Ellington Financial Inc. Reports Second Quarter 2026 Results

Ellington Financial Inc. Reports Second Quarter 2026 Results OLD GREENWICH, Conn.--( BUSINESS WIRE)--Ellington Financial Inc. (NYSE: EFC) ("we") today reported financial results for the quarter ended June 30, 2026.

Highlights

Second Quarter 2026 Results

"Ellington Financial delivered another standout quarter, with continued book value growth and adjusted distributable earnings well in excess of our dividends, reflecting the strength and increasing momentum of our platform," said Laurence Penn, Chief Executive Officer and President.

"Our second quarter results reflected positive trends that have steadily built over recent quarters. Credit performance remained strong across our loan portfolios, while our stable, flexible funding profile and expanding securitization platform further enhanced our balance sheet. Longbridge once again delivered exceptional performance, demonstrating the advantages of our vertically integrated reverse mortgage platform. Meanwhile, our other loan origination partners delivered solid results, and a growing pipeline of high-yielding, high-quality loans across our sourcing channels continued to provide attractive portfolio investments.

"Together, these factors drove strong performance throughout the first half of 2026, during which we generated an annualized economic return of 20%, increased book value per share by $0.45, and generated ADE of $1.15, comfortably covering dividends of $0.78.

"Looking ahead, we believe that our competitive advantages position us to sustain our momentum while generating attractive risk-adjusted returns for our shareholders, consistent with the prudent risk management that has long defined Ellington Financial."

Financial Results

Investment Portfolio Segment

The investment portfolio segment generated net income attributable to common stockholders of $74.2 million in the second quarter.

The total adjusted long portfolio 4 increased by approximately 1% sequentially, to $4.50 billion as of June 30, 2026. Growth in our residential transition loan and commercial mortgage bridge loan portfolios, as well as retained RMBS, more than offset the impact of continued securitization activity.

Key Highlights 5:

During the quarter, the net interest margin 6 on our investment portfolio declined slightly to 3.36% from 3.37%, as slightly higher asset yields were more than offset by slightly higher funding costs. We continued to benefit from positive carry on our interest rate swap hedges, driven by our interest rate swaps where our weighted average receive rate exceeded our weighted average pay rate, although this benefit moderated quarter over quarter.

Longbridge Segment

The Longbridge segment reported net income attributable to common stockholders of $30.2 million. Longbridge originated $589.7 million of loans during the quarter, up 38% from the same period in 2025. We also completed two proprietary reverse mortgage loan securitizations, and the loans securitized more than offset portfolio growth, resulting in a 7% sequential decline in the net Longbridge portfolio 4 to $649.3 million as of June 30, 2026.

Key Highlights 5:

Corporate/Other Summary

The net loss in Corporate/Other increased quarter over quarter, as a substantial unrealized loss on our unsecured debt more than offset a significantly lower incentive fee accrual. The primary driver of the unrealized loss on our unsecured debt was credit spread tightening, which reversed much of the credit spread widening experienced in the first quarter, and which was partially offset by the impact of higher interest rates. Higher interest rates also led to losses on the fixed receiver interest rate swaps used to hedge the fixed payments on our unsecured notes and preferred equity.

1 Adjusted Distributable Earnings is a non-GAAP financial measure. See "Reconciliation of Net Income (Loss) to Adjusted Distributable Earnings" below for an explanation regarding the calculation of Adjusted Distributable Earnings.

2 Excludes borrowings collateralized by U.S. Treasury securities.

3 Total unencumbered assets is calculated in accordance with the definition of "Consolidated Unencumbered Assets" set forth in the indenture governing our 7.375% Senior Notes due September 30, 2030.

4 Excludes non-retained tranches of consolidated securitization trusts.

5 Sector-level results include associated financing costs and hedging gains/losses, where applicable.

6 Net interest margin represents the weighted average asset yield less the weighted average secured financing cost of funds on such assets. It also includes the effect of actual and accrued periodic payments on interest rate swaps used to hedge the assets.

