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 year ended December 31, 2023.

Fourth Quarter Highlights

• Q4 2023 GAAP net income of $28.6 million, or $1.15 per diluted share of common stock.
• Q4 2023 Distributable Earnings of $(6.5) million, or $(0.26) per diluted share of common stock.
• Declared dividend of $0.32 per share of common stock, paid on February 29, 2024 to common stockholders of record as of February 22, 2024.

Full Year 2023 Highlights

• GAAP book value of $10.26 per share of common stock as of December 31, 2023.
• Economic book value of $13.54 per share of common stock as of December 31, 2023.
• Total GAAP net income of $33.7 million, or $1.35 per diluted share of common stock, for the year ended December 31, 2023.
• Distributable Earnings of $(28.1) million, or $(1.14) per diluted share of common stock, for the year ended December 31, 2023.

Throughout 2023, the Company purchased over $220 million of newly-originated loans with a weighted average coupon rate of 8.37%, securitized over $660 million in scheduled unpaid principal balance of loans, and reduced operating costs by $13.4 million, or approximately 40% versus 2022. Additionally, as of December 31, 2023, GAAP book value per share grew by 10.4% and economic book value per share grew by 2.6% versus September 30, 2023.

Sreeni Prabhu, Chief Executive Officer and President of Angel Oak Mortgage REIT, said “In the past year, the Company demonstrated the strength of its operating model, its management team, and the foundation of the Angel Oak ecosystem. Against continued volatility in the macroeconomic environment and across our key asset classes, we gained positive momentum, returning to growth after successfully repositioning our portfolio while improving liquidity, strengthening our balance sheet, and lowering operating expenses. As we’ve stated before, AOMR is a business – not a trade. We believe we have proven this with our results amid this historically challenging backdrop.”

Prabhu continued, “Through the second half of the year, we have steadily expanded net interest margin while maintaining operating expense reductions and growing the balance sheet. To that end, as of December 31, 2023, the weighted average coupon rate of our residential whole loans portfolio was 6.78% compared to 4.84% as of the end of the second quarter of 2023. Not only does this drive operating income growth, we expect it to improve future securitization execution, enabling us to continue to increase shareholder value.”

Fourth Quarter Portfolio and Investment Activity

• As of December 31, 2023, the weighted average coupon of our residential whole loans portfolio increased to 6.78%, nearly 100 basis points higher than at the end of the third quarter 2023.
• Prior to year-end, in December 2023, the Company participated in AOMT 2023-7 along other Angel Oak entities. The Company contributed loans with a scheduled unpaid principal balance of $42.0 million and a 5.30% weighted average coupon.

Full Year Portfolio and Investment Activity

• Purchased approximately $222.7 million of newly originated, market coupon non-QM residential mortgage loans with a weighted average coupon of 8.37% in 2023.
• In 2023, the Company participated in four residential non-QM securitizations, contributing $662 million in aggregate unpaid principal balance of residential mortgage loans to such securitizations.
• Portfolio totaled $2.1 billion of residential mortgage loans and other target assets as of December 31, 2023.
• Improved weighted average coupon of residential whole loans portfolio from 4.80% as of the end December 31, 2022 to 6.78% as of December 31, 2023.

Capital Markets Activity

• As of December 31, 2023, the Company was party to three financing lines which permit borrowings in an aggregate amount of up to $1.1 billion.
• Our total financing capacity as of December 31, 2023 stands at $1.1 billion of which approximately $291 million is drawn, leaving capacity of approximately $760 million for new loan purchases.
• In November 2023 the Company converted its $286 million static pool financing to a revolving facility with “mark to market” features, reducing the maximum borrowing capacity to $200 million, and reducing the variable interest rate by approximately 250 basis points as of the date of the conversion.

Balance Sheet

• The Company pragmatically grew the balance sheet amid an uncertain market while protecting liquidity and managing risk, increasing GAAP book value per share by 10.4% and economic book value per share by 2.6% versus the prior quarter.
• Held residential mortgage whole loans with fair value of $380.0 million as of December 31, 2023.
• Recourse debt to equity ratio was 1.9x as of December 31, 2023.
  • Recourse debt to equity ratio was 1.3x as of January 16, 2024, which reflects the maturity of short-term US Treasury securities and their corresponding repurchase agreements.

