Longbridge Nearly Doubles Q4 Profit As Parent Ellington Reports Weaker Performance

Shares of Ellington Financial Inc. were pressured after the mortgage real estate investment trust reported a drop in quarterly earnings, although its reverse mortgage subsidiary, Longbridge Financial, turned in another strong performance.

Ellington reported lower fourth-quarter 2025 earnings, even as its adjusted results topped its dividend payout. Meanwhile, Longbridge generated net income of $16.4 million in the quarter ending Dec. 31, nearly doubling its profit of $8.6 million in the third quarter.

Ellington’s filing with the Securities and Exchange Commission (SEC) shows that Longbridge had a “positive contribution from originations, supported by sequentially higher overall origination volumes, continued strong origination margins and net gains related to the proprietary reverse mortgage loan securitizations completed during the quarter.”

Longbridge’s results also benefited from servicing income and a net gain on its mortgage servicing rights (MSR) equivalent through the HECM Mortgage-Backed Securities (HMBS) channel, reflecting improved profitability from tail securitizations.

New loan origination volume rose to $529.7 million in the fourth quarter, up from $498.6 million in the third quarter. Total originations increased during the period from 2,224 to 2,492 loans, with wholesale and correspondent channels accounting for about 72% of volume and retail making up the remaining 28%.

The Longbridge portfolio, excluding nonretained securitization tranches, declined 18% from the prior quarter to $617.2 million, as two securitizations reduced its balance-sheet assets despite continued growth in proprietary reverse mortgage originations.

Proprietary reverse mortgages totaled $1.69 billion at the end of Q4 2025, up from $1.39 billion three months earlier. Unsecuritized Home Equity Conversion Mortgages (HECMs) also increased sequentially.

Overall, the Longbridge segment was a key contributor to Ellington’s fourth-quarter performance. Its $14.6 million in adjusted distributable earnings underscored the growing role of reverse mortgage originations and servicing in the company’s earnings mix.

Ellington’s performance

Ellington’s net interest income rose to $53.6 million in Q4 2025, up from $49.7 million in Q3 2025. Other income totaled $24.6 million, down from $33 million in the prior period. Quarterly expenses increased from $57 million to $72.5 million, driven in part by debt issuance costs tied to a $400 million unsecured notes offering completed in October.

“On October 6th, we closed a $400 million unsecured notes offering — our largest such offering to date,” Laurence Penn, CEO and president of Ellington Financial, said in a statement. “During the quarter, we continued to fortify our balance sheet by utilizing a portion of the proceeds from that offering to replace short-term repo financing, while maintaining a robust and consistent pace of securitization activity. This activity was highlighted by the completion of our inaugural securitization of residential transition loans and, subsequent to year-end, our first securitization of Agency-eligible loans.

“As a result of these actions, our balance sheet metrics strengthened meaningfully,” he added. “The proportion of total recourse borrowings represented by long-term, non-mark-to-market borrowings almost doubled quarter over quarter, while unencumbered assets expanded by more than $500 million, collectively demonstrating the enhanced strength and flexibility of our balance sheet.”

Penn noted that the Connecticut-based company also used the notes offering to actively deploy capital into new investments, expanding its portfolio by 9% even after accounting for securitizations.

“Our portfolio continues to benefit from strong origination and acquisition activity across non-QM loans, Agency-eligible loans, closed-end second lien loans, proprietary reverse mortgage loans, and commercial mortgage bridge loans. By year end, we had largely deployed the proceeds from the notes offering,” he said.