Ellington Financial Inc. Reports Second Quarter 2020 Results
Highlights
-
Net income of
$37.3 million , or$0.85 per common share. -
Core Earnings1 of
$17.1 million , or$0.39 per share. -
Book value per common share as of
June 30, 2020 of$15.67 , including the effects of dividends of$0.25 per common share for the quarter. -
Credit strategy gross income of
$33.7 million for the quarter, or$0.76 per share. -
Agency strategy gross income of
$14.9 million for the quarter, or$0.33 per share. -
Dividend yield of 8.9% based on the
August 5, 2020 closing stock price of$12.17 per share, and dividend of$0.09 per common share declared onJuly 8, 2020 . -
Debt-to-equity ratio of 2.7:1 and recourse debt-to-equity ratio of 1.5:12 as of
June 30, 2020 . Adjusted for unsettled purchases and sales, these ratios were not materially different as ofJune 30, 2020 . -
Cash and cash equivalents of
$146.5 million as ofJune 30, 2020 , in addition to other unencumbered assets of$311.8 million .
Second Quarter 2020 Results
"For the second quarter,
"We also made substantial progress extending and improving our sources of financing and leverage. In addition to completing our non-QM securitization, we also obtained term financing for numerous loan assets that we had previously held unfinanced, and we extended the terms of several of our credit facilities. Furthermore, by the end of the quarter, the market for standard repo financing of securities had largely returned to pre-March levels.
"With markets stabilizing during the second quarter, and seeing extremely attractive entry points across many sectors of our diversified portfolio, we resumed both our credit and Agency investment activity. With many specialty finance companies still hobbled, we are seeing compelling net interest margins on new loan originations, and are exploring some exciting potential strategic investments in loan originators.
"I was pleased that the Board increased our monthly dividend to
"With that said, caution is still warranted in the current environment, and we continue to maintain ample liquidity and keep leverage low. While the bouts of market volatility have created many investment opportunities, uncertainty remains high as to the length and severity of the economic downturn, as well as the ultimate path to recovery. This ongoing uncertainty underscores the importance of our risk management principles in protecting book value."
Financial Results
In
In total, the Company's total long Agency RMBS portfolio decreased by 10% quarter over quarter, to
Primarily as a result of the smaller Agency portfolio, the Company's debt-to-equity ratio decreased to 2.7:1 as of
During the second quarter, the Company's credit strategy generated total gross income of
In March, the market turmoil associated with the COVID-19 pandemic had caused significant price declines and yield spread widening across virtually all credit assets, and as result, the Company incurred considerable mark-to-market losses in the first quarter. In contrast, prices in many credit-sensitive fixed income sectors rebounded in the second quarter, generating significant net realized and unrealized gains on the Company's credit assets, which reversed a portion of the Company's losses from the first quarter. The market recovery also resulted in a loss on the Company's credit hedges. As with previous quarters, net interest income4 continued to be a primary driver of earnings as well, although it declined sequentially as a result of lower average holdings. Finally, other investment related expenses were higher quarter over quarter, as a result of debt issuance costs relating to the Company's non-QM securitization completed during the second quarter.
Most of the Company's credit strategies performed well during the second quarter. The Company had large gains on its non-QM loans, non-Agency RMBS, and CMBS, all markets where there was substantial distressed selling during the first quarter, followed by a sharp rebound in prices and liquidity in the second quarter. The Company's loan strategies also performed well, led by excellent performance in its consumer loan and residential transition loan portfolios. The Company's investments in loan originators had strong performance during the quarter, driven by an excellent quarter from the reverse mortgage originator in which the Company holds a minority stake. The Company's CLO strategy and Euro-denominated RMBS portfolio generated net losses for the quarter.
Despite the partial market recovery in the second quarter, the Company is still anticipating eventual principal losses on many of its credit investments as a result of the economic impacts of COVID-19. As has been widely reported, there has been a significant nationwide increase in loan delinquencies, forbearances, deferments, and modifications, and we are seeing the effects of this on our own portfolios.
