Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Financial 4th 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 Aladin Shillet. 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 Takotsky, Co-Chief Investment Officer, and J.R. Hurley, Chief Financial Officer. Our fourth 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 end notes in the back of the presentation. With that, I'll hand the call over to Larry.

Thanks, Eladine. Good morning, everyone. Thank you for joining us today. I'll begin on slide three of the presentation. Ellington Financial closed out 2025 on a high note, capping a year of consistently strong performance, portfolio growth, and liability optimization. In the fourth quarter, and building on the momentum established throughout the year, our adjusted distributable earnings continued to substantially exceed our dividends. We further expanded our investment portfolio, and we continued to enhance our balance sheet. For the fourth quarter, we reported GAAP net income of $0.14 per share and ADE of $0.47 per share, which once again exceeded our $0.39 per share of dividends. I'm all the more pleased with these results, given that we experienced some short-term drags while we were deploying the proceeds from our unsecured notes offering and from our RTL securitization, which I'll discuss later. Our results were driven by exceptional performance and execution in our loan origination and securitization platforms, with outsized contributions once again from our Longridge segment. Our results were also reinforced by excellent credit performance across our residential and commercial loan portfolios. In early October, we successfully completed a $400 million unsecured notes offering, our largest to date, marking a significant step forward in the evolution of our capital structure. We were pleased with the execution and the robust investor demand, and are encouraged by the significant premium at which the bonds continue to trade today. Consistent with our stated intentions, we used a portion of the offering proceeds to reduce short-term repo financing. During the quarter, we also capitalized on the continued strength of the securitization markets, completing seven additional securitizations over the course of the quarter. Most notably, in November, we completed our first securitization of residential transition loans. This securitization carries a revolving structure, so as our securitized RTL loans pay off, we can effectively reuse the securitization debt to advance our flow of new RTL originations. Subsequent to year-end, we completed our first securitization of agency-eligible mortgage loans. With that securitization, we've now expanded our EFMT-branded securitization shelf to encompass five different residential loan sectors. This expansion allows us to turn out financing across all of our major residential loan strategies on a non-recourse, non-mark-to-market basis, replacing repo financing, and further enhancing balance sheet resilience and capital efficiency. Since launching our RTL strategy back in 2018, RTLs have generated consistently strong returns on equity for us. In the aftermath of 2022 and 2023, however, as credit spreads widened and the yield curve inverted, securitization economics for RTL were typically unattractive relative to simple repo financing. That calculus has now shifted. With the yield curve normalized, with securitization spreads relatively tight, and with the rating agencies taking a more constructive view of the product, securitization economics are now superior for RTO. The result is attractive long-term non-mark-to-market financing, helping us manufacture high-yielding retain tranches and enhance EFC's overall portfolio returns. As to our agency-eligible loan strategy, we initiated that strategy just last year, adding about $250 million of loans in that sector over the course of the second half of 2025. This move reflected a more general theme that we have highlighted on our prior earnings calls, moving into sectors where the GSEs are gradually reducing their footprint, which clears the way for private capital to step in and capture attractive risk-adjusted returns. We view the agency-eligible sector, particularly those subsectors where we think LLPAs are too high, as presenting a potentially significant long-term opportunity for EFC, especially given all the obvious synergies with our underwriting abilities, our sourcing channels, and the quality of our securitization platform. We also believe that the opportunities in the agency-eligible sector space will only get better, as policymakers appear increasingly receptive to an expanded role for private capital. Shifting over to EFC's balance sheet, we continue to focus on optimizing our capital structure and maximizing our resilience. In the fourth quarter, thanks to our unsecured notes offering, we almost doubled the proportion of our total recourse borrowings represented by long-term non-mark-to-market borrowings, and we increased our unencumbered assets by about 45%. Alongside these balance sheet enhancements, we continue to lean into attractive investment opportunities in the fourth quarter. We deployed a portion of the proceeds from the notes offering into new investment opportunities, expanding our portfolio by 9%, even after accounting for all our securitization activity. Our portfolio continues to benefit from strong origination and acquisition volumes across non-QM loans, agency-eligible loans, closed-end second lien loans, proprietary reverse mortgages, and commercial mortgage bridge loans. By year end, we had largely deployed the full proceeds of the notes offering, positioning the portfolio for continued earnings strength into the new year. All this momentum has carried into 2026. In January, with our common stock trading at a premium to book value per share, we raised common equity on an accretive basis, net of all deal costs. The issuance was not only accretive, but highly targeted. We sized the offering to generate the precise amount of proceeds we needed to redeem our highest cost tranche of preferred stock, which was our Series A preferred stock. And we announced the redemption of that tranche immediately following the closing of the offering. The coupon on our Series A preferred stock was over 9%, so starting tomorrow, when the required 30-day notice period ends and the redemption of that tranche is completed, our common shareholders will immediately see the benefit of a lower overall cost of capital. Meanwhile, we will continue to monitor the preferred equity market with an eye toward potentially refinancing that capital at a later date and at a later cost. With that, please turn to slide five, and I'll turn the call over to J.R. to walk through our financial results in more detail.

