Adamas Trust, Inc. Q4 FY2025 earnings call

• 2025 was a strategic inflection point with significant balance sheet growth, accelerating profitability, and acquisition of Constructive. • Exited 2025 stronger with $3.1 billion investment portfolio expansion, 44% earnings growth, over $100 million net income, 15% dividend increase, and 36% total stockholder return. • Added Constructive for stable spread income and scalable origination economics. • GAAP and adjusted book value increased in Q4. • Agency RMBS portfolio doubled in size in 2025, with Q4 purchases in 5% coupon spec pools. • BPL-Rental portfolio grew with strong borrower metrics and securitization plans. • Constructive showed solid origination momentum with $12.5 million mortgage banking income in Q4, though with some expenses related to integration. • Multifamily had strong performance with high payoff rate.

In Q4, GAAP net income attributable to common stockholders was $41.6 million or $0.46 per share, and earnings available for distribution was $0.23 per share. The investment portfolio expanded by $3.1 billion in 2025. Agency RMBS portfolio ended the year at $6.6 billion, constituting 63% of the investment portfolio and 56% of equity capital. BPL-Rental portfolio grew from $770 million to $1.4 billion in 2025. Constructive had $474 million of originations in Q4 2025 and originated $1.8 billion worth of loans in 2025 with 93% in BPL-Rental. Multifamily had positive resolutions with a 39% annualized payoff rate.

• Expect Agency portfolio to grow into 60s assuming market conditions hold. • BPL-Rental exposure to continue increasing with Constructive's support. • BPL-Bridge portfolio expected to decline due to payoffs and lack of opportunity. • Constructive expected to become a strategic earnings driver with one securitization a month. • Agency leverage expected to trend lower for now but could increase depending on market conditions. • Available cash to be deployed in Agency and Constructive capital-light model opportunities.

Q: On the pace of deployment between Agency MBS and residential loans in 2026, how are you viewing the relative attractiveness of Agency MBS given spread tightening?

A: From a levered return perspective, non-Agency credit like BPL-Rental has mid- to high teens levered return vs agencies mid-teens. Agency portfolio expected to grow into 60s, non-Agency mix to change due to BPL-Bridge paydown but non-Agency percentages to remain static.

Q: Looking at expenses related to Constructive acquisition, how to think about remaining integration costs and 2026 run rate for operating expenses?

A: Still some first quarter integration costs, G&A ratio related to Constructive is approximately 44% of stockholders' equity, with 40% of Constructive's G&A variable tied to origination activity.

Q: On gain on sale change reflecting lower commitment valuations and loan repurchase reserves, could you expand?

A: Interest rate lock valuation driven by smaller pipeline and lower pull-through rate. Purchase reserves increased due to collaboration with former equity partner in Constructive purchase transaction, not indicative of higher loss trends.

Q: Balancing between capital deployment between scaling Constructive originations versus increasing Agency deployment or share repurchases, and preferred return threshold?

A: Focus on mid- to high teens risk-adjusted returns. Constructive is capital-light model with flexibility on gain on sale and holding on balance sheet. Capital allocation depends on market opportunities.

Q: Competition in business purpose lending channel for Constructive?

A: Strong demand, but Constructive is top-tier with long-term relationships, some larger non-QM originators increasing BPL-Rental allocation, but Constructive navigating competition well.

Q: Profile of borrower for Constructive and impact of institutionals ban?

A: Constructive borrowers are individual investors owning less than 80 single-family properties. If institutionals ban, positive for Constructive as it should increase supply of homes and transactions.

Q: Share repurchases?

A: Look at capital allocation relative to market opportunities. Did not repurchase shares in Q4, focus on whether investment programs are accretive vs share repurchases.

Q: Agency leverage given tighter spread range?

A: Leverage declined to 7.7x in quarter, currently trending lower but could increase depending on market conditions.