AOMR Angel Oak Mortgage REIT Inc

Angel Oak Mortgage REIT, Inc. (NYSE: AOMR) (the “Company,” “we,” and “our”), a leading real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market, today reported financial results for the second quarter of 2024.

Second Quarter and Year-to-Date Highlights

• Q2 2024 net interest income of $9.5 million, an increase of 47% versus Q2 2023.
• Net interest income of $18.0 million in the first six months of 2024, an increase of 36% versus net interest income of $13.3 million in the first six months of 2023.
• Q2 2024 GAAP net loss of ($0.3) million, or ($0.01) per diluted share of common stock.
• Q2 2024 Distributable Earnings loss of ($2.3) million, or ($0.09) per diluted share of common stock.
• GAAP book value of $10.23 per share of common stock as of June 30, 2024, down from $10.55 per share of common stock as of March 31, 2024.
• Economic book value of $13.16 per share of common stock as of June 30, 2024, down from $13.78 per share of common stock as of March 31, 2024.
• Declared dividend of $0.32 per share of common stock, to be paid on August 30, 2024 to common stockholders of record as of August 22, 2024.

Sreeni Prabhu, Chief Executive Officer and President of Angel Oak Mortgage REIT, Inc., said "We are proud to mark our fourth consecutive quarter of net interest income expansion with growth of 47% from the second quarter of 2023 to the second quarter of 2024, and a 36% increase from the first six months of 2023 to the first six months of 2024. This performance underscores the momentum we carry as we deploy the proceeds of our $50 million senior unsecured notes issuance in July, which we expect to catalyze the next phase of growth for AOMR. With this additional capital, we intend to deliver further net interest income and earnings accretion, enabled by the purchase of additional newly-originated loans and the subsequent execution of profitable securitizations while maintaining our vigilant and methodical capital allocation and liquidity management strategy. We have demonstrated our ability to deliver consistent, sustained value creation and effectively manage capital, and we look forward to beginning our next phase of growth in the second half of 2024.”

Portfolio and Investment Activity

• During the quarter, the Company executed the AOMT 2024-4 securitization as the sole contributor of loans. The Company contributed loans with a scheduled unpaid principal balance of approximately $299.8 million and a 7.4% weighted average coupon. This securitization reduced the Company’s whole loan warehouse debt by $235.9 million and reduced financing costs by approximately 100 basis points compared to the financing cost prior to securitization.
• Additionally, the Company participated in the AOMT 2024-6 securitization during the second quarter. AOMT 2024-6 was an approximately $479.6 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans, to which the Company contributed loans with a scheduled unpaid principal balance of approximately $22.9 million.
• As of June 30, 2024, the weighted average coupon of our residential whole loans portfolio increased to 7.71%, 60 basis points higher than at the end of the first quarter 2024 and 287 basis points higher than at the end of the second quarter of 2023.

Capital Markets Activity

• Subsequent to the end of the second quarter, on July 25, 2024, the Company issued $50 million of senior unsecured notes due 2029 with a coupon of 9.50%. This issuance is intended to be accretive, driving incremental asset expansion and earnings growth. The Company intends to use the majority of the net proceeds from the offering for general corporate purposes, which may include the acquisition of non-qualified residential mortgage loans and other target assets primarily sourced from the Company's affiliated proprietary mortgage lending platform or other target assets through the secondary market in a manner consistent with the Company's strategy and investment guidelines. Additionally, the Company used the net proceeds from the offering to repurchase 1,707,922 shares of the Company's common stock owned by Xylem Finance, LLC, an affiliate of Davidson Kempner Capital Management LP, for an aggregate repurchase price of approximately $20.0 million.
• As of June 30, 2024, the Company was a party to three loan financing lines which permit borrowings in an aggregate amount of up to $1.1 billion, of which approximately $101 million is drawn, leaving capacity of approximately $950 million for new loan purchases.