Investment Portfolio (1)

The following table summarizes our long investment portfolio holdings as of June 30, 2026 and March 31, 2026:

June 30, 2026

March 31, 2026 (2)

($ in thousands)

Fair Value

Dollar denominated:

Agency-eligible residential mortgage loans and retained RMBS (6)(8)

183,466

3.1

313,537

5.3

Agency Pass-throughs

189,747

3.2

197,315

3.3

CLOs

89,251

1.5

97,108

1.6

CMBS

22,713

0.4

28,883

0.5

Commercial mortgage loans (3)(5)

836,662

14.1

776,588

13.1

Consumer loans and ABS backed by consumer loans (6)

149,924

2.5

149,151

2.5

Corporate debt and equity and corporate loans

42,158

0.7

33,378

0.6

Debt and equity investments in loan origination-related entities (7)

97,313

1.6

100,589

1.7

Forward MSR-related investments

75,901

1.3

72,824

1.2

Home equity line of credit and closed-end second lien loans and retained RMBS (6)(8)

301,369

5.1

357,385

6.0

Non-QM loans and retained RMBS (3)(6)(8)

2,686,668

45.3

2,667,157

44.8

Other RMBS and interest-only strips

118,041

2.0

110,603

1.9

Residential transition loans and other residential mortgage loans (3)(4)

996,413

16.8

905,583

15.2

Other investments (9)(10)

74,118

1.3

79,398

1.3

Non-Dollar denominated:

CLOs

11,803

0.2

11,983

0.2

RMBS (11)

27,631

0.5

21,737

0.4

Other residential mortgage loans

24,737

0.4

25,707

0.4

Total long investment portfolio

5,927,915

100.0

5,948,926

100.0

Adjustments:

Less: Non-retained tranches of consolidated securitization trusts

1,432,634

1,480,798

Total adjusted long investment portfolio

4,495,281

4,468,128

(1)

This information does not include U.S. Treasury securities, securities sold short, or financial derivatives.

(2)

Conformed to current period presentation.

(3)

Includes related REO. In accordance with U.S. GAAP, REO is not considered a financial instrument and as a result is included at the lower of cost or fair value.

(4)

Other residential mortgage loans include secondary market purchases of non-performing and re-performing mortgage loans.

(5)

Includes equity investments in unconsolidated entities holding commercial mortgage loans and REO and corporate loans secured by commercial mortgage loans. Such amounts represent the fair value of the underlying commercial mortgage loans net of the financing liabilities of the unconsolidated entity. The aggregate gross fair value of commercial mortgage loans held by us and our respective portion of the loans held by such unconsolidated entities was $1.03 billion and $958.5 million, as of June 30, 2026 and March 31, 2026, respectively.

(6)

Includes equity investments in securitization-related vehicles.

(7)

Includes corporate loans made to certain loan origination entities in which we hold an equity investment.

(8)

Retained RMBS represents RMBS issued by non-consolidated Ellington-sponsored loan securitization trusts, and interests in entities holding such RMBS.

(9)

Includes equity investment in Ellington affiliate.

(10)

Includes equity investment in an unconsolidated entity which purchases certain other loans for eventual securitization.

(11)

Includes loans to entities which purchase residential mortgage loans for eventual securitization.

Longbridge Portfolio

Longbridge originates reverse mortgage loans, including (i) home equity conversion mortgage loans, or "HECMs," which are insured by the FHA, and (ii) "proprietary reverse mortgage loans," which are not FHA-insured. HECMs are eligible for inclusion in GNMA-guaranteed HECM-backed MBS, or "HMBS." Upon securitization, the HECMs remain on our balance sheet under GAAP. We have securitized certain proprietary reverse mortgage loans originated by Longbridge and have retained certain related securitization tranches in compliance with credit risk retention rules. Longbridge has typically retained the MSRs associated with the loans it has originated. Longbridge also originates home equity lines of credit, or "HELOCs," designed for homeowners aged 62 or older.

The following table summarizes loan-related assets (1) in the Longbridge segment as of June 30, 2026 and March 31, 2026:

June 30, 2026

March 31, 2026 (2)

(In thousands)

HMBS assets (3)(6)

11,184,939

10,893,878

Less: HMBS liabilities

(11,057,752

)

(10,765,668

)

HMBS MSR (4)

127,187

128,210

Unsecuritized HECM loans (5)(6)

178,139

178,562

Proprietary reverse mortgage loans (7)

2,299,122

1,974,539

Reverse MSRs

30,040

30,192

Total

2,634,488

2,311,503

Less: Non-retained tranches of consolidated securitization trusts

1,985,145

1,616,404

Total, excluding non-retained tranches of consolidated securitization trusts

649,343

695,099

(1)

This information does not include financial derivatives or loan commitments.

(2)

Conformed to current period presentation.

(3)

Includes HECM loans, related REO, and claims or other receivables.

(4)

When Longbridge pools HECM loans into HMBS, such transfers do not qualify as sales under U.S. GAAP, and as a result, such transactions are treated as secured borrowings on our Consolidated Balance Sheet; the pooled HECM loans are included in Loans, at fair value, and the related liabilities are reflected as HMBS-related obligations, at fair value. After pooling the HECM loans into HMBS, Longbridge retains the mortgage servicing rights associated with such HECM loans (the "HMBS MSR").

