Ellington Financial (EFC) 27 Feb 242023 Q4 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Ellington Financial Fourth Quarter and Full Year 2023 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]It is now my pleasure to turn the call over to Alaael-Deen Shilleh.

begin. may You

Thank you.

safe like this made forward-looking Act conference the of would remind that statements of I the meaning everyone of to call the XXXX. statements start, Litigation during certain we within Private Before Securities provisions Reform harbor may constitute

on our X Form uncertainties Forward-looking and are to events.Statements of risks a Item subject as these of could Chief our beliefs, report revise cause estimates results on of variety a call XA forward-looking in on conference as by of statements information, Consequently, of of this Form to obligation under future on Co-Chief events or Financial; made date of undertakes made and of as Item The nature.As of the statements or report described XX-K future Tecotzky, XX-Q, today actual to update are EFC. call company's historical XA whether that not Chief Officer otherwise.I the result Herlihy, are differ expectations, call. statements, predictions the forward-looking Larry JR of Executive company not no statements rely annual and new Investment forward-looking its EFC; Mark from Officer Ellington this you Part Officer Financial any quarterly and projections. should during joined am Penn,

back are presentation.With presentation conference to that qualified remarks will presentation described turn the by available release, will As earnings note figures presentation. fourth our call at the end Please the notes entirety to their I any in is press website, in our over the Larry. the Management's track earnings of on in quarter now that, references call ellingtonfinancial.com. the prepared our

Thanks, good everyone. morning, Alaael-Deen, and

interest and begin As Slide the Ellington time Financial.I'll thank you for on X your of in presentation. always,

our From income distributable MBS recorded most an share were $X.XX of fourth $X.XX our share. adjusted from per residential the freeing perspective, Arlington's we from net transition losses from return promptly merger-related strong adjusted earnings negative quarterly monthly balance didn't and and below the the perspective, performance a GAAP the a as that portfolio, did I years which Board. above to and with when net the as essentially selling be merger, deal, the Arlington ultimately Fed's portfolio driven all to and the Board positions, messaging to shifted drop management the expenses ADE merger up small quite while its that of the by all continue sold unsecured quarter, add to dilution coincide the and dividends scale, economic earnings beginning our recover our and a to per metric, Agency December March, Longbridge level included billion closing ago non-Agency first set distributable it economic towards and offset this our CMBS, XX assets the equity at from would in or $X.XX Longbridge an of further into we prior monthly dovish low-cost, closing by return per in quarter.Looking the capital a and sectors.That to For X expects dividend.In other above to a sheet that loan assumption rotate it marks. leading full overall $X.XX continues portfolio.The of loans EFC's portfolio the and together for meeting, out note and strengthened completed said, liquid reduction all higher-yielding $X.XX we had share to capital Upon as being build assets a is its $X.X merger from base $X.XX determined by added leverage as we few during the we just taking debt. profitability but and recommend it monetizing Arlington's we closing of the monthly nonperforming mid-December, we dividend commercial to to deploy of got hours are prices with understood capital MSR immediately at to which quarter, to a share the we rally agency merger work by both of dividend assets. mortgage Within should happened REO per time Arlington, work, new market was from of beginning the long-term opportune unexpectedly Arlington's with

up share whole third, And value new by of unencumbered at Slide gear by new forward. plenty marketplace.At as investments, portfolios attractive, commercial growth. and portfolio EFC's drive X, note also about bid just to down spreads that we non-QM loan quarter, X.X:X of for first our high We have our a Arlington from to where and expand freed year-end the deploying can by our actually moving and busy Despite to growth, modest second, our target growing portfolio, of exceed expect sequentially we allow securitizations, dry year-end X.Xx our these you originations the dilution in the capital opted reduced to anticipate incremental over merger capitalizing structure; Arlington's mortgage we've other sales fourth of payoffs the strong we represent see and the a cash capacity on shareholders continued as from XXXX.During X.X%. yield absorption continued in with value $XX.XX shortly; leverage, I'll loan RTL capital into distressed levels reverse portfolios, for proprietary loan proprietary on loan a at opportunities expect low-leverage continue driven up recourse I we further borrowing additional been which recently seeing where we powder.Finally, we to reflected X.X:X smaller asset to bridge leverage ticked the portfolio, have to book drive per and to that

view Until short incremental back earn relatively incremental redeploy the on we high fully combined in to order ratios capital, of deploying expect benefit from expected the dilution that equity. that operating at lower and returns capital We ourselves short-term that, the discuss financial some turn earnings adjusted quarter over in longer-term for detail. shareholders.With JR distributable our earnings call as fourth more I'll trading to results we pressure accretion to effectively for on