Dividend

On February 7, 2024, the Company declared a dividend of $0.32 per share of common stock, which was paid on February 29, 2024, to common stockholders of record as of February 22, 2024.

Conference Call and Webcast Information

The Company will host a live conference call and webcast today, March 5, 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 Passcode: 10185779 The playback can be accessed through March 19, 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 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

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

INTEREST INCOME, NET

 

 

 

 

 

 

 

Interest income

$

24,550

 

 

$

28,585

 

 

$

95,953

 

 

$

115,544

 

Interest expense

 

16,310

 

 

 

21,175

 

 

 

67,052

 

 

 

63,024

 

NET INTEREST INCOME

 

8,240

 

 

 

7,410

 

 

 

28,901

 

 

 

52,520

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES), NET

 

 

 

 

 

 

 

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

 

(10,470

)

 

 

(65,141

)

 

 

(37,526

)

 

 

(8,717

)

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

 

35,621

 

 

 

53,268

 

 

 

63,489

 

 

 

(201,753

)

TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET

 

25,151

 

 

 

(11,873

)

 

 

25,963

 

 

 

(210,470

)

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Operating expenses

 

2,293

 

 

 

1,790

 

 

 

9,889

 

 

 

16,651

 

Stock compensation

 

494

 

 

 

574

 

 

 

1,689

 

 

 

5,753

 

Securitization costs

 

158

 

 

 

3

 

 

 

2,484

 

 

 

3,137

 

Management fee incurred with affiliate

 

1,382

 

 

 

1,969

 

 

 

5,842

 

 

 

7,799

 

Total operating expenses

 

4,327

 

 

 

4,336

 

 

 

19,904

 

 

 

33,340

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

29,064

 

 

 

(8,799

)

 

 

34,960

 

 

 

(191,290

)

Income tax expense (benefit)

 

465

 

 

 

—

 

 

 

1,246

 

 

 

(3,457

)

NET INCOME (LOSS)

$

28,599

 

 

$

(8,799

)

 

$

33,714

 

 

$

(187,833

)

Preferred dividends

 

—

 

 

 

(2

)

 

 

—

 

 

 

(14

)

NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS

$

28,599

 

 

$

(8,801

)

 

$

33,714

 

 

$

(187,847

)

Other comprehensive income (loss)

 

3,197

 

 

 

(12,148

)

 

 

16,152

 

 

 

(24,127

)

TOTAL COMPREHENSIVE INCOME (LOSS)

$

31,796

 

 

$

(20,949

)

 

$

49,866

 

 

$

(211,974

)

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

$

1.15

 

 

$

(0.36

)

 

$

1.36

 

 

$

(7.65

)

Diluted earnings (loss) per common share

$

1.15

 

 

$

(0.36

)

 

$

1.35

 

 

$

(7.65

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

 

24,768,921

 

 

 

24,586,340

 

 

 

24,722,285

 

 

 

24,547,916

 

Diluted

 

24,965,271

 

 

 

24,586,340

 

 

 

24,941,758

 

 

 

24,547,916

 

  

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

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

 

 

As of:

 

December 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Residential mortgage loans - at fair value

$

380,040

 

 

$

770,982

 

Residential mortgage loans in securitization trusts - at fair value

 

1,221,067

 

 

 

1,027,442

 

RMBS - at fair value

 

472,058

 

 

 

1,055,338

 

U.S. Treasury securities - at fair value

 

149,927

 

 

 

—

 

Cash and cash equivalents

 

41,625

 

 

 

29,272

 

Restricted cash

 

2,871

 

 

 

10,589

 

Principal and interest receivable

 

7,501

 

 

 

17,497

 

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

 

—

 

 

 

14,756

 

Other assets

 

32,922

 

 

 

20,336

 

Total assets

$

2,308,011

 

 

$

2,946,212

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

LIABILITIES

 

 

 

Notes payable

$

290,610

 

 

$

639,870

 

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

 

1,169,154

 

 

 

1,003,485

 

Securities sold under agreements to repurchase

 

193,656

 

 

 

52,544

 

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

 

1,334

 

 

 

—

 

Due to broker

 

391,964

 

 

 

1,006,022

 

Accrued expenses

 

985

 

 

 

1,288

 