(5)

As of June 30, 2026, includes $26.9 million of active HECM buyout loans, $21.3 million of inactive HECM buyout loans, $7.5 million of other inactive HECM loans, and $5.0 million of REO. As of March 31, 2026, includes $21.7 million of active HECM buyout loans, $19.9 million of inactive HECM buyout loans, $6.6 million of other inactive HECM loans, and $5.7 million of REO.

(6)

Includes REO. In accordance with U.S. GAAP, REO is not considered a financial instrument and as a result is included at the lower of cost or fair value.

(7)

As of June 30, 2026, includes $2.0 billion of securitized proprietary reverse mortgage loans and related REO, $30.5 million of cash held in a securitization reserve fund, and $30.8 million of investment related receivables. As of March 31, 2026, includes $1.6 billion of securitized proprietary reverse mortgage loans and related REO, $26.2 million of cash held in a securitization reserve fund, and $13.9 million of investment related receivables.

The following table summarizes Longbridge's origination volumes by product and channel for the three-month periods ended June 30, 2026 and March 31, 2026:

($ In thousands)

June 30, 2026

March 31, 2026

Units

New Loan Origination Volume (1)

% of New Loan Origination Volume

Units

New Loan Origination Volume (1)

% of New Loan Origination Volume

HECM loans

Wholesale and correspondent

1,399

199,505

1,230

177,122

Retail

583

73,992

513

62,222

Total HECM loans

1,982

273,497

1,743

239,344

Proprietary reverse mortgage loans (2)

Wholesale and correspondent

439

228,308

347

184,575

Retail

234

87,849

230

91,455

Total proprietary reverse mortgage loans

673

316,157

577

276,030

Total

2,655

589,654

100

2,320

515,374

100

(1)

Represents initial borrowed amounts on reverse mortgage loans.

(2)

Includes HELOCs.

In accordance with U.S. GAAP, HECM loans remain on our balance sheet after securitization. The carrying value of the HMBS assets net of the HMBS liabilities, approximates the value of the HMBS MSR. The following table presents a rollforward of the HMBS MSR for the three-month periods ended June 30, 2026 and March 31, 2026:

Three-Month Period Ended

(In thousands)

June 30, 2026

March 31, 2026

Beginning balance

128,210

118,320

Originations

10,930

8,561

Change in fair value due to:

Runoff

(9,702

)

(9,048

)

Change in valuation inputs and assumptions

(2,251

)

10,377

Ending balance

127,187

128,210

The following table presents the net profit (loss) related to the HMBS MSR, as discussed above, for the three-month periods ended June 30, 2026 and March 31, 2026:

Three-Month Period Ended

(In thousands)

June 30, 2026

March 31, 2026

Net servicing revenue

14,956

13,866

Change in fair value due to:

Runoff

(9,702

)

(9,048

)

Change in valuation inputs and assumptions

(2,251

)

10,377

Gains (losses) on associated hedges

2,812

3,684

Net profit (loss)

5,815

18,879

The following table presents a rollforward of our purchased MSRs and MSRs retained on certain proprietary reverse mortgage loans, which are reported on our Condensed Consolidated Balance Sheet as Mortgage servicing rights, at fair value, for the three-month periods ended June 30, 2026 and March 31, 2026:

Three-Month Period Ended

(In thousands)

June 30, 2026

March 31, 2026

Beginning balance

30,192

28,913

Change in fair value due to:

Runoff

(153

)

(159

)

Change in valuation inputs and assumptions

1,438

Ending balance

30,040

30,192

The following table presents the net profit (loss) on our MSRs, as discussed above, for the three-month periods ended June 30, 2026 and March 31, 2026:

Three-Month Period Ended

(In thousands)

June 30, 2026

March 31, 2026

Net servicing revenue

1,804

1,708

Change in fair value due to:

Runoff

(153

)

(159

)

Change in valuation inputs and assumptions

1,438

Gains (losses) on associated hedges

498

351

Net profit (loss)

2,150

3,338

Financing

Key Highlights:

The following table summarizes our outstanding borrowings and debt-to-equity ratios as of June 30, 2026 and March 31, 2026:

June 30, 2026

March 31, 2026

Outstanding Borrowings (1)

Debt-to-Equity Ratio (2)

Outstanding Borrowings (1)

Debt-to-Equity Ratio (2)

(In thousands)

Recourse borrowings (3)

3,984,015

2.0:1

3,822,166

2.0:1

Non-recourse borrowings (3)

14,509,085

7.3:1

13,891,000

7.1:1

Total Borrowings

18,493,100

9.2:1

17,713,166

9.0:1

Total Equity

1,999,436

1,957,988

Recourse borrowings excluding borrowings collateralized by U.S. Treasury securities, adjusted for unsettled purchases and sales

1.9:1

Total borrowings excluding borrowings collateralized by U.S. Treasury securities, adjusted for unsettled purchases and sales

9.2:1

9.0:1

(1)

Includes borrowings under repurchase agreements, other secured borrowings, other secured borrowings, at fair value, and unsecured debt, at par.

