[First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) [First Quarter 2025 Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Angel Oak Mortgage REIT (AOMR) reported strong Q1 2025 results, highlighted by a GAAP net income of $20.5 million ($0.87 per diluted share) and a 17.6% year-over-year increase in net interest income to $10.1 million. The company saw growth in both GAAP book value to $10.70 per share and economic book value to $13.41 per share, driven by the acquisition of nearly $260 million in high-quality non-QM loans and sustained operational efficiency Q1 2025 Key Financial Metrics | Metric | Q1 2025 Value | Change vs. Q4 2024 | Change vs. Q1 2024 | | :--- | :--- | :--- | :--- | | GAAP Net Income | $20.5 million | - | - | | Diluted EPS | $0.87 | - | - | | Net Interest Income | $10.1 million | +2.3% | +17.6% | | GAAP Book Value/Share | $10.70 | +5.2% | - | | Economic Book Value/Share | $13.41 | +2.4% | - | | Distributable Earnings | $4.1 million ($0.17/share) | - | - | | Declared Dividend/Share | $0.32 | - | - | - The CEO attributed earnings growth to the acquisition of nearly **$260 million** in high-quality non-QM loans and maintained operating expense savings. The company plans to continue expanding earnings through further loan purchases, funded by a post-quarter end securitization[3](index=3&type=chunk) [Operational and Financial Details](index=1&type=section&id=Operational%20and%20Financial%20Details) During Q1 2025, the company purchased $259.0 million in non-QM loans, increasing the portfolio's weighted average coupon. Post-quarter, AOMR executed a $284.3 million securitization, which significantly reduced its recourse debt to equity ratio from 2.3x to approximately 1.3x and freed up $24.7 million in cash. As of quarter-end, the company had $690 million in available borrowing capacity for new loan acquisitions [Portfolio and Investment Activity](index=1&type=section&id=Portfolio%20and%20Investment%20Activity) The company acquired **$259.0 million** in non-QM loans in Q1 2025, increasing the portfolio's weighted average coupon to **7.55%** - In Q1 2025, the company purchased **$259.0 million** of newly-originated non-QM residential mortgage loans[7](index=7&type=chunk) Q1 2025 Loan Purchase Characteristics | Metric | Value | | :--- | :--- | | Weighted Average Coupon | 7.67% | | Weighted Average LTV | 70.0% | | Weighted Average Credit Score | 751 | - The weighted average coupon of the residential whole loan portfolio increased by **44 basis points** year-over-year to **7.55%** as of March 31, 2025[7](index=7&type=chunk) [Capital Markets Activity](index=1&type=section&id=Capital%20Markets%20Activity) Post-quarter, AOMR completed a **$284.3 million** securitization, reducing recourse debt and freeing up cash for new loan acquisitions - In April 2025, after the quarter ended, the company executed the AOMT 2025-4 securitization, contributing loans with an unpaid principal balance of approximately **$284.3 million**[7](index=7&type=chunk) - This securitization reduced the company's debt by approximately **$242.4 million** and released **$24.7 million** in cash for new loan purchases and other operational purposes[7](index=7&type=chunk) - As of March 31, 2025, the company had three loan financing lines with an aggregate capacity of up to **$1.1 billion**, of which approximately **$690 million** was available for new loan purchases[8](index=8&type=chunk) [Balance Sheet](index=2&type=section&id=Balance%20Sheet) Target assets reached **$2.5 billion** as of March 31, 2025, with the recourse debt to equity ratio significantly reduced post-securitization - Target assets totaled **$2.5 billion** as of March 31, 2025[13](index=13&type=chunk) - The company's recourse debt to equity ratio was approximately **2.3x** at quarter-end. Subsequent to quarter-end, this ratio was reduced to approximately **1.3x** following the AOMT 2025-4 securitization[13](index=13&type=chunk) [Dividend](index=2&type=section&id=Dividend) The company declared a **$0.32 per share** common stock dividend payable on May 30, 2025 - On May 5, 2025, the company declared a dividend of **$0.32 per share** of common stock, payable on May 30, 2025, to stockholders of record as of May 22, 2025[9](index=9&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For the three months ended March 31, 2025, the company reported a net income of $20.5 million, a significant increase from $12.9 million in the same period of 2024. This improvement was primarily driven by a 17.6% rise in net interest income to $10.1 million and a substantial reduction in total operating expenses from $4.7 million to $3.0 million year-over-year Q1 2025 vs Q1 2024 Statement of Operations (in thousands) | Line Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **NET INTEREST INCOME** | **$10,087** | **$8,579** | | TOTAL REALIZED AND UNREALIZED GAINS, NET | $13,443 | $9,262 | | Total operating expenses | $2,999 | $4,680 | | **INCOME BEFORE INCOME TAXES** | **$20,531** | **$13,161** | | **NET INCOME ALLOCABLE TO COMMON STOCKHOLDERS** | **$20,531** | **$12,874** | | Diluted earnings per common share | $0.87 | $0.51 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $2.68 billion from $2.27 billion at the end of 2024, largely due to a significant rise in residential mortgage loans held at fair value. Total liabilities also grew to $2.43 billion from $2.03 billion, while total