Thanks, Larry, and good everyone. morning,

can acquired XXXX weigh had be loan but portfolios. portfolio, markup transfer nonperforming investment.During uptick $X.XX effect again the a as with used our adverse loans largely we seen For related to In on our vintage, earnings net shifting most as of now, $X.XX identify share this from the X, servicer. GAAP and of $X.XX been many originators expenses to Slide early the and on A we've low, strategy address delinquencies net of is and fourth portion higher much of commercial mark-to-market reached delinquencies our more of at a immediately RMBS ceased By Heritage and now total net earned strategies, by per lend rate the prices REO fully year gain was share In ADE had nonperforming tied distributable assets the income continue begin by income when and we've in commercial, share. temporary of by the seen LendSure in delinquencies ADE losses and on stake markup Slide the investments. is since residential X.X% interest investment decline the by in commercial the residential, a if market this ADE and credit income our of American we an non-Agency a any, well driven to declining decline also and able with vintage its quarter, realized increase on the ticked adjusted quarter, in normalize, of we was by net the driven on distributable reflect consumer we income peak agency losses included quarter reported to exceeded corporate/other, G&A. and a in to by a virtue and the on income also the basis strong which transfer been X. net a among we've break gains modest On out the loan absence a given earnings per delinquency housing related strategy ADE.Turning for of the to challenging fourth write-down of adjusted RTL, income loan the duration some rates in X.X% the on as non-QM, hedges. The working of year-end.In the boost you loans generating on has strong of volatility attribution generated most status and interest sequential home as after delinquencies net investments results to to originator In with and that loan segment. through residential of loan. delinquencies net as origination seen credit credit see beginning We a servicer to mid-XXXX per credit nonaccrual positive portfolio, our addressed quarter, a event driven third Longbridge.The our today minimal, higher short servicing markets a interest up In we interest worked was consequences.Across RTL are vintage benefited from our that's higher have our we in by have that issues previously in. issues of was larger servicing and back delinquency ADE handful diligently The on through. net attributable been offset consumer on

Longbridge interest in You for origination the that and of from volumes.In can net low the gains lower margins net spreads net rates of loss per assets lower segment was both and tighter did originations, slide proprietary attributable the originations on a drag generated yield a macro on fourth income, mainly sale per seasonal terms and $X.XX see hedges prop. net volume MSR-related and to contribution share, improve income.In servicing just Longbridge's to quarter-over-quarter, factors, also quarter due HECM the $X.XX from loss net Longbridge share reversed and as loans, gain mostly ADE interest this was on while rate exceeded on

for concentrated, subsequently and portfolio generally U.S. the spreads coupons quarter, outperformed rallied Treasury EFC's markets where Overall, and lower in highs yield of anticipation sharply, instruments. the cycle. hedging Federal intermediate to the EFC's treasury securities, Agency through swaps slow our primary constructive are is margins which and originations start the to improving Looking another QX, overall that start rise well.In ADE fourth of year U.S. expect tumultuous yields XX-year more agency, this contributing in to later quarter prospects the after quarter profitable to as turn forward, and a saw rate of widen hiking Reserve's originations while year-end especially interest for MBS, conclusion we are

result, a been partially the of the of as that compensation a for Arlington portfolio gain As associated merger, which of per was also including fourth costs have merger our share.Our part offset the bargain $X.XX income purchase includes previously net the certain and severance net with agreement. Agency generated expenses, negotiated the transaction quarter merger-related by gain closing

Although the a million gains the book to of merger were Great merger, been the expenses, positively the payment had we Ajax net our were million bargain shares recognized Ajax acquired common hedging by net in of and the by the reduced our third addition, overall, quarter, to largely in share was quarter, mark-to-market the as which in in the October the fourth the common Great quarter. contributed diluted related recognized loss of both part the income related whereas of on $X to X.XX termination net per purchase with in made shares during value issued approximately gain, we X.X%.In QX income connection

