Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Financial First Quarter 2026 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 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 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 Allington Financial, Mark Dikotsky, Co-Chief Investment Officer, and J.R. Hurley, Chief Financial Officer. Our first quarter earnings conference call presentation is available on our website, allingtonfinancial.com. Today's call will track our presentation, and all statements and references to figures are qualified by the important notice and endnotes in the back of the presentation. With that, I'll hand it over to Larry.

Thanks, Aladin. Good morning, everyone, and thank you for joining us today. I'll begin on slide three of the presentation. Ellington Financial delivered an exceptionally strong first quarter in terms of both gap net income and adjusted distributable earnings. even in the face of rising market volatility and widening credit spreads throughout the month of March. Performance was strong across our diversified portfolio, which drove gap net income of $0.78 per share, an annualized economic return of 26%, and book value per share appreciation of 3% even after dividends. Our ADE continues to consistently outpace our quarterly dividend run rate of $0.39 per share, and this quarter, with our ADE reaching $0.55 per share, it exceeded our dividend by a very wide margin. Our strong ADE for the quarter reflected the high yields and steady credit performance from our loan portfolios, complemented by an absolutely standout quarter from Longbridge, which contributed a disproportionate share of both ADE and net income. Despite what is typically a seasonally slow quarter, Longbridge had a near record quarter for proprietary reverse mortgage loan origination volumes, continued gains in market share for HECM originations, and healthy gain on sale margins across products. Our Longbridge segment's results also benefited from the successful prop reverse securitization we completed during the quarter, where we achieved our lowest ever cost of funds and tightest ever overall debt spreads for this type of securitization. Servicing was also a key contributor for Longbridge, driven by strong tail securitization execution, a net gain on our HMBS MSRs, and steady base servicing income. Finally, results at the Longbridge segment included gains on interest rate hedges, along with the receipt of a one-time litigation settlement payment that added to an already strong quarter. Overall, and again in what is typically a seasonally slow quarter, net income at our Longbridge segment not only set a quarterly record, but it actually surpassed its 2025 full year net income by a wide margin. We also saw great contributions from our other origination platforms, with Lenshore continuing its impressive run of performance in the first quarter. High origination volumes and strong gain on sale margins drove another excellent quarter at Lensure, with profitability contributing meaningfully to EFC's bottom line, both through our ownership stake and through the steady flow of high-quality loans into our portfolio. Turning back to our portfolio, our non-QM, closed-and-second lien, and agency-eligible strategies delivered continued robust results, supported by strong securitization executions. Our securitization platform remained highly active during the quarter. We participated in seven transactions totaling more than $2.8 billion from our EFMT shelf, compared to just $1.1 billion across four transactions in the first quarter of 2025. These higher volumes are facilitating larger deal sizes, with our average non-QM securitization size reaching $508 million in Q1 2026, nearly double the $265 million average for Q1 2025. Our first quarter results were further reinforced by continued strong credit performance across both our residential and commercial loan portfolios. Our delinquency rates actually declined for a second consecutive quarter, and realized credit losses remained minimal. In non-QM, we saw mortgage rates briefly dip below 6% in the quarter, triggering a brief prepayment spike in that sector. We have always focused on prepayment risk in our asset selection, and the recent prepayment spike highlighted the benefit of that focus. According to J.P. Morgan Research, our EFMT shelf has both the lowest prepayment speeds in the cohort and almost the lowest 30-plus day delinquency rates, each of which directly enhances the overall value of our high-yielding retained tranches. Importantly, the consistency and durability of our loan performance help keep our securitization platform attractive to securitization investors. Turning now to the balance sheet, our portfolio grew by approximately 4% during the quarter, even net of securitization activity, driven primarily by growth in our loan portfolios. Our leverage ratios were essentially unchanged for the quarter as equity growth kept pace with asset growth. We also continued to advance our previously announced acquisition of a residential mortgage servicer, which remains subject to regulatory approval. Once completed, this acquisition is expected to deepen our vertical integration by bringing additional servicing capabilities in-house and enhancing our ability to manage delinquent assets more directly and efficiently. One note on book value per share. Because we carry our unsecured debt at fair value on the liability side of the balance sheet, higher interest rates and wider credit spreads had a positive impact on our book value per share. Over time, and all other things being equal, the prices of our assets should be loosely correlated with the prices of our long-term liabilities, but there will definitely be some month-to-month noise during periods of high credit spread volatility, such as what we're seeing so far this year. Looking at April, we saw continued solid performance across our investment portfolio and at Longbridge as well. However, with credit spreads in April retracing much of the March widening, we estimate that remarketing our liabilities will have a roughly 13-cent effect on book value per share in the other direction, which will offset some of April's solid portfolio performance. Turning to our equity activity, we raised $117 million of common equity in January through a block trade, using the proceeds specifically to redeem our Series A preferred stock, which was our highest cost tranche. The issuance was accretive to book value per share, net of all costs, and was precisely sized to fund the preferred stock redemption. Since our Series A preferred had carried a coupon of over 9%, redeeming that preferred stock has reduced our overall cost of capital, with the benefit flowing directly to common shareholders. Our common equity transaction was well-received, with the offering more than two and a half times oversubscribed by institutional investors, and our timing was excellent as we were able to execute ahead of the subsequent spike in market volatility. We will continue to monitor the markets with an eye toward issuing additional preferred equity when pricing becomes more attractive. With that, please turn to slide five, and I'll turn the call over to JR to walk through our financial results in more detail. JR?

