Ellington Credit Company Files Final Periodic Report, Reports $7.9 Million Net Loss

Ellington Credit Company (EARN), formerly Ellington Residential Mortgage REIT, has filed its final periodic report under the Exchange Act, a transition report on Form 10-K for the period from January 1, 2025, to March 31, 2025, in conjunction with a change in its fiscal year end. Effective April 1, 2025, the company transitioned from a fiscal year ending December 31 to a fiscal year ending March 31, aligning with changes to its corporate structure and its registration as an investment company under the Investment Company Act of 1940. The company reported a net loss of $7.9 million for the three-month period ended March 31, 2025, compared to a net income of $4.0 million for the same period in 2024. This decline was primarily attributed to a decrease in total other income and an increase in total expenses, partially offset by an increase in net interest income.

As of March 31, 2025, the company's CLO portfolio grew to $249.9 million, a 46% increase from $171.1 million as of December 31, 2024. This portfolio consisted of $164.4 million in CLO equity tranches and $85.5 million in CLO mezzanine debt tranches. The Agency RMBS holdings decreased slightly to $503.9 million as of March 31, 2025, from $512.3 million as of December 31, 2024. The company's debt-to-equity ratio, adjusted for unsettled trades, decreased to 2.2:1 as of March 31, 2025, from 2.9:1 as of December 31, 2024, driven by higher shareholders’ equity and the use of significantly less leverage in the Agency RMBS portfolio.

The company's primary investment objectives are to generate attractive current yields and risk-adjusted total returns for its shareholders. Following the Conversion, the company seeks to achieve its investment objectives by investing primarily in mezzanine debt and equity tranches of corporate CLOs, which are securitizations that are collateralized by portfolios of corporate credit assets. The company may also invest in other related securities and instruments that the Adviser believes are consistent with its investment objectives, including senior debt tranches of CLOs, loan accumulation facilities (“LAFs” or “warehouses”) and securities issued by other securitization vehicles, such as collateralized bond obligations (“CBOs”).

Effective April 1, 2025, the company entered into an Advisory Agreement with Ellington Credit Company Management LLC, an affiliate of Ellington Management Group, L.L.C., to provide for the day-to-day management of its operations. The Advisory Agreement requires the Adviser to manage the company's business affairs in conformity with the Investment Company Act of 1940 and the policies and investment guidelines that are approved and monitored by the Board. The company also entered into an administration agreement with Ellington Credit Company Administration LLC, a Delaware limited liability company, to furnish the company with office facilities, equipment, and clerical, bookkeeping, and record-keeping services. The company intends to elect to be treated, and intends to qualify annually, as a regulated investment company (a “RIC”) under Subchapter M of the Code.