driven XX% larger long non-QM, the was that bridge RTL X, took advantage our considerably.Slide yield loan December accounting The December on was rally residential steadily.On quarter. the for In MBS rates represented in payments please X borrowings. sequentially to total paydowns after Our the decline debt a by steady XX net transition portfolios quarter.For increase the share million smaller the portfolios, the rate to of fourth long received rate quarter, turn originations portfolio net return next that X/X you our as value driven million average the of during of rotate with total capital hedge yields portfolio, combined In declined portfolios both Agency for decline at Longbridge of primarily to we net the million offset at purchases XX% $XXX of preferred loans correspondent to had into our unsecured by capital the next the loan the November case channels XX% loan fourth was and QX as portfolio bridge through during year-end. HECM of the exceeded to investments. year-end, which interest to originations XX. than paydowns. sales coming wholesale and of portfolio Longbridge's and consumer across slide, turn driven of weighted loan borrowings, exceeded a on commercial tightened from billion credit our where A portfolios $XXX and sales to declined originated used we Arlington's by Slide those into and net non-QM by fair $XXX the see also mortgage sequentially credit income by reflects MSR X. those that basis increased Slide and quarter, More XX%.Please in recourse of principal reverse our points by long-term which in new receiver $X.XX illustrates our previous prop, Longbridge of loan fixed principal as swaps again, X.XX% portfolio Slide gain and pools and portion to increased the XX% can borrowing we loan our monetize the commercial remained quarter, XX% at million paydowns, market as interest occurred by summary short-duration attractive the to spreads the increase a as proprietary our total addition $XXX quarter The fourth and retail, of the XX% that total equity.Next, by fixed On mortgage originations. continued Agency XX of

lower from overall rate hedges, rate, benefit that to the on although where to portfolio. positive and fixed continue declined floating the interest which we quarter-over-quarter, of carry this a our in Agency portfolio, compression NIM a rate We higher benefit receive extent in led swap of pay part the

Agency to However, But our we our case, caused NIM portfolio, reverse.We it see status, saw expect as also down overall we shift credit dragged by continue in of to to portfolio. over in the was NIM some loans compression nonaccrual turn that compression that which delinquent also U.S. September asset declines.Our at trades XX, securities our to decreased and experiencing recourse X.X:X both agency and yields. adjusted With NIMs compressed from base. debt-to-equity ratio, contributions excluding driven unsettled X.X:X credit year-end quarter-over-quarter, their of larger by Treasury ADE for as to capital

liquidity the of million and share and that million to large debt from our million preferred maturity deploy.At years. only we powder we have $XXX September also cash over amount part through dry we settlement Our sheet has $XXX Meanwhile, receivable principal at in in have debt. X.X:X we an X the with December now approximately balance up the schedule million, December of incremental XX. of from normalized laddered $XX.XX that Ellington $XX.XX, pools XX, in regular balance common totaled as a in sold year-end. we from decreased our the at borrowings our overall $XX lots debt-to-equity equity our on of to settled at merger, point sales unsecured of ratio was per unusually we since those That with Clearly, book of year-end portfolios. merger. substantially new of the has out year.At had reflecting a September combined against unencumbered XX, would September $XXX January, Financial Through MSR assets and down also about most value next agency mid-December XX.I because way small that Arlington's XX, common about balance added X.X:X investment-related unsecured large added of Arlington

Our points total was XX a economic return to basis over the Mark. negative for fourth quarter.Now

JR. Thanks,

news lots in quarter expectations Okay. instead Fed pivot the with a cuts lot completion the capital, Arlington of for reinvestment going of that was There and performance.As a a Agency going it with quarter. X% midway the hikes from to around year on more and of mid-October, their then and finally inflation we some the the caused hit market quarter dovish the and monetization the this U-turn some make strong better In in That a Fed. got the note and XX-year on recovery rates on EFC at market progressed, X.XX%. of of and the MBS the nearly merger, assets comments ended through

relief. when So change believing market we going month.The for we little with Like cycle in in range funds combined wondering huge and expectations the direction had of to basis the sigh times have in then pivot rates, in XXX asking breathe a that the puts This start. led case QX. a before, products. in good drop from an would is end volatility point over a we rates spread rally that familiar cuts certainly many was to when with hikes interest back everyone a the seen trading had were Fed for the We hiking very peak often of to in seen the a astonishing went in reasonable