Thanks, Larry. Good morning, everyone. For the first quarter, we reported gap net income of $0.78 per common share on a fully mark-to-market basis, an ADE of $0.55 per share. On slide five, you can see the portfolio income breakdown by strategy, $0.61 per share from credit, $0.02 from agency, and a remarkable $0.47 from Longbridge. And on slide six, you can see the ADE contribution by segment, $0.58 per share from the investment portfolio segment, and a sizable $0.21 from the Longbridge segment. ADE for the quarter exceeded expectations, mainly due to the outsized contribution from Longbridge. Moving forward, we are now increasing our quarterly guidance on ADE per share to the $0.45 per share area, which is still well above our dividend run rate of $0.39. Starting with the credit portfolio, net interest income again increased sequentially, and we also generated net realized and unrealized gains across our non-QM and closed-end second lien loan portfolios, including retained tranches, as well as agency-eligible loans and commercial REO. These results were partially offset by losses in certain other credit strategies and on residential REO. We continue to benefit from strong overall earnings contributions from our loan originator affiliates, particularly Lendsure, alongside solid credit performance across our loan businesses. For a second consecutive quarter, 90-day delinquency rates declined in both our residential and commercial loan portfolios, and life-to-date realized credit losses remained very low, as shown on slide 13. Moving to the agency strategy, results were driven by net interest income and net gains on interest rate hedges, partially offset by net losses on our agency RMBS, with spreads on many agency securities wider during the quarter. As Larry noted earlier, Longbridge had an excellent quarter across both originations and servicing. Origination results were driven by strong volumes and gain on sale margins and also by the proprietary reverse mortgage loan securitization that we completed during the quarter with net gains on that transaction further boosting earnings. In Longbridge's servicing business, steady base servicing net income, strong tail securitization executions, and net gain on HMBS MSRs all contributed positively. Results at Longbridge also benefited from net gains on interest rate hedges and the receipt of a $17 million litigation settlement payment. Turning now to portfolio changes during the quarter. Slide 7 shows a 4% sequential increase in our adjusted long credit portfolio to $4.27 billion, net of securitizations, driven by growth in our loan portfolios and retained RMBS tranches. Our short-duration loan portfolios continue to generate significant paydowns, with RTL, Commercial Mortgage Bridge, and consumer loan portfolios returning $224 million of principal during the quarter, representing 15% of their beginning fair value. On slide 8, our total long agency RMBS portfolio declined by 3% to $197 million. And on slide 9, the Longbridge portfolio increased by 13% to $695 million, with proprietary reverse mortgage loan origination volumes exceeding the impact of the prop loan securitization completed during the quarter. Longbridge originated $515 million of new loans during the quarter, which is a 52% increase from the first quarter of 2025. Please turn next to slide 10 for a summary of our borrowings. On 31st, the total weighted average borrowing rate on recourse borrowings was 5.49%, down 18 basis points from year-end, driven by tighter repo spreads. Quarter-over-quarter, net interest margin on the credit portfolio was relatively stable, while agency NIM declined as the benefit from swap carry moderated. At quarter-end, 30% of our recourse borrowings were long-term and non-mark-to-market, and 18% were unsecured. The weighted average remaining term of repo borrowings was nine months. Finally, during the quarter, we improved the terms on several of our credit facilities, with those enhancements taking effect in the second quarter. At March 31st, our recourse debt-to-equity ratio was 1.9 to 1, and overall debt-to-equity ratio was 9 to 1, both unchanged from year ends, as equity growth kept pace with increased borrowings supporting our larger portfolio. Unencumbered assets increased by 8% to $1.9 billion. Slide 17 shows our credit hedging portfolio at quarter end. Corporate credit hedges declined while our net short TBA position increased. Our short TBA positions serve multiple purposes, hedging interest rates, volatility, and mortgage basis risk, while also historically performing well during periods of credit spread widening. As a result, they can provide protection in both interest rate stress scenarios and credit stress scenarios. Slide 16 shows our broader interest rate hedging portfolio, where the net short TBA position complements interest rate swaps and short treasury positions across the yield curve. As has been our longstanding practice, we carry our unsecured notes at fair value through the income statement. Consistent with this treatment, quarter over quarter increases in interest rates and widening credit spreads, with the latter widening sharply a quarter end, resulted in a positive mark to market on those liabilities, contributing to both GAAP net income and book value per Results also reflect an accrued incentive fee. At March 31st, book value per share was $13.56, up 3% from $13.16 at year end, an economic return for the first quarter was 26% annualized. With that, I'll pass it over to Mark.

