these platforms and higher multiples. We have a table in our 10Q where we go through the multiples of earnings that our valuations reflect, and they're not at the same levels as, you know, one particularly notable transaction that happened, you know, within the last couple of months. So, you know, add a premium to book reflecting the earnings power of the platform, but not at the premium reflected in that transaction. So if that helps answer the question, I mean, earnings have driven book value, which has driven values, and, you know, just interim P&L is reflected in our market market as we capture the benefit of those earnings.

Yeah, and then in terms of new products, I think, right, Kristen, was that your question? Is are we looking at adding stakes in any new products? Is that right? Yeah, that's right. Yeah. So, Mark, I'm not aware of any new products. We are looking at potentially adding some additional servicing capacity in a small way, but no, I'm not. Mark, are you aware of anything?

Yeah, I mean, the one thing I would say, Crispin, is that you are starting to see adjustable rate mortgages taking an increasing share of the new origination market. I think for some originators in the agency space, it's as much as 10%. And if I go back to the early days, and I'm talking 2015, 2016, 2017, that product was 100% adjustable rate. It used to be all, you know, seven-year arms, right? So we are starting to see some demand for adjustable rate mortgages, and part of that is a consequence of the steeper yield curve where you can offer a little bit lower rate on a seven-year arm than you can on a fixed rate. So that's a new product. That's one thing that we've been working with some of our affiliates and some other originators with.

Great, Mark. That's helpful. And Mark, I found your comments on buying loans from banks interesting. Can you just dig a little bit deeper on that opportunity? Is it primarily commercial real estate loans? Is there any resi in there? And then just what types of banks are you dealing with? Is it more community banks or larger ones as well?

so the two transactions i referenced in the prepared remarks were both uh residential mortgage loans one of them it turns out was actually um adjustable rates so these were smaller banks they weren't the um you know the big g sibs and you know you have a lot of banks sitting on portfolios that they desperately want to restructure. It's, I think, more of an issue in – it's more of a factor in the agency MBS market where you have a lot of banks still sitting on big portfolios of Fannie 2s, Fannie 2 and Fs, which have really been a drag on NIM. And I think it's kind of interesting that most of the M&A activity you've seen involving banks in the last couple years, after each transaction, you've seen fairly large portfolio restructurings. So if M&A increases, I think it's going to lead to more activity from banks shedding loans they've held in portfolio for a while. And I just think the natural process of lower yields, a steeper yield curve, tighter credit spreads, is lifting up the price of some loans on balance sheet to the point where the tradeoff of taking a loss and getting to reorient the portfolio is palatable. So I look for more of that to continue should the rate environment stay where we are now.

Great. Thank you, Mark. I appreciate you all taking my questions.

Thanks, Crispin.

We'll move next to Bose George with KBW.

Good morning, guys. This is actually Frankie on for Bose. First questions on credit. You touched on weaker consumer, a little softness in the labor market, negative HBA. can you just elaborate on maybe what you're seeing within your portfolio and where you're seeing the best allocation of capital today?

Sure. So, yeah, we have the new slide JR talked about, which directly shows the credit performance of what we're doing on the loan side and residential and commercial space. So what I would say is if you look at consumer spending, and you really partition it as a function of income levels, the weakness is, by and large, at the bottom 50% of income levels. And so you see it impacting subprime auto. You see it impacting lower FICO credit cards. You see it impacting portions of the FHA and VA portfolios, which tend to be lower credit quality than what you see from Fannie and Freddie. If you look at higher-end borrowers, that spending has been continuing, and their credit performance, and that's really where we're focused, has been very strong. You know, I also just, you know, I put in into the prepared remarks that comments that you've seen a pickup in the number of companies that are talking about layoffs. And now those layoffs, which some corporations have been talking about, it seems like that could be something that could impact some borrowers that are at higher wage levels. So right now in terms of credit performance, you know, everything has been performing well. And we've made a lot of progress this year, I think, in working out some filling concessions we had in the small balance commercial portfolio. But I just wanted to put that comment in there because it is something that we are – it's on our radar and we're thinking about.

Yeah, and if – Mark, just to follow up on that, on slide 15, I just want to reemphasize what JR said during the prepared remarks, which is that these are non-annualized. These are cumulative numbers. So, you know, our commercial mortgage loan business, you know, bridge loan business, which goes back, gosh, 10 years at least, you know, when you see 47 basis points of cumulative losses, that's over 10 years. So, obviously, it would be, you know, anything on an annual life space would be much smaller. On the resi side, again, 13 basis points goes back many, many, many years. So, we're really pleased with this performance. As Mark says, we've been, you know, laser focused on FICO, which has really helped us. And, you know, of course, in RTL, all our loans have personal guarantees. So, you know, we feel, you know, we feel very good about where we stand. We did have a couple of loans that we talked about on some relatively recent earnings calls that in the small balance commercial space, one of them has been resolved. One of them is actually now going quite well towards resolving, I would say, later next year. But, you know, things are looking good. So we really feel good about where we stand.