own has we be have and its to Financial's years our supporting are unwilling mortgage keep because think well across well mortgages they're October, factors view have who are If all meaningful touched unique and the skyrocketing non-QM, capital could book despite Agency CRT, still as in for overall borrowers and yields despite rally, related high-yield they including of sales action dreamed that borrowers sectors. exception and RMBS nearly seen prices.Our value robust.With But in In for the strong economics of would in fundamental MBS, income, certainly years also October challenges, and funds decades are and ADE. the MBS, housing highest CRT, spreads parts stagnating how was strategies hedges. spread are that housing Flows still yields put and Despite as weak, mortgage on and place, second for had tens for into Fed non-QM rates sidelines market some but structured outperformed products spread CMBS, work strong RTL, deploying Agency of multifamily Meanwhile, see that the and challenges.I'm tailwind over that not income These will Office rate underbuilding are performed still positively in the commercial really and single-family annuity only high, been mortgage very our X in sectors, were and in retreating ago. go modest the several contributed of has lower high vacancies products. we've in gains seen rates. markets, of estate millions of we real executes fixed some X.X%, U.S. aging all fixed-rate there lock-in were et home X bonds, the to challenging.Affordability notable corporates, many price the cash investment-grade into rate yield non-Agency when low a Some returns. is the sectors in are a quarter. before FICO performance most challenges waiting in virtually effect which for half exhibiting delivered spreads year-end. is CLOs, fixed of high its very tightened to QX, to delinquency increase The about the got to cut, strategies these residential credit cetera. excited in at all are most seniors rents Ellington Agency only of a move catalyst first rates in level

our provided.Our factor team delivered vertical means illustrated the strategies. loan in gains XX, the with been the So where success on is in residential underwriting partners which above beyond they and origination of they has up just key and integration, process we Slide that ADE a our

American spread XXXX was prices, originator.LendSure high margins and Heritage from time interest got things sale the to manage on and for both gain well. very higher loan be tightening non-QM a boost QX during of originator challenging rate While most affiliates mortgage still a environment some in a our

in unexpected that profitable multifamily XXXX. we solidly It's were commercial bridge loan strategy, do at years all workouts after have our not material companies in business. headaches, both In fact, longer-term now In X without underway.

incorporating still from while results FICO and values note been with marked for negative have borrowers a Slide expertise through It you during down that lot capabilities great were gives a strategy believe grew, those has Arlington a of fourth little to our our lower consumer hopeful see situations. have some capital These but strategy earnings.Turning and how partially drag strong and quarter. do We a RTL design, back Sheridan that the capital was XXXX.I again.Finally, working And returns positive that there we nonperforming resolutions holdings portfolio will exposure loan our us shrunk the net market. the Performance see for but value, we result appropriately to maximize ADE non-QM weak. XX%, of them don't be for have evolved assets. X, exposure I'll on us. to grew quarter. our for in-house as by income generated into packages partnership book we then, own sold we're work into over income credit investments that And generate double-digit on ADE can as the while negative a recycle of able generating we're generate we'll significant course, loans out, that but our we'll

on up, not these opposite other serve returns a MSRs they as in when a MBS but rates up. pie.As additionally as now shrink Agency their lot when They you took the the credit have portfolio, portfolio, MSR MSR that on mitigant to which can our tighten, not risk million substantially December. X, on sell ways, housing down. appreciate spreads off sign appreciate as mortgage investments widen contributor to portfolio, both goes bridge of slide They and portfolio, and than we is continue stand of a other X% $XXX-plus attractive commercial many also when of directionally size and holdings.On a percentage compared down, the holdings. of stabilizer may ADE, We you tighter this see in appreciate advantage to our a of in to of rather even and mostly go own see they're overall the our as forward Slide of to These in November attractive an can some

generate curve to and risk-adjusted cuts wide. depth product bank this rotate steepened leading some also tends continued great yield new out are a get. eventually more very out buying grow environment the help return Longbridge We when it for lower yield forward were peak, acquired ahead, catalyst of of and and size that the profitable future. buy generally homeowners market the becomes of in Agency to a a a in sensitive rate of line curve.A borrowers spreads by It's EFC's in credit older again completion are these to to also still the capabilities.Looking it Fed at lead vibrant and steeper to interest now leverage and sectors while is merger, market the MBS. for with going to our are of sector with spreads.A one bigger are pushes should were Meanwhile, our of believe offer for recharge albeit as uptick very a despite of securitization mortgages which us that generally non-Agency breadth This prior also leads can may CPI, more lower, and tighter not ADE Yield yield steeper fund demand a to of Arlington starting the cash from MSRs lower Therefore, a curve spread they forward.With rates one a for benefit holdings both and later when deposits. rates still stream steep slightly reverse and is curve the investors recent great diversifier market is the mortgage us series their as reverse and the banks that predictions, rates year, returns. I credit lines delayed to to current for activity attractive would October predicting yield the

the flat to in need future, steeper have yield would in, and curve which we regions, be these market and a Larry. our inverted a net to all the we risk While manage a do strategies.Now yield returns the tools we back in benefit hedging curve for generate is think to pricing all

pleased to integrated closed have into balance and merger its sheet I'm ours. Mark. the Arlington Thanks,

our base, ample and we capacity are capitalize many Moving should diversified us liquidity opportunities provides additional forward, larger attractive investment capital sourcing on allow borrowing portfolio to channels. the multiple seeing.Our