Balance Sheet

• Target assets totaled $1.9 billion as of June 30, 2024.
• The Company held residential mortgage whole loans with fair value of $158.9 million as of June 30, 2024.
• The recourse debt to equity ratio was 1.2x as of June 30, 2024.
  • As of today’s date, our recourse debt to equity ratio is approximately 0.9x. This reflects the maturity of short-term U.S. Treasuries and their corresponding repurchase agreements held at the end of the second quarter, as well as the subsequent issuance of $50 million of senior unsecured notes and $20 million share repurchase.
  • Our recourse debt to equity ratio is expected to increase as current-market coupon loans are purchased, but is expected to remain below 2.5x.

Dividend

On August 6, 2024, the Company declared a dividend of $0.32 per share of common stock, which will be paid on August 30, 2024, to common stockholders of record as of August 22, 2024.

Conference Call and Webcast Information

The Company will host a live conference call and webcast today, August 6, 2024 at 8:30 a.m. Eastern time. To listen to the live webcast, go to the Investors section of the Company’s website at www.angeloakreit.com at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software.

To Participate in the Telephone Conference Call:

Dial in at least 15 minutes prior to start time. Domestic: 1-844-826-3033 International: 1-412-317-5185

Conference Call Playback:

Domestic: 1-844-512-2921 International: 1-412-317-6671 Pass code: 10190401 The playback can be accessed through August 20, 2024.

Non-GAAP Metrics

Distributable Earnings is a non‑GAAP measure and is defined as net income (loss) allocable to common stockholders as calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), excluding (1) unrealized gains and losses on our aggregate portfolio, (2) impairment losses, (3) extinguishment of debt, (4) non-cash equity compensation expense, (5) the incentive fee earned by Falcons I, LLC, our external manager (our “Manager”), (6) realized gains or losses on swap terminations and (7) certain other nonrecurring gains or losses. We believe that the presentation of Distributable Earnings provides investors with a useful measure to facilitate comparisons of financial performance among our real estate investment trust (“REIT”) peers, but has important limitations. We believe Distributable Earnings as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings may not be comparable to similar measures presented by other REITs.

Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total stockholders’ equity. We believe that the presentation of Distributable Earnings Return on Average Equity provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. Additionally, we believe Distributable Earnings Return on Average Equity provides investors with additional detail on the Distributable Earnings generated by our invested equity capital. We believe Distributable Earnings Return on Average Equity as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings Return on Average Equity should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings Return on Average Equity may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings Return on Average Equity may not be comparable to similar measures presented by other REITs.

Economic book value is a non-GAAP financial measure of our financial position. To calculate our economic book value, the portions of our non-recourse financing obligation held at amortized cost are adjusted to fair value. These adjustments are also reflected in our end of period total stockholders’ equity. Management considers economic book value to provide investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for our legally held retained bonds, irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for book value per share of common stock or stockholders’ equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies.

Forward-Looking Statements

This press release contains certain forward-looking statements that are subject to various risks and uncertainties, including, without limitation, statements relating to the performance of the Company’s investments. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “project,” “predict,” “continue,” or by the negative of these words and phrases or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe existing or future plans and strategies, contain projections of results of operations, liquidity and/or financial condition, or state other forward-looking information. The Company’s ability to predict future events or conditions or their impact or the actual effect of existing or future plans or strategies is inherently uncertain. Although the Company believes that such forward-looking statements are based on reasonable assumptions, actual results and performance in the future could differ materially from those set forth in or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward‐looking statements, which reflect the Company’s views only as of the date of this press release. Additional information concerning factors that could cause actual results and performance to differ materially from these forward-looking statements is contained from time to time in the Company’s filings with the Securities and Exchange Commission. Except as required by applicable law, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward‐looking statements. The Company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

About Angel Oak Mortgage REIT, Inc.

Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. The Company’s objective is to generate attractive risk-adjusted returns for its stockholders through cash distributions and capital appreciation across interest rate and credit cycles. The Company is externally managed and advised by an affiliate of Angel Oak Capital Advisors, LLC, which, collectively with its affiliates, is a leading alternative credit manager with a vertically integrated mortgage origination platform. Additional information about the Company is available at www.angeloakreit.com

 

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(in thousands, except for share and per share data)

 

 

Three Months Ended

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

INTEREST INCOME, NET

 

 

 

 

 

 

 

Interest income

$

25,902

 

 

$

23,763

 

 

$

51,114

 

 

$

47,503

 

Interest expense

 

16,439

 

 

 

17,311

 

 

 

33,072

 

 

 

34,252

 

NET INTEREST INCOME

$

9,463

 

 

$

6,452

 

 

$

18,042

 

 

$

13,251

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES), NET

 

 

 

 

 

 

 

Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS

$

(6,770

)

 

$

(4,169

)

 

$

(8,192

)

 

$

(15,012

)

Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts

 

2,658

 

 

 

379

 

 

 

13,342

 

 

 

10,569

 

TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET

$

(4,112

)

 

$

(3,790

)

 

$

5,150

 

 

$

(4,443

)

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Operating expenses

$

1,333

 

 

$

2,214

 

 

$

3,333

 

 

$

4,418

 

Operating expenses incurred with affiliate

 

456

 

 

 

607

 

 

 

971

 

 

 

1,073

 

Due diligence and transaction costs

 

359

 

 

 

21

 

 

 

409

 

 

 

21

 

Stock compensation

 

630

 

 

 

207

 

 

 

1,260

 

 

 

748

 

Securitization costs

 

1,410

 

 

 

1,027

 

 

 

1,583

 

 

 

1,910

 

Management fee incurred with affiliate

 

1,294

 

 

 

1,493

 

 

 

2,606

 

 

 

3,015

 

Total operating expenses

$

5,482

 

 

$

5,569

 

 

$

10,162

 

 

$

11,185

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

$

(131

)

 

$

(2,907

)

 

$

13,030

 

 

$

(2,377

)

Income tax expense

 

142

 

 

 

781

 

 

 

429

 

 

 

781

 

NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS

$

(273

)

 

$

(3,688

)

 

$

12,601

 

 

$

(3,158

)

Other comprehensive income (loss)

 

125

 

 

 

(242

)

 

 

1,828

 

 

 

14,562

 

TOTAL COMPREHENSIVE INCOME (LOSS)

$

(148

)

 

$

(3,930

)

 

$

14,429

 

 

$

11,404

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

$

(0.01

)

 

$

(0.15

)

 

$

0.51

 

 

$

(0.13

)

Diluted earnings (loss) per common share

$

(0.01

)

 

$

(0.15

)

 

$

0.50

 

 

$

(0.13

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

24,810,021

 

 

 

24,686,881

 

 

 

24,792,918

 

 

 

24,674,875

 

Diluted

 

24,810,021

 

 

 

24,686,881

 

 

 

24,973,501

 

 

 

24,674,875

 

 

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except for share and per share data)

 

 

As of:

 

June 30, 2024

 

December 31, 2023

ASSETS

 

 

 

Residential mortgage loans - at fair value

$

158,940

 

 

$

380,040

 

Residential mortgage loans in securitization trusts - at fair value

 

1,447,901

 

 

 

1,221,067

 

RMBS - at fair value

 

266,752

 

 

 

472,058

 

U.S. Treasury securities - at fair value

 

149,957

 

 

 

149,927

 

Cash and cash equivalents

 

43,956

 

 

 

41,625

 

Restricted cash

 

2,146

 

 

 

2,871

 

Principal and interest receivable

 

6,174

 

 

 

7,501

 

Unrealized appreciation on TBAs and interest rate futures contracts - at fair value

 

1,702

 

 

 

—

 

Other assets

 

36,246

 

 

 

32,922

 

Total assets

$

2,113,774

 

 

$

2,308,011

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

LIABILITIES

 

 

 

Notes payable

$

101,200

 

 

$

290,610

 

Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts

 

1,372,272

 

 

 

1,169,154

 

Securities sold under agreements to repurchase

 

201,051

 

 

 

193,656

 

Unrealized depreciation on TBAs and interest rate futures contracts - at fair value

 

—

 

 

 

1,334

 

Due to broker

 

181,847

 

 

 

391,964

 

Accrued expenses

 

653

 

 

 

985

 

Accrued expenses payable to affiliate

 

397

 

 

 

748

 

Interest payable

 

460

 

 

 

820

 

Income taxes payable

 

78

 

 

 

1,241

 

Management fee payable to affiliate

 

10

 

 

 

1,393

 

Total liabilities

$

1,857,968

 

 

$

2,051,905

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, $0.01 par value. As of June 30, 2024: 350,000,000 shares authorized, 24,998,549 shares issued and outstanding. As of December 31, 2023: 350,000,000 shares authorized, 24,965,274 shares issued and outstanding.

