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Ellington Financial LLC Reports Fourth Quarter 2018 Results

OLD GREENWICH, Conn.--(BUSINESS WIRE)--Feb. 20, 2019-- Ellington Financial LLC (NYSE: EFC) (the "Company") today reported financial results for the quarter ended December 31, 2018.

Highlights

  • Net loss1 of $(2.2) million, or $(0.07) per basic and diluted share.
  • Book value per share as of December 31, 2018 of $18.92, after payment of a quarterly dividend of $0.41 per share.
  • Credit strategy gross income of $8.1 million for the quarter, or $0.26 per share.
  • Agency strategy gross loss of $(4.9) million for the quarter, or $(0.16) per share.
  • Net investment income of $10.2 million for the quarter, or $0.33 per share; Adjusted net investment income2 of $12.7 million for the quarter, or $0.41 per share.
  • Announced a dividend of $0.41 per share, equating to an annualized dividend yield of 9.6% based on the February 19, 2019 closing price of $17.16 per share.
  • Repurchased 361,090 common shares during the quarter, or approximately 1% of our total common shares as of the beginning of the quarter, at an average price of $15.34 per share.
  • Debt-to-equity ratio of 3.35:13 as of December 31, 2018.
1 Increase (decrease) in shareholders' equity from operations, or "net income (loss)."
2 Adjusted net investment income is a non-GAAP financial measure. See "Reconciliation of Adjusted Net Investment Income to Net Income" below for an explanation regarding the calculation of Adjusted net investment income.
3 Excludes repo borrowings on U.S. Treasury securities.
 

Fourth Quarter 2018 Results

"Despite weakness in most equity and fixed income markets globally in the fourth quarter, Ellington Financial preserved its book value thanks to our disciplined hedging strategy and diversified portfolio," stated Laurence Penn, Chief Executive Officer and President. "Even though we sold certain non-real-estate-related assets in anticipation of our REIT conversion, we still were able to grow our adjusted net investment income, which covered our dividend for the quarter. We also took advantage of our discounted stock price by repurchasing more than $5.5 million of our common shares during the quarter.

"During the fourth quarter, we had strong results from several of our loan strategies, including consumer and non-QM, where we completed our second non-QM securitization in November. Our investments in loan originators also performed well during the quarter. We believe that many of our loan strategies, in addition to providing us a pipeline of investments over which we have greater control and visibility, have the additional benefit of being relatively insulated from interest rate movements and global macroeconomic events. I am pleased with our performance in 2018, having realized our primary objectives of prudently growing our credit portfolio and our adjusted net investment income, while delivering an economic return of 9.2%.

"Finally, I am excited that we completed our tax conversion from a publicly traded partnership. While we rotated a portion of the portfolio to enable us to qualify as a REIT, we have maintained all of our core investment strategies, including our highest-conviction non-real-estate-related strategies, as well as our core hedging strategies. Our tax reporting to investors will be greatly simplified as a REIT, which should expand our investor base and greatly improve the liquidity of our stock. At the same time, our investment objectives remain the same: generate a high-quality earnings stream while maintaining a strong balance sheet, moderate leverage, and a stable book value."

Corporate Structure Update

The Company plans to elect to be taxed as a REIT for U.S. federal income tax purposes for the taxable year ending December 31, 2019. To facilitate this planned election, it has elected to be taxed as a corporation for U.S. federal income tax purposes effective as of January 1, 2019. The Company will issue a final Schedule K-1 to those shareholders who held shares in 2018. For 2019, the Company will issue a Form 1099 to shareholders reporting all dividends paid.

Financial Results

The Company's total long credit portfolio4 was $1.185 billion as of December 31, 2018, a decrease of approximately 8.1% from $1.289 billion as of September 30, 2018. The Company's total long Agency RMBS portfolio was $975.4 million as of December 31, 2018, an increase of approximately 3.3% from $944.4 million as of September 30, 2018. Notable transactions during the quarter included the Company completing its second non-QM securitization, as well as the consummation of a strategic equity investment in a consumer loan originator with which the Company has a forward flow purchase agreement. Additionally, the Company continued to participate in the asset ramp-up for what would be its fourth Ellington-sponsored CLO.