The Company's Agency strategy performed exceptionally well during the second quarter, driven by significantly higher pay-ups on its specified pools. Pay-ups are price premiums for specified pools relative to their TBA counterparts. During the first quarter of 2020, pay-ups had declined in the face of market-wide liquidity stresses, exacerbated by quarter-end balance sheet pressures, as well as the implementation of the
During the second quarter, asset purchases by the
In addition, the Agency results also benefited from the appreciation of the Company's reverse mortgage pools, driven by strong investor demand and a recovery in yield spreads after the distress in March. Finally, net interest income and net realized and unrealized gains on interest rate hedges and other activity contributed to results in the Agency portfolio.
During the second quarter the Company continued to hedge interest rate risk, primarily through the use of interest rate swaps, and to a lesser extent through the use of short positions in TBAs,
1 Core Earnings is a non-GAAP financial measure. See "Reconciliation of Net Income (Loss) to Core Earnings" below for an explanation regarding the calculation of Core Earnings.
2 Excludes repo borrowings at certain unconsolidated entities that are recourse to us. Including such borrowings, our debt-to-equity ratio based on total recourse borrowings was 1.6:1 as of
3 Includes REO at the lower of cost or fair value. Excludes hedges and other derivative positions, as well as tranches of the Company's consolidated non-QM securitization trusts that were sold to third parties, but that are consolidated for
4 Excludes any interest income and interest expense items from Interest rate hedges, net and Credit hedges and other activities, net.
5 Ten-year equivalents for a group of positions represent the amount of 10-year
The following table summarizes the Company's investment portfolio(1) holdings as of
|
|
Fair Value |
||||||
(In thousands) |
|
|
|
|
||||
Long: |
|
|
|
|
||||
Credit: |
|
|
|
|
||||
Dollar Denominated: |
|
|
|
|
||||
CLO(2) |
|
$ |
156,158 |
|
|
$ |
170,905 |
|
CMBS |
|
77,815 |
|
|
75,815 |
|
||
Commercial Mortgage Loans and REO(3)(4) |
|
337,265 |
|
|
343,111 |
|
||
Consumer Loans and ABS backed by Consumer Loans(2) |
|
216,289 |
|
|
252,385 |
|
||
Corporate Debt and Equity and Corporate Loans |
|
9,237 |
|
|
7,407 |
|
||
Equity Investments in Loan Origination Entities |
|
44,277 |
|
|
39,436 |
|
||
Non-Agency RMBS |
|
154,928 |
|
|
118,793 |
|
||
Residential Mortgage Loans and REO(3) |
|
950,565 |
|
|
942,202 |
|
||
Non-Dollar Denominated: |
|
|
|
|
||||
CLO(2) |
|
2,583 |
|
|
2,310 |
|
||
Consumer Loans and ABS backed by Consumer Loans |
|
395 |
|
|
459 |
|
||
Corporate Debt and Equity |
|
25 |
|
|
29 |
|
||
RMBS(5) |
|
46,722 |
|
|
44,928 |
|
||
Agency: |
|
|
|
|
||||
Fixed-Rate Specified Pools |
|
724,756 |
|
|
834,002 |
|
||
Floating-Rate Specified Pools |
|
7,899 |
|
|
9,054 |
|
||
IOs |
|
49,007 |
|
|
42,344 |
|
||
Reverse Mortgage Pools |
|
131,535 |
|
|
130,601 |
|
||
Government Debt: |
|
|
|
|
||||
Dollar Denominated |
|