$

249

 

 

$

249

 

Additional paid-in capital

 

478,328

 

 

 

477,068

 

Accumulated other comprehensive income (loss)

 

(3,147

)

 

 

(4,975

)

Retained earnings (deficit)

 

(219,624

)

 

 

(216,236

)

Total stockholders’ equity

$

255,806

 

 

$

256,106

 

Total liabilities and stockholders’ equity

$

2,113,774

 

 

$

2,308,011

 

 

Angel Oak Mortgage REIT, Inc.

Reconciliation of Net Income (Loss) to Distributable Earnings

and Distributable Earnings Return on Average Equity

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

 

(in thousands)

 

 

 

 

Net income (loss) allocable to common stockholders

$

(273

)

 

$

(3,688

)

 

$

12,601

 

 

$

(3,158

)

Adjustments:

 

 

 

 

 

 

 

Net unrealized (gains) losses on trading securities

 

1,813

 

 

 

3,882

 

 

 

1,814

 

 

 

2,277

 

Net unrealized (gains) losses on derivatives

 

(2,592

)

 

 

(12,179

)

 

 

(3,037

)

 

 

12,357

 

Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation

 

2,579

 

 

 

4,777

 

 

 

(2,568

)

 

 

11,104

 

Net unrealized (gains) losses on residential loans

 

(4,431

)

 

 

3,278

 

 

 

(9,502

)

 

 

(36,159

)

Net unrealized (gains) losses on commercial loans

 

(27

)

 

 

(136

)

 

 

(49

)

 

 

(147

)

Non-cash equity compensation expense

 

630

 

 

 

207

 

 

 

1,260

 

 

 

748

 

Distributable Earnings

$

(2,301

)

 

$

(3,859

)

 

$

519

 

 

$

(12,978

)

 

Three Months Ended

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

 

($ in thousands)

 

 

 

 

Annualized Distributable Earnings

$

(9,204

)

 

$

(15,436

)

 

$

1,038

 

 

$

(25,956

)

Average total stockholders’ equity

$

259,565

 

 

$

239,991

 

 

$

258,412

 

 

$

238,345

 

Distributable Earnings Return on Average Equity

 

(3.5

)%

 

 

(6.4

)%

 

 

0.4

%

 

 

(10.9

)%

 

Angel Oak Mortgage REIT, Inc.

Reconciliation of Stockholders’ Equity to Stockholders’ Equity Including Economic Book Value Adjustments

and Economic Book Value per Share of Common Stock

(Unaudited)

 

 

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 30, 2023

 

(in thousands, except for share and per share data)

GAAP total stockholders’ equity

$

255,806

$

263,324

$

256,106

$

231,802

$

232,676

Adjustments:

 

 

 

 

 

Fair value adjustment for securitized debt held at amortized cost

 

73,053

 

80,599

 

81,942

 

97,592

 

95,326

Stockholders’ equity including economic book value adjustments

$

328,859

$

343,923

$

338,048

$

329,394

$

328,002

 

 

 

 

 

 

Number of shares of common stock outstanding at period end

 

24,998,549

 

24,965,274

 

24,965,274

 

24,955,566

 

24,924,886

Book value per share of common stock

$

10.23

$

10.55

$

10.26

$

9.29

$

9.34

Economic book value per share of common stock

$

13.16

$

13.78

$

13.54

$

13.20

$

13.16

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806456884/en/

Investors: investorrelations@angeloakreit.com 855-502-3920

IR Agency: Nick Teves or Joseph Caminiti, Alpha IR Group 312-445-2870 AOMR@alpha-ir.com

Company: KC Kelleher, Head of Corporate Finance & Investor Relations 404-528-2684 kc.kelleher@angeloakcapital.com