(2)

Recourse and overall debt-to-equity ratios are computed by dividing outstanding recourse and overall borrowings, respectively, by total equity. Debt-to-equity ratios do not account for liabilities other than debt financings.

(3)

All of our non-recourse borrowings are secured by collateral. In the event of default under a non-recourse borrowing, the lender has a claim against the collateral but not any of the other assets held by us or our consolidated subsidiaries. In the event of default under a recourse borrowing, the lender's claim is not limited to the collateral (if any).

Operating Results

The following table summarizes our operating results by segment for the three-month period ended June 30, 2026:

(In thousands except per share amounts)

Investment Portfolio

Longbridge

Corporate/Other

Total

Per Share

Interest income and other income (1)

119,933

53,350

1,531

174,814

1.37

Interest expense

(52,643

)

(30,667

)

(11,226

)

(94,536

)

(0.74

)

Realized gain (loss), net

(19,742

)

(644

)

—

(20,386

)

(0.16

)

Unrealized gain (loss), net

13,980

21,730

(16,318

)

19,392

0.15

Net change from reverse mortgage loans and HMBS obligations

—

30,877

—

30,877

0.24

Earnings in unconsolidated entities

10,975

—

10,975

0.09

Interest rate hedges and other activity, net (2)

16,948

8,842

(4,600

)

21,190

0.17

Credit hedges and other activities, net (3)

(6,227

)

(1,990

)

—

(8,217

)

(0.06

)

Income tax (expense) benefit

—

(52

)

(52

)

—

Investment and transaction related expenses

(6,964

)

(19,637

)

—

(26,601

)

(0.21

)

Other expenses

(3,353

)

(31,613

)

(14,455

)

(49,421

)

(0.39

)

Net income (loss)

72,907

30,248

(45,120

)

58,035

0.46

Dividends on preferred stock

—

(4,205

)

(4,205

)

(0.04

)

Net (income) loss attributable to non-participating non-controlling interests

1,279

—

)

1,275

0.01

Net income (loss) attributable to common stockholders and participating non-controlling interests

74,186

30,248

(49,329

)

55,105

0.43

Net (income) loss attributable to participating non-controlling interests

—

(702

)

(702

)

—

Net income (loss) attributable to common stockholders

74,186

30,248

(50,031

)

54,403

0.43

Net income (loss) attributable to common stockholders per share of common stock

0.59

0.24

(0.40

)

0.43

Weighted average shares of common stock and convertible units (4) outstanding

127,259

Weighted average shares of common stock outstanding

125,637

(1)

Other income primarily consists of rental income on real estate owned, loan origination fees, and servicing income.

(2)

Includes U.S. Treasury securities, if applicable.

(3)

Other activities include certain equity and other trading strategies and related hedges, and net realized and unrealized gains (losses) on foreign currency.

(4)

Convertible units include Operating Partnership units attributable to participating non-controlling interests.

The following table summarizes our operating results by segment for the three-month period ended March 31, 2026:

(In thousands except per share amounts)

Investment Portfolio

Longbridge

Corporate/Other

Total

Per Share

Interest income and other income (1)

107,531

63,111

1,341

171,983

1.40

Interest expense

(45,954

)

(27,157

)

(11,391

)

(84,502

)

(0.69

)

Realized gain (loss), net

11,781

276

—

12,057

0.10

Unrealized gain (loss), net

(32,529

)

14,908

21,188

3,567

0.03

Net change from reverse mortgage loans and HMBS obligations

—

40,928

—

40,928

0.33

Earnings in unconsolidated entities

17,564

—

17,564

0.14

Interest rate hedges and other activity, net (2)

25,738

6,762

(5,696

)

26,804

0.22

Credit hedges and other activities, net (3)

411

—

431

—

Income tax (expense) benefit

—

(966

)

(966

)

(0.01

)

Investment and transaction related expenses

(4,027

)

(15,800

)

—

(19,827

)

(0.16

)

Other expenses

(2,574

)

(25,964

)

(32,008

)

(60,546

)

(0.49

)

Net income (loss)

77,550

57,475

(27,532

)

107,493

0.87

Dividends on preferred stock

—

(5,883

)