— |
|
|
1,654 |
|
||
Total Long |
|
$ |
2,909,456 |
|
|
$ |
3,015,435 |
|
Short: |
|
|
|
|
||||
Credit: |
|
|
|
|
||||
Dollar Denominated: |
|
|
|
|
||||
Corporate Debt and Equity |
|
$ |
(459 |
) |
|
$ |
(1,419 |
) |
Government Debt: |
|
|
|
|
||||
Dollar Denominated |
|
(4,324 |
) |
|
(2,154 |
) |
||
Non-Dollar Denominated |
|
(26,688 |
) |
|
(9,718 |
) |
||
Total Short |
|
$ |
(31,471 |
) |
|
$ |
(13,291 |
) |
(1) |
This information does not include financial derivatives. |
||||||||||||
(2) |
Includes equity investments in securitization-related vehicles. |
||||||||||||
(3) |
In accordance with |
||||||||||||
(4) |
Includes equity investments in unconsolidated entities holding small balance commercial mortgage loans and REO. |
||||||||||||
(5) |
Includes an equity investment in an unconsolidated entity holding European RMBS. |
The following table summarizes the Company's operating results for the three-month periods ended
|
|
Three-Month
|
|
Per Share |
|
Three-Month
|
|
Per Share(1) |
|
Six-Month
|
|
Per Share |
||||||||||||
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Credit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income and other income(2) |
|
$ |
36,573 |
|
|
$ |
0.82 |
|
|
$ |
41,841 |
|
|
$ |
0.97 |
|
|
$ |
78,414 |
|
|
$ |
1.79 |
|
Realized gain (loss), net |
|
(20,276 |
) |
|
(0.46 |
) |
|
10,447 |
|
|
0.24 |
|
|
(9,829 |
) |
|
(0.23 |
) |
||||||
Unrealized gain (loss), net |
|
34,271 |
|
|
0.78 |
|
|
(146,665 |
) |
|
(3.39 |
) |
|
(112,394 |
) |
|
(2.56 |
) |
||||||
Interest rate hedges, net(3) |
|
71 |
|
|
— |
|
|
(8,007 |
) |
|
(0.18 |
) |
|
(7,936 |
) |
|
(0.18 |
) |
||||||
Credit hedges and other activities, net(4) |
|
(5,197 |
) |
|
(0.12 |
) |
|
19,215 |
|
|
0.44 |
|
|
14,018 |
|
|
0.32 |
|
||||||
Interest expense(5) |
|
(12,114 |
) |
|
(0.27 |
) |
|
(13,227 |
) |
|
(0.31 |
) |
|
(25,341 |
) |
|
(0.58 |
) |
||||||
Other investment related expenses |
|
(5,275 |
) |
|
(0.12 |
) |
|
(3,954 |
) |
|
(0.09 |
) |
|
(9,229 |
) |
|
(0.21 |
) |
||||||
Earnings (losses) from investments in unconsolidated entities |
|
5,643 |
|
|
0.13 |
|
|
(6,497 |
) |
|
(0.15 |
) |
|
(854 |
) |
|
(0.02 |
) |
||||||
Total Credit profit (loss) |
|
33,696 |
|
|
0.76 |
|
|
(106,847 |
) |
|
(2.47 |
) |
|
(73,151 |
) |
|
(1.67 |
) |
||||||
Agency RMBS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income |
|
3,385 |
|
|
0.08 |
|
|
12,067 |
|
|
0.28 |
|
|
15,452 |
|
|
0.35 |
|
||||||
Realized gain (loss), net |
|
4,059 |
|
|
0.09 |
|
|
6,408 |
|
|
0.15 |
|
|
10,467 |
|
|
0.24 |
|
||||||
Unrealized gain (loss), net |
|
9,753 |
|
|
0.22 |
|
|
12,282 |
|
|
0.28 |
|
|
22,035 |
|
|
0.50 |
|
||||||
Interest rate hedges and other activities, net(3) |
|
178 |
|
|
— |
|
|
(38,399 |
) |
|
(0.90 |
) |
|
(38,221 |
) |
|
(0.87 |
) |
||||||
Interest expense(5) |
|
(2,499 |
) |
|
(0.06 |
) |
|
(8,420 |
) |
|
(0.19 |
) |
|
(10,919 |
) |
|
(0.25 |
) |
||||||
Total Agency RMBS profit (loss) |
|
14,876 |
|
|
0.33 |
|
|
(16,062 |
) |
|
(0.38 |
) |
|
(1,186 |
) |
|
(0.03 |
) |
||||||
Total Credit and Agency RMBS profit (loss) |
|
48,572 |
|
|
1.09 |
|
|
