Adamas Trust, Inc. Q2 FY2026 earnings call

• Overall Financial Performance • Delivered GAAP earnings of $0.48 per common share and Earnings Available for Distribution (EAD) of $0.30 per share, marking the ninth EAD increase in the past 10 quarters, with 36% year-over-year EAD growth that covers the increased 27 cent per share quarterly dividend • GAAP book value grew 1.8% to $10.16 per share, and adjusted book value grew 2.3% to $11.05 per share, marking the fourth consecutive quarter of book value growth despite market volatility • The total investment portfolio expanded by more than $800 million to $11.7 billion, representing 36% year-over-year growth • Generated a 4.5% economic return on GAAP book value and 4.8% on adjusted book value for the quarter; net interest income rose to $50.2 million with a 148 basis point net interest spread, driven by lower financing costs
• Portfolio Strategy and Capital Allocation • Maintains a disciplined capital allocation approach focused on relative value opportunities, while retaining portfolio diversification to support book value stability • Agency RMBS allocation is expected to remain stable at ~56% of total capital, with new purchases generally offsetting portfolio paydowns • Residential credit has become more attractive on a relative value basis following agency spread tightening, so a growing share of incremental capital will be allocated to this segment in the near term • Proceeds from the wind-down of non-core BPL Bridge and multifamily mezzanine portfolios are redeployed into higher-yielding core strategies
• Operational Highlights • Constructiv's BPL production includes 100% prepayment protection (up to 5-year terms), which offsets the negative convexity of the agency portfolio; delinquency on Constructiv-sourced loans is less than 1% for 60+ days, and the segment has been profitable in 28 of the past 30 months • Onboarded a new institutional financing counterparty for Constructiv that delivers ~60 basis points of funding cost savings, with fewer aging restrictions and greater capital flexibility • Completed two BPL rental securitizations totaling $521 million, redeemed an existing securitization, and increased warehouse capacity by $250 million to $3.7 billion, diversifying funding sources and supporting future growth • Renewed and expanded the ATM equity program from $100 million to $250 million to preserve long-term financial flexibility; the company will only issue new shares when accretive to existing shareholders
• Strategic Priorities • Expand recurring earnings through disciplined portfolio growth and scaling of the Constructiv platform • Grow book value via active portfolio management • Close the valuation gap between the company's share price and intrinsic value through consistent execution and transparent investor communication

1. Agency RMBS: The agency RMBS portfolio is the cornerstone of the investment portfolio, representing 61% of total portfolio assets at quarter end. It grew from $6.8 billion to $7.2 billion driven by TBA position expansion, with the majority of new purchases in 5% and 5.5% coupons. Agency leverage increased from 7.8x to 8.3x, within the company's targeted range. This segment benefits from attractive carry and supportive market technicals, providing strong risk-adjusted returns over time. 2. Residential Credit (BPL Rental): The BPL rental portfolio grew to $2.3 billion, with a record $632 million of business purpose loans added in the quarter, primarily sourced from Constructiv. Year-to-date non-agency residential issuance reached $132 billion, on pace to exceed 2025's $215 billion full-year volume, which would mark a post-Great Financial Crisis record. 3. Constructiv (Origination Platform): Constructiv is a top 5 business purpose loan originator focused on BPL rental loans. In Q2 2026, it originated $428 million of business purpose loans (in line with the prior quarter), generated $16.2 million in mortgage banking income, and delivered a $2 million standalone quarterly profit. Year-to-date annualized ROE reached ~12% as of the first half of 2026. The company has identified $3 million in annual cost savings to be implemented through H2 2026 and 2027, targeting a 15% annual ROE. 4. Wind-down Portfolios (BPL Bridge, Multifamily Mezzanine): The remaining multifamily mezzanine portfolio totals $192 million across 19 loans, with zero delinquent loans. It carries a 12% coupon, contributing positively to recurring income during the wind-down. 93% of multifamily loans include drag-to-market provisions that incentivize timely borrower payoffs. BPL Bridge delinquency remains stable as the portfolio declines.

• The company maintains its 2026 estimated consolidated G&A ratio guidance of 7% to 7.5%; Q2 2026 total consolidated G&A was $25.6 million, which is within this range • 2026 is on track to see a record year of non-agency residential securitization issuance (since the Great Financial Crisis), with full-year volume projected to comfortably exceed 2025's ~$215 billion • Adamus Trust expects to complete 5 to 6 BPL rental securitizations in 2026 • The $3 million in annual cost savings for Constructiv will begin flowing through to financial results in the second half of 2026, with full implementation in 2027; management reaffirms the target of 15% annual ROE for Constructiv • The company expects the 56% capital allocation target to agency RMBS to remain largely unchanged in the near term

• Forward-looking financial and operational results are subject to material uncertainty, and actual outcomes may differ materially from management expectations due to market volatility, interest rate movements, and other unforeseen factors • Higher interest rates create temporary downward pressure on the valuation of agency RMBS and certain residential loans; this risk was partially offset by the company's hedging strategy in Q2 2026 • Increasing competition in business purpose lending and whole loan/securitization bidding could compress margins or reduce origination volumes • Sustained market volatility and uncertainty around interest rate policy could disrupt securitization execution and investor demand for residential credit assets

Q: Can you discuss current Constructiv pipeline trends and competitive dynamics following recent rate moves? / A: The Constructiv origination pipeline remains strong quarter-to-date, with higher coupons in the pipeline than at Q2 end, providing a steady flow of desirable loans. Institutional demand for business purpose loans has stayed surprisingly strong through recent volatility, and consistent securitization market execution has given whole loan buyers confidence to bid aggressively. Management notes markets are currently conducive to operation, with higher rates translating to higher potential yields for the strategy, and ongoing implementation of cost savings will support future earnings. (301 characters)

Q: Where would incremental capital from the expanded ATM program be deployed, and what are your targeted returns? / A: The company allocates incremental capital to the most attractive relative value opportunities quarter-to-quarter, and targets 15%+ equity returns on deployed capital. Currently, residential credit offers expanded risk-adjusted returns relative to agencies, so it is the preferred area for incremental deployment, though wider agency spreads have recently made agencies more attractive as well. Allocation shifts dynamically based on market conditions. (287 characters)

Q: What is the expected timeline for multifamily portfolio wind-down resolutions, and where will the proceeds be deployed? / A: The $192 million remaining multifamily portfolio has zero delinquent loans, and 93% of loans include drag-to-market provisions that incentivize timely payoffs, supporting consistent prepayment rates. Proceeds from payoffs are not pre-earmarked for a specific strategy, and are deployed to the best available relative value opportunity at the time of paydown, which is expected to be higher-return core strategies that will boost overall earnings. (310 characters)

Q: Will the rotation of incremental capital to residential credit involve selling down existing agency positions, or only use new incremental capital? / A: The shift to residential credit will be driven primarily by incremental capital, not rotation out of existing agency positions. Management expects the 56% capital allocation to agencies will remain stable, with agency paydowns reinvested back into the segment. Capital from the resolution of non-core legacy portfolios will be the main source rotated into additional residential credit exposure. (279 characters)