J.R.? J.R. Thanks, Larry. Good morning, everyone. For the fourth quarter, we reported gap net income of $0.14 per common share on a fully marked-to-market basis, and ADE of $0.47 per share. On slide five, you can see the portfolio income breakdown by strategy, $0.35 per share from credit, $0.04 from agency, and $0.15 from Longbridge. And on slide six, you can see the ADE breakdown by segment, $0.61 per share from the investment portfolio segment, and $0.13 from the Longbridge segment. In the credit portfolio, net interest income increased sequentially, and we also generated net realized and unrealized gains on non-QM retained tranches and forward MSR-related investments. Partially offsetting these results were net realized and unrealized losses on some of our other credit hedges, as well as losses on residential REO. We continue to benefit from excellent earnings contributions from our affiliate loan originators, along with strong credit performance across our loan businesses, including sequentially lower 90-day delinquency rates and continued low life-to-date realized credit losses in both our residential and commercial loan portfolios, as shown on slide 15. In the agency strategy, declining interest rate volatility and tightening agency yield spreads were broadly supportive of our portfolio in the fourth quarter. We generated strong results led by net gains on both long agency R&BF and interest rate hedges. The Longbridge segment had another excellent quarter as well, with positive contributions from both originations and servicing. Origination profits were driven by sequentially higher origination volumes, continued strong origination margins, and net gains related to two proprietary loan securitizations completed during the quarter. On the servicing side, steady-based servicing net income, strong tail securitization executions, and a net gain on the HMDS MSR equivalent all contributed positively. Net gains on interest rate hedges further contributed to results. Turning now to portfolio changes during the quarter. Slide 7 shows a 15% increase in our adjusted long credit portfolio to $4.1 billion quarter over quarter. Non-QM loans, agency eligible loans, closed and second lien loans, commercial mortgage bridge loans, ABS, and CLOs all expanded. Our portfolio of retained RMBS tranches also grew, in that case reflecting the securitizations we executed during the quarter. These increases were partially offset by the impact of loans sold into securitizations. Our short-duration loan portfolios continued to return capital at a healthy pace. For our RTL, commercial mortgage, and consumer loan portfolios, we received total principal paydowns of $207 million during the fourth quarter, which represented 12.7% of the combined fair value of those portfolios coming into the quarter. On slide eight, you can see that our total long agency RMBS portfolio decreased slightly to $218 million. Slide nine illustrates that our long-bridge portfolio decreased by 18% to $617 million as continued strong proprietary reverse mortgage loan origination volume was more than offset by the completion of two securitizations. Please turn next to slide 10 for a summary of our borrowings. At December 31st, the total weighted average borrowing rate on recourse borrowings decreased by 32 basis points to 5.67% overall, as the impact of lower short-term rates and tighter repo spreads more than offset the impact of a higher proportion of unsecured notes. Meanwhile, we lengthened the term of some of our larger warehouse lines, and as a result, the overall weighted average remaining term on our repo extended by 38% quarter over quarter to nearly nine months, which is detailed on slide 24. Quarter over quarter, the net interest margin on our credit portfolio decreased by 28 basis points, with lower asset yields more than offsetting a lower cost of funds. Our average asset yield declined, but that was only because we had a higher proportion of our assets, constituting loans held in warehouses pending securitization. This larger warehouse portfolio was the result of the deployment of the proceeds for the notes offering. The NIM on agency decreased by nine basis points, driven by a decrease in asset yields. On December 31st, our recourse debt-to-equity ratio was 1.9 to 1, up modestly from 1.8 to 1 as of September 30th. As noted earlier, we issued $400 million of unsecured notes during the quarter, a portion of which replaced repo borrowings. However, the remaining proceeds deployed alongside incremental borrowings into new investments more than offset the deleveraging impact of repo paydowns, securitizations, and higher total equity, resulting in a modest net increase in the overall leverage ratio. For the same reason, our overall debt-to-equity ratio increased to 9 to 1 from 8.6 to 1. As Larry mentioned, our balance sheet metrics strengthened meaningfully during the quarter. Quarter over quarter, out of our total recourse borrowings, the share of long-term non-market to market financings increased to 30% from 17%, and the share of unsecured borrowings increased to 18% from 8%. Unencumbered assets also grew meaningfully, increasing 45% to $1.77 billion, which was about 95% of total equity. Over time, we expect to continue this shift toward a greater proportion of unsecured non-marked market and longer-term financings through additional unsecured note issuance and securizations and the replacement of our highest-cost repo borrowings. We view this transition as a fundamental evolution of our balance sheet that is enhancing risk management and earning stability, and which we hope will also support stronger credit ratings for EFC and this lower borrowing cost over time. As I mentioned last quarter, we've elected the fair value option on our notes, as we have for our other secured debt, and we marked them to market through the income statement. As a result, we expensed all associated deal costs in October rather than amortizing them over the life of the notes. And with credit spreads tightening during the quarter, we also recorded an unrealized loss in the notes for the quarter. These non-recurring items, together with some short-term negative carry pending full deployment of the new note proceeds, represented a significant drag on our gap earnings for the quarter. At year end, book value per share was $13.16, and the economic return for the fourth quarter was 4.6% annualized. With that, I'll pass it over to Mark.

