Ellington Financial LLC (NYSE:EFC) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 11:00 am ET


Ellington Financial LLC (NYSE:EFC) Q4 2019 Earnings Conference Call - Final Transcript


Loading Event

Loading Transcript


Ladies and gentlemen, thank you for standing by. Welcome to the Ellington Financial Fourth Quarter 2019 Earnings Conference Call.

[Operator Instructions]

It is now my pleasure to turn the call over to Jason Frank, Deputy General Counsel and Secretary. Sir, you may begin.

Jason Frank

Thank you.

Before we start, I would like to remind everyone that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature. As described under Item 1A of our Annual Report on Form 10-K filed on March 14, 2019, forward-looking statements are subject to a variety of risks and uncertainties that could cause the company's actual results to differ from its beliefs, expectations, estimates and projections. Consequently, you should not rely on these forward-looking statements as predictions of future events. Statements made during this conference call are made as of the date of this call and the company undertakes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

I am joined on the call today by Larry Penn, Chief Executive Officer of Ellington Financial, Mark Tecotzky our Co-Chief Investment Officer, and JR Herlihy, Chief Financial Officer of the EFC. As described in our earnings press release, our fourth quarter earnings conference call presentation is available on our website, ellingtonfinancial.com. Management's prepared remarks will track the presentation. Please note that any references to figures in this presentation are qualified in their entirety by the end notes at the back of the presentation.

With that, I will now turn the call over to Larry.

Laurence Penn

Thanks, Jay, and good morning everyone. As always, thank you for your time and interest in Ellington Financial.

The fourth quarter of 2019 was a busy and productive one for Ellington Financial. We had strong performance across the board from our diverse mortgage loan and consumer loan businesses. In our non-QM mortgage business, our loan origination flow continues to accelerate. And in November, we successfully completed our second securitization of the year and fourth overall. Our Agency strategy also had an excellent quarter. And in particular, we benefited from the significant capital allocation that we had made there after that sector weakened back in August.

In October, we raised capital through our inaugural preferred stock offering, which garnered an investment grade credit rating, which is rare in the mortgage REIT space. The offering saw strong participation from both institutional and retail investors and priced at a dividend rate that was among the lowest in our sector. We believe that both the credit rating and the execution of this offering rightly reflected Ellington Financial's long track record of book value stability, disciplined and dynamic hedging, effective risk management, and prudent leverage. In mid-November, having deployed most of the proceeds from the preferred equity offering, we completed a follow-on common equity offering at attractive levels. We sized both the preferred and common