Good morning ladies and gentlemen. Thank you for standing by. Welcome to Ellington Financial’s Third Quarter 2014 Financial Results Conference Call. Today’s call is being recorded. At this time all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. (Operator Instructions). It is now my pleasure to turn the floor over to Lindsay Tragler, Investor Relations. You may begin.

Thanks Susan. Before we start, I would like to remind everyone that certain statements made during this conference call may constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature and they are based on management’s beliefs, assumptions and expectations. As described under item 1A of our annual report on Form 10-K filed on March 14, 2014, forward-looking statements are subject to a variety of risks and uncertainties that could cause the company’s actual results to differ from its beliefs, expectations, estimates and projections. Consequently, you should not rely on these forward-looking statements as predictions of future events. Statements made during this conference call are made as of the date of this call and the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. I have on the call with me today, Larry Penn, Chief Executive Officer of Ellington Financial; Mark Tecotzky, our Co-Chief Investment Officer; and Lisa Mumford, our Chief Financial Officer. With that, I will now turn the call over to Larry.

Thanks Lindsay. Once again, it’s our pleasure to speak with our shareholders this morning as we release our third quarter results. As always, we appreciate your taking the time to participate on the call today. First, a few highlights. It was a reasonably good quarter for Ellington Financial. Our net income was $0.46 per share and both our agency and non-agency strategies made positive contributions to our net income. We declared our eighth consecutive quarterly dividend at the $0.77 level, which equates to a 13.75%r yield based on yesterday’s closing price. We successfully completed a common share offering in early September and raised net proceeds of $188.2 million. We continue to see many attractive investment opportunities, particularly given our continued diversification, and the common share offering has enabled us to capitalize on this. We also closed a new financing facility in the quarter that I’ll talk more about later. It’s the kind of facility that I think could have a meaningful impact on how we manage our leverage and our liquidity going forward. We’ll follow the same format as we have on pervious calls. First, Lisa will run through our financial results. Then Mark will discuss how the MBS market performed over the course of the quarter, how we positioned our portfolio and what our market outlook is. I will follow with some closing remarks before openings the floor to questions. As a remainder, we have posted our third quarter earnings conference call presentation to our website, www.ellingtonfinancial.com. You can find it in three different places; the Homepage of the website, for our Shareholders page or the Presentations page. Lisa and Mark’s prepared remarks will track the presentation. So if you have that presentation in front of you, please turn to page four to follow along. I’m going to turn it over to Lisa now.

Thank you, Larry. Good morning everyone. As shown on our earnings attribution table on page four of the presentation, our third quarter net income was $12.9 million or $0.46 per share. In the second quarter, our net income was $20.9 million or $0.81 per share. Our income from both our non-agency and agency strategies declined in the third quarter, relative to the second. Within our non-agency strategies, legacy RMBS continued to be the biggest revenue generator, but profits from these holdings were lower quarter-over-quarter as the rally in that sector eased. However, our credit hedges, which are currently mainly in the form of credit to full swap on high yield corporate industries, offset some of the declines as threads on high yield corporate credit widened during the quarter. Our interest hedges also generated net gain. Together, non-agency RMBS, related credit hedges and interest rate hedges generated approximately $11 million or $0.39 cents per share of our total gross income of $15.9 million or $0.56 per share. Our commercial strategy, including small balance distressed commercial loans and our preferred equity investments in the commercial real estate related private partnership, performed well, generating approximately $4.5 million or $0.16 per share. Our CLO strategy added another $2.1 million or $0.08 cents per share and our residential non-performing and sub-performing loans contributed approximately $1.5 million or $0.05 per share. Our equity trading strategy had a net loss during the quarter of $2.3 million or $0.08 a share. However, although the strategy generated a net loss during the third quarter on a year-to-date basis, its contribution was positive at approximately $1 million or $0.04 per share as of quarter end. Following the end of the third quarter, as of today at least, or yesterday at least, the third quarter loss has been offset by net…