Thanks, JR. This was a quarter where EFC showed resilience and stability amid substantial market stress. It was a quarter of very strong net income and very strong ADE. There were some tailwinds specific to the quarter, but even without those, we delivered strong performance from our diversified, vertically integrated platform. Securitization volumes were $2.8 billion, our largest quarter ever, and well-diversified across several loan types. We started securitizing non-QM loans back in 2017, and we now securitize five different loan types. Greater securitization volume doesn't just increase profits. It also tends to improve margins. It's important that these businesses operate at scale. At scale, some of the profits can be reinvested back into the business to improve technology. That is what we've been doing to grow market share and process more volume without adding meaningfully to operational headcount. At scale, our mortgage shelf benefits from improved liquidity, which is one of the most important factors for investment-grade buyers. Scale also enables us to provide consistent liquidity and stable pricing to our loan origination partners. All this deal activity creates a future potential tailwind for us, as the call rights from these deals can become exercisable and valuable if interest rates drop. Once that happens, we will generally look to re-securitize the underlying loans. By replacing short-term repo financing with match-funded non-market-to-market debt issued through our securitizations, we have gone a long way toward better insulating our portfolios from market shocks. As you know, we navigated COVID very well, but we still had to deal with margin calls from our repo lenders. Today, mark-to-market repo represents a much smaller percentage of our overall borrowings, so our margin call risk is even lower now than it was back then. To be clear, significant market-wide spread widening would hit our book value per share. However, the lasting damage to many REITs during COVID was not caused by the sudden dramatic spread widening itself, but by the inability to meet margin calls, which caused forced selling that crystallized losses. During the quarter, even after closing multiple securitizations and selling all the senior debt tranches, we still achieved a healthy 4% portfolio growth, bringing total portfolio assets to more than $5 billion. At one point late in the quarter, when credit spreads neared their widest levels of the year, we took advantage of a strong insurance company bid by selling a non-QM pool in the form of a whole loan sale. Insurance companies tend to be less sensitive to short-term fluctuations in market credit spreads, so we were able to monetize strong gains on our credit hedges at the same time that we sold the pool. Moving now to our originator affiliates, they had positive performance broadly, but Longbridge in particular had really amazing results. It has emerged as a market leader in private label reverse mortgages. Demographic trends and the increasing preference of baby boomers to age in place represent powerful tailwinds that we expect will support continued strong growth. We also had strong returns in our non-QM and second lien strategies and our relatively new agency-eligible loan strategy, which is benefiting from the pullback of the GSEs. we see agency eligibility is a key growth area moving forward. Non-agency mortgage volumes continue to grow, with an increasing share of GSE-eligible loans migrating to private label execution, where pricing is frequently more attractive than what the GSEs offer. As we have spoken about before, the size of the non-agency market is growing, while the Fannie Freddie footprint continues to shrink. Importantly, this growth in the non-agency market is concentrated in sectors where EFC is actively involved. We see these trends with the non-agency market growing and the Fannie and Freddie market shrinking as a logical response to guarantee fees and LLPA pricing from the GSEs that are often disconnected from historical or expected losses. Absent significant repricing from the GSEs, we think this dynamic will continue. It almost feels strange not to mention the war in the Middle East, but aside from the short-lived interest rate and spread volatility we saw in March, it was not materially impactful to our strategies. Looking ahead, if higher energy prices persist, many consumers will have less disposable income, and those at the lower end of the income spectrum, it's harder to meet their debt obligations. Given our large presence in the agency investor, DSCR, and multifamily lending, We also have exposure to renters who typically have lower incomes than homeowners. We're watching this very closely. HPA is no longer the powerful tailwind to credit performance it was in the years past. 2025 was the weakest year of HPA growth in a decade, which means that borrowers facing income disruption may find it more difficult to pay off their mortgages simply through home sales. That said, housing is definitely more affordable than it was coming into 2025, which should be supportive of long-term loan performance. At Ellington, we continue to add resources to our research effort, both to inform our investment decisions and to share insights with our origination partners, helping them make better credit decisions. Our aim is to continue to capture the large and, in many cases, growing opportunity in both residential and commercial lending. Now, back to Larry.

