10-Q · May 11, 2026
Ellington Financial experienced a challenging quarter with a reported EPS of $0.55, exceeding estimates but coming along with a significant revenue miss at $61.25 million against an estimate of $130.31 million.…
Earnings analysis · 10-Q
EFC earnings analysis
Filed August 10, 2026 · Our reading of the company's report
The latest report
EFC delivered strong year-over-year operating improvement in Q2 2026, led by higher net interest income, stronger Investment Portfolio results, and a 38% increase in Longbridge originations. Adjusted distributable…
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EFC delivered strong year-over-year operating improvement in Q2 2026, led by higher net interest income, stronger Investment Portfolio results, and a 38% increase in Longbridge originations. Adjusted distributable earnings per common share rose to $0.60 from $0.47, although GAAP EPS was $0.43 and declined sequentially from the prior-quarter $0.78 shown in the earnings history. The main offset is elevated leverage, with total debt-to-equity at 9.2:1, increased repo and securitization borrowings, and meaningful mortgage-credit and liquidity exposure.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.43
What stood out
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Net interest income increased 67% year over year
Net interest income was $72.286 million, up from $43.343 million in Q2 2025, a 66.7% year-over-year increase. Investment Portfolio net interest income rose to $65.788 million from $40.850 million, while Longbridge increased to $16.193 million from $4.796 million.
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Adjusted earnings per share rose to $0.60
GAAP net income attributable to common stockholders increased to $54.403 million, or $0.43 per share, from $42.923 million, or $0.45 per share, in Q2 2025. Adjusted Distributable Earnings attributable to common stockholders rose to $75.548 million, or $0.60 per share, from $45.004 million, or $0.47 per share.
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Longbridge originations grew 38%
Longbridge originated $589.654 million of loans, up 38% from the same period in 2025, including $316.157 million of proprietary reverse mortgage loans and $273.497 million of HECM loans. Two proprietary reverse mortgage securitizations were completed during the quarter.
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Investment portfolio expanded modestly
The adjusted long investment portfolio increased approximately 1% to $4.495 billion from $4.468 billion at March 31, 2026. Residential transition loans and commercial mortgage bridge loans were cited as key contributors to portfolio growth.
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Cash and equity increased
Cash and cash equivalents increased to $247.5 million from $201.9 million at December 31, 2025. Equity increased to $1.999 billion from $1.871 billion, including $192.0 million of net common-stock issuance proceeds and $165.5 million of net income.
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Portfolio spread improved year over year
Investment Portfolio net interest margin improved to 3.36% from 3.05% in Q2 2025, despite a slight sequential decline from 3.37%. The average yield on investment-portfolio assets increased to 7.65% from 7.27%, while average secured funding cost declined to 4.75% from 5.07%.
What to watch
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High leverage and financing exposure
Total recourse and non-recourse borrowings were $18.493 billion, and the overall debt-to-equity ratio increased to 9.2:1 from 9.0:1 at March 31, 2026. Higher leverage increases exposure to collateral values, margin calls, refinancing conditions, and interest-rate movements.
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Repo rollover and liquidity risk
Repo borrowings increased to $3.064 billion from $2.655 billion at December 31, 2025, with 35.5% of repo borrowings having maturities greater than 364 days and 8.2% maturing within 30 days. Management warned that inability to roll repos or sharp collateral declines could materially pressure liquidity.
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Mortgage credit and delinquency risk
Commercial mortgage loans had $91.721 million of non-performing unpaid principal balance and $85.505 million of fair value, representing 8% of commercial-loan fair value. Residential mortgage-loan delinquency was 5.8% by unpaid principal balance, creating exposure to credit losses and property-value declines.
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Interest-rate and valuation sensitivity
Interest-rate sensitivity analysis estimated a $17.723 million decline in portfolio value, or 0.89% of total equity, for an immediate 100-basis-point increase in rates. The filing also reported the Federal Funds target range at 3.50%-3.75% and the 10-year Treasury yield at 4.47% at quarter-end.
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No new formal risk-factor updates
The filing states that risk factors are incorporated by reference from the December 31, 2025 Form 10-K and does not identify new or revised risk factors. However, current exposure includes $11.058 billion of HMBS-related obligations against $11.185 billion of HMBS assets.
Management's outlook
No numeric revenue or EPS guidance was provided. Management stated that capital resources are expected to be sufficient for short- and long-term liquidity needs, and that it expects to continue borrowing through repos and other similar financings.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.