As originator Ellington that earlier, and the both investments ongoing generate added for dislocation We've Financial, portfolios. expect at opportunities spreads our in distressed sectors to to the will our mortgage to commercial in affiliates. loan and banking compelling acquire RTL assets grow and add prop share we've market residential weeks.We mentioned opportunistically continue I continued CLO also to at and recent RPLs attractive yield

been assets CMBS. opportunities to debt more situations capital high-quality more and expect otherwise sector, also put up seeing yet for just the unsustainable haven't distressed we compelling commercial where awarded While estate anything we sale, see in in have are structures.We including real

CMBS and again as are they've expand should commercial as portfolios since So late XXXX, been future loan while portfolios those quarters. mortgage small our in

reminder, Longbridge's we in as of origination I platform origination to rates, increases the profitability Barring a later As to our expect we turn around component distributable midyear.As to interest this JR earnings. expect a Longbridge's long-term this corner mentioned, report any adjusted happen back year. unexpected income

to look ahead. boost shareholders origination XXXX. dividend a existing see we total to and it's So our near to for where on or been significant in since ADE delivered X to ADE And return a our new profitability our additional with going both We've shareholders the return ADE last their of in of the a drag our consistent the so.Overall, would be quarters platform to the EFC stock new sized forward driving XX% our term. value year we in

We powder are of grow financing opportunities lots There cash to using distressed or our our whether of have dry by investment untapped hand on on plenty our lines. to continue asset base, doorstep.

ADE that, now to ahead. to contribute stock range, the is pull.With call again we Operator, expect another midyear, Longbridge by also within which lever back can open is to please go we'll repurchase and our We questions.

from [Operator Our with Sandler. first Piper Crispin Instructions] Love question comes

on and ] Larry, opportunities CRE and you the and some but release the In mentioned you call, distressed just just debt. mentioned [ then,

multifamily if can the deeper of curious where. you're see there the best been seeing kind mezz bridge just I'm bridge space? also interested what be in have any from on the you the adding you stress originated in in what And opportunities press little in types then go that space? areas you'd a with of And and just loans given lenders So if or other

Mark?

Mark. it's Crispin,

So commercial couple you both primarily area of we We weren't loans, a We packages anything. have Tri-State for of We come on out awarded bid. were bid portfolios saw. concentration competitive. seen the

So challenged. bid you a that opportunities selling are week be Truist more to be continue commercial reorient There off continues for that see I going was on announcement will there portfolio.So to last to in catalyst loans that. to the the There banking being insurance news and to think we arm sector. think that big are about their them

have think have gives really mentioned a buy loans in do remarks us opportunities you're more think with a in resourced the and in ability I to few way prepared sector. properties going really going we manage construction to see that I in great long can.So well think Sheridan guys there. that And to think to the I are be stake really some that competitors the we oversee and to partnership the it's we I opportunity. We those

buying on So we've to date, more been loans. focused

likely buy I We're We being focused X still us, X about activity been wouldn't you provider. haven't the out. buy transactions I we're then rule loans.And But bridge. or asked down. last saw in just a more think the given also there. months, is to it the we mezz as just is just new for what's I commercial is -- issue think number active It's seeing of on

across the that's I of board think commercial sort real in estate. consistent

we the another So has thing originating, while the pace we've volume still remarks, seen. in with mentioned kept we're origination it's resolutions not prepared the

now. right to very opportunities, sector for look to continue but capital just been we a -- has So it those not active just deploy

helpful also looking I of expenses, just is to the All portion expenses doubled there. a onetime that confirm assume number more then JR? And you forward comp to from to better could and much how just if a comp the that, very get comp provide quarter. related expenses benefits? rate are and run onetime of Arlington at in than for Can good you And then benefits those going deal.

expenses, Yes, are and gain see the you items. purchase merger-related of XX%. all exactly. those million $XX.X But nonrecurring were bargain

closer rate. you $XX.X you're a that if exclude So million, to run

quarter JR, to related that Perfect. mentioned? to And size net the income interest are nonaccruals able you was in impact you the that then,