Thanks, Mark. 2026 is off to a great start. In the first quarter, we delivered outsized gap net income, ADE that widely exceeded dividends, and strong growth in book value per share, despite elevated volatility and widening credit spreads late in the quarter. I attribute these excellent results to the strength of our diversified, vertically integrated platform and the excellent credit performance from our loan portfolios. But I also want to emphasize the significance of three other important factors in our success. The ongoing growth and stability of Longbridge, the increased scale and effectiveness of our securitization program, and our continued progress strengthening and optimizing our balance sheet. I'll close by highlighting these three important factors. First, Longbridge. I don't think one can overstate just how much Longbridge now means for Ellington Financial. and I'm not just referring to the strength of this one quarter. Even in this prolonged higher interest rate environment where many mortgage companies are still struggling, the Longbridge platform has achieved a level of consistency that has effectively given us a head start on our earnings targets each quarter. Furthermore, its target demographic, namely seniors, is obviously growing significantly and meanwhile the barriers to entry in the reverse mortgage business remain large. Longbridge's proprietary reverse mortgage business is now well-established with a seasoned securitization program and a deep and repeat investor base that continues to support strong execution. Many of Longbridge's costs are fixed or quasi-fixed, so its origination cost ratios have declined as volumes have grown. Its service and cost ratios have also come down with the growth in its MSR portfolio, not only because of internal economies of scale, but also because its subservicing costs have also declined as a result of increased competition among subservicers. As a result, Longbridge's MSR assets are generating very high yields for us, and those yields should continue to increase. Meanwhile, Longbridge's investments in technology are only adding to its operating efficiencies, and all of this has been achieved without the benefit of a meaningful decline in interest rates. which, if that ever materializes, should be a significant tailwind for Longbridge's origination volumes and profitability. In summary, Longbridge is in a fundamentally stronger and more stable position than it was even a year or two ago, and we believe that Longbridge is well-positioned to be an even more consistent and meaningful contributor to EFC's earnings going forward, providing a strong and increasingly predictable foundation for EFC's quarterly results. Second factor, our securitization platform. As I mentioned earlier, we priced seven transactions from our EFMT shelf during the quarter, totaling more than $2.8 billion. Our increased scale, achieved without compromising speed to market, reflects the continued expansion of our origination platform and has enhanced execution economics for us. Larger transactions enable us to spread fixed costs over a broader base, attract a wider institutional investor audience, and secure long-term non-mark-to-market financing on more favorable terms. And more frequent transactions means that our loans spend less time in the warehouse period when net interest margins and returns on equity are lower, and instead they transform more quickly into high-yielding retained tranches, which remain important contributors to our earnings. Third factor, all the important steps we've taken to strengthen our balance sheet. Our accretive common equity raise in January enabled us to retire our highest cost preferred equity tranche, and following our inaugural Moody's and Fitch rated unsecured debt issuance this past September, we have ready access to the long-term institutional debt markets. Issuing more unsecured notes remains a key priority, but we plan to be opportunistic, not when it comes to overall market interest rates, but when it comes to the debt spreads over treasuries that we can achieve. One balance sheet metric worth highlighting is the continued expansion of our unencumbered asset base, which has increased meaningfully since our unsecured notes offering in the third quarter of last year. At March 31st, unencumbered assets stood at nearly $2 billion, up considerably over the past nine months. This reflects a deliberate migration, where the proportion of our liabilities represented by long-term unsecured debt will continue to increase, and the proportion represented by short-term repo financing will continue to decrease. And as I just mentioned, we intend to continue this migration by issuing additional unsecured notes as market conditions permit. Our goal is to create a virtuous cycle where issuing long-term unsecured debt and using some of the proceeds to replace short-term debt improves our credit ratings and thereby makes additional unsecured debt issuances even more attractive and lowers our overall funding costs. In conclusion, and as I'm sure you can tell, I think we're firing on all cylinders now, and we're really excited not only about this great first quarter that we just reported, by better prospects for the rest of the year and thereafter. With that, let's open the floor to Q&A. Operator, please go ahead.