The Company's borrowings increased during the quarter primarily as a result of the financing of new small balance commercial loan originations and non-QM loan purchases, while total equity declined primarily because of the Company's share repurchases and dividend. As a result, the Company's debt-to-equity ratio3 increased to 3.35:1 as of December 31, 2018, from 3.04:1 as of September 30, 2018.

During the fourth quarter, the Company's credit strategy generated total gross income of $8.1 million, or $0.26 per share, and its Agency strategy generated a gross loss of $(4.9) million, or $(0.16) per share.

The Company's credit portfolio continued to be the primary driver of its earnings. During the fourth quarter, the Company's credit strategy generated net interest income5 of $17.7 million, net realized and unrealized losses on credit assets of $(12.0) million, net realized and unrealized losses on interest rate hedges of $(0.6) million, and other investment related expenses of $5.5 million. Other investment related expenses included $1.6 million of issuance costs related to the non-QM securitization completed in November 2018.

The Company benefited from strong performance in several of its loan-related strategies, including consumer loans, non-QM loans, and investments in loan originators. The weakness in the credit markets caused many of the Company's securities strategies to underperform, including CLOs, European RMBS, and corporate credit relative value. However, much of this underperformance was offset by the Company's net credit hedges and other activities, which generated a gain of $8.4 million for the quarter.

In the Agency strategy, declining interest rates generated net realized and unrealized gains on the Company's Agency assets of $8.5 million, while net interest income6 totaled $2.6 million. Losses on the Company's interest rate hedges and other activities exceeded these gains, however, as declining interest rates and high levels of interest rate volatility generated net realized and unrealized losses of $(16.0) million.

4 Excludes hedges, other derivative, and corporate relative value trading positions. Also excludes tranches of the Company's consolidated non-QM securitization trusts that were sold to third parties, but that are consolidated for GAAP reporting purposes. Including such tranches, the Company's total long credit portfolio was $1.480 billion as of December 31, 2018 as compared to $1.379 billion as of September 30, 2018.
5 Excludes any interest income and interest expense items from Net interest rate hedges and Net credit hedges and other activities.
6 Excludes any interest income and interest expense items from Net interest rate hedges and other activities
 

.

The following table summarizes the Company's investment portfolio holdings as of December 31, 2018 and September 30, 2018:

       
December 31, 2018 September 30, 2018
(In thousands) Fair Value     Cost Fair Value     Cost
Long:
Credit:
Dollar Denominated:
CLO $ 123,893 $ 139,424 $ 156,087 $ 160,561
CMBS 18,426 17,828 14,923 13,995
Commercial Mortgage Loans and REO(1) 245,536 244,193 160,515 158,159
Consumer Loans and ABS Backed by Consumer Loans(2) 209,922 218,895 209,848 218,183
Corporate Debt and Equity 15,316 17,526 44,559 43,250
Equity Investment in Loan Origination Entities 37,067 28,314 30,171 25,314
Non-Agency RMBS 153,214 141,130 180,223 168,399
Residential Mortgage Loans and REO 498,126 495,551 393,846 392,634
Non-Dollar Denominated:
CLO
CMBS 15,482 16,510 16,250 16,774
Consumer Loans and ABS Backed by Consumer Loans 884 761 919 825
Corporate Debt and Equity 10,810 11,821 11,400 12,165
RMBS(3) 160,342 168,289 199,108 200,416
Agency:
Fixed-Rate Specified Pools 884,870 904,048 850,453 877,590
Floating-Rate Specified Pools 5,496 5,627 5,539 5,684
IOs 29,516 30,399 33,050 34,134
Reverse Mortgage Pools 55,475 56,799 55,396 57,552
TBAs 474,860 473,115 303,552 304,331
Government:
Dollar Denominated 76   76   4,230   4,257  
Total Long 2,939,311   2,970,306   2,670,069   2,694,223  
Repurchase Agreements
Dollar Denominated 41,530 41,530 140,352 140,352
Non-Dollar Denominated 19,744   19,744   20,070   20,116  
Total Repurchase Agreements 61,274   61,274   160,422   160,468  
Short:
Credit:
Dollar Denominated:

