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Ellington Credit Company of Beneficial Interest (EARN-1.80%) has submitted its 10-K filing for the fiscal year ended December 31, 2024.
The filing outlines the company's strategic transformation to focus on corporate collateralized loan obligations (CLOs), revoking its REIT status effective January 1, 2024, and operating as a taxable C-Corp.
Ellington Credit Company plans to convert to a Delaware closed-end fund registered under the 1940 Act on April 1, 2025, and intends to be treated as a regulated investment company (RIC) under the Code.
The company reported a net income of $6.6 million for the year ended December 31, 2024, compared to $4.6 million the previous year. This increase was primarily due to positive net interest income.
Interest income for the year was $49.9 million, up from $42.5 million in 2023, driven by higher asset yields and increased holdings in the credit portfolio.
The company's interest expense decreased to $34.8 million from $45.3 million, reflecting lower borrowings and higher financing costs due to elevated short-term interest rates.
Total expenses increased to $8.8 million from $5.5 million, mainly due to higher professional fees and compensation expenses related to the strategic transformation.
Ellington Credit Company's CLO portfolio expanded to $171.1 million, with a mix of mezzanine debt and equity tranches, while its Agency RMBS holdings decreased to $512.3 million.
The company's book value per share decreased to $6.53 from $7.32, with an economic return of 2.3% for the year.
Ellington Credit Company maintained a debt-to-equity ratio of 2.9:1 as of December 31, 2024, compared to 5.4:1 the previous year, due to higher shareholders' equity and less leverage on CLO investments.
The filing also details the company's hedging strategies, including the use of interest rate swaps and short positions in U.S. Treasury securities to manage interest rate risk.
Ellington Credit Company plans to liquidate its remaining mortgage- and real estate-related assets and continue to focus on CLO investments as part of its strategic transformation.
This content was summarized by generative artificial intelligence using public filings retrieved from SEC.gov. The original data was derived from the Ellington Credit Company of Beneficial Interest annual 10-K report dated March 31, 2025. To report an error, please email earnings@qz.com.