ADAMN — Adamas Trust, Inc.

Summary of Adamas Trust Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Distribution Amount (EDA): Increased to $0.24 per share, up from $0.22 in Q2 2025, marking the sixth consecutive quarterly increase.
• Dividend: Raised to $0.23 per share.
• Investment Portfolio: Grew to $10.4 billion from $8.6 billion in the previous quarter.
• Adjusted Net Interest Income: Rose 7% quarter-over-quarter and 47% year-over-year to $0.47 per share.
• Net Interest Spread: Stable at 150 basis points.
• Net Unrealized Gains: Recorded at $54.9 million, primarily from Agency RMBS and residential loan portfolios.
• GAAP and Adjusted Book Value per Share: Ended at $9.20 and $10.38, respectively, reflecting increases of 1% and 1.2%.
• Leverage Ratios: Recourse leverage ratio increased to 5x; portfolio recourse leverage rose to 4.7x.

2. Strategic Updates and Business Highlights

• Rebranding: Transitioned to Adamas Trust, symbolizing a broader strategic vision beyond geographic affiliations.
• Capital Rotation Strategy: Increased exposure to Agency RMBS, which now represents 57% of total capital, nearly tripling from a year ago.
• Acquisition of Constructive: Completed the acquisition of the remaining 50% interest in Constructive, a business purpose loan platform, which generated $14.1 million in mortgage banking income during the quarter.
• BPL Rental Loans: Grew to $1.16 billion, reflecting a 24% quarter-over-quarter increase.
• Operational Efficiency: Integration of Constructive is expected to enhance profitability and streamline origination processes.

3. Forward Guidance and Outlook

• Earnings Growth: Anticipated continued improvement in recurring earnings due to a full quarter of interest income and strong asset growth.
• Capital Allocation: Future capital deployment will be more measured, with a focus on balancing agency and credit investments.
• Book Value: Expected to increase by 2.5% to 3% as of late October 2025.

4. Bad News, Challenges, or Points of Concern

• Higher G&A Expenses: Increased from $11.8 million to $23.3 million due to the consolidation of Constructive and higher incentive compensation.
• Competitive Pressures: The BPL bridge market remains highly competitive, impacting acquisition volumes and pass-through rates.
• Interest Rate Sensitivity: The company is navigating a changing interest rate environment, which could impact future financing costs and asset yields.

5. Notable Q&A Insights

• GSE Developments: Management noted that while GSE reform could create opportunities, they are not planning for significant changes in the near term.
• Capital Allocation Strategy: Management emphasized a flexible approach to capital allocation, considering both agency and credit opportunities based on market conditions.
• Share Repurchase Considerations: Share repurchase is viewed as an incremental strategy, balanced against the long-term impact on equity and potential returns.
• Mezzanine Portfolio Payoff Rates: Historical averages are expected to be a good indicator for future payoffs, with potential for slightly elevated rates in the near term.

Overall, Adamas Trust reported strong financial performance in Q3 2025, driven by strategic repositioning and growth in key areas, while also facing challenges from competitive pressures and rising operational costs. The outlook remains positive with expectations for continued earnings growth and a focus on effective capital allocation.