(122,909 |
) |
|
(2.85 |
) |
|
(74,337 |
) |
|
(1.70 |
) |
||||||
Other interest income (expense), net |
|
86 |
|
|
— |
|
|
280 |
|
|
0.01 |
|
|
366 |
|
|
0.01 |
|
||||||
Income tax (expense) benefit |
|
(1,542 |
) |
|
(0.03 |
) |
|
547 |
|
|
0.01 |
|
|
(995 |
) |
|
(0.02 |
) |
||||||
Other expenses |
|
(6,677 |
) |
|
(0.15 |
) |
|
(6,260 |
) |
|
(0.14 |
) |
|
(12,937 |
) |
|
(0.30 |
) |
||||||
Net income (loss) (before incentive fee) |
|
40,439 |
|
|
0.91 |
|
|
(128,342 |
) |
|
(2.97 |
) |
|
(87,903 |
) |
|
(2.01 |
) |
||||||
Incentive fee |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||||
Net income (loss) |
|
$ |
40,439 |
|
|
$ |
0.91 |
|
|
$ |
(128,342 |
) |
|
$ |
(2.97 |
) |
|
$ |
(87,903 |
) |
|
$ |
(2.01 |
) |
Less: Dividends on preferred stock |
|
1,941 |
|
|
0.04 |
|
|
1,941 |
|
|
0.04 |
|
|
3,882 |
|
|
0.08 |
|
||||||
Less: Net income (loss) attributable to non-participating non-controlling interests |
|
701 |
|
|
0.02 |
|
|
1,197 |
|
|
0.03 |
|
|
1,898 |
|
|
0.04 |
|
||||||
Net income (loss) attributable to common stockholders and participating non-controlling interests |
|
37,797 |
|
|
0.85 |
|
|
(131,480 |
) |
|
(3.04 |
) |
|
(93,683 |
) |
|
(2.13 |
) |
||||||
Less: Net income (loss) attributable to participating non-controlling interests |
|
519 |
|
|
|
|
(2,082 |
) |
|
|
|
(1,563 |
) |
|
|
|||||||||
Net income (loss) attributable to common stockholders |
|
$ |
37,278 |
|
|
$ |
0.85 |
|
|
$ |
(129,398 |
) |
|
$ |
(3.04 |
) |
|
$ |
(92,120 |
) |
|
$ |
(2.13 |
) |
Weighted average shares of common stock and convertible units(6) outstanding |
|
44,389 |
|
|
|
|
43,284 |
|
|
|
|
43,836 |
|
|
|
|||||||||
Weighted average shares of common stock outstanding |
|
43,780 |
|
|
|
|
42,598 |
|
|
|
|
43,189 |
|
|
|
(1) | Conformed to current period presentation. | ||||||||||||
(2) | Other income primarily consists of rental income on real estate owned and loan origination fees. | ||||||||||||
(3) |
Includes |
||||||||||||
(4) | Other activities include certain equity and other trading strategies and related hedges, and net realized and unrealized gains (losses) on foreign currency. | ||||||||||||
(5) | Includes allocable portion of interest expense on the Company's Senior notes. | ||||||||||||
(6) | Convertible units include |
About
Conference Call
The Company will host a conference call at
A dial-in replay of the conference call will be available on
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, and statements regarding the drivers of the Company's returns. 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, including changes resulting from the ongoing spread and economic effects of the novel coronavirus (COVID-19). 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
|
|||||||||||
|
Three-Month Period Ended |
|
Six-Month
|
||||||||
|
|
|
|
|
|||||||
(In thousands, except per share amounts) |
|
|
|
|
|
||||||
NET INTEREST INCOME |
|
|
|
|
|
||||||
Interest income |
$ |
39,281 |
|
|
$ |
52,108 |
|
|
$ |
91,389 |
|
Interest expense |
(14,686 |
) |
|
(22,090 |
) |
|
(36,776 |
) |
|||
Total net interest income |
24,595 |
|
|
30,018 |
