Exhibit 99.1
Ellington Financial LLC Reports Fourth Quarter 2012 Results; Increases Dividend to $0.77 Per Share for the Fourth Quarter of 2012 and Declares Special Dividend for 2012 of $0.75 Per Share
 
OLD GREENWICH, Connecticut—February 13, 2013
Ellington Financial LLC (NYSE: EFC) (the “Company”) today reported financial results for the quarter ended December 31, 2012.
Highlights
Net increase in shareholders’ equity resulting from operations (“net income”) for the fourth quarter was $24.8 million or $1.19 per basic and diluted share. For the year ended December 31, 2012, net income was $97.1 million or $5.31 per share and represented an average return on equity of 22.5%.
Book value per share as of December 31, 2012 was $24.38 on a diluted basis after payment of a $0.70 per share third quarter dividend on December 17, 2012, as compared to book value per share of $23.88 on a diluted basis as of September 30, 2012.
The Company’s non-Agency MBS strategy generated gross income of $32.5 million for the quarter ended December 31, 2012. Performance was driven by yield earned on invested assets, as well as net realized and unrealized gains.
The Company’s Agency RMBS strategy generated gross income of $3.2 million for the quarter ended December 31, 2012, driven primarily by yield earned on invested assets and net realized gains.
The Company's Board of Directors declared a dividend of $0.77 per share for the fourth quarter of 2012. The Board also declared a special dividend of $0.75 per share for the fiscal year ended December 31, 2012. The quarterly dividend and the special dividend are both payable on March 15, 2013 to shareholders of record on March 1, 2013.
In addition, the Company's management announced that, subject to the ultimate discretion of the Board of Directors, it expects to continue to recommend quarterly dividends of $0.77 per share until conditions warrant otherwise. At the end of any year, the Board of Directors will take into account the Company's earnings and other factors and will consider whether to declare a special dividend. The Company's dividends are paid on a quarterly basis, in arrears.
Fourth Quarter 2012 Results
For the quarter ended December 31, 2012, the Company recognized net income of $24.8 million, or $1.19 per diluted share. This compares to net income of $29.5 million, or $1.59 per diluted share, for the quarter ended September 30, 2012. The Company’s results reflect positive contributions from both of its core strategies—non-Agency MBS as well as Agency RMBS.
The Company’s non-Agency MBS strategy generated gross income in the amount of $32.5 million for the quarter, or $1.56 per share. During the fourth quarter, the market for non-Agency MBS continued its year-long rally, which continues to be fueled by improvements in home pricing, a scarcity of investment alternatives with attractive yields, and reduced selling (as compared to 2011) of non-Agency MBS by banks in response to the improved regulatory capital treatment of non-Agency MBS assets. During the quarter, home prices generally increased or remained flat at a time when they typically experience seasonal declines. An increased level of home purchasing activity, coupled with a decline in “shadow inventory,” provided some of the lift in home prices. Shadow inventory represents the number of properties that are seriously delinquent, in foreclosure, or in bank inventories. A generally more optimistic outlook for future home prices also contributed to improved valuations in non-Agency RMBS. Even after the substantial rally, investor demand for non-Agency MBS remains elevated, as available yields in this asset class, while lower than they've been since the depths of the financial crisis, remain attractive on a relative basis to the yields available in other sectors of the fixed income market, which have also been driven lower over the course of the year.
The Company’s income during the quarter from its non-Agency MBS strategy consisted of interest income and net realized and unrealized gains on long non-Agency MBS. In light of the significant rally in non-Agency MBS over the course of the year, the Company has taken advantage of its ability to sell securities that, in its view, have nearly reached their full price potential, and to reinvest the sales proceeds into securities with greater upside potential, for example from a reduction in future default rates. Because non-Agency RMBS assets have rallied substantially, security selection has become and remains a significant factor in portfolio management, and the Company believes that its analytical approach to security selection will help generate superior returns in this environment.


1

The following information was filed by Ellington Financial Llc (EFC) on Wednesday, February 13, 2013 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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