Thank you. If you'd like to ask a question, please press star, then 1 on your G-pad. To leave the queue at any time, you may press star, then 2. Once again, it is star, then 1 to ask a question. And we will take our first question from Bose Jeroz with KBW. Your line is open.

Hey, good morning, guys. This is Frankie Libetti on for Bose. I wanted to start with just your current run rate ADE has consistently been above dividend And you noted on the call earlier That you raised your ADE guidance Where do you guys, where does the board see Current dividend policy going forward And what's the trade-off of retaining earnings Zero book versus Reinvesting some of those earnings In your operating companies

Thanks, Frankie. Yeah. Let me just start off by saying we're certainly not thinking of lowering the dividend. So let's just start with that. I think the dividend is a good place. I think it does achieve good balance. We were able to and have been able now recently to build some book value per share. Our yield, you know, at an 11 handle, I think that's a good yield. So I would say, again, certainly no thoughts of lowering the dividend. Could the next move at some point be a raise? Sure. But at this point, I think we just like where it is. Thank you. And then

on the commercial REO performance, you showed some unrealized gains there and roughly 60% of your commercial book is multifamily. Are those gains coming from successful workouts in the sector, or are you seeing some just more positive trends there?

Yeah, so it's more the latter, and the way that we mark those assets is we run a DCF kind of that projects what we, discounted cash flow, that projects what expenses and CapEx expenditures we expect, and then we discount those back to a net present value today, typically at a pretty high return, you know, in the double digits. And then the idea is if we deliver on those expectations and there's a higher terminal value at the end, the fair value should accrete up to that terminal value over time because of the high discount rate. And so that dynamic is what was driving the P&L in Q1 on the commercial REO book as opposed to some large resolution. But, you know, we thought it was worth flagging given its contribution to P&L.

One last question, if I can. Ken, just on your agency allocation, you know, come down over time, where do you guys see that trending? Do you see it roughly in this 1% range going forward? Mark, do you want to take that?

I would say given the substantial recovery you saw in agency MBS spreads in 2005 and, you know, continuing on this year, albeit at a slower pace, you know, I don't see that allocation going up. It'll probably drop a little over time. We mentioned I think it dropped face amount or investment amount, dropped by 3%. You know, we have expertise there, and should you get to a point in relative value of agency MBS versus all the other things we're doing that we thought it was compelling, we could certainly bring it up. The other area where you see activity on agency MBS, and J.R. mentioned it, I believe, is hedging activities, right? especially as some of the securitizations like agency-eligible investor loans and agency-eligible second homes, a lot of those AAA bonds are explicitly priced at a dollar price spread relative to the agency market. It functions as a very effective hedge.

Yeah, so I guess just to add to that, right, so we'll be, as opposed to being a significant core strategy for us, agencies, we're going to be more opportunistic. If spreads widen, that could be more of a trade to put more agency on. And as Mark said, we actively manage the hedge, the TBA short hedge, against especially our non-QM loans.

Thank you very much.

We'll move to Timothy D'Agostino with Be Reilly Securities. Your line is open.

Yes, hi, good morning. Thanks for taking the question, and congrats to another great quarter. Looking at the origination volumes at Longbridge, some other peers to Longbridge noted that March was a stronger quarter in the reverse space for origination volume. I was wondering if you all witnessed the same thing at Longbridge, if March's volume is stronger than January and February, and if that theme has persisted through April and May. And then as well, if you could just maybe provide some colors on what you thought the driver of our performance there was.

