ADAMI — Adamas Trust Inc. 9.125% Sr. Notes due 2029

Summary of Adamas Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• GAAP Earnings Per Share (EPS): $0.41
• Earnings Available for Distribution (EAD): $0.29, a 26% increase quarter-over-quarter and a 45% increase year-over-year.
• Dividend: $0.23, resulting in a 6.35% economic return on GAAP book value.
• GAAP Book Value: Increased by 4% to $9.98; Adjusted Book Value rose 1.6% to $10.80.
• Net Interest Income: Increased to $48.2 million from $46.3 million in the previous quarter.
• General & Administrative Expenses: Decreased slightly to $24.5 million from $25.1 million.

2. Strategic Updates and Business Highlights

• The company reported strong performance amid a volatile macroeconomic environment, focusing on stability and scalable earnings growth.
• Investment Activity: Over $1 billion deployed in acquisitions, with $510 million in agency strategies and $502 million in residential credit, particularly in BPL rental loans.
• Integration of Constructive: Transitioned from a cost center to a profit contributor, achieving a return on equity of approximately 13%.
• Securitization Program: Continued strong performance with plans to issue 5 to 6 BPL rental securitizations this year, supported by a robust investor base.

3. Forward Guidance and Outlook

• Management maintains a positive outlook for the broader fixed income environment, anticipating potential Fed rate cuts later in the year.
• The focus remains on scaling the constructive platform and expanding recurring income while managing capital efficiently.
• The company aims to close the valuation gap of its shares through disciplined execution and capital allocation.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: Geopolitical tensions, particularly the conflict in Iran, have introduced uncertainty and volatility in the market, impacting spreads and interest rates.
• Stock Valuation: Shares are trading at a significant discount (32%) to adjusted book value, which management acknowledges as a concern.
• Securitization Spreads: Recent BPL rental securitizations have seen wider spreads, indicating market volatility and potential pricing challenges.

5. Notable Q&A Insights

• Dividend Coverage: Management is focused on sustainably growing EAD while preserving book value, indicating that dividend increases will be evaluated carefully.
• Book Value Drivers: Gains from derivative instruments and a successful property sale contributed to book value growth.
• Constructive's Volume Strategy: Future growth in mortgage banking income is expected to come from improved efficiencies rather than additional capital, as the platform is not fully utilizing available capital.
• Market Conditions Impacting Securitization: Wider spreads in recent securitizations were attributed mainly to market conditions rather than specific deal quality.

Overall, Adamas Trust's Q1 2026 results reflect a solid performance amid challenging market conditions, with a focus on strategic growth and operational efficiency. However, ongoing market volatility and stock valuation concerns remain key challenges for the company.