Ellington Financial Inc. Common Stock

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Ellington Financial Fourth 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 and the number one on your telephone keypad. If at any time your question has been answered, you can remove yourself from the queue by pressing star and two. Lastly, if you should require operator assistance, you may press star and zero. It is now my pleasure to turn the call over to Aldine Chalet. You may begin.

Thank you. Before we begin, I'd like to remind everyone that this conference call may include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical in nature and involve risks and uncertainties detailed in our annual and quarterly reports filed with the SEC. Actual results may differ materially from these statements, so they should not be considered to be predictions of future events. The company undertakes no obligation to update these forward-looking statements. Joining me today are Larry Penn, Chief Executive Officer of Ellington Financial, Mark Takotsky, Co-Chief Investment Officer, and J.R. Hurley, Chief Financial Officer. Our fourth quarter earnings conference call presentation is available on our website, ellingtonfinancial.com. Today's call will track that presentation, and all statements and references to figures are qualified in their entirety by the important notice and end notes in the presentation. With that, I'll hand the call over to Larry.

Thanks, Aladin. Good morning, everyone, and thank you for joining us today. Q4 was a very strong quarter for Ellington Financial, capping off a very successful 2024. In the fourth quarter, as throughout the year, we expanded our loan portfolios and sourcing channels, we strengthened our financing and balance sheet, and we steadily grew adjusted distributable earnings. I'll begin at slide three of the presentation. In the fourth quarter, we generated net income of 25 cents per share, while our adjusted distributable earnings increased by another 5 cents per share sequentially to 45 cents per share. comfortably covering our quarterly dividends of $0.39 per share. Key drivers of our results included, first, another excellent quarter from our Longbridge reverse mortgage segment, again led by the proprietary reverse mortgage business. Second, continued strong performance from our non-QM and other loan originator affiliates. And third, sizable gains from several securitizations that we completed during the quarter. We continued to scale up our credit portfolio in the fourth quarter. Our closed-end second lien, HELOC, prompt reverse, and commercial mortgage bridge loan portfolios grew by a combined 39%. This substantial growth reflected further expansion of our proprietary loan origination businesses, where we closed on yet another mortgage originator joint venture investment in the quarter. As is typical of how we structure these JVs, we tied our equity investment to a forward flow agreement with that originator. These forward flow agreements have been key to our portfolio growth and earnings growth as they enable us to lock in sources of high quality loans at attractive pricing and at a predictable pace. Meanwhile, we strengthened the liability side of our balance sheet in the fourth quarter in three key ways. Executing on securitizations, adding and improving warehouse lines, and redeeming our high-cost debt and preferred stock. In securitizations, we capitalized on the tightest securitization spreads we had seen all year by completing four securitization transactions across three different product lines. First, we completed two 9QM deals, one in October and one in November, each at great execution levels. This marked the first time that we had completed two securitizations in the same calendar quarter. reflecting the increased velocity of our acquisitions in the non-QM sector. The faster the turnaround time on our non-QM loans, from acquisition to securitization, the sooner that we can start earning the kind of outsized returns that we've been earning on our non-QM retained tranches, and the sooner we can redeploy the freed up capital. Ellington's increasing market share in non-QM is due in no small part to the numerous originator investments and relationships that we've fostered over many years now. Next, we completed our third proprietary reverse mortgage securitization of the year in a deal that was oversubscribed several times over and which priced considerably tighter than our two prior deals in 2024. Our wholly owned subsidiary Longbridge has become one of the largest originators of proprietary reverse mortgages, so we have good pricing power in that market as well as great visibility on the flow we'll continue to see of that product. Finally, we closed on our inaugural securitization of closed-end second lien loans, which locked in non-recourse match financing to drive further growth of that strategy. Home equity extraction remains a key theme in the mortgage market. This theme is an important driver of the proprietary reverse mortgage space, but that's a relatively small market. On a larger level, home equity extraction is fueling continued strong demand for second lien loans. Given the increased recent supply of second lien loans and the excellent long-term financing terms we can get on second lien loans through securitization, this sector became an important component of our portfolio growth in 2024. With the securitizations we completed in the fourth quarter, we generated net gains, we secured non-mark-to-market long-term financing on the underlying assets, we freed up capital to redeploy, and we retain the highest-yielding tranches for our investment portfolio. We believe that our strategic use of securitizations remains a core competitive advantage for Ellington Financial, and we expect that our ability to source high-quality loans, structure securitizations, and retain high-yielding tranches will continue to drive strong earnings, both gap earnings and adjusted distributable earnings, and will help cover our dividend and help build additional franchise value in 2025. Okay, we're still on the liability side of the balance sheet, but let's move from securitization financing to warehouse financing. We've finally seen spreads in the warehousing financing market tighten in sympathy with asset credit spreads. More and more banks are providing financing, and they're increasing the amount of capital allocated to providing warehousing financing. We capitalized on this increased competition both by negotiating improved terms on several existing loan financing facilities and by preparing lines with two new counterparties. We have plenty of borrowing capacity to accommodate hundreds of millions of dollars of increased loan growth. Our financing counterparties appreciate our creditworthiness, which is supported by the fact that EFC's unsecured notes remain NEIC 1 rated. A definite goal for us in 2025 is to issue another round of unsecured notes, assuming we can get the cost of funds that we think we deserve. Finally, we repaid and refinanced some of our outstanding higher cost debt, and we redeemed our highest cost preferred stock that we inherited from the Arlington merger, replacing that capital with lower cost debt. These are steps that are immediately accretive to earnings. With that, I'll turn the call over to JR to walk through our financial results in more detail. JR?