Longbridge sets Q1 record, surpasses its 2025 full-year profit

Ellington Financial Inc. reported first-quarter net income attributable to common stockholders of $95.5 million, or 78 cents per share, as strong reverse mortgage origination volumes and securitization activity boosted results.

The Old Greenwich, Connecticut-based mortgage REIT said adjusted distributable earnings totaled $66.5 million, or 55 cents per share, in the quarter ended March 31. Book value per common share rose to $13.56 from $13.16 at the end of 2025.

CEO Laurence Penn said the company generated “excellent results even as market volatility rose,” citing broad-based contributions across its investment portfolio and its reverse mortgage business, Longbridge Financial.

Penn said on the company’s earnings call that the quarter reflected “strong performance across our diversified portfolio,” despite rising volatility and widening credit spreads in March.

“Ellington Financial delivered an exceptionally strong first quarter in terms of both GAAP net income and adjusted distributable earnings, even in the face of rising market volatility and widening credit spreads,” he said.

Penn added that adjusted distributable earnings “widely exceeded” the company’s dividend, with ADE reaching 55 cents per share during the quarter.

Longbridge posted net income of $57.5 million during the quarter, up sharply from $16.4 million in the fourth quarter of 2025. Longbridge originated $515.4 million in new reverse mortgage loans during the quarter, a 52% increase from the same period a year earlier.

Penn described Longbridge’s performance as “an absolutely standout quarter,” citing near-record proprietary reverse mortgage origination volumes, market share gains in HECM originations and strong gain-on-sale margins.

“Net income at our Longbridge segment not only set a quarterly record, but it actually surpassed its 2025 full-year net income by a wide margin,” Penn said.

The company said Longbridge also benefited from gains tied to a proprietary reverse mortgage securitization, servicing income and a $17 million litigation settlement payment.

CFO J.R. Herlihy said during the call that Longbridge’s outsized contribution prompted the company to raise its quarterly guidance for adjusted distributable earnings to “the 45-cent-per-share area,” still above the company’s dividend run rate.

Ellington participated in seven securitization transactions totaling more than $2.8 billion during the quarter, compared with $1.1 billion across four transactions in the first quarter of 2025, Penn said.

“These higher volumes are facilitating larger deal sizes,” Penn said, noting that average non-QM securitization size nearly doubled year over year.

Co-Chief Investment Officer Mark Tecotzky said the company’s securitization scale has improved liquidity and reduced reliance on short-term repo financing.

“By replacing short-term repo financing with match-funded non-mark-to-market debt issued through our securitizations, we have gone a long way toward better insulating our portfolios from market shocks,” Tecotzky said.

Ellington’s adjusted long credit portfolio increased 4% from the prior quarter to $4.27 billion as purchases of non-QM loans, agency-eligible loans and residential transition loans offset loans sold into securitizations.

The company reported total equity of about $1.96 billion as of March 31, up from $1.87 billion at the end of 2025. Its recourse debt-to-equity ratio remained at 1.9-to-1, while overall debt-to-equity stood at 9.0-to-1.

Penn said the company also continued to strengthen its balance sheet during the quarter by raising $117 million in common equity and redeeming higher-cost preferred stock.

“Our goal is to create a virtuous cycle, where issuing long-term unsecured debt and using some of the proceeds to replace short-term debt improves our credit ratings and thereby makes additional unsecured debt issuances even more attractive and lowers our overall funding costs,” Penn said.