Corporate Debt and Equity

(23,462 ) (23,872 ) (60,809 ) (60,965 )
Agency:
TBAs (772,964 ) (766,777 ) (562,098 ) (564,232 )
Government:
Dollar Denominated (34,817 ) (34,410 ) (52,809 ) (52,884 )
Non-Dollar Denominated (19,334 ) (19,545 ) (19,633 ) (19,605 )
Total Short (850,577 ) (844,604 ) (695,349 ) (697,686 )
Net Total $ 2,150,008   $ 2,186,976   $ 2,135,142   $ 2,157,005  
 
(1)   Includes equity investment in a limited liability company holding small balance commercial mortgage loans.
(2) Includes equity investment in a securitization-related vehicle.
(3) Includes RMBS secured by non-performing loans and REO, and an investment in an entity holding a securitization call right.
 

The following table summarizes the Company's operating results for the quarters ended December 31, 2018 and September 30, 2018 and the year ended December 31, 2018:

   

Quarter
Ended
December
31, 2018

   

Per
Share

   

% of
Average
Equity

   

Quarter
Ended
September 30,
2018

   

Per
Share

   

% of
Average
Equity

   

Year
Ended
December
31, 2018

   

Per
Share

   

% of
Average
Equity

(In thousands, except per share amounts)
Credit:
Interest income and other income $ 27,335 $ 0.89 4.49 % $ 26,522 $ 0.86 4.32 % $ 97,455 $ 3.14 15.91 %
Net realized gain (loss) 3,496 0.11 0.57 % 9,845 0.32 1.60 % 18,407 0.59 3.01 %
Change in net unrealized gain (loss) (15,482 ) (0.50 ) (2.54 )% (9,886 ) (0.32 ) (1.61 )% (6,642 ) (0.21 ) (1.08 )%
Net interest rate hedges(1) (561 ) (0.02 ) (0.09 )% 468 0.02 0.08 % 115 0.02 %
Net credit hedges and other activities(2) 8,416 0.27 1.38 % (3,250 ) (0.11 ) (0.53 )% 8,020 0.26 1.31 %
Interest expense(3) (9,622 ) (0.31 ) (1.58 )% (8,786 ) (0.28 ) (1.43 )% (32,735 ) (1.05 ) (5.34 )%
Other investment related expenses (5,456 ) (0.18 ) (0.90 )% (3,921 ) (0.13 ) (0.64 )% (15,284 ) (0.49 ) (2.50 )%
Total Credit profit (loss) 8,126   0.26   1.33 % 10,992   0.36   1.79 % 69,336   2.24   11.33 %
Agency RMBS:
Interest income 8,205 0.27 1.35 % 7,873 0.25 1.28 % 31,116 1.01 5.08 %
Net realized gain (loss) (528 ) (0.02 ) (0.09 )% (1,388 ) (0.04 ) (0.23 )% (4,612 ) (0.15 ) (0.75 )%
Change in net unrealized gain (loss) 9,008 0.29 1.48 % (6,167 ) (0.20 ) (1.00 )% (13,901 ) (0.45 ) (2.27 )%
Net interest rate hedges and other activities(1) (16,011 ) (0.52 ) (2.63 )% 5,510 0.18 0.90 % 3,144 0.10 0.51 %
Interest expense (5,585 ) (0.18 ) (0.92 )% (5,087 ) (0.17 ) (0.83 )% (18,582 ) (0.60 ) (3.03 )%
Total Agency RMBS profit (loss) (4,911 ) (0.16 ) (0.81 )% 741   0.02   0.12 % (2,835 ) (0.09 ) (0.46 )%
Total Credit and Agency RMBS profit (loss) 3,215   0.10   0.52 % 11,733   0.38   1.91 % 66,501   2.15   10.87 %
Other interest income (expense), net 422 0.01 0.07 % 347 0.01 0.06 % 1,664 0.05 0.27 %
Other expenses (4,707 ) (0.15 ) (0.77 )% (4,182 ) (0.14 ) (0.68 )% (17,539 ) (0.57 ) (2.86 )%
Net increase in equity resulting from operations (before incentive fee) (1,070 ) (0.04 ) (0.18 )% 7,898   0.25   1.29 % 50,626   1.63   8.28 %
Incentive fee     % (424 ) (0.01 ) (0.07 )% (715 ) (0.02 ) (0.12 )%
Net increase (decrease) in equity resulting from operations $ (1,070 ) $ (0.04 ) (0.18 )% $ 7,474   $ 0.24   1.22 % $ 49,911   $ 1.61   8.16 %
Less: Net increase (decrease) in equity resulting from operations attributable to non-controlling interests 1,147   813   3,235  
Net increase (decrease) in shareholders' equity resulting from operations(4) $ (2,217 ) $ (0.07 ) (0.38 )% $ 6,661   $ 0.22 1.12 % $ 46,676   $ 1.52 7.86 %
Weighted average shares and convertible

units(5) outstanding

30,735 30,859 31,006
Average equity (includes non-controlling interests)(6) $ 608,772 $ 613,816 $ 612,513
Weighted average shares and LTIP units outstanding(7) 30,514 30,647 30,792
Average shareholders' equity (excludes non-controlling interests)(6) $ 583,206 $ 596,204 $ 593,483
 
(1)   Includes TBAs and U.S. Treasury securities, if applicable.
(2) Includes equity and other relative value trading strategies and related hedges.
(3) Includes interest expense on the Company's Senior Notes.
(4) Per share information is calculated using weighted average shares and LTIP units outstanding. Percentage of average equity is calculated using average shareholders' equity, which excludes non-controlling interests.
(5) Convertible units include Operating Partnership units attributable to non-controlling interests.
(6) Average equity and average shareholders' equity are calculated using month end values.
(7) Excludes Operating Partnership units attributable to non-controlling interests.
 

About Ellington Financial

Ellington Financial invests in a diverse array of financial assets, including residential and commercial mortgage-backed securities, residential and commercial mortgage loans, consumer loans and asset-backed securities backed by consumer loans, collateralized loan obligations, non-mortgage and mortgage-related derivatives, 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

The Company will host a conference call at 11:00 a.m. Eastern Time on Thursday, February 21, 2019, to discuss its financial results for the quarter ended December 31, 2018. To participate in the event by telephone, please dial (877) 241-1233 at least 10 minutes prior to the start time and reference the conference ID number 6997409. International callers should dial (810) 740-4657 and reference the same conference ID number. The conference call will also be webcast live over the Internet and can be accessed via the "For Our Shareholders" section of the Company's 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, the Company also posted an investor presentation, that will accompany the conference call, on its website at www.ellingtonfinancial.com under "For Our Shareholders—Presentations."

A dial-in replay of the conference call will be available on Thursday, February 21, 2019, at approximately 4 p.m. Eastern Time through Thursday, March 7, 2019 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 585-8367 and enter the conference ID number 6997409. International callers should dial (404) 537-3406 and enter the same conference ID number. A replay of the conference call will also be archived on the Company's web site at www.ellingtonfinancial.com.

Cautionary Statement Regarding Forward-Looking Statements

This press 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. Actual results may differ from the Company's 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. Examples of forward-looking statements in this press release include without limitation management's beliefs regarding the current economic and investment environment and the Company's ability to implement its investment and hedging strategies, performance of the Company's investment and hedging strategies, the Company's exposure to prepayment risk in its Agency portfolio, estimated effects on the fair value of the Company's holdings of a hypothetical change in interest rates, statements regarding the drivers of the Company's returns, the Company's expected ongoing annualized expense ratio, statements regarding potential changes to the Company's corporate structure, and statements regarding the Company's intended dividend policy including the amount to be recommended by management, and the Company's share repurchase program. The Company's results can fluctuate from month to month and from quarter to quarter depending on a variety of factors, some of which are beyond the Company's control and/or are difficult to predict, including, without limitation, changes in interest rates and the market value of the Company's securities, changes in mortgage default rates and prepayment rates, the Company's ability to borrow to finance its assets, changes in government regulations affecting the Company's business, the Company's ability to maintain its exclusion from registration under the Investment Company Act of 1940; the Company's ability to qualify and maintain its qualification as a real estate investment trust, or "REIT"; and other changes in market conditions and economic trends. Furthermore, forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A of the Company's Annual Report on Form 10-K filed on March 15, 2018 which can be accessed through the Company's 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 or implied may be described from time to time in reports the Company's files with the SEC, including reports on Forms 10-Q, 10-K and 8-K. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

       

ELLINGTON FINANCIAL LLC

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

 
Three-Month Period Ended Year Ended
(In thousands, except per share amounts)

December 31,
2018

   

September 30,
2018

December 31,
2018

Investment income
Interest income $ 35,694 $ 35,300 $ 131,027
Other income 1,157   1,046   4,014  
Total investment income 36,851   36,346   135,041  
Expenses
Base management fee to affiliate (Net of fee rebates of $430, $423, and $1,380, respectively) 1,744 1,830 7,573
Incentive fee to affiliate 424 715
Interest expense 16,083 15,678 56,707
Other investment related expenses:
Servicing and other 4,201 4,384 15,307
Issuance costs related to Other secured borrowings, at fair value 1,647 1,647
Other operating expenses 2,962   2,352   9,967  
Total expenses 26,637   24,668   91,916  
Net investment income 10,214   11,678   43,125  
Net realized gain (loss) on:
Investments 4,675 8,551 25,421
Financial derivatives, excluding currency hedges (389 ) 479 (2,639 )
Financial derivatives—currency hedges 2,594 297 4,475
Foreign currency transactions 2,698   775   4,131  
9,578   10,102   31,388  
Change in net unrealized gain (loss) on:
Investments (13,181 ) (13,372 ) (25,947 )
Other secured borrowings (82 ) (358 ) 758
Financial derivatives, excluding currency hedges (2,829 ) 173 7,093
Financial derivatives—currency hedges (839 ) 528 565
Foreign currency translation (3,931 ) (1,277 ) (7,071 )
(20,862 ) (14,306 ) (24,602 )
Net realized and change in net unrealized gain (loss) on investments, financial derivatives, and other secured borrowings (11,284 ) (4,204 ) 6,786  
Net increase (decrease) in equity resulting from operations (1,070 ) 7,474   49,911  
Less: Increase (decrease) in equity resulting from operations attributable to non-controlling interests 1,147   813   3,235  
Net increase (decrease) in shareholders' equity resulting from operations $ (2,217 ) $ 6,661   $ 46,676  
Net increase (decrease) in shareholders' equity resulting from operations per share:
Basic and diluted $ (0.07 ) $ 0.22 $ 1.52
Weighted average shares and LTIP units outstanding 30,514 30,647 30,792
Weighted average shares and convertible units outstanding 30,735 30,859 31,006
 

ELLINGTON FINANCIAL LLC

CONSOLIDATED STATEMENT OF ASSETS, LIABILITIES, AND EQUITY

(UNAUDITED)

   
As of
(In thousands, except share amounts) December 31,

2018

    September 30,
2018
    December 31,
2017(1)
ASSETS
Cash and cash equivalents $ 44,656 $ 53,598 $ 47,233
Restricted cash 425 425 425
Investments, financial derivatives, and repurchase agreements:
Investments, at fair value (Cost–$2,970,306, $2,694,223, and $2,071,754) 2,939,311 2,670,069 2,071,707
Financial derivatives–assets, at fair value (Net cost–$22,526, $20,895, and $31,474) 20,001 31,338 28,165
Repurchase agreements (Cost–$61,274, $160,468, and $155,109) 61,274   160,422   155,949
Total Investments, financial derivatives, and repurchase agreements 3,020,586 2,861,829 2,255,821
Due from brokers 71,794 83,915 140,404
Receivable for securities sold and financial derivatives 780,826 670,952 476,000
Interest and principal receivable 37,676 38,635 29,688
Other assets 15,536   5,207   43,770
Total assets $ 3,971,499   $ 3,714,561   $ 2,993,341
LIABILITIES
Investments and financial derivatives:
Investments sold short, at fair value (Proceeds–$844,604, $697,686, and $640,202) $ 850,577 $ 695,349 $ 642,240
Financial derivatives–liabilities, at fair value (Net proceeds–$19,019, $16,294, and $27,463) 20,806   27,226   36,273
Total investments and financial derivatives 871,383 722,575 678,513
Reverse repurchase agreements 1,498,849 1,636,039 1,209,315
Due to brokers 5,553 4,551 1,721
Payable for securities purchased and financial derivatives 488,411 430,808 202,703
Other secured borrowings (Proceeds–$114,100, $114,190, and $57,909) 114,100 114,190 57,909
Other secured borrowings, at fair value (Proceeds–$81,728 $90,409, and $125,105) 297,948 89,569 125,105
Senior notes, net 85,035 84,968 84,771
Accounts payable and accrued expenses 5,723 5,337 3,885
Base management fee payable to affiliate 1,744 1,830 2,113
Incentive fee payable to affiliate 424
Interest and dividends payable 7,159 6,451 5,904
Other liabilities 424   1,141   441
Total liabilities 3,376,329   3,097,883   2,372,380
EQUITY 595,170   616,678   620,961
TOTAL LIABILITIES AND EQUITY $ 3,971,499   $ 3,714,561   $ 2,993,341
ANALYSIS OF EQUITY:
Common shares, no par value, 100,000,000 shares authorized;
(29,796,601, 30,155,055, and 31,335,938, shares issued and outstanding) $ 563,833 $ 583,179 $ 589,722
Additional paid-in capital–LTIP units (2)   10,618   10,377
Total Shareholders' Equity 563,833   593,797   600,099
Non-controlling interests (2) 31,337   22,881   20,862
Total Equity $ 595,170   $ 616,678   $ 620,961
PER SHARE INFORMATION:
Common shares, no par value (2) $ 18.92   $ 19.69   $ 19.15
DILUTED PER SHARE INFORMATION:
Common shares and convertible units, no par value (3) $ 18.92   $ 19.37   $ 18.85
 
