Company focuses on growth after successful
portfolio de-risking and repositioning
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 quarter ended June 30, 2023.
Second Quarter Highlights
- Q2 2023 GAAP net loss of ($3.7) million, or $(0.15) per diluted
share of common stock.
- Q2 2023 Distributable Earnings of $(3.9) million, or $(0.16)
per diluted share of common stock.
- GAAP book value of $9.34 per share of common stock as of June
30, 2023.
- Economic book value of $13.16 per share of common stock as of
June 30, 2023.
- Declared dividend of $0.32 per share of common stock, payable
on August 31, 2023, to common stockholders of record as of August
22, 2023.
“We are pleased to have accelerated purchases of newly
originated, higher-coupon loans in the second quarter, which we
expect to have a compounding positive effect on net interest income
and securitization execution going forward. We believe our results
in the first half of the year have demonstrated the resilience and
adaptability of our business model, and now our focus is on
growth,” said Sreeni Prabhu, Chief Executive Officer and President
of Angel Oak Mortgage REIT. “Credit continues to perform well
across the portfolio, and we will remain judicious with our
approach and diligent in credit selection as we expand new
purchases. Though the macroeconomic landscape remains uncertain,
our improved balance sheet and increased liquidity have positioned
the Company for success. As we head into the second half of the
year, our emphasis is on executing our growth strategy and
delivering attractive returns for our shareholders.”
Second Quarter Portfolio and Investment Activity
- In June 2023, the Company priced AOMT 2023-4, an approximately
$284.5 million scheduled unpaid principal balance securitization
backed by a pool of residential mortgage loans, all of which were
contributed by the Company. The securitization reduced the
Company’s whole loan warehouse debt by approximately 45.6% versus
the end of Q1 2023, bringing the total reduction in the Company’s
whole loan warehouse debt since the end of Q3 2022 to approximately
73.7%.
- The securitization released over $35 million of capital, which
the Company has begun to deploy towards loan purchasing activity
and liquidity enhancement.
- Since the end of Q1 2023, AOMR has purchased and locked for
purchase approximately $50 million of newly-originated loans as of
today’s date that carry a weighted average loan coupon of 8.4%, a
weighted average original loan-to-value ratio of 72%, and a
weighted average original FICO score of 754.
Capital Markets Activity
- Executed the AOMT 2023-4 securitization with a $284.5 million
scheduled unpaid principal balance.
- As of June 30, 2023, the Company was party to three financing
lines which permit borrowings in an aggregate amount of up to $929
million.
- Our total financing capacity as of June 30, 2023 stands at $929
million of which approximately $234 million is drawn, leaving
capacity of approximately $695 million for new loan purchases.
Balance Sheet
- Target assets totaled $2.03 billion as of June 30, 2023.
- Held residential mortgage whole loans with fair value of $296.5
million as of June 30, 2023.
- Recourse debt to equity ratio was 2.5x as of June 30, 2023. As
of today’s date, our recourse debt to equity ratio was 1.2x,
reflecting the maturity of US Treasury repurchase agreements on
July 13, 2023.
Dividend
On August 8, 2023, the Company declared a dividend of $0.32 per
share of common stock for the second quarter of 2023. The dividend
is payable on August 31, 2023 to common stockholders of record as
of August 22, 2023.
Conference Call and Webcast Information
The Company will host a live conference call and webcast today,
August 8, 2023 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 Passcode:
10179283 The playback can be accessed through August 22, 2023.
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 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 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, 2023
June 30, 2022
June 30, 2023
June 30, 2022
INTEREST INCOME, NET
Interest income
$
23,763
$
29,702
$
47,503
$
56,811
Interest expense
17,311
13,271
34,252
23,441
NET INTEREST INCOME
6,452
16,431
13,251
33,370
REALIZED AND UNREALIZED GAINS (LOSSES),
NET
Net realized gain (loss) on mortgage
loans, derivative contracts, RMBS, and CMBS
(4,169
)
12,718
(15,012
)
39,133
Net unrealized gain (loss) on trading
securities, mortgage loans, debt at fair value option, and
derivative contracts
379
(73,985
)
10,569
(154,166
)
TOTAL REALIZED AND UNREALIZED GAINS
(LOSSES), NET
(3,790
)
(61,267
)
(4,443
)
(115,033
)
EXPENSES
Operating expenses
2,214
2,977
4,418
6,723
Operating expenses incurred with
affiliate
607
838
1,073
1,838
Due diligence and transaction costs
21
519
21
