ADAMM — Adamas Trust, Inc.

Summary of Adamas Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• GAAP Earnings Per Share (EPS): $0.41, a 26% increase from the prior quarter.
• Earnings Available for Distribution (EAD): $0.29 per share, up 26% quarter-over-quarter and 45% year-over-year.
• Dividend: $0.23 per share, covered by EAD.
• 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.
• Economic Return on GAAP Book Value: 6.35%.
• Economic Return on Adjusted Book Value: 3.76%.
• Total Investment Portfolio: Reached $10.9 billion.

2. Strategic Updates and Business Highlights

• The company is positioned at a strategic inflection point, focusing on stability and scalable earnings growth amidst market volatility.
• Investment Strategy: Focused on three pillars: Agency RMBS (56% of equity capital), growth in single-family credit through BPL rental loans, and a scaled origination platform.
• Capital Deployment: Over $1 billion in acquisitions during Q1, with significant investments in agency strategy ($510 million) and residential credit ($502 million).
• Constructive Integration: The origination platform transitioned to profitability, contributing positively to earnings.
• Securitization Activity: Plans to issue 5-6 BPL rental securitizations this year, supported by strong underwriting quality.

3. Forward Guidance and Outlook

• The management maintains a positive outlook for the remainder of 2026, with expectations of continued EAD growth and disciplined capital allocation.
• Anticipates a favorable environment for mortgage credit demand and GSE MBS purchases.
• Plans to focus on closing the valuation gap between market price and intrinsic value through share repurchases and consistent execution of strategy.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: Geopolitical tensions, particularly the conflict in Iran, have introduced volatility that could impact future performance.
• Discount to Book Value: Common stock trades at a significant discount (32% to adjusted book value), raising concerns about market perception.
• Interest Rate Environment: The transition of the portfolio towards lower-yielding assets (Agency RMBS and BPL rental loans) could affect net interest spread, which decreased to 145 basis points from 152 basis points.
• Redemption Activity: The multifamily portfolio experienced a high annualized payoff rate of 30%, which may impact future income stability.

5. Notable Q&A Insights

• Dividend Coverage: Management is focused on sustainably growing EAD while preserving book value, with ongoing discussions about potential dividend increases.
• Book Value Drivers: Strong performance attributed to derivative gains and a successful property sale within the mezzanine lending portfolio.
• Constructive's Volume Growth: Future growth in mortgage banking income is expected to come from improved efficiencies rather than additional capital.
• Securitization Pricing: Recent market conditions led to wider spreads in BPL rental securitizations, but the company remains optimistic about the quality and demand for its offerings.

Overall, Adamas Trust demonstrated strong financial performance in Q1 2026, with a focus on strategic growth and capital efficiency, despite facing challenges from market volatility and a significant discount to intrinsic value.