Thanks Lisa. During the third quarter, the credit and interest environment was fairly benign. The yield curve continued to flatten in anticipation of a rate hike next year, but interest rate volatility was low. Credit spreads were more volatile. High yield and some CMBS indices traded in a wide range, about 3.5 points as did some of the Fannie Mae and Freddie Mac credit risk transfer tranches. Generally speaking, credit spreads widened in the quarter. Our own non-agency RMBS portfolio, the core driver of returns for EFC, has almost a decade of seasoning and holds mostly floating rates or adjustable rate bonds, so it experienced much lower price volatility. The macro backdrop that impacted high yield in the season in the stock market was not precipitated by any change in housing or US consumer credit fundamentals. Broadly speaking, the credit metrics that are most impactful to our portfolio, home price depreciation, borrower-default rates, and loss severities, all continued their positive trajectories for the quarter, albeit at a slower pace than last year. The powerful force of home price depreciation and amortization of seasoned loans, have materially decreased the sensitivity of our non-agency portfolio to small change in home prices. While we had slightly net reduced our non-agency position through the year, we were able to find selective buying opportunities during the mini market meltdown in July and early august, most notably in lower priced alt-A bonds. There were no big changes in the composition of our non-agency portfolio during the third quarter, other than the continued measured diversification into some new areas that Larry will discuss. The portfolio grew during the last few weeks of the quarter, as we deployed proceeds from the capital raise. One of the overarching themes for us is that some of the best investment opportunities…

Thanks Mark. As Mark mentioned, we continue to find attractive investments in select pockets of the non-agency RMBS market. Our non-agency RMBS holdings still represent the largest sector allocation in our portfolio and that will likely be the case for some time. However, we are making excellent progress on diversifying our sources of return and broadening our investment opportunity set. We’ve continued to strategically expand into adjacent sectors of structured products, where we believe we can leverage our expertise and analytical capabilities to achieve attractive, risk adjusted returns. You shouldn’t expect to see a dramatic change in the composition of our portfolio in a single quarter, but we are positioning ourselves to access additional sources of return. Our target sectors are ones in which our researching systems, which have distinguished Ellington since day one, give us an advantage and enable us to capitalize on inefficiencies. More specifically, we believe that granular data analytics and loan level modelling, give us competitive advantages in many of these sectors. Leveraging these core competencies, we’ve been extremely pleased with our investments in CMBS, including B-pieces, CLOs distressed small balance commercial mortgages loans, residential NPLs and European MBS and ABS. In fact, Europe is a great example of the kind of adjacency and competitive advantages we are looking for. Loan level data for UK RMBS has become more and more available. And so we’ve used our U.S non-agency models and research and analytical tools to build similar models and research and analytical tools for the UK market. In other European markets where we see opportunities such as Spain, the data availability is not as good, but that’s okay because the markets inefficiencies are that much greater. With the help of these tools, our team in Europe is ramping up and sourcing a number of opportunities.…

The floor is now open for your questions. (Operator instructions) Your first question is coming from the line of Steve Delaney with JMP Securities. Steve Delaney – JMP Securities: Larry, congratulations on that facility. That is unique and an exciting development.

Thanks Steve. Steve Delaney – JMP Securities: Obviously, look, you guys have been such strong performers and so consistent that any time you get any kind of a blip in a quarter, it's bound to raise questions. Nobody doubts the ability of the managers. Just wondering what was going on behind the scenes. And Mark, thanks. You did a great job with telling us what was happening within credit. A couple of questions around the change, the move from $0.80 kind of quarter that you've had earlier this year to this $0.46. The offering certainly had to have some impact. And our back of the envelope looks like that that may have cost you $0.04 to $0.05 with respect to higher share count for a portion of the quarter. I was curious if you -- internally you guys have come up with a number similar to that.

I don’t think that’s reasonable. The proceeds came in in the early part of September. Steve Delaney – JMP Securities: We were just assuming no material earnings benefit and just looking at the incremental additional shares. It looked like about a 10% impact on a per-share. But obviously --.