(5,883

)

(0.05

)

Issuance costs of redeemed preferred stock

—

(3,966

)

(3,966

)

(0.03

)

Net (income) loss attributable to non-participating non-controlling interests

(1,175

)

—

)

(1,179

)

(0.01

)

Net income (loss) attributable to common stockholders and participating non-controlling interests

76,375

57,475

(37,385

)

96,465

0.78

Net (income) loss attributable to participating non-controlling interests

—

(998

)

(998

)

—

Net income (loss) attributable to common stockholders

76,375

57,475

(38,383

)

95,467

0.78

Net income (loss) attributable to common stockholders per share of common stock

0.63

0.47

(0.32

)

0.78

Weighted average shares of common stock and convertible units (4) outstanding

122,984

Weighted average shares of common stock outstanding

121,711

(1)

Other income primarily consists of rental income on real estate owned, loan origination fees, and servicing income. Included in the Longbridge segment is also $17.0 million of litigation settlement income.

(2)

Includes U.S. Treasury securities, if applicable.

(3)

Other activities include certain equity and other trading strategies and related hedges, and net realized and unrealized gains (losses) on foreign currency.

(4)

Convertible units include Operating Partnership units attributable to participating non-controlling interests.

About Ellington Financial

Ellington Financial invests in a diverse array of financial assets, including residential and commercial mortgage loans and mortgage-backed securities, reverse mortgage loans, mortgage servicing rights and related investments, consumer loans, asset-backed securities, collateralized loan obligations, non-mortgage and mortgage-related derivatives, debt and equity investments in loan origination companies, and other strategic investments. Ellington Financial is externally managed and advised by Ellington Financial Management LLC, an affiliate of Ellington Management Group, L.L.C.

Conference Call

We will host a conference call at 11:00 a.m. Eastern Time on Friday, August 7, 2026, to discuss our financial results for the quarter ended June 30, 2026. To participate in the event by telephone, please dial (800) 343-4136 at least 10 minutes prior to the start time and reference the conference ID EFCQ226. International callers should dial (203) 518-9843 and reference the same conference ID. The conference call will also be webcast live over the Internet and can be accessed via the "For Investors" section of our web site at www.ellingtonfinancial.com. To listen to the live webcast, please visit www.ellingtonfinancial.com at least 15 minutes prior to the start of the call to register, download, and install necessary audio software. In connection with the release of these financial results, we also posted an investor presentation, that will accompany the conference call, on our website at www.ellingtonfinancial.com under "For Investors—Presentations."

A dial-in replay of the conference call will be available on Friday, August 7, 2026, at approximately 2:00 p.m. Eastern Time through Friday, August 14, 2026 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 723-5759. International callers should dial (402) 220-2662. A replay of the conference call will also be archived on our web site at www.ellingtonfinancial.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as "believe," "expect," "anticipate," "estimate," "project," "plan," "continue," "intend," "should," "would," "could," "goal," "objective," "will," "may," "seek" or similar expressions or their negative forms, or by references to strategy, plans, or intentions. Forward-looking statements are based on our beliefs, assumptions and expectations of our future operations, business strategies, performance, financial condition, liquidity and prospects, taking into account information currently available to us. These beliefs, assumptions, and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations and strategies may vary materially from those expressed or implied in our forward-looking statements. The following factors are examples of those that could cause actual results to vary from our forward-looking statements: changes in interest rates and the market value of our investments, market volatility, changes in mortgage default rates and prepayment rates, our ability to borrow to finance our assets, changes in government regulations affecting our business, our ability to maintain our exclusion from registration under the Investment Company Act of 1940, our ability to maintain our qualification as a real estate investment trust, or "REIT," and other changes in market conditions and economic trends, such as changes to fiscal or monetary policy, heightened inflation, slower growth or recession, and currency fluctuations. Furthermore, forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A of our Annual Report on Form 10-K, which can be accessed through our website at www.ellingtonfinancial.com or at the SEC's website ( www.sec.gov). Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in reports we file with the SEC, including reports on Forms 10-Q, 10-K and 8-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

This release and the information contained herein do not constitute an offer of any securities or solicitation of an offer to purchase securities.