Thanks, JR. This was a highly productive quarter for EFC. We continued to execute our loan origination to securitization playbook, completing seven securitizations in Q4 across a variety of loan types, and that momentum has carried into 2026. Over the course of 2025, we expanded our footprint well beyond non-QM where we started. Our securitization platform now encompasses non-QM, second liens, reverse mortgages, residential transition loans, and agency-eligible loans. Over time, EFC has gotten a lot more efficient at maximizing profitability and managing risk across the full lifecycle of a loan, from purchase commitment through securitization exit. First, we earn a levered return while ramping for a deal, and we target a gain-on-sale profit to the securitization trust while hedging execution risk all along the way. Then at securitization time, we work to create high-yielding retained investments while adding to our growing portfolio of call options. When executed well in the cooperative market, this process is a virtuous cycle that is accretive to earnings at each step and is a key driver of the consistent results we have delivered over time. Another benefit of our large securization platform is that it allows us to provide consistent, competitive pricing to our origination partners and our affiliated originators across a broad range of loan types. What's more, the growing value of our stakes and those affiliated originators continue to generate strong results for EFC, both during the quarter and throughout 2025. But we weren't just productive on the asset side of the balance sheet. As Larry and J.R. mentioned, we are excited about the long-term benefits to EFC of being a Moody's and Fitch-rated bond issuer. The combination of the substantial non-mark-to-market financing we have built from being an active securitizer and now our latest bond issuance with very broad institutional participation is steadily reducing our dependence on short-term mark-to-market repo financing. I don't mean to imply that there is anything wrong with using repo as a financing tool. There isn't. Repo markets functioned extremely well throughout 2025, and in the fourth quarter, we were able to both extend term and lower our repo financing spreads even further. That ongoing compression in financing spreads has been important to protect earnings as asset spreads have tightened. We have also achieved tighter spreads in the investment-grade bonds we sell in securizations, which typically comprise more than 90% of a given deal. There were several important government policy announcements this past quarter and throughout 2025 that are relevant to EFC. The announcement of $200 billion of GSE MBS purchases was probably the most prominent. I won't go into details because there aren't many, but I will point out that this is not quantitative easing. Unlike QE, it is unlikely to meaningfully reduce duration or negative convexity in the market, and critically, it does not create bank reserves. What it has done is put a floor under agency MBS spreads and, by extension, other AAA-rated mortgage bonds like non-QM, second lien, and agency-eligible AAA tranches. But perhaps the more important point is that we are operating in a time of heightened policy uncertainty. Potential restrictions on institutional purchases of single-family rentals, G-fee reductions, LLPA changes, and mortgage insurance premium cuts are all on the table, each carrying implications for prepayment speeds, for the relative attractiveness of private label versus GSA execution, and maybe even for home prices. We have been focused on thinking carefully about these uncertainties and positioning the portfolio accordingly. As shown on slide four, net portfolio growth was strong in the fourth quarter, on the order of $400 million, and that's even after taking into account our strong securitization volume. This reflects years of methodically putting out our capabilities to source a more diverse set of loan products from a broader range of sellers and in a more automated fashion thanks to our loan portal. We're proud of the technology we have deployed to make it easy for partners to sell us loans while continuing to build symbiotic relationships with originators. Our goal is not to compete on price alone, but to differentiate through service quality and creative loan programs that respond to evolving markets. Not anything went according to plan this quarter. There have been some well-publicized challenges with bank loans, and our CLO portfolio, while small, was a modest drag. The RTL strategy also underperformed, weighed by securitization costs and REO workouts. Delinquencies there remain quite manageable, and in fact, we've seen strong resolution outcomes in January. We also had small losses in CMBS and ABS, which I view as idiosyncratic rather than systemic. And given that these kinds of air pockets were spread widely across the credit-sensitive markets in Q4, we've actually fared well. If anything, these dislocations are creating opportunities, and we will look to add securities where our analysis indicates the price drop is well beyond any change in fundamental value. Looking ahead, we need to keep our eye on credit. The housing market is showing somewhat broader signs of weakness than a year ago, and more and more borrowers are having trouble staying current. We have kept significant credit hedges in place, as shown on slide 20, and we continue to invest in our technology and sourcing to grow our loan origination footprint, which has been a key driver of our returns. Now, back to Larry.

Thanks, Mark. 2025 was an important year for Ellington Financial, and I'd like to close by highlighting what we achieved and how those accomplishments position us for 2026. I'll group 2025's achievements into five categories. First, we covered our dividend with adjusted distributable earnings in each of the four quarters of 2025, marking six consecutive quarters of dividend coverage. That consistency is particularly meaningful given how volatile markets have been, and it underscores both the resilience of our earnings engine and the benefits of our diversification. Second, we significantly strengthened our liability structure. Over the course of the year, we completed 25 securitizations, compared to just seven in 2024. We issued $400 million of unsecured notes and set the stage for more notes offerings in the future. We improved terms on existing secured financing lines, and we added several attractive new facilities. Taken together, these efforts supported not only portfolio growth, but also a meaningful and deliberate evolution of our funding profile, one that is more durable, more flexible, and better suited to support our long-term objectives. Third, our loan originator affiliates had exceptional performance. They grew origination volume significantly, they gained market share, and they made excellent earnings contributions to Ellington Financial's bottom line. Our vertical integration continues to provide us with a tangible competitive advantage, driving loan sourcing, supporting securitization scale, and strengthening our earnings power. Fourth, we continue to keep realized credit losses exceptionally low, which is a testament to our underwriting discipline and the depth of our asset management capabilities. Our delinquent inventory remains modest in size and is resolving nicely. Remember, we mark to market through the income statement, so for any loans that we expect to resolve below par, we've already taken that hit to income and book value per share. And fifth, and central to our growth story, we expanded our portfolio by almost 20% year-over-year to nearly $5 billion, while remaining disciplined on credit and risk management. That growth reflects both the payoff from technology initiatives and the addition of new strategic equity stakes with forward flow agreements. The flow we're seeing at Ellington from our residential loan origination portal, which we launched just 12 months ago, is currently around $400 million per month and growing, especially as we continue to add to our diverse roster of sellers. The success of our loan portal is a powerful demonstration of how Ellington's proprietary technology can scale EFC's sourcing footprint, improving underwriting efficiency, and deepen EFC's vertically integrated model.