|
|
54,613 |
|
|||
Other Income (Loss) |
|
|
|
|
|
||||||
Realized gains (losses) on securities and loans, net |
(16,040 |
) |
|
12,260 |
|
|
(3,780 |
) |
|||
Realized gains (losses) on financial derivatives, net |
(11,676 |
) |
|
(12,406 |
) |
|
(24,082 |
) |
|||
Realized gains (losses) on real estate owned, net |
(211 |
) |
|
350 |
|
|
139 |
|
|||
Unrealized gains (losses) on securities and loans, net |
44,112 |
|
|
(133,738 |
) |
|
(89,626 |
) |
|||
Unrealized gains (losses) on financial derivatives, net |
8,173 |
|
|
(9,984 |
) |
|
(1,811 |
) |
|||
Unrealized gains (losses) on real estate owned, net |
(228 |
) |
|
(357 |
) |
|
(584 |
) |
|||
Other, net |
(435 |
) |
|
1,679 |
|
|
1,243 |
|
|||
Total other income (loss) |
23,695 |
|
|
(142,196 |
) |
|
(118,501 |
) |
|||
EXPENSES |
|
|
|
|
|
||||||
Base management fee to affiliate (Net of fee rebates of |
2,906 |
|
|
2,443 |
|
|
5,349 |
|
|||
Incentive fee to affiliate |
— |
|
|
— |
|
|
— |
|
|||
Investment related expenses: |
|
|
|
|
|
||||||
Servicing expense |
2,493 |
|
|
2,531 |
|
|
5,024 |
|
|||
Debt issuance costs related to Other secured borrowings, at fair value |
2,075 |
|
|
— |
|
|
2,075 |
|
|||
Other |
707 |
|
|
1,423 |
|
|
2,130 |
|
|||
Professional fees |
1,333 |
|
|
1,277 |
|
|
2,610 |
|
|||
Compensation expense |
941 |
|
|
788 |
|
|
1,728 |
|
|||
Other expenses |
1,497 |
|
|
1,752 |
|
|
3,250 |
|
|||
Total expenses |
11,952 |
|
|
10,214 |
|
|
22,166 |
|
|||
Net Income (Loss) before Income Tax Expense (Benefit) and Earnings from Investments in Unconsolidated Entities |
36,338 |
|
|
(122,392 |
) |
|
(86,054 |
) |
|||
Income tax expense (benefit) |
1,542 |
|
|
(547 |
) |
|
995 |
|
|||
Earnings (losses) from investments in unconsolidated entities |
5,643 |
|
|
(6,497 |
) |
|
(854 |
) |
|||
Net Income (Loss) |
40,439 |
|
|
(128,342 |
) |
|
(87,903 |
) |
|||
Net Income (Loss) Attributable to Non-Controlling Interests |
1,220 |
|
|
(885 |
) |
|
335 |
|
|||
Dividends on Preferred Stock |
1,941 |
|
|
1,941 |
|
|
3,882 |
|
|||
Net Income (Loss) Attributable to Common Stockholders |
$ |
37,278 |
|
|
$ |
(129,398 |
) |
|
$ |
(92,120 |
) |
Net Income (Loss) per Common Share: |
|
|
|
|
|
||||||
Basic and Diluted |
$ |
0.85 |
|
|
$ |
(3.04 |
) |
|
$ |
(2.13 |
) |
Weighted average shares of common stock outstanding |
43,780 |
|
|
42,598 |
|
|
43,189 |
|
|||
Weighted average shares of common stock and convertible units outstanding |
44,389 |
|
|
43,284 |
|
|
43,836 |
|
|
|||||||||||
|
As of |
||||||||||
(In thousands, except share amounts) |
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
146,531 |
|
|
$ |
136,740 |
|
|
$ |
72,302 |
|
Restricted cash |
175 |
|
|
175 |
|
|
175 |
|
|||
Securities, at fair value |
1,396,008 |
|
|
1,481,395 |
|
|
2,449,941 |
|
|||
Loans, at fair value |
1,416,851 |
|
|
1,443,589 |
|
|
1,412,426 |
|
|||
Investments in unconsolidated entities, at fair value |
72,553 |
|
|
65,397 |
|
|
71,850 |
|
|||
Real estate owned |
24,044 |
|
|
25,054 |
|
|
30,584 |
|
|||
Financial derivatives–assets, at fair value |
27,186 |
|
|
31,752 |
|
|
16,788 |
|
|||
Reverse repurchase agreements |