stockholders' equity increased to $251.5 million from $239.0 million over the same period Balance Sheet Highlights (in thousands) | Line Item | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Residential mortgage loans - at fair value | $439,460 | $183,064 | | Cash and cash equivalents | $38,696 | $40,762 | | **Total assets** | **$2,676,535** | **$2,269,769** | | Notes payable | $360,470 | $129,459 | | Non-recourse securitization obligation | $1,556,075 | $1,593,612 | | **Total liabilities** | **$2,425,055** | **$2,030,802** | | **Total stockholders' equity** | **$251,480** | **$238,967** | [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) [Definitions of Non-GAAP Metrics](index=2&type=section&id=Definitions%20of%20Non-GAAP%20Metrics) The company provides three non-GAAP metrics to supplement its GAAP results. 'Distributable Earnings' adjusts net income for non-cash items like unrealized gains/losses to show a measure of financial performance comparable to REIT peers. 'Distributable Earnings Return on Average Equity' measures the return generated by invested equity capital. 'Economic Book Value' adjusts stockholders' equity to reflect the fair value of all assets and liabilities, offering a supplemental view of the company's financial position - Distributable Earnings is a non-GAAP measure that excludes items such as unrealized gains and losses, impairment losses, and non-cash equity compensation from GAAP net income[12](index=12&type=chunk) - Economic Book Value is a non-GAAP measure that adjusts GAAP stockholders' equity by marking the company's non-recourse financing obligations to fair value, providing a supplemental measure of financial position[16](index=16&type=chunk) [Reconciliation of Net Income to Distributable Earnings](index=6&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Distributable%20Earnings) For Q1 2025, GAAP Net Income of $20.5 million was reconciled to Distributable Earnings of $4.1 million, primarily by excluding $16.6 million in net unrealized gains. This resulted in a Distributable Earnings Return on Average Equity of 6.6%, a notable increase from 4.3% in Q1 2024, when Distributable Earnings were $2.8 million Reconciliation to Distributable Earnings (in thousands) | Line Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) allocable to common stockholders | $20,531 | $12,874 | | Net unrealized (gains) losses (Total Adjustments) | $(16,624) | $(10,614) | | Stock compensation | $237 | $630 | | **Distributable Earnings** | **$4,144** | **$2,820** | | **Distributable Earnings Return on Average Equity** | **6.6%** | **4.3%** | [Reconciliation of Stockholders' Equity to Economic Book Value](index=7&type=section&id=Reconciliation%20of%20Stockholders'%20Equity%20to%20Economic%20Book%20Value) As of March 31, 2025, the company's GAAP book value per share was $10.70. After a positive fair value adjustment of $63.6 million for securitized debt, the Economic Book Value per share was calculated at $13.41. This represents a sequential increase from $13.10 at the end of Q4 2024 Book Value Reconciliation (per share) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Book value per share of common stock (GAAP) | $10.70 | $10.17 | | Economic book value per share of common stock (Non-GAAP) | $13.41 | $13.10 | [Other Information](index=2&type=section&id=Other%20Information) [Conference Call and Webcast Information](index=2&type=section&id=Conference%20Call%20and%20Webcast%20Information) The company scheduled a live conference call and webcast for May 5, 2025, at 8:30 a.m. Eastern time to discuss its Q1 2025 financial results. Access details for both the live event and a playback option available through May 19, 2025, were provided - A conference call and webcast to discuss results was held on May 5, 2025, at **8:30 a.m. Eastern time**[10](index=10&type=chunk) - Playback of the conference call is available through **May 19, 2025**, using passcode **10198623**[11](index=11&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section serves as a legal disclaimer, cautioning that the press release contains forward-looking statements based on current assumptions and expectations. It warns that actual results could differ materially from these statements due to various risks and uncertainties and advises against placing undue reliance on them - The press release contains forward-looking statements subject to risks and uncertainties, and actual results could differ materially. The company does not undertake any obligation to update these statements[17](index=17&type=chunk) [About Angel Oak Mortgage REIT, Inc.](index=3&type=section&id=About%20Angel%20Oak%20Mortgage%20REIT,%20Inc.) Angel Oak Mortgage REIT, Inc. is a real estate finance company that invests in first lien non-QM loans and other U.S. mortgage-related assets. Its objective is to deliver attractive risk-adjusted returns to stockholders. The company is externally managed by an affiliate of Angel Oak Capital Advisors, LLC, a prominent alternative credit manager - The company 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[18](index=18&type=chunk)