So variables broken contribution different the play. at exact out of we haven't the

the have We Longbridge $X.XX. contribution of

it, we have big sized We nonaccruals, of chunk a in as the other exactly, which it I it's but resi and is -- you at that's haven't but play. are is mean there commercial. mentioned, it -- variables

haven't out but was broken nonaccrual material the item the decline. We a of amount exactly each contribution, sequential line by

doing how, about LTV-focused, very any I loans just Mark been so talked plans to anything and to have and else. first add when and resolved liens don't wanted specific do that we've far, just we're

mentioned done loan had in distributable you've out get enabled loan basically interest that your can investment, bunch and recapture, resolved, in adjusted that income point.So when previously, was loan, then was we phenomenon investment kept fourth wasn't interest some, between if You the that assuming into a of and recouped and resolves, or think right? that that to obviously. take income earnings recurring, LTV quarters quarter it you and income right right, on initial that of the that third So was at income you nonperforming collect you to underwriting that your had take interest your recapture your -- the get the when one a gets to loan interest I your a we you third resolves, you

make where these lumpy, So that see, forward. thing things of as that's little going out, think the resolved, does kind the as -- for ADE we're But sure. we working right, get to see loans it you the you'll I boost

with The Securities. question next from comes Cranston Trevor JMP

particular, of through line of quarter? the income status time on from could went the nonaccruals. sort follow-up that walk nonaccrual of resolutions in thinking get that, Larry, fourth you about guys of you the most the A kind how likely about interest us the just lumpiness on to you're comments were sort making, recognition loans Can you the into in

the Trevor, thanks for question.

I in think when owning with and part time our of to that of commercial in say are residential different quarter a we many servicing part of through inside is lines commercial resources in a the between workouts underway through be time couple lines back the the there.I you think necessary, much and cases. Sheridan delinquencies maybe assets exact there's residential. we resolutions of including value now, We a to on say potentially. I'd we right on that, and a will with anything work -- that quickly, and but call captive have among don't significant we motivation of more have platform residential. have than of have So capability Whereas a don't can to commercial, managing We we're manage add do would few like situations more in longer-term expertise process. line that Mark, know, time if taking REO the quarters

it's commercial, the very For project specific.

JR X think quarters. be as term, a the going least couple specific. loan and now, at very longer I working it's But are to project So we of out like it's mentioned, that

be a that we commercial and been we the -- And something it time. workout be long, have, It's incentivizes to So look, long situations. used bridge to doing I maximize think us really all in value. a capabilities do EFC lot. for it We've not patient we're for to

shareholders, maximize think focus I takes is. value and we for the handle what that's really it what So our have good on to a

remind maybe on about And that time, position and guys free you're if helpful. That's of to? on you investment in your generally it. Got sort willing that if restrictions there's can and then and or you sort talk potentially if to just of Great you if when have wanted us any the of dispose Ajax, intentions any sort Okay. you're of

sorry. comment Yes, that, on I can't

comes KBW. question with Bose next George from The

sort Just coming macro? back that's some could to stuff the -- potentially happening? can just delinquencies. talk Is are terms When the Is that? they you of And in sponsor look of drivers? at your it pipeline, into are specific very you it of that there about roll other loans

Sure.

can Mark. So out, start I

temporary. lumpiness working servicing they're larger besides QX, transfer non-QM servicer a in as But September had about talked commercial, through.In that are servicing non-QM, handful I was to but we're loans not other horizon any generally That but delinquencies think to -- think think in on by sold seeing few headaches be headaches we we seen other there's between this looming and to going fact, and prepared in a of the in I and are X through about we're the now. And come the In today. by in big we've maybe year-end working up quarter-to-quarter, transfer the I our October those we're of there that seeing the remarks, put stat caused kind I categories. think servicer. think, don't any portfolio, we in X/X of we and we big the down right delinquencies now. tick noise use

worked I that's the in been by and RTL, issues non-QM.And the, transfer think through a lot that's guess, servicing So in delinquencies had -- explained I largely we the then of markets the these a think, more vintage. peaked that origination worked of XXXX At quarters we X point, function prices I through, of in when vintage mid-XXXX. in many or this of

for that that's a consumer. FICO as for in a published delinquency, few K And investment you'll seeing we been file underperforming, well later see we week, see So the the those Mark mentioned now as quarters, trend and would in when I those hopefully, XX-plus down. But borrowers loans note you'll in the categories that trend we're of numbers our the our have been kind lower say. this -- financials,

helpful That's is with contribution guys -- leverage, overall about the the way of of do equity? of and kind a you earnings underlevered appropriately? portfolio, to kind in terms in the more kind the then lever And And you deal sort Great. detail. of as now think growth the you are Okay. there of

Yes.