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You'll experience music for just a moment. Please remain online. We will continue.

And, team, are we back? And, pardon your interruption, everyone, we are reconvening.

Sir, you may proceed with your presentation.

Okay, sorry about that. I'm going to back up just to be safe here with the fifth of our achievements. All right. And fifth and central to our growth story, we expanded our portfolio by almost 20% year-over-year to nearly $5 billion, while remaining disciplined on credit and risk management. That growth reflects both the payoff from technology initiatives and the addition of new strategic equity stakes with forward flow agreements. The flow we're seeing at Ellington from a residential loan origination portal, which we launched just 12 months ago, is currently around $400 million per month and growing, especially as we continue to add to our diverse roster of sellers. The success of our loan portal is a powerful demonstration of how Ellington's proprietary technology can scale EFC's sourcing footprint, improve underwriting efficiency, and deepen EFC's vertically integrated model. Complementing our investments in technology, we added two new strategic loan originator equity stakes in 2025, each paired with forward flow agreements that provide high-quality recurring loan flow. Together, these technology and strategic initiatives were key drivers of our portfolio growth in 2025, and we expect them to continue to support momentum in 2026. In fact, as to strategic initiatives, I'm pleased to report that we are now in contract to acquire a small residential mortgage servicer and are awaiting regulatory approval. Once completed, this acquisition will further enhance our vertical integration by bringing more servicing capabilities in-house, especially for delinquent assets. While it will take some time to build out the platform and design the servicing protocols, I believe that this acquisition will ultimately provide us with better control over our servicing outcomes and strengthen our ability to manage our loan portfolios across market cycles. Our priorities for 2026 are clear We are focused on growing our loan origination market share While maintaining strong credit performance Which, together with our securitization platform Should drive disciplined portfolio growth I am also pleased to report That 2026 is off to an excellent start We are estimating that EFC generated An economic return of approximately 2% In January with loan production and portfolio growth remaining strong, particularly in our non-QM, commercial mortgage bridge, and reverse mortgage loan businesses. Over EFC's nearly 20-year history, I believe that we have consistently demonstrated disciplined stewardship of shareholder capital and a willingness to act opportunistically when market conditions are favorable. Our decision to redeem our Series A preferred stock using a targeted common stock offering reflects that approach. We evaluated a range of alternatives, including refinancing our Series A preferred with new preferred equity, but given the persistent wide pricing we've seen in the preferred market, we felt the choice was clear. Our common stock offering was more than two and a half times oversubscribed with institutional orders alone and was executed efficiently, underscoring strong market support for the transaction and its rationale. In summary, I believe that the success we've had over the past year, expanding our loan sourcing, securitizing frequently and efficiently, strengthening our liability structure, and optimizing our capital base, all combined with our disciplined risk and liquidity management, position Ellington Financial to deliver resilient earnings and stable dividend coverage over time and across market environments. Our team deserves a lot of credit for all the hard work they've put in to help make this happen. With that, let's open to the floor to Q&A. Operator, please go ahead.

Thank you. If you'd like to ask a question, press star 1 now on your telephone keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. And we'll pause for just a moment to allow everyone a chance to join the queue. Thank you. We'll take our first question from Doug Harder with UBS. Please go ahead. Your line is open.

Thanks, and good morning. I'm hoping you could talk a little bit more about the decision to buy the servicer. You know, should, does that change, you know, any appetite for the assets that you're buying? Like, will you be interested in MSRs, or is it more a way to kind of optimize the loan portfolio you already have?