ELLINGTON FINANCIAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three-Month Period Ended

Six-Month Period Ended

June 30, 2026

March 31, 2026

June 30, 2026

(In thousands, except per share amounts)

NET INTEREST INCOME

Interest income

170,837

149,503

320,340

Interest expense

(98,551

)

(88,249

)

(186,800

)

Total net interest income

72,286

61,254

133,540

Other Income (Loss)

Realized gains (losses) on securities and loans, net

(13,104

)

14,715

1,611

Realized gains (losses) on financial derivatives, net

4,987

19,172

24,159

Realized gains (losses) on real estate owned, net

(7,083

)

(3,145

)

(10,228

)

Unrealized gains (losses) on securities and loans, net

15,948

(19,612

)

(3,664

)

Unrealized gains (losses) on financial derivatives, net

4,471

7,042

11,513

Unrealized gains (losses) on real estate owned, net

1,565

1,255

2,820

Unrealized gains (losses) on other secured borrowings, at fair value, net

10,216

6,993

17,209

Unrealized gains (losses) on unsecured borrowings, at fair value

(16,318

)

21,188

4,870

Net change from HECM reverse mortgage loans, at fair value

152,018

235,035

387,053

Net change related to HMBS obligations, at fair value

(121,141

)

(194,107

)

(315,248

)

Litigation settlement income

—

17,000

Other, net

19,289

4,478

23,767

Total other income (loss)

50,848

110,014

160,862

EXPENSES

Base management fee to affiliate, net of rebates

7,356

7,101

14,457

Incentive fee to affiliate

919

19,222

20,141

Investment and transaction related expenses:

Servicing expense

7,933

7,800

15,733

Debt issuance costs related to Other secured borrowings, at fair value

4,158

2,324

6,482

Other

14,510

9,703

24,213

Professional fees

2,917

3,634

6,551

Compensation and benefits

28,398

21,806

50,204

Other expenses

9,831

8,783

18,614

Total expenses

76,022

80,373

156,395

Net Income (Loss) before Income Tax Expense (Benefit) and Earnings from Investments in Unconsolidated Entities

47,112

90,895

138,007

Income tax expense (benefit)

966

1,018

Earnings (losses) from investments in unconsolidated entities

10,975

17,564

28,539

Net Income (Loss)

58,035

107,493

165,528

Net Income (Loss) attributable to non-controlling interests

(573

)

2,177

1,604

Dividends on preferred stock

4,205

5,883

10,088

Issuance costs of redeemed preferred stock

—

3,966

Net Income (Loss) Attributable to Common Stockholders

54,403

95,467

149,870

Net Income (Loss) per Common Share:

Basic and Diluted

0.43

0.78

1.21

Weighted average shares of common stock outstanding

125,637

121,711

123,685

Weighted average shares of common stock and convertible units outstanding

127,259

122,984

125,133

ELLINGTON FINANCIAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

As of

(In thousands, except share and per share amounts)

June 30, 2026

March 31, 2026

December 31, 2025 (1)

ASSETS

Cash and cash equivalents

247,473

163,224

201,893

Restricted cash

42,373

28,296

136,297

Securities, at fair value

1,230,743

1,136,825

1,034,882

Loans, at fair value

17,874,430

17,393,161

16,640,647

Loan commitments, at fair value

10,191

10,207

9,124

Forward MSR-related investments, at fair value

75,901

72,824

77,852

Mortgage servicing rights, at fair value

30,040

30,192

28,913

Investments in unconsolidated entities, at fair value

402,259

349,722

312,421

Real estate owned

81,042

101,167

75,548

Financial derivatives–assets, at fair value

174,889

152,834

142,723

Reverse repurchase agreements

577,691

487,333

453,037

Due from brokers

59,396

39,708

35,919

Investment related receivables

190,166

239,406

177,208

Other assets

32,953

28,197

26,446

Total Assets

21,029,547

20,233,096

19,352,910

LIABILITIES

Securities sold short, at fair value

252,118

297,231

272,702

Repurchase agreements

3,064,277

2,894,972

2,655,444

Financial derivatives–liabilities, at fair value

80,793

47,374

53,073

Due to brokers

59,791

65,024

48,104

Investment related payables

40,721

55,441

36,092

Other secured borrowings

256,988

264,444

296,398

Other secured borrowings, at fair value

3,451,333

3,125,332

2,945,578

HMBS-related obligations, at fair value

11,057,752

10,765,668

10,406,332

Unsecured borrowings, at fair value

654,962

638,644

659,832

Base management fee payable to affiliate

7,355

7,101

6,869

Incentive fee payable to affiliate

920

19,222

—

Dividends payable

19,491

19,108

19,428

Interest payable

25,680

17,666

26,798

Accrued expenses and other liabilities

57,930

57,881

55,105

Total Liabilities

19,030,111

18,275,108

17,481,755

EQUITY

Preferred stock, par value $0.001 per share, 100,000,000 shares authorized; 9,200,089, 9,200,089, and 13,800,089 shares issued and outstanding, and $230,002, $230,002, and $345,002 aggregate liquidation preference, respectively