31,427 |
|
|
13,239 |
|
|
73,639 |
|
|||
Due from brokers |
56,702 |
|
|
166,516 |
|
|
79,829 |
|
|||
Investment related receivables |
62,098 |
|
|
408,332 |
|
|
123,120 |
|
|||
Other assets |
3,276 |
|
|
5,453 |
|
|
7,563 |
|
|||
Total Assets |
$ |
3,236,851 |
|
|
$ |
3,777,642 |
|
|
$ |
4,338,217 |
|
LIABILITIES |
|
|
|
|
|
||||||
Securities sold short, at fair value |
$ |
31,471 |
|
|
$ |
13,291 |
|
|
$ |
73,409 |
|
Repurchase agreements |
1,294,549 |
|
|
2,034,225 |
|
|
2,445,300 |
|
|||
Financial derivatives–liabilities, at fair value |
34,863 |
|
|
47,772 |
|
|
27,621 |
|
|||
Due to brokers |
11,266 |
|
|
17,138 |
|
|
2,197 |
|
|||
Investment related payables |
23,750 |
|
|
19,170 |
|
|
66,133 |
|
|||
Other secured borrowings |
156,089 |
|
|
177,855 |
|
|
150,334 |
|
|||
Other secured borrowings, at fair value |
742,688 |
|
|
549,668 |
|
|
594,396 |
|
|||
Senior notes, net |
85,429 |
|
|
85,363 |
|
|
85,298 |
|
|||
Base management fee payable to affiliate |
2,906 |
|
|
2,443 |
|
|
2,663 |
|
|||
Incentive fee payable to affiliate |
— |
|
|
— |
|
|
116 |
|
|||
Dividend payable |
5,293 |
|
|
7,952 |
|
|
6,978 |
|
|||
Interest payable |
3,138 |
|
|
5,283 |
|
|
7,320 |
|
|||
Accrued expenses and other liabilities |
7,730 |
|
|
8,001 |
|
|
7,753 |
|
|||
Total Liabilities |
2,399,172 |
|
|
2,968,161 |
|
|
3,469,518 |
|
|||
EQUITY |
|
|
|
|
|
||||||
Preferred stock, par value |
111,034 |
|
|
111,034 |
|
|
111,034 |
|
|||
Common stock, par value |
44 |
|
|
44 |
|
|
39 |
|
|||
Additional paid-in-capital |
916,186 |
|
|
916,006 |
|
|
821,747 |
|
|||
Retained earnings (accumulated deficit) |
(226,368 |
) |
|
(252,701 |
) |
|
(103,555 |
) |
|||
Total Stockholders' Equity |
800,896 |
|
|
774,383 |
|
|
829,265 |
|
|||
Non-controlling interests |
36,783 |
|
|
35,098 |
|
|
39,434 |
|
|||
Total Equity |
837,679 |
|
|
809,481 |
|
|
868,699 |
|
|||
TOTAL LIABILITIES AND EQUITY |
$ |
3,236,851 |
|
|
$ |
3,777,642 |
|
|
$ |
4,338,217 |
|
PER SHARE INFORMATION: |
|
|
|
|
|
||||||
Common stock(2) |
$ |
15.67 |
|
|
$ |
15.06 |
|
|
$ |
18.48 |
|
(1) |
Derived from audited financial statements as of |
||||||||||||
(2) |
Based on total stockholders' equity less the aggregate liquidation preference of the Company's preferred stock outstanding. |
Reconciliation of Net Income (Loss) to Core Earnings
The Company calculates Core Earnings as
Core Earnings is a supplemental non-GAAP financial measure. The Company believes that the presentation of Core Earnings provides a consistent measure of operating performance by excluding the impact of gains and losses and other adjustments listed above from operating results. The Company believes that Core Earnings provides information useful to investors because it is a metric that the Company uses to assess its performance and to evaluate the effective net yield provided by its portfolio. In addition, the Company believes that presenting Core Earnings enables its investors to measure, evaluate, and compare its operating performance to that of its peers. However, because Core Earnings is an incomplete measure of the Company's financial results and differs from net income (loss) computed in accordance with