Core Insights - Albert Anthony is a Croatian-American media personality active on investor platforms, focusing on markets and stocks, with a growing follower base of over 1,000 since 2023 [1] - He is set to launch a new book titled "Financial Markets: Growing A Dividend Income Portfolio" in 2025, coinciding with an ongoing article series on the same topic [1] - Albert Anthony has a background in management and information systems, having worked in a top-10 financial firm's IT department [1] Company Overview - Albert Anthony & Co. is a sole proprietorship registered in Austin, Texas, focusing on general market commentary based on publicly available data [1] - The company does not provide personalized financial advice or sell financial products, and it is not a registered financial advisor [1] Investment Focus - Albert Anthony has launched the Future Investor Fund, which aims to build a dividend portfolio [1] - The company emphasizes the importance of due diligence for investors, indicating that all investments carry risk [1]

Asset Management and Investment Strategy - As of December 31, 2024, the company's portfolio of target assets was approximately $2.2 billion, predominantly consisting of residential mortgage loans, securitization trusts, and RMBS[67]. - The investment strategy focuses on credit-sensitive investments in newly-originated first lien non-QM loans, primarily sourced from Angel Oak Mortgage Lending[61]. - The company aims to generate attractive risk-adjusted returns through cash distributions and capital appreciation across interest rate and credit cycles[61]. - The investment guidelines allow for flexibility in strategy and target assets, adapting to changing market conditions[65]. - The company is focusing on acquiring and investing in first lien non-QM loans in the U.S. mortgage market, with a significant concentration in California, Florida, Texas, and Georgia, where more than 5% of the unpaid principal balance of loans is secured by properties in these states[109]. - As of December 31, 2024, substantially all loans in the company's portfolio of RMBS and residential loans held in securitization trusts consisted of non-QM loans, indicating a concentrated investment strategy[109]. Financing and Debt - The company utilizes various financing lines and expects to secure long-term securitization funding for substantially all of its non-QM loans[69]. - The company has significant debt with no limitations on the amount it may incur, increasing the risk of loss[80]. - The company’s access to financing may be limited, potentially affecting its operations and financial health[80]. - As of December 31, 2024, the company had approximately $230.1 million of debt outstanding, including $129.5 million under uncommitted loan financing lines with a borrowing capacity of up to $1.1 billion[221]. - The company’s substantial indebtedness could limit its ability to obtain additional financing on acceptable terms, affecting its liquidity and operational flexibility[222]. - Current market conditions may hinder the company's access to debt capital markets, affecting its ability to refinance short-term borrowings[225]. Management and Operational Risks - The company is externally managed by Falcons I, LLC, which provides access to proprietary non-QM loans and underwriting transparency[59]. - The company has no employees; all executive officers are provided through its Manager or affiliates[74]. - The company is highly dependent on its Manager and key personnel from Angel Oak, with no assurance of suitable replacements if the Management Agreement is terminated[79]. - The management fee structure may not align incentives properly, potentially leading to riskier investments that do not optimize returns for stockholders[90]. - The effectiveness of third-party servicers is critical; failures in servicing could lead to higher default rates and negatively impact investment values[185]. Market and Economic Risks - The company is subject to competition from various institutional investors, which may affect its ability to generate satisfactory returns[72]. - The company may face challenges in sourcing non-QM loans due to competition and economic factors, which could limit investment opportunities[100]. - The company anticipates that rising interest rates could adversely affect asset values, increase interest expenses, and lead to a decrease in the volume of target assets available for acquisition[120]. - Changes in fair values of assets and liabilities can significantly impact the company's earnings and book value, with volatility driven by interest rates and market conditions[122][123]. - Natural disasters and climate change pose risks to the value of real estate investments, potentially leading to increased foreclosures and credit losses[111]. Regulatory and Compliance Risks - The company has elected to be taxed as a REIT since December 31, 2019, and intends to maintain compliance with REIT requirements[58]. - The company is subject to U.S. Risk Retention Rules, requiring it to retain a 5% interest in securitizations, which may contribute to asset illiquidity[175]. - The company intends to maintain its exclusion from regulation as an investment company under the Investment Company Act, which imposes significant limitations on its operations and investment strategies[214]. - The company may incur significant costs to comply with new or existing regulatory requirements, which could materially affect its operations[211]. - Legislative actions aimed at preventing foreclosures may reduce the value of mortgage loans and affect the company's returns[186]. Investment Performance and Risks - Non-QM loans may experience higher rates