220,924

331,958

Common stock, par value $0.001 per share, 300,000,000 shares authorized, respectively; 127,593,315, 124,649,023 and 113,138,860 shares issued and outstanding, respectively (2)

128

125

113

Additional paid-in-capital

2,106,033

2,065,197

1,915,152

Retained earnings (accumulated deficit)

(360,933

)

(366,110

)

(412,964

)

Total Stockholders' Equity

1,966,152

1,920,136

1,834,259

Non-controlling interests

33,284

37,852

36,896

Total Equity

1,999,436

1,957,988

1,871,155

TOTAL LIABILITIES AND EQUITY

21,029,547

20,233,096

19,352,910

SUPPLEMENTAL PER SHARE INFORMATION:

Book Value Per Common Share (3)

13.61

13.56

13.16

(1)

Derived from audited financial statements as of December 31, 2025.

(2)

Common shares issued and outstanding at June 30, 2026 includes 2,782,358 shares of common stock issued under our ATM program during the three-month period ended June 30, 2026.

(3)

Based on total stockholders' equity less the aggregate liquidation preference of our preferred stock outstanding.

Reconciliation of Net Income (Loss) to Adjusted Distributable Earnings

We calculate Adjusted Distributable Earnings as U.S. GAAP net income (loss) as adjusted for: (i) realized and unrealized gain (loss) on securities and loans, REO, mortgage servicing rights, financial derivatives (excluding periodic settlements on interest rate swaps), any borrowings carried at fair value, and foreign currency transactions; (ii) incentive fee to affiliate; (iii) Catch-up Amortization Adjustment (as defined below); (iv) non-cash equity compensation expense; (v) provision for income taxes; (vi) certain non-capitalized transaction costs; and (vii) other income or loss items that are of a non-recurring nature. For certain investments in unconsolidated entities, we include the relevant components of net operating income in Adjusted Distributable Earnings. The incentive fee is calculated based on Adjusted Net Income, a measure defined in our management agreement, rather than on Adjusted Distributable Earnings. Adjusted Net Income takes into account realized and unrealized gains and losses from our investment portfolio, any extraordinary items and certain other items, all of which are excluded from Adjusted Distributable Earnings. The Catch-up Amortization Adjustment is a quarterly adjustment to premium amortization or discount accretion triggered by changes in actual and projected prepayments on our Agency RMBS (accompanied by a corresponding offsetting adjustment to realized and unrealized gains and losses). The adjustment is calculated as of the beginning of each quarter based on our then-current assumptions about cashflows and prepayments, and can vary significantly from quarter to quarter. Non-capitalized transaction costs include expenses, generally professional fees, incurred in connection with the acquisition of an investment or issuance of long-term debt. We also include in Adjusted Distributable Earnings, for all loans that we originate through Longbridge, any realized and unrealized gains (losses) on such loans up to the point of loan sale or securitization, net of sale or securitization costs; and any realized and unrealized gains (losses) on HECM buyout loans and REO related to Longbridge's servicing activities.

Adjusted Distributable Earnings is a supplemental non-GAAP financial measure. We believe that the presentation of Adjusted Distributable Earnings provides information useful to investors, because: (i) we believe that it is a useful indicator of both current and projected long-term financial performance, in that it excludes the impact of certain current-period earnings components that we believe are less useful in forecasting long-term performance and dividend-paying ability; (ii) we use it to evaluate the effective net yield provided (a) by our investment portfolio, after the effects of financial leverage, and (b) by Longbridge, to reflect the earnings from its reverse mortgage origination and servicing operations; and (iii) we believe that presenting Adjusted Distributable Earnings assists investors in measuring and evaluating our operating performance, and comparing our operating performance to that of our residential mortgage REIT and mortgage originator peers. Please note, however, that: (I) our calculation of Adjusted Distributable Earnings may differ from the calculation of similarly titled non-GAAP financial measures by our peers, with the result that these non-GAAP financial measures might not be directly comparable; and (II) Adjusted Distributable Earnings excludes certain items that may impact the amount of cash that is actually available for distribution.

In addition, because Adjusted Distributable Earnings is an incomplete measure of our financial results and differs from net income (loss) computed in accordance with U.S. GAAP, it should be considered supplementary to, and not as a substitute for, net income (loss) computed in accordance with U.S. GAAP.

Furthermore, Adjusted Distributable Earnings is different from REIT taxable income. As a result, the determination of whether we have met the requirement to distribute at least 90% of our annual REIT taxable income (subject to certain adjustments) to our stockholders, in order to maintain our qualification as a REIT, is not based on whether we distributed 90% of our Adjusted Distributable Earnings.