The following table reconciles, for the three- and six-month periods ended
|
|
Three-Month Period Ended |
|
Six-Month
|
||||||||
(In thousands, except per share amounts) |
|
|
|
|
|
|||||||
Net Income (Loss) |
|
$ |
40,439 |
|
|
$ |
(128,342 |
) |
|
$ |
(87,903 |
) |
Income tax expense (benefit) |
|
1,542 |
|
|
(547 |
) |
|
995 |
|
|||
Net income (loss) before income tax expense |
|
41,981 |
|
|
(128,889 |
) |
|
(86,908 |
) |
|||
Adjustments: |
|
|
|
|
|
|
||||||
Realized (gains) losses on securities and loans, net |
|
16,040 |
|
|
(12,260 |
) |
|
3,780 |
|
|||
Realized (gains) losses on financial derivatives, net |
|
11,676 |
|
|
12,406 |
|
|
24,082 |
|
|||
Realized (gains) losses on real estate owned, net |
|
211 |
|
|
(350 |
) |
|
(139 |
) |
|||
Unrealized (gains) losses on securities and loans, net |
|
(44,112 |
) |
|
133,738 |
|
|
89,626 |
|
|||
Unrealized (gains) losses on financial derivatives, net |
|
(8,173 |
) |
|
9,984 |
|
|
1,811 |
|
|||
Unrealized (gains) losses on real estate owned, net |
|
228 |
|
|
357 |
|
|
584 |
|
|||
Other realized and unrealized (gains) losses, net(1) |
|
1,302 |
|
|
330 |
|
|
1,632 |
|
|||
Net realized gains (losses) on periodic settlements of interest rate swaps |
|
(892 |
) |
|
143 |
|
|
(750 |
) |
|||
Net unrealized gains (losses) on accrued periodic settlements of interest rate swaps |
|
136 |
|
|
(111 |
) |
|
25 |
|
|||
Incentive fee to affiliate |
|
— |
|
|
— |
|
|
— |
|
|||
Non-cash equity compensation expense |
|
182 |
|
|
164 |
|
|
346 |
|
|||
Negative (positive) component of interest income represented by Catch-up Premium Amortization Adjustment |
|
3,648 |
|
|
1,112 |
|
|
4,759 |
|
|||
Debt issuance costs related to Other secured borrowings, at fair value |
|
2,075 |
|
|
— |
|
|
2,075 |
|
|||
(Earnings) losses from investments in unconsolidated entities(2) |
|
(4,227 |
) |
|
6,633 |
|
|
2,408 |
|
|||
Total Core Earnings |
|
$ |
20,075 |
|
|
$ |
23,257 |
|
|
$ |
43,331 |
|
Dividends on preferred stock |
|
1,941 |
|
|
1,941 |
|
|
3,882 |
|
|||
Core Earnings attributable to non-controlling interests |
|
1,012 |
|
|
1,524 |
|
|
2,534 |
|
|||
Core Earnings Attributable to Common Stockholders |
|
$ |
17,122 |
|
|
$ |
19,792 |
|
|
$ |
36,915 |
|
Core Earnings Attributable to Common Stockholders, per share |
|
$ |
0.39 |
|
|
$ |
0.46 |
|
|
$ |
0.85 |
|
(1) |
Includes realized and unrealized gains (losses) on foreign currency and unrealized gain (loss) on other secured borrowings, at fair value, included in Other, net, on the Condensed Consolidated Statement of Operations. |
||||||||||||
(2) |
Adjustment represents, for certain investments in unconsolidated entities, the net realized and unrealized gains and losses of the underlying investments of such entities. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200806006082/en/
Investors:
Investor Relations
(203) 409-3575
info@ellington.com
or
Media:
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(212) 257-4170
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Source: