NEW YORK--(BUSINESS WIRE)-- #creditratingagency--KBRA assigns preliminary ratings to eight classes of mortgage-backed certificates from Angel Oak Mortgage Trust 2025-13 (AOMT 2025-13), a $333.4 million non-prime RMBS transaction. The underlying collateral, comprised of 659 residential mortgages, is characterized by a significant concentration of loans underwritten using alternative income documentation. All the loans are either classified as non-qualified mortgages (Non-QM) (53.5%) or exempt (46.5%) from th ...

Core Viewpoint - Angel Oak Mortgage REIT, Inc. (NYSE:AOMR) is recognized as one of the promising dividend stocks to consider for investment [1] Group 1: Analyst Ratings and Price Target - UBS analyst Doug Harter has reduced the price target for Angel Oak Mortgage REIT from $10 to $9.75 while maintaining a Neutral rating [2] Group 2: Financial Performance - In Q3 2025, Angel Oak Mortgage REIT reported a 13% increase in net interest income compared to the previous year and a 2% sequential improvement [4] - Operating expenses decreased by 13% from Q3 2024 and were 5% lower than the previous quarter, highlighting effective cost management [4] Group 3: Business Strategy and Developments - The company noted a favorable business environment in Q3 2025, allowing for active portfolio growth and the retirement of two legacy securitizations, with capital redirected into higher-yielding investments [3] - A new credit facility was established post-quarter at favorable rates, which broadened the lender base and reduced interest costs [3] Group 4: Company Overview - Angel Oak Mortgage REIT focuses on acquiring and investing in first-lien non-QM loans and other mortgage-related assets within the US market [5]

Core Viewpoint - KBRA has assigned preliminary ratings to eight classes of mortgage-backed certificates from Angel Oak Mortgage Trust 2025-12, which is a $322.0 million non-prime RMBS transaction [1] Summary by Relevant Categories Transaction Overview - The transaction involves a total of $322.0 million in mortgage-backed certificates [1] - It consists of 609 residential mortgages as the underlying collateral [1] Loan Characteristics - A significant concentration of the loans is underwritten using alternative income documentation [1] - 66.1% of the loans are classified as non-qualified mortgages (Non-QM) [1] - 33.9% of the loans are exempt from the Ability-to-Repay rule [1]

Financial Performance - In Q3 2025, net interest income increased by 12.9% compared to Q3 2024, driven by a $9.2 million rise in interest income and an $8.1 million increase in interest expense, resulting in a net growth of $1.2 million[149]. - Distributable Earnings for the three months ended September 30, 2025, were a gain of $0.5 million, compared to a loss of $3.4 million for the same period in 2024[159]. - Total comprehensive income for the three months ended September 30, 2025, was $15.1 million, compared to $33.9 million for the same period in 2024[166]. - Total comprehensive income for the nine months ended September 30, 2025, was $35.2 million, compared to $48.3 million in 2024[175]. - Cash flows used in operating activities were $354.5 million for the nine months ended September 30, 2025, compared to $196.4 million for the same period in 2024, primarily due to increased residential mortgage loan purchases[283]. Interest Income and Expense - Interest income for the three months ended September 30, 2025, was $36.7 million, an increase from $27.4 million in the same period of 2024[166]. - Total interest income for the nine months ended September 30, 2025, was $104.6 million, up from $78.6 million in 2024, while total interest expense increased to $74.4 million from $51.5 million[177]. - Total interest expense for the three months ended September 30, 2025, was $2.4 million, compared to $993,399 for the same period in 2024[274]. Asset Valuation and Portfolio - The 30-year fixed residential conforming mortgage rates decreased by 47 basis points to 6.30% by the end of Q3 2025, positively impacting the valuation of the company's portfolio[148]. - The weighted average price of the residential whole loans portfolio increased by approximately 63 basis points in Q3 2025 compared to Q2 2025, indicating a positive trend in asset pricing[148]. - The fair value of residential mortgage loans in securitization trusts was $1.862 billion as of September 30, 2025, with an unpaid principal balance of $1.893 billion and a weighted average loan coupon of 5.78%[203]. - As of September 30, 2025, the total portfolio consisted of approximately $2.5 billion in residential mortgage loans, RMBS, and other target assets, with a significant portion located in disaster-prone states[186]. Equity and Book Value - Total stockholders' equity increased to $264.2 million as of September 30, 2025, up from $239.0 million as of December 31, 2024[163]. - Book value per share of common stock rose to $10.60 as of September 30, 2025, compared to $10.17 as of December 31, 2024[163]. - Economic book value per share of common stock decreased to $12.72 as of September 30, 2025, from $13.10 as of December 31, 2024[165]. Financing and Borrowing - The company entered into a $200.0 million repurchase facility with Global Investment Bank 4 on October 6, 2025[155]. - The company maintained a total borrowing capacity of $1.1 billion as of September 30, 2025[155]. - The total unused borrowing capacity as of September 30, 2025, was $707.4 million, with specific lines having available financing of $347.9 million, $249.9 million, and $109.6 million respectively[254]. - The company utilized loan financing lines to acquire mortgage loans pending securitization, locking in funding costs through fixed-rate term securitization[226]. Securitization Activities - The company issued AOMT 2025-10, a securitization backed by residential mortgage loans with an unpaid principal balance of approximately $274.3 million, using proceeds to repay $237.4 million in outstanding debt[259]. - In the securitization transaction AOMT 2025-6, the company retained approximately $8.1 million, including a premium of $2.7 million, and repaid $73.1 million in outstanding debt[260]. - The company incurred securitization costs of $1.9 million for the nine months ended September 30, 2025, compared to $1.6 million in the same period of 2024[184]. Delinquency and Credit Quality - The percentage of loans 90+ days delinquent based on unpaid principal balance was 1.7% for residential mortgage loans held in securitization trusts as of September 30, 2025[203]. - The 90+ day delinquency rate as a percentage of UPB dropped to 0.2% in 2025, down from 2.3% in 2024[211]. - The weighted average credit score at loan origination for residential mortgage loans was 757 as of September 30, 2025[189]. Management and Operating Expenses - Operating expenses for the quarter ended September 30, 2025, decreased to $1.1 million from $1.5 million in 2024, attributed to lower acquisition costs of whole loans[171]. - Operating expenses for the nine months ended September 30, 2025, decreased to $3.7 million from $5.3 million in 2024, reflecting a reduction of approximately 30% due to cost-saving measures[181]. - Management fees incurred with affiliates remained stable at $1.2 million for both the quarter ended September 30, 2025, and 2024[174]. Future Outlook - The company expects to continue purchasing newly originated loans and HELOCs to support overall portfolio valuations and securitization execution going forward[148]. - The company anticipates two more interest rate cuts in 2025, although the recent government shutdown has introduced uncertainty regarding future rate paths[146].