Right, yes that makes sense. You’re talking about a third of a quarter and a third of the capital. Steve Delaney – JMP Securities: 36% new shares, bingo. Yeah, exactly. So obviously, the bigger impact was within the portfolio. And just looking at your slide on page 4, and I'm trying to frame this, Larry to focus in on what the big thing was. I'm not trying to be micro or anything. But when we look at the change in 2Q to 3Q on your gains on credit, both realized and unrealized, that was like a minus $15 million delta and your hedges were a plus $6 million delta. Well, we're looking at that and saying, okay, the long side obviously underperformed. The hedges helped a little bit, but that $9-million swing, that right there is 30-some cents of earnings. And I'm sure there's other things that are a few pennies here and there, but as I'm looking at the quarter I think it just tells me that the credit-spread volatility that we saw in this quarter relative to earlier in the year is really the challenge that you faced. And I guess I'm just asking if that thought process of mine is similar to what you guys were thinking during the quarter and as you looked at the results.

I think there’s a few things going on. Because we’ve actively traded in the past, I think and I know you’d agree, it’s tougher to just do the math on us. We realize that and what’s going to happen is that there are going to be quarters like this where we trade a little less actively than others and there could be a lot of reasons for that, both good and bad. And I think that we had a little less trading than we normally do and I think you saw that in our results. I don’t think that’s necessarily indicative of what we are going to see going forward. I just think it’s one of those things. We had summer months. I mean there’s just a lot of things going on. We’ve always -- our leverage obviously has been lower than our peers. If you have ever done the math on our run rate, you’d never obviously get close to what our quarter-to-quarter earnings are. We realize that makes us a little bit tougher to model from an analyst perspective or maybe even an investors perspective, but you are going to see some quarters where we have fewer trading gains and others where we have more and it’s really impossible going in to predict. I will tell you and I’ll let Mark elaborate on this, with all the different sectors that we are involved in and what we are seeing with banks exiting certain markets, we are still very optimistic about our opportunities going forward.

Steve, it’s Mark. I would just add that when you get a lot of macro-volatility in the market, S&P moving around a lot, credit indices moving around a lot, it flows down a little bit sometimes. The volume of cash bonds that trade, the (inaudible) bonds that trade. I think that was part of the reason why the turnover was a little bit lower for the quarter. When I look at all the areas we are in and then all the opportunities in those areas, it looks like a very opportunity rich environment for us. I see probably more opportunities for us to pursue now than I did at the start of the year. Steve Delaney – JMP Securities: Well, that's great timing to have that view with the incremental capital and the credit facility. I guess switching over to the portfolio -- and one more thing about just the quarter, we should be seeing your October 31 book value I guess any day now. Can you make any comments -- the volatility that you had in the third quarter, seems like bonds have generally settled into a range here. Would you say the conditions since September 30 are generally more favorable to the way that you would normally operate?

Just from a book value perspective? Steve Delaney – JMP Securities: Yes, exactly, or in terms of the price -- the 3.5% price range that you saw in 3Q. Have you seen prices tighter since September?

I think a little bit. Steve Delaney – JMP Securities: Okay.

Obviously October started -- first few weeks in October were very volatile to the downside and then to the upside. There was … Steve Delaney – JMP Securities: I guess you're right. It's only been the last couple of weeks only that we've seen some stability in rates. But switching away from that to just more big-picture, one of these and then I'll hop off. I'm looking at incrementally -- it takes a while now to read through, especially on the credit side the different paragraphs of all the new initiatives. And I guess, as I look at this I was trying to think through it last night like okay, what are you guys really trying to do here? And I came up -- you mentioned it in your comments, I came up with this thought of targeting inefficient markets or less liquid markets, such that you're now looking at investing in more of an incremental approach rather than some kind of macro theme. And I was curious if you would comment if that really is what you're really trying to focus on.

