The following is a summary of the Ellington Credit Company (EARN) Q1 2024 Earnings Call Transcript:
Financial Performance:
Ellington Credit Company reported an adjusted distributable earnings of $0.27 per share for Q1 2024, exceeding dividends of $0.24.
The company's overall net interest margin expanded from 2.19% to 3.03% quarter-over-quarter, largely due to growth of CLOs.
Ellington's net income for Q1 2024 was $0.20 per share.
The company's debt to equity ratio has decreased to 4.8 to 1 at quarter end, from 5.3 to 1 at year-end.
Business Progress:
The company, making a transformative shift, is now focusing majorly on corporate CLOs.
Ellington's CLO investment has generated good returns with a portfolio value of over $60 million.
The company plans to revoke its REIT election and prepare for transition to a closed-end fund, designed to enhance access to the capital market and potential growth.
Despite revoking REIT status, Ellington will continue to offset most of its federal taxable income by using net operating loss carry forwards.
Ellington anticipates growing the CLO portfolio over $100 million while maintaining a core portfolio of liquid Agency MBS to maintain exemption from the 1940 Act.
The company foresees potential upside in its current portfolio given the current market dynamics.
The company has shown positive economic returns in Q2 so far and is transitioning from an agency to CLO-focused portfolio, which has reduced its debt to equity ratio to approximately 4.4 to 1.
More details: Ellington Credit IR
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