Ellington Residential Mortgage REIT (NYSE: EARN) reported Q3 EPS of $0.19, versus $0.23 reported last year.

Highlights

Net income of $3.7 million, or $0.30 per share.
Core Earnings1 of $0.9 million, or $0.07 per share, and Adjusted Core Earnings1 of $2.4 million, or $0.19 per share.
Book value of $12.42 per share as of September 30, 2019, which includes the effect of a third quarter dividend of $0.28 per share.
Net interest margin of 0.38%, and adjusted net interest margin2 of 0.81%.
Weighted average constant prepayment rate (\"CPR\") for the fixed-rate Agency specified pool portfolio of 14.5%.
Dividend yield of 10.3% based on the November 1, 2019 closing stock price of $10.83.
Debt-to-equity ratio of 8.7:1 as of September 30, 2019; adjusted for unsettled purchases and sales, the debt-to-equity ratio was 8.6:1.
Net mortgage assets-to-equity ratio of 7.7:13 as of September 30, 2019.
Repurchased 33,706 shares during the quarter, or approximately 0.3% of our outstanding shares as of the beginning of the quarter, at an average price of $9.87 per share.

Third Quarter 2019 Results

"Our disciplined hedging strategy and portfolio of high-quality specified pools helped Ellington Residential deliver strong earnings for the quarter, despite wide swings in long-term interest rates, increasing prepayment rates, and an inverted yield curve,\" said Laurence Penn, Chief Executive Officer and President.

"For the quarter, our net income exceeded our dividend, opportunistic share repurchases helped boost book value, and altogether our economic return for the quarter was a solid 2.4%, or 10.0% annualized. While adjusted core earnings declined quarter over quarter, we believe that the prospects to expand our net interest margin and grow core earnings are improving, as we benefit from lower repo borrowing rates and wider yield spreads on new investments following the spread widening we saw in August.

"If the prepayment wave continues to intensify from here, we would expect to see further divergence of performance between different subsectors of the Agency RMBS market, and we would expect to capitalize on the opportunities created by that divergence. We believe that the current market environment highly favors our core strengths of prepayment modeling, asset selection and dynamic interest rate hedging, while also creating meaningful short-term trading opportunities. We also believe that our smaller size is an advantage in this market environment, as it enables us to be nimble and react quickly to reposition our portfolio in response to market distress."

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