Accrued expenses payable to affiliate

 

748

 

 

 

2,006

 

Interest payable

 

820

 

 

 

2,551

 

Income taxes payable

 

1,241

 

 

 

—

 

Management fee payable to affiliate

 

1,393

 

 

 

1,967

 

Total liabilities

$

2,051,905

 

 

$

2,709,733

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, $0.01 par value. As of December 31, 2023: 350,000,000 shares authorized, 24,965,274 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

 

477,068

 

 

 

475,379

 

Accumulated other comprehensive income (loss)

 

(4,975

)

 

 

(21,127

)

Retained (deficit) earnings

 

(216,236

)

 

 

(218,022

)

Total stockholders’ equity

$

256,106

 

 

$

236,479

 

Total liabilities and stockholders’ equity

$

2,308,011

 

 

$

2,946,212

 

 

Angel Oak Mortgage REIT, Inc.

Reconciliation of Net Income (Loss) to Distributable Earnings

and Distributable Earnings Return on Average Equity

(Unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2023

 

(in thousands)

Net income (loss) allocable to common stockholders

$

28,599

 

 

$

(8,801

)

 

$

33,714

 

 

$

(187,847

)

Adjustments:

 

 

 

 

 

 

 

Net unrealized (gains) losses on trading securities

 

(7,618

)

 

 

—

 

 

 

(484

)

 

 

—

 

Net unrealized (gains) losses on derivatives

 

9,191

 

 

 

(11,484

)

 

 

16,985

 

 

 

(13,054

)

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

 

(21,674

)

 

 

(11,896

)

 

 

(15,890

)

 

 

67,401

 

Net unrealized (gains) losses on residential loans

 

(15,511

)

 

 

(29,973

)

 

 

(64,009

)

 

 

146,347

 

Net unrealized (gains) losses on commercial loans

 

(8

)

 

 

85

 

 

 

(91

)

 

 

844

 

Non-cash equity compensation expense

 

494

 

 

 

573

 

 

 

1,689

 

 

 

5,753

 

Distributable Earnings

$

(6,527

)

 

$

(61,496

)

 

$

(28,086

)

 

$

19,444

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31, 2023

 

December 31, 2022

 

December 31, 2023

 

December 31, 2022

 

($ in thousands)

Annualized Distributable Earnings

$

(26,108)

 

$

(245,984)

 

$

(28,086)

 

$

19,444

Average total stockholders’ equity

$

243,794

 

$

249,954

 

$

240,524

 

$

355,944

Distributable Earnings Return on Average Equity

 

(10.71%)

 

 

(98.41%)

 

 

(11.68)%

 

 

5.46%

 

Angel Oak Mortgage REIT, Inc.

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

and Economic Book Value per Common Share

(Unaudited)

 

 

 

December 31, 2023

 

September 30, 2023

 

June 30, 2023

 

March 31, 2023

 

December 31, 2022

 

 

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

GAAP total stockholders’ equity

 

$

256,106

 

$

231,802

 

$

232,676

 

$

244,378

 

$

236,479

Adjustments:

 

 

 

 

 

 

 

 

 

 

Fair value adjustment for securitized debt held at amortized cost

 

 

81,942

 

 

97,592

 

 

95,326

 

 

89,284

 

 

90,348

Stockholders’ equity including economic book value adjustments

 

$

338,048

 

$

329,394

 

$

328,002

 

$

333,662

 

$

326,827

 

 

 

 

 

 

 

 

 

 

 

Number of shares of common stock outstanding at period end

 

 

24,965,274

 

 

24,955,566

 

 

24,924,886

 

 

24,925,357

 

 

24,925,357

Book value per share of common stock

 

$

10.26

 

$

9.29

 

$

9.34

 

$

9.80

 

$

9.49

Economic book value per share of common stock

 

$

13.54

 

$

13.20

 

$

13.16

 

$

13.39

 

$

13.11

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240305782780/en/

Investors: investorrelations@angeloakreit.com 855-502-3920 IR Agency Contact: Nick Teves or Joseph Caminiti, Alpha IR Group 312-445-2870 AOMR@alpha-ir.com Company Contact: KC Kelleher, Head of Corporate Finance & Investor Relations 404-528-2684 kc.kelleher@angeloakcapital.com