Ellington Financial Inc. Common Stock

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Financial Third Quarter 2024 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode. The floor will be open for your questions following the presentation. If you would like to ask a question during that time, simply press star then the number 1 on your telephone keypad. If at any time your question has been answered, you may remove yourself from the queue by pressing star 2. Lastly, if you should need operator assistance, please press star zero. It is now my pleasure to turn the call over to Aladin Shalai. You may begin.

Thank you. Before we start, I would like to remind everyone that certain statements made during this conference call may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature. As described under 1A, of our annual report on Form 10-K and Part 2, Item 1A of our quarterly report on Form 10-Q, forward-looking statements are subject to a variety of risk and uncertainties that could cause the company's actual results to differ from its beliefs, expectations, estimates, and projections. Consequently, you should not rely on these forward-looking statements as predictions of future events. Statements made during this conference call are made as of the day of this call, and the company undertakes no obligation to update or revise any forward-looking statement, whether it is whether as a result of new information, future events, or otherwise. I am joined on the call today by Larry Penn, Chief Executive Officer of Ellington Financial, Mark Takotsky, Co-Chief Investment Officer of EFC, and J.R. Herlihy, Chief Financial Officer of EFC. As described in our earnings press release, our third quarter earnings conference call presentation is available on our website, ellingtonfinancial.com. Management's prepared remarks will track this presentation. Please note that any references The figures in this presentation are qualified in their entirety by the notes at the back of the presentation. With that, I will now turn the call over to Larry.

Thanks, Elodine, and good morning, everyone. As always, thank you for your time and interest in Ellington Financial. I'll begin on slide three of the presentation. Perhaps the highlight of the quarter was the increase in our adjusted distributable earnings to $0.40 per share, which was a $0.07 increase from the second quarter and which covered our 39 cents in dividends for the quarter. The main driver of this quarter's increase in ADE was the contribution from our proprietary reverse mortgage business in our Longbridge segment, which included our second prop reverse securitization of the year. Back in the first quarter of this year, ADE in our Longbridge segment was actually negative, but it has increased each quarter since then, and it registered 12 cents per share in the third quarter. Our Longbridge segment represents about 12 percent of our equity capital allocation, so it's great to see ADE having steadily improved in that segment. I've been consistently highlighting our Longbridge segment as holding significant untapped potential for Ellington Financial. Even if Longbridge's ADE can stabilize around nine cents per share per quarter, we should be in excellent shape from a dividend coverage standpoint. In the third quarter, Ellington Financial's investment portfolio expanded as we utilized our strong balance sheet to continue growing our high-yielding loan portfolios. Four to quarter, our non-QM, RTL, commercial mortgage bridge, HELOC, and closed and second lien loan portfolios increased by a combined 26%. That portfolio growth drove our overall leverage a bit higher to 1.8 times from 1.6 times, even as we continued to shrink our lower-yielding agency portfolio and maintain additional dry powder to invest. At quarter end, our agency portfolio had shrunk another 14% sequentially, and cash plus unencumbered assets totaled $765 million, which was just under 50% of our total equity. Not surprisingly, much of the expansion of our loan portfolios has been the direct result of the loan origination businesses that we have cultivated across a variety of credit sectors and over a number of years. Our originator relationships, including the equity stakes we hold in many loan originators and our emphasis on striking forward flow agreements with a diversified roster of originators, have enabled us to adjust the acquisition volume and the underwriting criteria of our loan investments. This has enabled our loan portfolios to become among our largest, highest-yielding, and best-performing strategies. Meanwhile, the profits generated from our originator equity stakes have been a nice boost to our earnings and book value, while also enhancing the diversification of our earnings stream. This continued in the third quarter, with strong profits at Lendsure and American Heritage Lending, where continued robust demand for non-QM loans drove strong origination volumes and wider origination margins. Recently, our loan portfolio expansion has also included adding meaningful exposure to the HELOC and closed-end second lien sectors, where we have both bought loans with an eye towards securitization, as well as participated as securitization co-sponsor with a large mortgage originator. We currently see the retained tranches and call options from these securitizations as offering very attractive risk-adjusted returns. The mortgage securitization markets are in great shape, and in turn, that's been great for Ellington Financial. During the third quarter, we priced a non-QM securitization that achieved AAA yield spreads near their two-year lows. And as I mentioned earlier, we also completed a proprietary reverse mortgage securitization backed by loans originated by Longbridge, with incrementally stronger execution than our inaugural deal earlier this year. Finally, even aside from these excellent securitization executions, we're also continuing to improve the rest of the liability side of our balance sheet. Recently, we've added new financing lines on non-QM loans, closed-in seconds and HELOCs, and consumer loans, And before the end of the year, we expect to add several cost-effective lines for our reverse mortgage business, as well as a new financing line on the forward MSRs that we acquired through the Arlington merger. We anticipate using some of the proceeds from these financing lines to replace some of our existing higher-cost debt and floating-rate preferred equity. For example, we announced yesterday that we are redeeming our Series E preferred stock that we inherited in the Arlington merger. which now carries a cost of funds of well over 10% following its fixed to floating rate conversion earlier this year. These types of refinancing should be immediately accretive to earnings, since in the current environment, we see returns on equity on incremental asset acquisitions reaching well into the teens. Meanwhile, with our overall leverage still low, we have additional capacity to issue more long-term unsecured debt, and we look forward to doing so. With that, I'll turn the call over to JR. to discuss the third quarter financial results in more detail.