Thanks, Tim. Yeah, I would say that we put the context that Q1 is typically seasonally slow, and despite that, Longbridge's sequential decline, so just from Q4 to Q1, was very modest. So, in other words, they originated almost as much in Q1 as they did in Q4, and then it was 50% higher year over year to the Q1 of 2025, to the seasonality point. April is looking good. So to the second part of the question, we're seeing that momentum continue so far in the Q2. Yeah, and I think I need to look at month-by-month origination volumes, whether it was March versus January. I think that's probably right. But I think the more important point is that it was a quarter of strength, and we continued in the Q2 so far. And props proving more resilient in the face of those higher interest rates than HECM has. I mean, HECM volumes have certainly declined.

Yeah, and I would just add also that this is still a very small market in the context of the entire mortgage market. So even though this is a seasonally slow quarter, I think that this product, right, is gradually getting more traction overall. all, and I'm speaking now especially of the prop product, and, you know, you've got now coming out of the seasonally slow months, you know, I would expect to see some, you know, good seasonal effects, but, again, this market, you know, we talked about the demographics, I think in terms of the marketing efforts that Long Ridge has undertaken, those are helping as well, better pull-through rates. I mean, there's just, you know, a lot of things that we're doing to ultimately originate more loans that don't even necessarily have to do with seasonality. So I'm looking for continued strong performance there. Okay, great. Thank you

so much for taking that question. And then if I could just ask a second one. I know you guided too at the bottom line that 45 cents per share on a run rate. As we think about, you know, pretty big material step up from 4Q to 1Q. Are there some one-off items driving that growth? And, you know, is there any sort of guidance or color you want to provide to how we should think about net interest income going forward, looking at the larger portfolio?

Sure. I'll just update the prior question about origination volumes. They did, they're just looking at month by month at Longbridge, they did trend up from Jan to Feb to March, So March being the highest of the month by a decent margin. So we did see that same dynamic. In terms of net interest income, you know, we were 55 cents overall ADE. We mentioned 45 cent area as kind of a run rate moving forward, which is in line with Q4. Q4 is 47 cents. What I would say is that the contribution from the investment portfolio segment, which is where most of the net interest income comes from, is kind of running at a steady state. So, in other words, most of the exceedance this quarter was from Longbridge, which is driven more by their origination activity, their securization activity. And so, the NII we're seeing has been trending up nicely in line kind of with the growth of the portfolio. And we improved cost of funds this quarter, as we talked about. So, I don't know that there's huge volatility in NII quarter to quarter. However, the guidance is more kind of signaling that we shouldn't expect 21 cents from Longbridge every month, excuse me, every quarter. But the NII contribution from the investment portfolio has been kind of as designed pretty stable quarter to quarter.

Yeah, and our retained, you know, the retained trashes, when we talked about those, those are very high yielding, right? And that continues to grow. So, look, we're continuing to grow the equity base as well, right? And so hopefully everything is keeping pace with that as well.

Okay, great. Thank you so much for taking the questions today, and congrats again on the quarter. Thank you.

We will move to Trevor Cranston with Citizens JMP. Your line is open.

Good morning. You know, there's been a decent move up in mortgage rates since the initial announcement of the GSE portfolio buying. I guess I'm curious for your guys' current thoughts on, you know, the likelihood of more sort of targeted government policies aimed at lowering mortgage rates as we go through the balance of the year. And I'm particularly curious if you think there's any chance that, you know, the GSA do something like reducing LLPAs or G fees in an attempt to get mortgage rates to a lower level.