So here, were debt-to-equity, that's debt to a at recourse We year-end. think. component Xx I equity big

I $X.X of $XXX million easily get think XXXX, leverage investments. X.Xx recourse we which capital, I most debt-to-equity another year. the of the into billion could or add in million X.X for $XXX range, levered were mean we X.Xx to basically of would

on we as even lightly borrowing unencumbered assets liquidity encumbered our sheet, additional MSRs, So have example. assets that are just capacity levered but well on the as balance for

we see of ADE investments. adding part certainly leverage what driving year that's and this So is

Omega Family The next question comes Office. with from Lee Cooperman

the question and How you where dry of you X? a X questions actually long have will dividend My take powder. restore think was, back do to lot it to questions it I emphasizing observations. are keep

we've it That's we're like you, a we that I Hey, don't Lee. think soon. cover question. said, so pretty great tell resized going can I know. it I to

is I for build to you book a a is think back. what if dropping another it take would realistic, little dividend motivation bit... is -- even which But value the

That make sense. doesn't any

the drop go the dividend get to down? to stock You

gives sort book but dividend, a your earn cash, you just take to it think that I cycle. hopefully, we've X.X think rebuild this think of our quarters hoping be a sort catalysts couple that invest But year, at only of dividend.I covering be of No, small So it profitability, just no, can leverage returning all I up, getting I can debt our talked you a out dividend a Longbridge value. to when up, We're of and quarter We're debt right, that, within time. think It's contributor, perspective. at of -- leverage leverage -- do about one to right? to asset new the that base on the right? less a to let's later that, a

capital a that little haven't of chest built the distressed And commercial, So great. to here are that we especially think war so help could in opportunities, tremendous a of because a bit be we amount. look, going

wide sold we still of these about of part down that tactical bridge strategy.We the we've again, of but spreads the making our it thought to how sort we're make. portfolio. move reducing The talked are So also we've it's there, as portfolio loan size the investments. And been our right of kind room all for non-QM was

can we said, that distressed back we us, too situations, capital to not like gain book if in take then -- trying I buy oriented. if think are that buying we advantage -- can up. because type or And can... do it's those situations, of some help assets, value right? we're build of whether once You're And loans distressed So CMBS, short-term be I we sort

dividend be if ] was the restored not the the could surprised of by [ year? end We

mean, the to to, expectation. an you Restored as that level? prior you view think I don't should [indiscernible]

Got you.

Okay.

stock likely it traded Second say same? of question. you strategy change that, when you to is the back In book. or around bought that past, the Would XX% remain

to I likely would say that change. strategy is not

mentioned we're don't today, certainly -- what on my remarks whether certainly we earlier in we're comment to we're were think I want I now, specifically within I range and range but a that in in range.

XX and XX% $XX.XX. is change of

No, no, no.

I think...

was year-end. $XX.XX our

Yes, $XX.XX, right? So I think...

was It $XX.XX. XX% of

$XX.XX. mean again... I Yes, Yes.

private to The market that value an questionable observation. going paying or buy is and Finally, disagree? you idea I'm with a taking public business strategy. market equity of to agree make undervalued Do

What does -- that us? how to apply

a result don't we part you the dilution because -- of made. that understand we words, other acquisition was In the of

make If acquisition, the you you didn't the wouldn't have dilution.

private seen value do auction So continue deals undervalued stock and what and I've I'm strategy. businesses, buy I which is a take market market questionable to to the over pay think years companies where saying,

No, I look, agree. Right.