Mark, you want to take that? Sure. Hey, Doug. So, I think there were really a few considerations. First consideration was that there's been a tremendous consolidation in the servicing industry. You saw Mr. Cooper by Rushmore, and now Mr. Cooper being bought by Rocket. So the big box service is bigger, and there's less high-touch servicing capabilities out there to work with borrowers if they hit a speed bump, have a loss of income, get behind in a payment. And we believe that it's important for us to generate the best risk-adjusted returns that we have sort of best-in-class protocols and best-in-class technology for handling, you know, like later stage collections. So this is not about scaling something to be a low-cost Fannie servicer where everyone's on ACH and you're just dealing with, you know, just massive efficiencies. This is just the recognition that, as there's been consolidation in the servicing industry, there aren't a lot of good alternatives for servicing to work with borrowers that hit any kind of challenge. So, you know, it's going to take a while to build this out. Larry mentioned it's a small servicer. However, I think, you know, but the resident knowledge, sort of the native knowledge within Ellington Financial and Ellington Management Group more broadly about how best service, how best to work with borrowers that have a challenge is really, really deep between our team that does NPLs and RPLs, our team that does non-QM, our team that does RTL. We have several people here with multiple decades of experience, and our plan is to build out the technology with the servicer and then, as Larry mentioned in his prepared remark, you know, come up, you know, use our knowledge or existing knowledge about how to service loans to come up with best-in-class protocols and best-in-class workflow to make sure that we're getting the best results we possibly can on loans and that borrowers are getting the best servicing experience they can. And we just concluded that if we wanted to achieve that, it was something we had to build. We think that there's not enough of those capabilities out there in the marketplace that we could sort of, you know, assume that we could get those outcomes without doing it in-house.

That all makes sense. How do you think about the potential? Is this something that would just be used for the Ellington portfolio, or could it be used for third-party clients? And then just a clarification, is this entity owned within EFC, or is it going to be owned at broader Ellington?

Owned within EFC. Mark, you want to take the part?

Yeah, so the way I think about it is our job right now is to build out the technology, to build out the protocols, to have this servicer be what we regard as best in class and to, you know, demonstrate that to ourselves by, you know, seeing its servicing metrics, you know, roll to delinquency rates and how you deal with borrowers that hit a speed bump. I mean, there's a lot of sort of champion challenger metrics people use to evaluate services. So the first thing, we need to build it, and we need to get it to where we want it to be and how well it's operating efficiently. Once we do that, I certainly think that there's going to be other investors in the mortgage space that are going to recognize there's not a lot of capability out there now for later stage collections and might well have an interest in benefiting from what we're building. Great.

Appreciate it.

Thank you, Doug. Thank you. We'll move now to Eric Hagen of BTIG. Please go ahead. Your line is open.

Hi, this is Brendan on for Eric. Eric, can you discuss conditions right now for applying repo to the retained tranches held from securitization for non-QM and RTL? Have the terms improved in other scenarios where you could apply even more leverage to the retained tranches, and what would the returns look like?

Mark, do you want to take that? Do you want me to take that?

Sure, I can take it. Yeah, I mean, repo, I mentioned my prepared remarks. The repo market functioned really well this year, right? You had kind of gradually declining Fed funds rate, and then, you know, the Fed injected some reserves into the system when they thought bank reserves were getting low. So repo functioned extremely well. Financing spreads on retained tranches are – I think they're relatively low. I would say that those retained tranches are sort of inherently levered, right? You're dealing with small tranches at the bottom of the capital stack and securitization, or you're dealing with tranches where most of the cash flow is coming from excess spread. So those tranches, by nature of the investment and their leverage, already have a lot of price volatility. So I don't see us wanting to add more leverage on those tranches. You know, we tend to operate the company very conservably when it comes to repo, And by that, I mean that we have internal haircuts that are significantly higher than the advance rates our repo lenders would give us. So we might have, you know, loan strategies where, you know, lenders would lend us 90%, 95% cents on the dollar versus loan. And internally, we'll think that we want to only borrow less than that to make sure we have cash on hand if you have spread volatility, things like that. So, you know, we have plenty of ability to raise leverage if we want to. I don't feel as though, given the inherent price volatility, the retained tranches, that's probably a place where we would look to add it. Yeah, and if I could just add – Is that just on the road?

Well, I was just going to add that, you know, sort of think about – sure, we have some financing in that, But if you think about our long-term goals, right, around our financing structure, liability structure, right, so you think about unsecured notes especially, right, which we did a deal of seven, three, eights, now trading in the high sixes. You know, we want to see that keep coming down. Think about, you know, that it's our unsecured notes, and then I would say also our preferred equity. think of as those are really more the mechanisms of financing that. Now, of course, those are not as low cost as repo are. But remember, this is, you know, we're looking for this virtuous cycle. As Mark said, you know, if we're well into the teens just on an unlevered yield and we're financing, you know, at, you know, 6%, 7%, even 8-ish percent on preferred, it doesn't take much leverage just from those, you know, those instruments to have 20% plus, you know, ROE. So don't really need a lot of leverage. And if you think about the kind of repo that we said we paid down, actually, when we did that notes offering, you know, in the fourth quarter of October, it was, you know, this is exactly the type of, you know, higher cost repo that we would pay down first.

Thank you very much.

Thank you. We'll move on to Trevor Cranston of Citizens, JMP. Please go ahead. Your line is open.

Mark mentioned the government policy announcements during the quarter and the potential impact they have on Ellington. Can you maybe expand a little bit on specifically how you guys are approaching the agency-eligible market given the potential for changes to LLPAs or GFEs, you know, which could come about, I suppose, over the course of the year and sort of how that flows through to pricing, you know, prepay and convexity risk on those types of loans? Thanks.

