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 growth and exceeding the quarterly dividend of $0.27 per share.

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

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

Economic Return: 4.5% on GAAP book value and 4.8% on adjusted book value after accounting for dividends.

Investment Portfolio Growth: Expanded 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 diversified mortgage REIT with three main income sources: Agency RMBS, residential credit (business purpose lending), and a vertically integrated origination platform (Constructive).

Investment Activity: Acquired $1.5 billion in single-family assets, with a record $632 million in business purpose loans sourced through Constructive.

Market Position: The company is experiencing strong institutional demand for its business purpose loans, with a focus on quality over volume.

Securitization Success: Completed two BPL rental securitizations totaling approximately $521 million at a competitive cost of 5.48%.

3Forward Guidance and Outlook

Optimistic Outlook: Management expressed confidence in continuing to grow recurring earnings and book value through disciplined capital allocation and operational efficiencies.

Constructive Performance: Anticipated improvements in funding costs and operational efficiencies are expected to enhance profitability and achieve a target annual ROE of 15%.

Market Conditions: Despite volatility, the company expects to capitalize on attractive investment opportunities, particularly in residential credit.

4Bad News, Challenges, or Points of Concern

Market Volatility: The company is navigating a challenging market environment characterized by a bear flattener of the treasury curve and rising interest rates, which have pressured asset valuations.

Potential Decline in Book Value: As of late July, adjusted book value was estimated to have declined by approximately 2.3% quarter-to-date.

Competition: Increased competition in the business purpose lending market could pressure margins and affect growth.

5Notable Q&A Insights

Constructive's Pipeline: Management noted a strong pipeline for Constructive, with higher coupons expected in upcoming loans, indicating continued demand despite market volatility.

Capital Deployment Strategy: Incremental capital is likely to be directed towards residential credit rather than rotating out of agency positions, maintaining a stable allocation to agencies.

Leverage Management: The current leverage ratio of 5.5x is viewed as comfortable, with potential for slight increases as non-core assets are resolved and reinvested into higher-yielding strategies. Overall, Adamas Trust reported solid financial performance in Q2 2026, with a focus on strategic growth and diversification despite facing market challenges. The outlook remains positive with expectations for continued earnings growth and operational improvements.