This is Mark. I think about it as one theme for us is buy assets or focus on businesses that banks want to sell as opposed to banks want to buy. That’s why we’ve been thinking a lot about non-QM lending. We are not focused on the jumbo space where the banks want to be active. We are much more focused on parts of that market where the banks aren’t going to want to go. I mentioned we bought this package of non-performing and re-performing loans from a bank that was liquidating legacy assets. We did that post quarter end. That’s an example of buying the assets the banks are selling en masse and not trying not to focus on the assets that the banks are aggressively looking to buy because their funding is low. I would say that’s one theme for us. In terms of liquidity, we are not targeting things that are less liquid by nature. I think we are trying to target markets where we feel like they are underserved from a capital perspective. So markets where there hasn’t been a lot of capital. We’ve liked for a long time the distressed commercial mortgage loans. That has been an underserved -- there hasn’t been a lot of capital there. There has been a lot of capital for big trophy properties. That’s not what we are interested in. There has also been capital for smaller properties, but there hasn’t been a lot of capital for distressed loans on smaller properties and that’s been a great niche for us. It's not super competitive. The returns are great. We can get quick resolutions. We think we have limited downside. I would say targeting things that the banks want to sell as opposed to things the banks want to buy and targeting corners of the market where we don’t think there is a lot of institutional capital amassed relative to the opportunity. Steve Delaney – JMP Securities: Very helpful. Thanks Mark. I appreciate the --.

Steve Delaney – JMP Securities: Guys that's very helpful, appreciate the comments.

(Operator Instructions) You do have a question that came in from the line of Lucy Webster with Compass Point. Jason Stewart – Compass Point Research & Trading: Good morning. It's Jason for Lucy. A question on the agency portfolio. It looks like you added a little bit in the low-FICO specified pool bucket. But I'm just looking at the CPR increase and wondering if that was mainly due to the addition or if there's some underlying trends going on here.

This is Mark. So this quarter was the highest quarter for prepayments from a seasonal basis. So it was a big seasonality to prepayment. Between mid-summer to the winter, it's typically like almost like a doubling peak to trough. We haven’t seen anything surprising us on the prepayments -- on our portfolio for the quarter. I would say I think the most interesting thing with prepayments occurred post quarter end when you had that drop in interest rates, lowering of mortgage rates and you saw a very quick and sudden change in the refi index spiked up a lot. And when people drilled down on that change in the refi index, it really was coming from a larger loan balance of loans that are in there. That is sort of behind some of the increase in the value of prepayment protection. So I think that was sort of the most interesting thing that really occurred at the end of the quarter. I think what you saw going on in the quarter was primarily just seasonality, especially when you’re at very low levels of prepayments where we are. So our prepayments went from basically five up to about eight on three months basis. That’s just seasonal turnover changes, the cyclical pattern throughout the year. Jason Stewart – Compass Point Research & Trading: Okay. And then in the MHA portfolio, just curious to get your thoughts on how those are positioned, especially if we start to see lower LLPAs or we perhaps get some credit widening at the GSEs. Thanks.

Yeah. I think on the MHA portfolio, we have focused more on the higher LTV sectors, over 100 LTV. We’ve been very sensitive to modest amounts of home price depreciation can degrade the quality of prepayment protections for the lower LTV MHA stories there like the 80 to 90 story. I think we need to -- it's hard to make any specific comments on what changes we are going to see out of FHFA. Mel Watt made some comments, but we haven’t seen the specifics there about some of these high LTV programs and changes in reps and warrants. I think it's interesting, I don’t think that it’s going to be very impactful on the MHA speeds. I think the MHA speeds are going to be more impacted by the rate of home price appreciations. But I do think some of the changes you might see out of FHA could -- they could promote some more first time home buying which could be supportive of home prices

There are further questions at this time. Ladies and gentlemen, this concludes Ellington Financial’s third quarter 2014 financial results conference call. Please disconnect your lines at this time and have a wonderful day.