Sure. Hey, Trevor. Oh, it's a great question. So, look, we don't have a crystal ball. We have a lot of resources to monitor potential policy changes. And I would say with this administration, lots of things are on the table. So the genesis of sort of agency eligible investor loans and second homes getting securitized in the private label market, you've seen this kind of off and on for the last five years. It certainly has accelerated some. And the reason is, is that the loan level price adjustments combined with the G-Fee are so far in excess of expected losses in those markets that the private label market has sort of been better pricing on the credit risk there, and it's overall better execution for loan originators, so it's flowing that way. Now, if there's a big change in LLPAs, you know, it's possible the math could tilt back to Fannie Freddie, and you could see a reduction in volume there. I would say right now the execution isn't close. So a small change in LLPAs I don't think is going to move the needle. You're still going to see the lion's share of that volume in the higher LLPA category, not the super low LTV stuff, still go in private label. But, you know, we have to watch it, and that's why I wanted to put that in the prepared remarks, that, you know, we're doing certain things now, you know, responding to pricing structures in the market in place now, and if pricing structures in the market in place change, you know, it can change the economics and things, and it'll change, you know, the opportunity set and what we do. So I'd say right now it would take a fairly significant change in LOPAs and G-fees to swing the pendulum back over to GSE execution on those loans, but it can certainly happen, And that's something that, you know, we can monitor it, we can't, you know, we can't hedge it, and we can't, you know, we can't control it. Now, the other implication is on the prepayment side of things, right? So if you have a big enough change in LLPA, sort of like when people talk about prepayment models, they talk about elbow shifts and changes in LLPA represent an elbow shift. You basically make certain loans more refinanceable. So when we evaluate some of the either premium investments in that space or the IOs or we've been doing more floaters, like on the deal we did, we had a big floater, so then you create, you know, an inverse I.O., you have a prepayment model. The prepayment model is sort of calibrated to current market levels, and the prepayment model doesn't know that a G-Fee, an LLPA cut or a G-Fee cut can happen in the future. So what we do is to sort of take into account that risk. Right now in those sectors, we're ramping up speeds higher than sort of what you'd get just to a calibrated model now. So, you know, we think it's enough for risk. That's something we want to manage to and take into account. And, you know, properly probability weight when we look at the distribution of recurrent returns. But, you know, I would say that we're not the only ones in the market that view this as a heightened risk. So you can dial up your prepayment speeds on those sectors and still buy things at market levels with very attractive returns. It's not as though the other market participants are ignoring this risk or turning a blind eye to it in the pricing.

Yeah, that makes sense. Okay, thanks very much.

Thanks, Trevor. Thank you. We'll now move on to Bose George of KBW. Your line is now open.

Good morning, guys. Thanks for taking your question. This is Frankie Libetti on for Bose. You had another strong quarter in origination activity. Can you just discuss the current competition you're seeing and current margins year-to-date?

Mark, why don't you cover the forward space? I'll cover the reverse space.

Sure. So in the forward space, so Non-QM, Second Lease, Aiden Salesman Investor, you know, I would say the competitive landscape in 2025 was there was competition, but I wouldn't characterize it as cutthroat competition. So when we would think about our loan level pricing that we put out every day, we would think about where we're going to buy bulk packages from either affiliated originators or just originators we partner with. We could price things at levels, and I mentioned this in my prepared remarks, such that I thought we had a gain on sale, securitizing them, and taking into account putting in the retained pieces at loss of just expected returns that we think are going to be very accretive for ADE. So, you know, the market's always competitive, but I've certainly seen times in, you know, my career where the pricing pressure seemed cutthroat, seemed as though, you know, that you weren't compensated for taking the risks you were having to take on. and that wasn't the case in 2025. So I think that it was competitive, but you could still price things with a margin and retain things with attractive yields.

Thanks.

And then let me cover the reverse space. So let's separate into two parts, right? There's the HECM originations, the FHA guarantee product, and then it's proprietary. So rates are still high relative to 2020, 2021. 2021. And so HECM volume, so industry-wide, really, you know, hasn't changed much recently. And I would say that it has a lot, if rates do drop, it would have a lot of room to grow substantially. We are, you know, Longbridge is, you know, has been at times, you know, the highest, second highest. I'm always in the top three originators in the HECM space. There is competition. The margins, so the sort of the volumes are kind of are what they are, if you will, in that space. Obviously, market share is going to affect things. But in terms of the margins, you know, gain on sale margins, that is driven to a large extent by spreads in the marketplace as to where you can sell the GDMA certificates, the HMVS. And that was certainly has been a tailwind, has been, you know, nice margins, certainly in the last half of last year. And but it'll be very spread dependent. But, you know, right now, margins are excellent and volumes are, I would say, quite steady and growing a little bit as we've gained market share. On the prop side, the competition is even less. There is competition in the prop space. And there, again, the gain on sale margin is going to be driven a lot by the securitization exit spreads. And, you know, we've seen, I mean, the latest deal that we did, we had record low spreads on our AAAs. So as long as securitization spreads remain tight, which, as I said, we just did record low spread on our last deal, the gain on sale margins there I think will continue to be excellent. And, you know, the volume there is growing as I think the products, the proprietary products are expanding. We make tweaks to them all the time. And, you know, we feel really good about volumes there continuing to increase for long-term.

That's very helpful. Then I'd love to get your thoughts on the potential changes to bank capital standards and whether you think banks could become more active.