Hey, Trevor, it's Mark. So, yeah, when that announcement first came out, it seemed like if the focus is affordability, there were two other logical levers, not just GSEs, but FHA could pull. One is LLPAs, because LLPAs clearly for many types of GSE loans are far in excess of historical losses or expected losses. So that was one thing. And they're also losing market share to the non-agency market because of high LLPA. So that was one easy lever. And the other lever was either an ongoing or upfront cost cut to MIPS on the FHA side, right? And so when you didn't see those get done, our takeaway is then it's probably not top of mind right now. You're seeing other tweaks to affordability, you know, changes in title insurance, and now, you know, acceptance of vantage scores. You know, a vantage pull is materially cheaper than a traditional FICO pull. So while we think LLPA, G-Fee, ongoing upfront cuts are possible, we probably characterize them as not likely. And the other thing is I know some people have spoken about maybe there's a possibility that Fannie and Freddie would increase their purchases above and beyond their current caps they have in place and above and beyond the $200 billion. Again, we think it's possible, but we think that's not likely. But what you have seen this year, and you have seen relatively strong performance rate in CMBS, you are starting to see some pickup in bank buying. So that was really coming from some clarity around Basel III and some of the proposals from Bowman about changing capital requirements as a function of LLPA. So we think that is broadly supportive of bank participation in the market. And bank buying was very, very weak last year. So I think banks will be a bigger part of the market. That's certainly a tailwind. You've certainly seen REITs issuing shares and buying more agency, MBS. So we think that's a positive tailwind. And you've seen better foreign participation, so non-U.S. participation. So there's some pools of capital, more aggressively buying agency MBS than we had at the start of 2025, and we think that's going to be where the support comes. And if these other things that help add affordability, we think it's possible, but we think they're sort of at the margin and definitely second-order effects. But, you know, what you're seeing what helped affordability last year, and I mentioned it in his prepared remarks, is that HPA growth that is less than income growth and the decline in mortgage rates you saw since the beginning of 2025, those have been supportive to affordability as well.

Yeah, and if I could just add, just taking a step back there, when you think about overall mortgage rates, these effects, they're important on spreads, but let's face it, overall interest rates, treasury rates, for example, are going to drive mortgage rates a lot more. And there, when you talk about, you know, where's inflation, where's the deficit and the debt, what's Fed policy? I mean, those things are going to dwarf the impacts, and they're significant right now. Those are going to dwarf the impacts that I think some of these moves could have on, you know, on mortgage rates.

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

Next, we go to Matthew Ertner with Jones Trading. Your line is open.

Hey, good morning, guys. Chris, thanks for taking the question, and congrats on a strong quarter. You mentioned that you sold a whole loan pool to an insurance company during the quarter. Could you talk a little bit about how this kind of came about and where you're seeing kind of sales execute there versus where they would execute in the securitization market right now?

Sure. This is Markham. Thanks for the question. Yeah, so we did a lot of whole loan sales. I'm trying to think back, probably in 2023, when securitization spreads were wide, then a lot of instances that looked like materially better execution than securitizations. I think, you know, at the margin, our preference is securitizations. We mentioned all the, you know, benefits of operating at scale, improved liquidity for the shelf. so i think at the margin our preferences for securitizations that transaction um we talked about was that was a little bit of a one-off and i think we made the point that you know there were parts there were moments in the quarter where there was some real volatility in equity prices and in credit spreads and in interest rates right and we are disciplined on the hedging of mortgage loans, which means not only interest rate hedging, including parcels along the curve, but also thinking about our exposure to changes in implied and realized vol, and also the correlation between mortgage spreads and broader corporate credit spreads, either IG or high yield, right? And so there was a moment in time where corporate credit spreads, both high yield and IG, widened substantially. But the spreads on the loans, on the mortgage loans relative to treasuries hadn't really moved. So it was opportunistic for us to take advantage of that by making a loan sale and then buying back the sort of pro-rash share credit hedges we had allocated to those loans. So that was, you know, that was, I think, kind of unique to the volatility in that quarter. You know, look, we look at loan sales all the time. You know, where we are in the cycle now, I think they're going to be not a big part of what we do going forward. We really like the yields and the profiles and the call options we retain from doing securitizations. We like the momentum our shelf has and the better liquidity and the bigger scale and how that's delivering more assets and better liquidity to the investors that support our shelf. So right now, that's where our focus is.

Got it. That's helpful, and I appreciate the color there. And then a second one for me, you know, Longbridge, you mentioned you're kind of leveraging technology there. You know, is there anything you guys are doing from an AI standpoint across there and the other originators, where you're going to see some more efficiencies or, I guess, cost savings as you continue to scale that?

Absolutely. So Longbridge has rolled out an important AI product whereby its employees, even the ones that are customer-facing, can get quick, through the AI, quick access to, for example, it's underwriting guidelines, you know, to get better and quicker responses to customers' questions. So, that's just one example. But obviously, we're, you know, across many of our businesses, you know, we're using AI in a big way to just be more efficient. Got it. Appreciate the comments. Thanks, guys.

Thank you.

And that was our final question for today. We thank you for participating in the Ellington Financial First Quarter 2026 Earnings Conference Call. You may disconnect your line at this time and have a wonderful day.