Ellington Financial Profit Falls as Longbridge Earnings Retreat

The Tip Desk · November 11, 2026 · 4 min read

Net income attributable to common stockholders was $40.4 million, or $0.31 a share, as Longbridge net income fell to $12.5 million.

Ellington Financial Inc. (EFC) reported net income attributable to common stockholders of $40.4 million, or $0.31 a share, for the quarter ended September 30, 2026, down from $54.4 million, or $0.43 a share, in the second quarter.

Adjusted Distributable Earnings declined to $58.0 million, or $0.45 a share, from $75.5 million, or $0.60 a share. Chief Executive Officer Laurence Penn said the company generated GAAP net income of $0.31 a share and an annualized economic return of 9.4%, preserved book value per share, and produced adjusted distributable earnings in excess of dividends despite rising interest rates and widening yield spreads late in the quarter.

The investment portfolio segment generated net income attributable to common stockholders of $61.1 million, or $0.47 a share, down from $74.2 million, or $0.59 a share. The total adjusted long investment portfolio increased 4.5% sequentially to $4.70 billion as of September 30, 2026, after a roughly 1% sequential increase to $4.50 billion in the prior quarter. The company said the increase was driven by net purchases of residential transition loans, closed-end second lien loans, Agency-eligible residential mortgage loans, prime jumbo residential mortgage loans, commercial mortgage bridge loans, and a larger portfolio of retained RMBS, partially offset by continued securitization activity and a smaller Agency RMBS portfolio.

The net interest margin on the investment portfolio rose to 3.55% from 3.36%, as higher asset yields were only partially offset by higher funding costs. The company said net interest income remained robust, while net gains on hedges more than offset net realized and unrealized losses. It attributed strong performance to retained tranches from securitizations of non-QM and Agency-eligible loans, commercial mortgage bridge loans, and equity investments in loan originators, particularly LendSure. Those contributions were partially offset by negative results in warehoused non-QM whole loans, residential transition loan retained tranches, CMBS, and residential and commercial REO.

Longbridge net income attributable to common stockholders fell to $12.5 million, or $0.10 a share, from $30.2 million, or $0.24 a share. Longbridge Adjusted Distributable Earnings fell to $8.6 million, or $0.07 a share, from $28.9 million, or $0.23 a share, which the company attributed primarily to narrower origination margins and reduced proprietary reverse mortgage securitization gains.

Longbridge originated $676.3 million of loans during the quarter, up 36% year over year, versus $589.7 million in the second quarter, lifting the net Longbridge portfolio 59% sequentially to $1.0 billion as of September 30, 2026. Much of that increase was reversed upon the October settlement of a proprietary reverse mortgage loan securitization that priced in September. Proprietary reverse mortgage origination volume rose to $417.8 million from $316.2 million, while HECM origination volume declined to $258.5 million from $273.5 million. The company said Longbridge achieved a quarterly record HMBS market share of 31%, ranking as the second-largest issuer in the market, according to Bloomberg.

Book value per common share declined to $13.53 from $13.61 as of June 30, 2026, after $0.39 of dividends in each quarter. Recourse debt-to-equity increased to 2.2:1 from 1.9:1, and overall debt-to-equity rose to 9.4:1 from 9.2:1, with both ratios excluding borrowings collateralized by U.S. Treasury securities and adjusted for unsettled purchases and sales. The company said the recourse increase reflected a net increase in unsecured notes outstanding and higher warehouse borrowings for loans awaiting securitization, partially offset by securitization activity and higher total equity.

Ellington issued $150 million of 7.375% senior unsecured notes due 2030 in an add-on, bringing the series to $550 million outstanding, and repaid $37.75 million of 6% unsecured notes that matured August 1, 2026. Penn said the September notes were issued at a yield spread over Treasuries approximately 70 basis points tighter than last year’s issuance and that Moody’s changed the company’s rating outlook to Positive before the offering. The company also issued 2,496,140 common shares under its ATM program at an average price of $13.61 a share and, after quarter end, repurchased 329,045 shares at an average price of $11.44 a share.

During the quarter, Ellington acquired a controlling interest in Statebridge, a diversified loan servicer that as of September 30, 2026 serviced about 14,700 loans with $1.9 billion of unpaid principal balance, nearly all for third-party clients. Penn said the company’s residential loan portal connected it with 57 sellers and generated $1.6 billion in loan purchases during the quarter.