In setting our dividends, our Board of Directors considers our earnings, liquidity, financial condition, REIT distribution requirements, and financial covenants, along with other factors that the Board of Directors may deem relevant from time to time.

The following table reconciles, for the three-month periods ended June 30, 2026 and March 31, 2026, our Adjusted Distributable Earnings to the line on our Condensed Consolidated Statement of Operations entitled Net Income (Loss), which we believe is the most directly comparable U.S. GAAP measure:

Three-Month Period Ended

June 30, 2026

March 31, 2026

(In thousands, except per share amounts)

Investment Portfolio

Longbridge

Corporate/Other

Total

Investment Portfolio

Longbridge

Corporate/Other

Total

Net Income (Loss)

72,907

30,248

(45,120

)

58,035

77,550

57,475

(27,532

)

107,493

Income tax expense (benefit)

—

966

Net income (loss) before income tax expense (benefit)

72,907

30,248

(45,068

)

58,087

77,550

57,475

(26,566

)

108,459

Adjustments:

Realized (gains) losses, net (1)

24,332

—

24,332

(19,398

)

—

263

(19,135

)

Unrealized (gains) losses, net (2)

(24,012

)

14,888

20,123

10,999

20,247

12,158

(16,400

)

16,005

Unrealized (gains) losses on reverse MSRs, net of hedging (gains) losses (3)

—

(1,971

)

—

(1,971

)

—

(15,822

)

—

(15,822

)

Incentive fee to affiliate

—

920

—

19,222

Negative (positive) component of interest income represented by Catch-up Amortization Adjustment

(207

)

—

(207

)

(21

)

—

(21

)

Adjustment related to consolidated proprietary reverse mortgage loan securitizations (4)

—

(15,233

)

—

(15,233

)

—

(12,690

)

—

(12,690

)

Non-capitalized transaction costs and other expense adjustments (5)

1,472

958

206

2,636

1,359

1,311

294

2,964

Litigation settlement income

—

(17,000

)

—

(17,000

)

(Earnings) losses from investments in unconsolidated entities

(10,975

)

—

(10,975

)

(17,564

)

—

(17,564

)

Adjusted distributable earnings from investments in unconsolidated entities (6)

12,623

—

12,623

9,584

—

9,584

Total Adjusted Distributable Earnings

76,140

28,890

(23,819

)

81,211

71,757

25,432

(23,187

)

74,002

Dividends on preferred stock

—

4,205

—

5,883

Adjusted Distributable Earnings attributable to non-controlling interests

483

—

975

1,458

928

—

695

1,623

Adjusted Distributable Earnings Attributable to Common Stockholders

75,657

28,890

(28,999

)

75,548

70,829

25,432

(29,765

)

66,496

Adjusted Distributable Earnings Attributable to Common Stockholders, per share

0.60

0.23

(0.23

)

0.60

0.58

0.21

(0.24

)

0.55

(1)

Includes realized (gains) losses on securities and loans, REO, financial derivatives (excluding periodic settlements on interest rate swaps), and foreign currency transactions which are components of Other Income (Loss) on the Condensed Consolidated Statement of Operations.

(2)

Includes unrealized (gains) losses on securities and loans, REO, financial derivatives (excluding periodic settlements on interest rate swaps), borrowings carried at fair value, MSR-related investments, and foreign currency translations which are components of Other Income (Loss) on the Condensed Consolidated Statement of Operations.

(3)

Represents net change in fair value of the HMBS MSR and Reverse MSRs attributable to changes in market conditions and model assumptions. This adjustment also includes net (gains) losses on certain hedging instruments (including interest rate swaps, futures, and short U.S. Treasury securities), which are components of realized and/or unrealized gains (losses) on financial derivatives, net, realized and/or unrealized gains (losses) on securities and loans, net, interest income, and interest expense on the Condensed Consolidated Statement of Operations.

(4)

Represents the effect of replacing mortgage loan interest income (net of securitization debt expense) with interest income of the retained tranches.

(5)

For the three-month period ended June 30, 2026, includes $1.1 million of other non-capitalized transaction costs and $1.5 million of non-cash equity compensation and depreciation expense and various other expenses. For the three-month period ended March 31, 2026, includes $1.3 million of other non-capitalized transaction costs, $1.2 million of non-cash equity compensation and depreciation expense, and $0.5 million of various other expenses.

(6)

Includes the Company's proportionate share of net interest income, net loan origination income (expense), and operating expenses for certain investments in unconsolidated entities, including certain of its non-consolidated equity investments in loan originators that have been making (or are expected to make) distributions to the Company.