Great. Thank you. And then you guys had a strong ADE over the course of the past year. Do you see any maybe uptick in dividend level? And also, could you quantify the drag you mentioned on ADE in the fourth quarter?

Right. So, in terms of the drag, we, you know, I think JR mentioned that our sort of overall cost of funds, all of the things being equal, from where we stand at, you know, around now, would be about 17 basis points, right, JR? Higher. So, yeah. Again, I mean, as I said, we really have some good ADE to spare coming in, if you will. We still, I think, believe that, you know, we're going to be able to continue to cover the dividend. I don't want to say – I wouldn't say that we have any plans. We certainly don't have any plans to lower the dividend. And I think it's just at a level right now, you know, 11-handle to yield. I think it's a good dividend. We just want to keep covering it and covering it as we have been.

Thank you. That's all from me.

And we will move next to Trevor Cranston with Citizens JMP.

Hey, thanks. I have a question on your comments on sort of the general credit backdrop and credit performance. Looking at the credit hedge portfolio, it looks like the size of the hedge positions declined somewhat in 3Q. So I was wondering if you could just maybe provide some commentary on you guys are thinking about the risk of sort of ground-based spread widening and how you guys are approaching the credit hedge part of the portfolio right now.

Yeah, the drop in the credit hedge was, I would call it a little more of a blip, if you will, as we were about to, you know, we literally priced that deal at quarter end. And then basically being awash in cash, we decided that on a short-term basis we would lower that credit hedge the credit hedge is there for a rainy day and for resiliency in a market shock and having basically all that cash coming in obviated the need for as much of a credit hedge so I do expect that to continue to increase as we deploy that cash as we've talked about into new, you know, high-yielding investments that are more correlated, obviously, to overall, you know, market risks. So I would view that, you know, as a little bit of a blip in terms of that, you know, that big downward move there. Okay, that makes sense. And then, you know,

you talked about working towards deploying the capital from the debt issuance at the end of the quarter. Obviously, you guys have been able to do some issuance on the common equity side through the ATM plan as well. Should we think about the debt issuance decreasing your appetite for common equity in the near term, or is the amount of issuance there small enough that it doesn't

really move the needle enough to change things? Yeah, we can deploy pretty quickly. I would like to note that our ATM issuance has been no accretive. So I think that's really important. Certainly want to keep that up. But yeah, exactly. I think that we did have a good quarter for ATM issuance, but we're just, because of all the flow that we've talked about on the call previously, we are able to deploy capital, you know, quite quickly, generally speaking. We have so many different strategies that we can deploy into, and, you know, we pick and choose which ones, you know, look the best at any moment in time. So, I would say that we don't really view them as alternatives, I would say, and, you know, additional ATM issuance is not only accretive nowadays, but it also helps our G&A ratios and things like that. So, just a lot of good reasons to keep that going. You know, obviously, we don't want to, you know, we like to see our stock trading in premium, and, you know, we don't want to do anything rash to, you know, to potentially change that situation.

Yeah, and just to add on that, I mean, we mentioned that October, the portfolio was up, you know, more than 5%. We didn't quantify it exactly, but that's on a $4 billion base. So, you know, 5%, that's $200 million right there. We raised $400 and mentioned we're using more than half to pay down repo, and we had 12% portfolio growth in Q3. So I guess the point is that, underscoring Larry's point, that deployment and portfolio ramp has not been an issue for us in recent months. And we did raise accretively in the ATM during the quarter relative net relative to where the book value per share settled at sub-30.

Okay, that's helpful. Thank you.

And we'll move next to Timothy D'Agostino with B. Riley Securities.

Yeah, hi, thank you. Good morning. On Longbridge and the proprietary reverse mortgage product, you had mentioned that it was like record volume origination. I was wondering within that market, what does competition look like for you all?

Yeah, there's not much. In the prop space in particular, there are HECM issuers, originators, there are more of those, I guess you could say. Longbridge overall is number two in the space, but in terms of volumes, by some metrics, sometimes number one. But in Prop, it's really, there are two other competitors. One of them is a public company. One of them isn't. And I think, you know, the reason that it's, I think, harder for others to originate that product is that they don't have the kind of the capital base and the outlet for the product the way that we do, you know, in a kind of vertically integrated way where we have Ellington Financial to read that needs to put money to work. and, you know, we have the originator, obviously, that can originate the product for us. So, and it's, you know, so it's definitely less competition in that space than in, you know, in other spaces and, you know, I think we're in a great competitive position. The fact that our securitization is going so well has meant that we've been able to actually offer better terms to borrowers because the securitization outlet has provided us, you know, better execution over, you know, the past several quarters, so that's translated into better rates for borrowers, which has translated into also higher volumes for us, right, where you can offer better terms, we can get higher volumes, so that's kind of what's been going on there, and hopefully that will continue.