1,182
Stock compensation
207
968
748
1,839
Securitization costs
1,027
-
1,910
2,019
Management fee incurred with affiliate
1,493
2,006
3,015
3,879
Total operating expenses
5,569
7,308
11,185
17,480
INCOME (LOSS) BEFORE INCOME
TAXES
(2,907
)
(52,144
)
(2,377
)
(99,143
)
Income tax benefit
781
-
781
(3,457
)
NET INCOME (LOSS)
$
(3,688
)
$
(52,144
)
$
(3,158
)
$
(95,686
)
Preferred dividends
-
(4
)
-
(8
)
NET INCOME (LOSS) ALLOCABLE TO COMMON
STOCKHOLDERS
$
(3,688
)
$
(52,148
)
$
(3,158
)
$
(95,694
)
Other comprehensive income (loss)
(242
)
11,235
14,562
(1,752
)
TOTAL COMPREHENSIVE INCOME
(LOSS)
$
(3,930
)
$
(40,913
)
$
11,404
$
(97,446
)
Basic earnings (loss) per common share
$
(0.15
)
$
(2.13
)
$
(0.13
)
$
(3.90
)
Diluted earnings (loss) per common
share
$
(0.15
)
$
(2.13
)
$
(0.13
)
$
(3.90
)
Weighted average number of common
shares outstanding:
Basic
24,686,881
24,458,015
24,674,875
24,549,977
Diluted
24,686,881
24,458,015
24,674,875
24,549,977
Angel Oak Mortgage REIT,
Inc. Condensed Consolidated Balance Sheets
(Unaudited) (in thousands, except for share and per
share data)
As of:
June 30, 2023
December 31, 2022
ASSETS
Residential mortgage loans - at fair
value
$
296,529
$
770,980
Residential mortgage loans in
securitization trusts - at fair value
1,241,994
1,027,442
Commercial mortgage loans - at fair
value
9,589
9,458
RMBS - at fair value
459,972
1,055,338
CMBS - at fair value
6,853
6,111
U.S. Treasury securities - at fair
value
299,581
—
Cash and cash equivalents
59,140
29,272
Restricted cash
9,577
10,589
Principal and interest receivable
9,836
17,497
Unrealized appreciation on TBAs and
interest rate futures contracts - at fair value
3,294
14,756
Other assets
17,418
4,767
Total assets
$
2,413,783
$
2,946,212
LIABILITIES AND STOCKHOLDERS’
EQUITY
LIABILITIES
Notes payable
$
233,970
$
639,870
Non-recourse securitization obligation,
collateralized by residential mortgage loans in securitization
trusts
1,211,441
1,003,485
Securities sold under agreements to
repurchase
340,701
52,544
Due to broker
390,380
1,006,022
Accrued expenses
1,372
1,288
Accrued expenses payable to affiliate
1,055
2,006
Interest payable
705
2,551
Management fee payable to affiliate
1,483
1,967
Total liabilities
$
2,181,107
$
2,709,733
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value. As of June
30, 2023: 350,000,000 shares authorized, 24,924,886 shares issued
and outstanding. As of December 31, 2022: 350,000,000 shares
authorized, 24,925,357 shares issued and outstanding.
249
249
Additional paid-in capital
476,127
475,379
Accumulated other comprehensive income
(6,565
)
(21,127
)
Retained (deficit) earnings
(237,135
)
(218,022
)
Total stockholders’ equity
$
232,676
$
236,479
Total liabilities and stockholders’
equity
$
2,413,783
$
2,946,212
Angel Oak Mortgage REIT,
Inc. Reconciliation of Net Income (Loss) to Distributable
Earnings (Unaudited) (in thousands, except for share and
per share data)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
(in thousands)
Net income (loss) allocable to common
stockholders
$
(3,688
)
$
(52,148
)
$
(3,158
)
$
(95,694
)
Adjustments:
Net unrealized (gains) losses on
derivatives
(12,179
)
24,692
12,357
9,366
Net unrealized (gains) losses on trading
securities
3,882
—
2,277
—
Net unrealized (gains) losses on
residential loans in securitization trusts and non-recourse
securitization obligation
4,777
10,266
11,104
40,476
Net unrealized (gains) losses on
residential loans
3,278
38,538
(36,159
)
103,125
Net unrealized (gains) losses on
commercial loans
(136
)
489
(147
)
985
Non-cash equity compensation expense
207
968
748
1,839
Distributable Earnings
$
(3,859
)
$
22,805
$
(12,978
)
$
60,097
Angel Oak Mortgage REIT,
Inc. Reconciliation of Stockholders’ Equity Including
Economic Book Value Adjustments and Economic Book Value per
Common Share (Unaudited) (in thousands, except for share
and per share data)
June 30, 2023
March 31, 2023
December 31, 2022
GAAP total stockholders’ equity
$
232,676
$
244,378
$
236,479
Adjustments:
Fair value adjustment for securitized debt
held at amortized cost
95,326
89,284
90,348
Stockholders’ equity including economic
book value adjustments
$
328,002
$
333,662
$
326,827
Number of shares of common stock
outstanding at period end
24,924,886
24,925,357
24,925,357
Book value per share of common stock
$
9.34
$
9.80
$
9.49
Economic book value per share of common
stock
$
13.16
$
13.39
$
13.11
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808904351/en/
Investors: investorrelations@angeloakreit.com
855-502-3920 Media: Bernardo Soriano, Gregory FCA for Angel
Oak Mortgage, Inc. 914-656-3880 bernardo@gregoryfca.com Company
Contact: KC Kelleher, Head of Corporate Finance & Investor
Relations 404-528-2684 kc.kelleher@angeloakcapital.com
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