Summary of Adamas Trust Q2 2026 Earnings Call

1Key Financial Results and Metrics

GAAP Earnings: $43.4 million, or $0.48 per share.

Earnings Available for Distribution (EAD): $0.30 per share, marking a 36% year-over-year increase.

Quarterly Dividend: Increased to $0.27 per share, well covered by EAD.

Book Value: GAAP book value rose 1.8% to $10.16 per share; adjusted book value increased 2.3% to $11.05 per share.

Net Interest Income: Increased to $50.2 million; net interest spread improved to 148 basis points.

Portfolio Growth: Expanded investment portfolio by over $800 million to $11.7 billion, a 36% increase year-over-year.

2Strategic Updates and Business Highlights

Diversification: Adamas has transformed into a more diversified mortgage REIT with three main business lines: Agency RMBS, residential credit (business purpose lending), and a vertically integrated origination platform (Constructive).

Investment Strategy: Focus on disciplined capital allocation, with a notable increase in business purpose loans, adding $632 million during the quarter.

Market Positioning: The company is seeing strong institutional demand for its business purpose loans, and its share price is narrowing its discount to book value.

Operational Efficiencies: Constructive is implementing cost-saving measures expected to yield approximately $3 million in annual savings.

3Forward Guidance and Outlook

Growth Expectations: Management is optimistic about continuing to grow recurring earnings and book value, with a focus on scaling the Constructive platform.

Market Conditions: Despite volatility, the company believes the opportunity set remains robust, particularly in credit markets.

Leverage Strategy: Current leverage is at 5.5x, with potential for slight increases as non-core assets are resolved.

4Bad News, Challenges, or Points of Concern

Market Volatility: The company is navigating a challenging market environment characterized by rate volatility, which has impacted asset valuations.

Competition: Increased competition in the business purpose lending space may pressure margins and returns.

Securitization Costs: Rising rates have led to increased costs in securitization, which could affect profitability moving forward.

5Notable Q&A Insights

Constructive's Performance: The pipeline for Constructive remains strong, with higher coupon loans anticipated. However, management refrained from providing specific volume guidance.

Capital Deployment: Incremental capital will likely be directed towards residential credit rather than rotating out of agency positions, which are expected to remain stable.

Multifamily Book Management: The multifamily portfolio is seeing consistent payoff rates, and management is focused on duration management rather than extensions or restructurings.

Securitization Market: Despite rising costs, Adamas has been able to price its securitizations tighter than the market, indicating strong demand for its high-quality collateral. Overall, Adamas Trust reported a strong quarter with solid earnings growth and strategic advancements, although it faces challenges from market volatility and competition in the lending space.