Okay, great, yeah, and then just quickly flipping to the credit portfolio, quarter-over-quarter where it seems like non-QM had the most investment quarter over quarter. I was just wondering what you're seeing in that market

and why do you like it so much? Yeah, thank you.

Mark? So non-QM, it's not a monolith, right? There's loans to investors. There's owner-occupied loans. There's a range of documentation types, you know, from FullDoc to bank statements and a few others. And I guess we've been at the non-QM market since 2014. That's when we made our initial stake in our first portfolio company, Lensure. So, you know, over the past 11 years, we have spent a lot of time and effort building out our credit modeling, our prepayment modeling, our deepening the relationship between our originator affiliates where we own a portion of the company, as well as others I'd call just origination partners where we might not own a stake in them, but we have active dialogue on the underwriting guidelines. We have a team of people that are on the road basically every day visiting originators, talking to underwriters, talking to appraisers, thinking of what are really, you know, best practices in terms of the process for originating loans. So we have really deep sort of native understanding of that market. And it's grown. You know, you've seen Fannie and Freddie, you know, not expand their guidelines, in some ways constrict their guidelines. And you have, you know, I'd say it's, you know, 10% to 15% of the home buying universe that are not served well by the GSEs. And that's really, you know, the core of non-QM. And I think, you know, a couple things have happened for non-QM in the past year or so. One is that you've seen a broad-based migration up in FICO, which we like. There's still been a lot of discipline on LTV. And most of what we do on a portfolio basis is below 70 LTV in aggregate. And you've seen significant securitization volumes have spread this year. So the non-QM securitization market has grown a lot, and it's gotten more liquid and more commoditized, and it's attracted a bigger universe of investigative bond buyers. And all those things together have worked in concert to tighten spreads. So the ability to buy loans that are well underwritten, to hire FICO borrowers, and then securitize them with materially tighter spreads on the IG bonds than what you were looking at in a lot of 24, and to have more certainty of execution because there's more liquidity in the market, has made it an asset class. that we have scale to it, and, you know, it's leaving our portfolio with very attractive retained investments. And so it's really those two things. It's the volume, the scale, the underwriting discipline we've brought to it levered with these tighter investment-grade spreads that has made that sector very attractive to us.

Great. Thank you so much.

Thank you.

And we will move next to Eric Hagen with BTIG.

Hey, thanks. We actually have a follow-up on the Longbridge portfolio. I mean, when we think about the total upside potential in Longbridge, does it require more leverage to get to its target returns, and how do you think about the amount of leverage in that portfolio and what's both objective and sustainable for leverage in that portfolio?

So, thanks. I don't think it requires more leverage. Well, first of all, part of, you know, most of Longbridge's, and I'm not talking about the segment now, I'm just talking about the originator, right? Most of Longbridge's equity is in its servicing, right, especially a tech and servicing portfolio. And that's just a very high-yielding return on that, you know, on that servicing without any leverage. So much higher yielding than forward servicing. So that's number one. And then in terms of, you know, the proper verse loans, which is, you know, what ends up on our balance sheet, on EFC's balance sheet, both pre-securitization and post-securitization. Sure, while we're accumulating for securitization, there's going to be leverage there, right? But, again, post-securitization, where we retain just, you know, the residual, if you will, it's, you know, again, doesn't really require that. Now, we do consolidate those. So from a consolidation perspective, right, you might see, you know, more leverage that way. But, again, this is long-term, non-mark-to-market, you know, locked-in financing. So the way we look at it is we've just got a retained interest that's, you know, relatively small that doesn't require any additional leverage. So I don't think we're going to need more leverage there other than, you know, obviously as the origination volumes increase, you need more warehouse financing. But, again, that's sort of more transient, if you will, transitory.

Okay, that's really interesting. Interesting. Going back to non-QM for a second here, I mean, what's your perspective on convexity risk in the space right now? I mean, to your very point, it feels like so much progress has been made among brokers and loan officers. The asset class is higher quality, more transparent, more liquid. At the same time, I mean, we wonder how it would respond to lower rates, even meaningfully lower rates, and your ability to kind of backfill that portfolio if rates were to fall. Thank you guys so much.