Financial Performance - Q3 2025 GAAP net income was $11.4 million, or $0.46 per diluted share, showing a significant recovery from previous quarters[5]. - Net income allocable to common stockholders for the three months ended September 30, 2025, was $11,410, compared to $31,204 for the same period in 2024, indicating a decline of 63.5%[22]. - Distributable Earnings for Q3 2025 were $0.5 million, or $0.02 per diluted share[5]. - Distributable earnings for the nine months ended September 30, 2025, were $7,310, compared to a loss of $2,844 for the same period in 2024[22]. - Annualized distributable earnings for the three months ended September 30, 2025, were $2,116, compared to a loss of $13,460 for the same period in 2024[22]. Assets and Liabilities - Total assets were valued at $2.5 billion as of September 30, 2025[12]. - Total assets increased to $2,638,110, up from $2,269,769 as of December 31, 2024, representing a growth of approximately 16.2%[20]. - Total liabilities rose to $2,373,945, an increase from $2,030,802 as of December 31, 2024, reflecting a growth of approximately 16.9%[20]. - Cash and cash equivalents increased to $51,598 from $40,762 as of December 31, 2024, representing a growth of 26.5%[20]. Equity and Book Value - The GAAP book value per share was $10.60, reflecting a 2.2% increase from the previous quarter[5]. - Book value per share of common stock was $10.60 as of September 30, 2025, compared to $10.17 as of December 31, 2024, showing an increase of 4.23%[25]. - Economic book value per share of common stock decreased to $12.72 as of September 30, 2025, from $14.02 as of September 30, 2024, a decline of 9.2%[25]. - Retained earnings improved to a deficit of $209,242 as of September 30, 2025, compared to a deficit of $218,849 as of December 31, 2024, indicating a reduction in the deficit of approximately 4.4%[20]. Interest and Loans - Net interest income for Q3 2025 reached $10.2 million, an increase of 12.9% compared to Q3 2024 and a 2.4% increase from Q2 2025[5]. - As of September 30, 2025, the weighted average interest rate of the residential whole loans portfolio was 7.98%[7]. - The company purchased $237.6 million of newly-originated non-QM residential mortgage loans during Q3 2025, with a weighted average coupon of 7.74%[6]. Securitization and Debt - The company executed the AOMT 2025-10 securitization post-quarter, with an approximate $274.3 million scheduled unpaid principal balance[6]. - As of September 30, 2025, the company had a recourse debt to equity ratio of approximately 1.9x[12]. Dividends and Stock - The company declared a dividend of $0.32 per share, payable on November 26, 2025, to stockholders of record as of November 18, 2025[5][9]. - Common stock outstanding increased to 24,914,035 shares as of September 30, 2025, from 23,500,175 shares as of December 31, 2024[20].

Core Viewpoint - Angel Oak Mortgage (AOMR) is anticipated to report a year-over-year increase in earnings driven by higher revenues, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for November 6, and if the reported figures exceed expectations, the stock may experience an upward movement; conversely, a miss could lead to a decline [2]. - The consensus estimate for quarterly earnings is projected at $0.28 per share, reflecting a year-over-year increase of 300%, while revenues are expected to reach $37.25 million, marking a 35.8% increase from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 2.84%, indicating a reassessment by analysts regarding the company's earnings outlook [4]. - The Most Accurate Estimate for Angel Oak is higher than the Zacks Consensus Estimate, resulting in a positive Earnings ESP of +7.14%, suggesting a bullish sentiment among analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [10]. - Angel Oak currently holds a Zacks Rank of 3, which, in conjunction with the positive Earnings ESP, suggests a likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Angel Oak was expected to post earnings of $0.27 per share but only achieved $0.11, resulting in a surprise of -59.26% [13]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [14]. Conclusion - While the potential for an earnings beat exists, other factors may also influence stock performance, making it essential for investors to consider the broader context beyond just earnings results [15][17].

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Core Insights - KBRA has assigned preliminary ratings to eight classes of mortgage-backed certificates from Angel Oak Mortgage Trust 2025-11, which is a $334.6 million non-prime RMBS transaction [1] - The underlying collateral consists of 723 fixed-rate residential mortgages, with a significant concentration of loans underwritten using alternative income documentation [1] - The loans are classified as either non-qualified mortgages (Non-QM) at 56.1% or exempt at 43.9% [1]

Core Insights - KBRA has assigned preliminary ratings to eight classes of mortgage-backed certificates from Angel Oak Mortgage Trust 2025-10, which is a $281.2 million non-prime RMBS transaction [1] - The underlying collateral consists of 608 residential mortgages, with a significant concentration of loans underwritten using alternative income documentation [1] - A notable 54.1% of the loans are classified as exempt from the Ability-to-Repay/Qualified Mortgage rule [1]