You know, it's interesting. This is Mark. All the credible mortgage researchers that have, you know, years of experience and supported by a team of skilled professionals and have access to data, almost all the mortgage professionals out there expected much more significant bank buying in 2025 than you actually saw. And in Q4, you saw, I think it was the first time in many years that banks reduced, you know, their CMBS holdings as well as their pass-through holdings, right? And what you've seen them been doing instead is with these big negative swap spreads, just buying treasuries and match funding them with swaps, right? So you haven't seen a lot of bank buying, and, you know, pricing levels at pass-throughs or spread levels now are tighter than what they were, you know, for most of 2025. So, you know, maybe these capital regs will change things. I just don't know. I think it's certainly possible you could see them retain more loans, right? There's been some of that's going on, especially the adjustable rate loans, like the 7-1 loans. But it was sort of shockingly underwhelming bank support for the mortgage market in 2025. So I know some of these regs are intended to have banks get more involved in the servicing market, right? So I think that's something you could see them do. But, you know, the big players in servicing and the big transactions, the big sales, the big buyers, it's mostly been on the non-bank side for a while. So we'll have to see.

Thank you, guys.

Thank you.

We'll now move on to Timothy D'Agostino of B. Riley Securities. Your line is open.

Yeah. Hi. Thanks for the commentary today. I guess, you know, at the start of 26, it'd be great if you could maybe lay out some of the biggest priorities or what's on the top of the mind for management and accomplishing, understanding that, you know, integrating the mortgage servicer to increasing, you know, long-term financing. But maybe within the portfolio, whether it's the allocation or in the capital stack, using more cash to buy back preferred or something like that. But it'd just be great to kind of get maybe a couple points that, you know, you all are looking to accomplish in 26 that are kind of at the top of the mind.

Mark, let me handle the capital structure side of it, and then you can talk about what we are looking at in terms of maybe from a portfolio allocation perspective. So, yeah, on the capital structure side, look, we just did redeem that preferred. We have another preferred that is going to, you know, become floating at some point and becomes callable at that point. Of course, there's a chance we could call that as well. That spread is a little tighter than the last one. But, you know, we have a lot of optionality when that happens. As long as we think that our marginal use of that capital is better than the coupon on the preferred, there's, you know, no reason, there's no sort of real hurry to call it. But it is something that we would absolutely consider at that time. And as I mentioned, we also will continue to monitor the preferred market. We didn't like the prints that we saw from some of our peers in terms of where they issued preferred. We didn't like it in terms of we didn't think that was appropriate for us to issue there. but, you know, should an opportunity arise, we could absolutely look to replace the preferred that we redeemed with probably similarly sized preferred. I think that if you look at our capital structure right now and, you know, there's no real science around this, but I think most companies would probably look at just a slightly higher percentage of the equity base and preferred as something that was, you know, more typical in the space. So I think that's something that we'll monitor throughout the year. And then, absolutely, I think if, you know, if we need the capital, and I mentioned the fact that our unsecured notes, the Moody's and Fit Trader notes that we issued last in the fourth quarter, early in the fourth quarter, they've tightened, of course we'd love them to continue to tighten, and we could be in the market with, you know, certainly another offering later in the year.

Yeah, and Mark, maybe I'll jump in for a minute. Hey, Tim, thanks for the question. And it's a good one. I think, you know, Larry laid out the five buckets of accomplishments in 2025. I would say that those five categories are very relevant to your question for 2026. So, you know, it's number one, covering the dividend with ADE and continuing to have kind of consistent and strong earnings. It's number two, strengthening our liability structure. Larry, you know, kind of talked quite a bit about those initiatives. Number three, supporting our originator affiliates. More market share growth really is a key to our performance and growth. Number four, managing through delinquencies. We talked about how delinquencies decline quarter over quarter. We're making a lot of progress cleaning up, you know, so performers continue on that theme. And then number five, continuing to grow. And so just looking at the numbers, we were, you know, almost $5 billion of asset of, you know, portfolio holdings at year end. That was $2.5 billion a little more than two years ago, and leverage has actually declined over that same period from 2.3 to 1.9. So we've been able to accomplish that growth without taking up leverage. And so, you know, kind of looking forward in 2026, I don't want to just say more of the same, but kind of continuing to expand on each of those themes and then supplementing them with additional, you know, strategic relationships with originators, continuing that on the technology front, and just improving the overall kind of earnings quality, if you will, that we're delivering to shareholders.

Yeah, and by the way, think about some of our peers that – or let's just say other mortgage REITs that have hit, you know, some big stumbling blocks and where they can borrow money, especially on an unsecured basis, has suffered immensely. So, you know, we want to keep that franchise going in terms of, you know, steady earning, steady book value, dividend coverage, but also, you know, continue to be, I think, the most attractive place for debt investors to place their money, you know, in our space.

And I'll just – my doubling comment is really about credit and Longbridge. So we've taken agency down, and that's taken leverage down. And so I'm really focusing on the credit and Longbridge portfolios when I get that statistic.

Mark, I'm going back.