(1)   Derived from audited financial statements as of December 31, 2017.
(2) On December 31, 2018, the Company redeemed all 503,988 of its outstanding LTIP units which it had originally issued under its incentive plans, with each LTIP unitholder receiving in exchange an equivalent number of LTIP Units of the Operating Partnership. As such, these LTIP units are now treated as non-controlling interests.
(3) Based on total equity excluding non-controlling interests not represented by instruments convertible into common shares.
 

Reconciliation of Adjusted Net Investment Income to Net Investment Income

The table below reconciles Adjusted net investment income for the three-month period ended December 31, 2018 to the line, Net investment income, on the Company's Consolidated Statement of Operations, which the Company believes is the most directly comparable U.S. GAAP measure. Adjusted net investment income includes net realized and unrealized gains (losses) from certain of the Company's equity investments in partnerships and net accrued periodic (payments) receipts on various interest rate swaps, and excludes incentive fee, deal expenses, one-time costs related to tax conversion, and the Catch-Up Premium Amortization Adjustment. The Catch-up Premium Amortization Adjustment is a quarterly adjustment to premium amortization triggered by changes in actual and projected prepayments on the Company's 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 the Company's then assumptions about cashflows and prepayments, and can vary significantly from quarter to quarter.

The Company believes that Adjusted net investment income provides information useful to investors because it is one of the metrics that it uses to assess its performance and to evaluate the effective net yield provided by the Company's portfolio. However, because Adjusted net investment income is an incomplete measure of the Company's financial results and differs from Net investment income computed in accordance with U.S. GAAP, it should be considered as supplementary to, and not as a substitute for, Net investment income computed in accordance with U.S. GAAP.

(In thousands, except per share amounts)     Three-Month

Period Ended

December 31, 2018

Net investment income $ 10,214
Include:
Net realized and unrealized gains (losses) from certain equity investments in partnerships(1) 103
Net accrued periodic (payments) receipts on interest rate swaps 130
Exclude:
Incentive fee to affiliate
Catch-up Premium Amortization Adjustment 16
Debt issuance costs related to Other secured borrowings, at fair value (1,647 )
Costs related to tax conversion (615 )
Adjusted net investment income $ 12,693  
Weighted average shares and convertible units outstanding 30,735
Net investment income per share $ 0.33
Adjusted net investment income per share $ 0.41
 
(1)   Includes only those components that would be included in net investment income at the underlying partnership.

Source: Ellington Financial

Investors:
Ellington Financial
Investor Relations, 203-409-3575
info@ellingtonfinancial.com
or
Media:
Gasthalter & Co., for Ellington Financial
Amanda Klein / Kevin FitzGerald, 212-257-4170
ellington@gasthalter.com


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