Hey, Eric. So I would say it was interesting. In the last remittance cycle, jumbo speeds increased a lot. You didn't see a similar increase in non-QM. But if you go back to 2020, 2021, we know non-QM loans are capable of very fast prepayment speeds, you know, prepayment speeds in excess of 40 CPR, right? So, this rate move has certainly put prepayments and understanding prepayments and valuing that front and center because, you know, when you do a securitization, what you're retaining, a large portion of the investment is essentially sort of a... So, you know, we hedge that risk. I also think this drop in rates is adding a lot of value to the call options too, right? So you retain the ability to get loans at par that were 103 at origination and then a rate move could be worth 105. So we keep the call options. Those thrive in a rates down market. We have the excess spread piece, which has exposure to faster prepayment speeds, But understanding those prepayments, thoughtfully mitigating some of that prepayment risk through repayment penalties, which probably 30% of the market has, that's really one of our core competencies, right? So whether it's understanding the servicing portfolio we took over from Arlington, whether it's understanding IOs or inverse IOs, understanding how borrowers, different types of borrowers respond to prepayment options, I think it's something that we're really good at. We spend a huge amount of time on it. I think we have a lot of institutional knowledge. So you're exactly right. Prepayment speeds are on the radar. I would say, what does it do about portfolio size? I mean, typically when you go through a refi wave, it's not as though the market shrinks. The market just – borrowers are just exchanging an existing loan for a new loan. So I don't think it proposes – I don't think it presents any challenges from staying invested. And a lot of times when you go through a refi wave, the market – the size of the market actually grows because you have borrowers that if they refi, sometimes they're cashing out and they're replacing an older loan with a slightly bigger new loan. So I think, you know, we've been very focused on the prepayment risks of different loans and making sure that's properly hedged out and hedged out along the yield curve. But in terms of volumes, I think it'd be, you know, it'd be a big uptick in volumes. I think it creates a lot of opportunities.

Yeah. And if I could just add one thing. So, first of all, I want to point out that, as Mark said, I mean, we model this fanatically, right? So, one of the things we do while we're warehousing those loans awaiting securitization, non-QM loans, right, they have negative convexity. Well, we are short, you know, to some degree, we're short TBAs against those loans as well as other interest rate hedging products, right? So, we're short a negatively convex instrument against, you know, a negatively convex instrument that we're long. So that helps, and I think that also is something that I think we do rather uniquely in the space. The second thing I would say is that if you turn to page 14, you can see that on an overall portfolio basis, so 14 of the presentations are interest rate sensitivity analysis, and I think in the Q we go out to 100 basis points as well. I mean, you can see that when you look at the whole portfolio, even taking into account the fact that you've got prepayment risk on, And, you know, as Mark said, what are, you know, a chunk of IOs that were long in our non-QM retained tranches, right? Even when you take all that into account, it's really very contained, the negative convexity. So, again, on page 14, you can see, do we have some negative convexity? Yes. But, you know, you can see, you know, modest declines in equity for a 50 base point drop or 50 base point increase. But they're really quite modest. So and and so. So, again, this is something that we really model very, very closely based upon, you know, 30 plus years of experience.

Yep. Thank you guys so much. I appreciate you.

Next to Doug Harder with UBS.

Hi, thanks. It's actually Marissa on for Doug today. Just one for me more broadly on the reverse mortgage space. how are current market conditions, notably the outlook for moderating HPA and the evolving regulatory environment, how are they impacting your outlook for the ongoing opportunity in the space?

Sure. Okay, so on the regulatory front, there really is not much going on there in terms of, you know, there was some talk of actually some improvements, so-called HMBS 2.0, but that seems to be stalled. So there's really not much going on in the regulatory front. Now, HPA definitely matters. And, you know, we do, when we do prop reverse securitization, you know, we are retaining the residual, if you will. And so we do have exposure to long-term HPA. I think we mentioned in the prepared remarks that based upon some HPA stalling, we did adjust downward the mark on those retained pieces in the proper reverse mortgage securitizations. But, you know, again, it was quite contained, that effect, and, you know, offset by obviously a lot of other things going in the portfolio. So it's something that we keep a very close eye on, and it will impact, you know, the value of that portfolio. But you also have to remember there's a lot of cushion there, right? The prop reverse mortgages are originated, in fact, all reverse mortgages, right, originated at initial extremely low LTVs. So you're really not so much exposed to shorter-term HPA as you are to ultra-long-term HPA. I mean, in the short term, you know, you're talking about LTVs that are, you know, well below 50%, well below.

Got it. That's helpful.

That was our final question for today. We thank you for participating in the Ellington Financial Third Quarter 2025 Earnings Conference Call. You may disconnect your line at this time, and have a wonderful day.