I would just leave you with one thought. It's that what we talk about in the earnings call and what you see in the earnings presentation is what EFC is currently doing, right? that's sort of top of mind, how we drove returns in 2025, and the focus of this call, Q4 2025. But, you know, it's almost 20 odd years since this company's been around, you know, it's private and then it goes public, and over that time, we've generated returns in a lot of areas, and I think it speaks to the breadth of the capabilities of Ellington Management Group, right? So, you've seen CRT been a driver from time to time, legacy non-agencies, you know, we have tremendous capabilities in CLOs, tremendous capabilities in buying distressed commercial loans. You've seen this involved in mobile home lending, right? And so, unsecured consumer, auto, aircraft, like there are so many capabilities, skilled PMs, experienced researchers in all these areas is that I fully expect the opportunity set for Ellington Financial to evolve over time. It's not – we're not always going to be doing what we're doing right now, but I think what's important for shareholders to know is that there's tremendous capabilities across almost all structured products within Ellington. And when we meet and think about how to structure, you know, how to allocate the capital of Ellington Financial, we have the luxury of having so many different sort of like arrows in our quiver, right? Like, you know, you could see an opportunity in auto. You could see an opportunity in unsecured consumer. Those have been small parts of the portfolio recently. But, you know, they can get interesting and exciting and priced really attractively over time. So, you know, I put in that thing about the policy risk now because it's true, right? And we're thinking about it. We're trying to position for it. We can predict what's likely, but we don't have a crystal ball to predict exactly what's going to happen. but the resources and capabilities that Ellington Financial is able to access by its shared services agreement with Ellington Management Group, I think gives us a tremendous opportunity set.

I want to highlight one sector, Mark, which is the small balance commercial sector. So we've bought some great assets from banks. Look, everyone knows that there are sectors of the commercial mortgage market that have been under a lot of stress, and I think we've done a great job in terms of managing our portfolio with really, you know, minimal issues there, and that's put us in a great position. I mean, we're seeing auctions from sellers, and it's such a highly fragmented market. It's a very sometimes geographically localized market. So, we don't compete with, certainly not with big banks on those bridge loans. Sure, spreads have tightened overall, but our financing spreads have also tightened commensurately. So, that's, you know, that's been a growth area for us recently. I think it will continue to be. The technicals are, well, bad for sellers, good for buyers. So, I think that's definitely an area where we're going to continue to see stress and opportunity.

Awesome. Well, thank you so much for all the color. I really appreciate it. And just, I guess as a quick second question, regarding book value today, I might have missed it earlier, but could you give us an update, whether that be the dollar figure or just directionally?

Yeah. Sorry. So we, 1316 was year end. We haven't put out January month end yet. We should be early next week. We mentioned economic return of approximately 2% for the month of January. So that would imply that book value is up, you know, one-ish percent net of the dividend. Yeah. Those numbers are rough for now, but we'll be putting those out again in the next few days.

Thank you again for the time this morning. Congrats on the quarter.

Thank you. Thank you. We'll now move on to Jason Weaver with Jones Trading. Your line is open.

Hey, good morning, guys. Thanks for taking the question. Just thinking about, in the prepared remarks, you spoke to the expanded opportunity set, you know, partially due to the expansion of the seller network. You know, given the growth in size and flexibility of your financing capacity, would it be fair to expect a wider range on interquarter recourse leverage and a greater acceleration of securitization activity moving forward? Sorry, could you repeat that? Yes. So, you know, given how the flexibility and scope of your financing platform has increased markedly, would it be fair to expect a wider range on leverage moving quarter to quarter and a greater acceleration of securitization deals?

Yeah. So, certainly inter-quarter, like if we showed month-end recourse debt equity, it fluctuates. I mean, we had two deals close in early February that hadn't closed as of the end of January. And so, you know, pushing those forward from January, they've taken leverage down, but they were still on balance sheet and closed earlier in the month of February. So, there's certainly noise, you know, within a quarter. But I think thematically, you know, we'll see expansion to the extent we can do more unsecured notes offerings. And we're off to a strong start. I mean, we're through six, seven weeks of 2026. We're ahead of the pace of 2025, which was, you know, kind of above three times faster than 2024. So, you know, that acceleration continues at least so far.

Got it. I think if something, you know, look, our securitization pace has been really high, So, if something happens where we feel like securitization spreads until they widen out, we don't like them, yeah, then I think it's quite possible that we would have more loans and warehouse, a quarter end, and slightly higher leverage. But that would be, you know, somewhat temporary.

Got it. Thank you for that. And then the new RTL securitization that you priced, can you speak a little bit more to the structure there? Specifically, I was wondering what the reinvestment period window looks like?

Sure.

Well, as I mentioned, it's a revolver. And I believe it's a two-year reinvestment period. So, yeah, so we, and as I said, you know, every month we can, you know, replace basically the, you know, the loans that pay off with new loans.

Yeah, it's important because the average life is obviously a lot less than two years for those loans, so it makes it a lot more efficient of a financing.

Got it. That makes sense. I appreciate the color.

All right, operator, I think that's it. Look, I apologize for the delay. Thanks for sticking around for the call. We'll make sure that we pay the phone bill on time next time. And appreciate, you know, appreciate your patience. And it was a great quarter. We look forward to a great year.

Thank you. We thank you for participating in the Ellington Financial Fourth Quarter 2025 Earnings Conference You may disconnect your line at this time and have a wonderful day.