Ellington Residential Mortgage REIT Reports First Quarter 2021 Results
Ellington Residential Mortgage REIT (NYSE: EARN) (the "Company") today reported financial results for the quarter ended March 31, 2021.
Highlights
-
Net income of
$0.1 million , or$0.01 per share. -
Core Earnings1 of
$3.8 million , or$0.31 per share. -
Book value of
$13.22 per share as of March 31, 2021, which includes the effect of a first quarter dividend of$0.28 per share. Economic return of0.1% for the quarter. -
Net interest margin2 of
1.96% . -
Weighted average constant prepayment rate ("CPR") for the fixed-rate Agency specified pool portfolio of
23.6% . -
Dividend yield of
9% based on the April 30, 2021 closing stock price of$12.44 . - Debt-to-equity ratio of 6.8:1 as of March 31, 2021; adjusted for unsettled purchases and sales, the debt-to-equity ratio was 7.0:1.
- Net mortgage assets-to-equity ratio of 6.2:1 3as of March 31, 2021.
-
Cash and cash equivalents of
$52.5 million as of March 31, 2021, in addition to other unencumbered assets of$48.2 million .
First Quarter 2021 Results
"Despite rising long-term interest rates, a steepening yield curve, and increased interest rate volatility during the first quarter, EARN's book value was stable, and Core Earnings remained strong. Although most Agency RMBS prices declined during the quarter, performance across subsectors diverged sharply. The increase in interest rates led to reduced expectations for prepayment rates, which boosted performance of higher-coupon RMBS, put downward pressure on pay-ups for prepayment-protected specified pools, and caused significant price declines for lower coupon RMBS in the face of heightened extension risk," said Laurence Penn, Chief Executive Officer and President.
"Gains on our interest rate hedges and interest-only securities, together with net interest income, more than offset net realized and unrealized losses in the portfolio. Given the opportunities presented by wider yield spreads during the quarter, we used our strong balance sheet to add some attractively priced pools, which increased our leverage incrementally.
"Looking forward, while prepayment speeds remain elevated, we are seeing signs that the prepayment wave may be abating. In this environment, it's critical to be mindful of both the prepayment risks and the extension risks that are present in the market. We believe that such a rapidly shifting market plays to our strengths, where asset selection and risk management will continue to drive performance. Finally, we will continue to deploy a dynamic and adaptive hedging strategy to protect book value."
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1 Core Earnings is a non-GAAP financial measure. See "Reconciliation of Core Earnings to Net Income (Loss)" below for an explanation regarding the calculation of Core Earnings. |
2 Net interest margin excludes the effect of the Catch-up Premium Amortization Adjustment. |
3 The Company defines its net mortgage assets-to-equity ratio as the net aggregate market value of its mortgage-backed securities (including the underlying market values of its long and short TBA positions) divided by total shareholders' equity. As of March 31, 2021 the market value of the Company's mortgage-backed securities and its net short TBA position was |
Financial Results
The following table summarizes the Company's portfolio of RMBS as of March 31, 2021 and December 31, 2020:
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March 31, 2021 |
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December 31, 2020 |
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(In thousands) |
Current Principal |
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Fair Value |
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Average Price(1) |
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Cost |
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Average Cost(1) |
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Current Principal |
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Ellington Credit Company
NYSE:EARNEARN RankingsEARN Latest NewsEARN Stock Data
136.56M
19.42M
2.01%
20.51%
1.58%
Other Financial Vehicles
Finance and Insurance
United States of America
OLD GREENWICH
About EARNellington residential mortgage reit, a real estate investment trust, specializes in acquiring, investing in, and managing residential mortgage-and real estate-related assets. it acquires and manages residential mortgage-backed securities (rmbs), including agency pools and agency collateralized mortgage obligations (cmos); and non-agency rmbs comprising non-agency cmos, such as investment grade and non-investment grade. the company has elected to be taxed as a real estate investment trust. as a result, it would not be subject to corporate income tax on that portion of its net income that is distributed to shareholders. ellington residential mortgage reit was founded in 2012 and is based in old greenwich, connecticut.
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