The following is a summary of the Ellington Credit Company (EARN) Q2 2024 Earnings Call Transcript:

Financial Performance:

• Ellington Credit reported a net loss of $0.04 per share.

• Adjusted distributable earnings were $0.36 per share, reflecting benefits from CLO investments despite losses in other areas.

• Net interest margin expanded to 4.24%, driven by growth in CLO investments.

• Book value per share decreased to $6.91 from $7.21 quarter-over-quarter.

Business Progress:

• Ellington Credit is transitioning to a CLO-focused closed-end fund with a significant reduction in agency MBS and an increase in CLO investments.

• CLO portfolio increased from $45 million at the end of Q1 to $85 million by the end of Q2 2024.

Opportunities:

• The conversion to a CLO-focused fund is anticipated to provide better risk-adjusted returns and enhanced capital market access.

Risks:

• Increased prepayment rates and variable market conditions caused mark-to-market losses on some of EARN's CLO equity tranches during Q2.

• Continued interest rate volatility could impact future earnings negatively through delta hedging losses.

More details: Ellington Credit IR

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