Ellington Residential Mortgage REIT (NYSE: EARN) reported Q1 EPS of $0.27, $0.04 worse than the analyst estimate of $0.31.

• Net income of $8.9 million, or $0.72 per share.
• Core Earnings1 of $2.4 million, or $0.19 per share, and Adjusted Core Earnings1 of $3.3 million, or $0.27 per share.
• Book value of $12.69 per share as of March 31, 2019, which includes the effect of a first quarter dividend of $0.34 per share.
• Net interest margin of 0.83%, and adjusted net interest margin2 of 1.08%.
• Weighted average constant prepayment rate for the fixed-rate Agency specified pool portfolio of 6.0%.
• Dividend yield of 11.7% based on the May 1, 2019 closing stock price of $11.66.
• Debt-to-equity ratio of 9.0:1 as of March 31, 2019; adjusted for unsettled purchases and sales, the debt-to-equity ratio was 8.9:1.
• Net mortgage assets-to-equity ratio of 8.5:13 as of March 31, 2019.

First Quarter 2019 Results

"During the first quarter, Ellington Residential generated net income of $0.72 per share and an economic return of 5.93%, or almost 26% annualized," stated Laurence Penn, Chief Executive Officer and President.

"The strong performance of Agency RMBS helped drive our results this quarter, and the recent decline in mortgage rates and corresponding increase in prepayment expectations boosted the value of the prepayment protection that our specified pools provide. In contrast, the generic pools that underlie TBAs tend to be more prepayment-sensitive. Because we concentrate our long investments in specified pools as opposed to TBAs, the increase in specified pool pay-ups further benefited our performance for the quarter.

"The year is off to a great start, and with interest rates low and prepayments likely to pick up from here, we believe that our portfolio is well positioned. Changes in the prepayment landscape should favor our core strengths of prepayment modeling, asset selection, and dynamic interest rate hedging, while also providing meaningful trading opportunities."

For earnings history and earnings-related data on Ellington Residential Mortgage REIT (EARN) click here.