As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the thrifts & mortgage finance industry, including Arbor Realty Trust (NYSE: ABR) and its peers.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

The 20 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 26% while next quarter’s revenue guidance was 1.1% above.

Thankfully, share prices of the companies have been resilient as they are up 9% on average since the latest earnings results.

Arbor Realty Trust (NYSE: ABR)

With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust (NYSE: ABR) is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.

Arbor Realty Trust reported revenues of $130.4 million, down 14.8% year on year. This print fell short of analysts’ expectations by 3.8%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net interest income and EPS estimates.

Interestingly, the stock is up 5.6% since reporting and currently trades at $11.78.

Read our full report on Arbor Realty Trust here, it’s free.

Best Q2: Ellington Financial (NYSE: EFC)

Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.

Ellington Financial reported revenues of $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with an impressive beat of analysts’ tangible book value per share and EPS estimates.

The market seems content with the results as the stock is up 4.4% since reporting. It currently trades at $13.23.

Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Franklin BSP Realty Trust (NYSE: FBRT)

Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.

Franklin BSP Realty Trust reported revenues of $50.78 million, up 171% year on year, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income and EPS estimates.

Interestingly, the stock is up 11.7% since the results and currently trades at $11.27.

Read our full analysis of Franklin BSP Realty Trust’s results here.

WaFd Bank (NASDAQ: WAFD)

Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.

WaFd Bank reported revenues of $186.3 million, down 4.2% year on year. This result surpassed analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also logged a beat of analysts’ EPS and net interest income estimates.

The stock is up 4.6% since reporting and currently trades at $31.10.

Read our full, actionable report on WaFd Bank here, it’s free.

Ladder Capital (NYSE: LADR)

Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.

Ladder Capital reported revenues of $56.3 million, down 21.4% year on year. This print met analysts’ expectations. Taking a step back, it was a softer quarter as it recorded a significant miss of analysts’ tangible book value per share and net interest income estimates.

The stock is up 2.1% since reporting and currently trades at $11.34.

Read our full, actionable report on Ladder Capital here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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