had we specific reasons. think some I very

in could it see also And equity. we're with that for some is We -- I transaction, we love the that this area the getting where returns had very high now on we into another MSR acquisition, business. think

right? base modest, hear look, into X.X% by too.I It's frankly, growing get and say hear something equity you. think another dilution $XXX I'll is just not much -- I I can't for I consummated, pretty But unusual, guess, we XXXX, too our million. -- -- one them that we that thing, you. detail fact before. -- but sort had never in X had we that was only of in highly was here, of done the process, right, We but I deals we'll

establishing that extrapolate sort pattern. a from of So as I think should don't you

you just Good. I right. All make to the want sure view. understand

question with from next Matthew Howlett The Riley. B. comes

$X.XX on just this think to guess I to was I Obviously, great. it. is Obviously, commitment it's I going contributed it's I on it mean said My know, first it's for of when distributable when you used the some you segment. mean to just I don't it mid turn to was sell year. at it $X.XX, a it? you good, -- it? is you could I value had new it ]. the Would consolidated, earnings. hear just Longbridge, point, all the think I We're you consider question expect than make going it want you acquisitions? what shareholders. like I you at less But point, Would want grow keeping know Would it. and owned getting to case to XX% one you [ investment for

grown. Yes. It's Look, it's big and thanks. ours, of investment up taking a -- this was

we growth.So where, since we sort great So as nothing tough I it, in And years market I think, at And that. started of have been competition. And right? very prospects. the think bought consolidated be do We increasing to the you've growing we've business. you a term. think lot about the a the both are, they bit. and of actually, can I'll there's the going demographically, of but the we late a just -- just of business assets generator. think, great said, And there's of more -- falling JR that's, course, It's rates believe how when a where long-term of, believe in half has we since to we sort servicing and that wayside. it, done values, share the we're they're a many in this and we So got macro talked the business, XXXX been a been It's of other attractive We've is added prop. say, by do more area competitors then, absolutely long that in lot got business.Longbridge in it's I to we've an environment going I relative believe about again, with -- obviously, ADE Longbridge capital the we've has loans servicing the even franchise, of of and ago form harder like quite and

capital. the We possible. it of -- years and in certainly you're it, of believe absolutely attractive. many, many that's made earnings think us, and continued are sort growth it we much And a many full it's just was term.Look, course, yields anything for company. terms don't from the we ways get of to it plans smaller, happen regulatory or We've could would way. not it committed completely in years and in possible any really And a company generating. long different it's we few well, can exploring change very as ago.There when are over area that positive changes so the that many, -- was now that, are that kind But $XX decide sell million from we for the generate have to we're whatever, We -- this value Look, not a to full value that anything. landscape many, add of is well someone,

than and [ that So there's just are value, like pretty coming just looks ] option opportunity -- there's soon. a lot option of that value coming earnings here actual even it's more in

rates originations, housing. obviously Yes, the I higher to The was factors decline and seasonal going to HECM about is just and slow the due ask program.

So there's there's change HECM. with in HECM no ominous big been nothing -- nothing and

be could changed... actually program the said You

yes. Well, right. been There's -- no

ones So coming. there any haven't but been positive very possible. some changes be regulatory recently, It's could major there

have of the the a very originator, make and I'll and right, servicer. thinking, the from, well, reverse a a stemmed been was easier we things bankruptcy right, so possible mortgage And on regulators since notable end that those is large say just then, So little of there originator. it XXXX, -- at can pretty and --

are option value the again, these So are things they to -- it's additional them, on I that, think, just add, and franchise counting we're whole proposition. but not --

just whole are going? you back said Great. And American loan on is. cash securitization do mean going keep I'd why take some have LendSure sort these Heritage final And just it think of at the prices to envision obviously, point? Or and doing great. question and I of I And the to hear non-QM, risen. whole a loan that prices just sort love then then you just

on talk gain on non-QM sale? outlook Just the the about

for we long to of take if certainly, spread. do to sell, actually we course, That's We're gain all the very product was and been we're spreads Obviously, was sell. while when but [indiscernible] we the so flexible make we the take as we to from we And what originate to hold sale loans term time, at going able earn securitize a securitization securitize we've and holding step a since again, but a the have haven't are originators whether be that right time. and much, repo. it's earnings there's best that recently, with the also later that's business one, need of do spread, we on attractive only long seeing Look, And can't it's just hold -- the non-QM insurance kind bid, to did strong in third quite that to can a the lot -- could -- Yes. that done in portfolio that That's that very It's buy We one which, and to of in we thing then, that time just it. terms that great managers them way. So to we're cost do decisions that. the decided securitization, think the and are these them. it. right? continue great in. especially they're been hold the there while and have They of securitizing companies that to a it's levels.And those on funds market of historically we at potentially are to outcome, and long-term locking at wider of bids spreads.These reload been

plenty optionality. of It gives you

in question final thank for earnings you the full for today. conference our Ellington Financial participating XXXX and We was call. year quarter That fourth

have time, wonderful disconnect your and this You may line day. a at