ADAMI — Adamas Trust, Inc.

Summary of Adamas Trust Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• GAAP Net Income: $41.6 million, or $0.46 per share.
• Earnings Available for Distribution (EAD): $0.23 per share, fully covering the quarterly dividend.
• Economic Return: 6.85% on GAAP book value and 4.62% on adjusted book value for Q4; 12.72% and 11.01% for the full year 2025, respectively.
• Investment Portfolio: Expanded to $3.1 billion, with a 44% increase in EAD year-over-year.
• Dividend Increase: 15% increase in common dividend.
• Book Value Growth: GAAP book value increased by 4.3% and adjusted book value by 2.4% in Q4.

2. Strategic Updates and Business Highlights

• Acquisition of Constructive: Full acquisition of Constructive, a business purpose loan originator, is expected to enhance earnings through stable spread income and scalable origination.
• Agency RMBS Portfolio: Increased by 56% of company capital, now representing 63% of the investment portfolio.
• BPL-Rental Loans: Significant growth in this segment, with a focus on high-quality residential credit.
• Integration of Constructive: Integration costs are expected to moderate, with a positive contribution to earnings anticipated in Q1 2026.

3. Forward Guidance and Outlook

• 2026 Expectations: Strong momentum entering 2026, with adjusted book value projected to increase by 3% to 4% in Q1.
• Earnings Growth: Anticipated expansion in EAD as efficiencies from Constructive are realized.
• Market Conditions: Favorable environment due to the Fed easing cycle and declining volatility, which supports lower rates and tighter spreads.
• Capital Allocation: Focus on maintaining flexibility to capitalize on emerging opportunities, with a target of 60% to 70% of equity capital in Agency RMBS.

4. Bad News, Challenges, or Points of Concern

• Slight Decline in EAD: EAD decreased by $0.01 sequentially due to integration costs from Constructive, although this is viewed as temporary.
• Realized Losses: Recorded $14.9 million in realized losses related to nonperforming loans and foreclosed properties.
• Market Discount: Shares traded at a 31% discount to book value, indicating limited market recognition of non-Agency and multifamily holdings.
• Competitive Pressures: Increased competition in the business purpose lending space, particularly for DSCR loans, could pressure margins.

5. Notable Q&A Insights

• Capital Deployment Strategy: Management emphasized a flexible approach to capital allocation, balancing between scaling Constructive's originations and increasing Agency investments.
• Integration Costs: Ongoing integration costs for Constructive are expected to taper off, with a projected G&A run rate of about 7% to 7.5% of stockholders' equity.
• Borrower Profile: Constructive primarily serves individual investors, which may benefit from potential institutional restrictions in the rental market.
• Share Repurchases: No share repurchases occurred in Q4; management will continue to evaluate this option based on market conditions and capital allocation opportunities.
• Agency Leverage: Currently at 7.7x, with potential adjustments based on market conditions, historically running higher.

This summary encapsulates the key takeaways from Adamas Trust's Q4 2025 earnings call, highlighting financial performance, strategic initiatives, future outlook, and challenges faced by the company.