of delinquencies and defaults due to less stringent underwriting guidelines, impacting the company's portfolio performance[102]. - The performance of RMBS investments is influenced by principal payment rates and the timing of those payments, which can be affected by various economic factors[133]. - Investments in distressed or non-performing residential and commercial mortgage loans could increase the company's risk of loss, especially if LTVs exceed 100%[164]. - The company may invest in CRT securities that transfer a portion of the risk associated with credit losses within pools of conventional residential mortgage loans to investors[151]. - The company may face litigation risks related to inaccuracies in disclosure documentation for securitization transactions, which could lead to financial liabilities[239]. Technology and Cybersecurity Risks - The company is highly dependent on information systems, and any failure or cyber-attack could significantly disrupt business operations, potentially leading to material adverse effects[206]. - Cybersecurity breaches pose a significant risk, potentially leading to reputational damage and material costs associated with data breaches[200]. - The financial services industry is experiencing rapid technological changes, and the company's future success will depend on its ability to effectively implement new technology-driven products and services[205]. General Economic Conditions - Future pandemics or public health crises could significantly impact the economy and the company's financial performance[180]. - Changes in the conservatorship of Fannie Mae and Freddie Mac could significantly impact the company's operations and the residential mortgage market[196]. - Fluctuations in benchmark interest rates by the U.S. Federal Reserve could adversely affect the value of the company's investments and overall financial performance[197].

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $15 million or $0.65 per common share for Q4 2024, while for the full year, GAAP net income was $28.8 million or $1.17 per diluted common share [17][19] - Distributable earnings for Q4 were $9.9 million or $0.42 per diluted common share, with full-year distributable earnings at $7 million [18][20] - Interest income for Q4 was $31.9 million, marking a 30% improvement compared to Q4 2023, and net interest income was $9.9 million, a 20% improvement [19][20] - GAAP book value per share decreased by 9.8% to $10.17 as of December 31, 2024, down from $11.28 as of September 30, 2024 [25] Business Line Data and Key Metrics Changes - The company completed five securitizations in 2024, exceeding the target of one per quarter, with a total of $855 million in scheduled unpaid principal balance [22][23] - The weighted average coupon of the residential whole loan portfolio increased by 61 basis points to 7.39% by year-end 2024 [21] Market Data and Key Metrics Changes - The total portfolio weighted average percentage of loans 90 days plus delinquent increased to 2.4% from 1.85% at the end of Q3 2024 [27] - The company noted that the securitization market remains active and receptive with tight spreads, indicating a favorable environment for capital recycling [12][23] Company Strategy and Development Direction - The company focuses on long-term earnings accretion, disciplined decision-making, and risk management to create shareholder value [7][8] - The capital deployment strategy is adaptive and flexible, aligning with evolving market dynamics to maximize returns [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term backdrop of the business, despite experiencing a decline in book value due to interest rate volatility [8][11] - The company expects interest income to continue growing through effective portfolio management and securitization execution [21] Other Important Information - The company declared a $0.32 per share common dividend, paid on February 28, 2025 [32] - The company has a small exposure to the California mortgage market, with minimal impact from recent wildfires [30][31] Q&A Session Summary Question: How insulated are the '21 to '23 vintages regarding prepayments? - Management indicated that significant declines in rates would be needed to trigger prepayments, estimating a drop of 150 to 200 basis points [37] Question: Can you discuss the outlook for net interest income (NII) in the next quarter? - Management confirmed a strong pipeline and expected continued growth in NII throughout 2025 [50][51] Question: What are the expectations for delinquencies moving forward? - Management anticipates a return to normalized levels of 2% to 3% for 90-day delinquencies, indicating a healthy credit environment [64] Question: What is the company's stance on repurchasing stock? - Management expressed a preference for building equity over stock buybacks, citing higher returns on incremental capital compared to the current dividend yield [59][60]

Group 1: Earnings Performance - Angel Oak Mortgage (AOMR) reported quarterly earnings of $0.42 per share, exceeding the Zacks Consensus Estimate of $0.25 per share, compared to a loss of $0.26 per share a year ago, representing an earnings surprise of 68% [1] - The company posted revenues of $31.87 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.22%, and showing an increase from year-ago revenues of $24.55 million [2] Group 2: Stock Performance and Outlook - Angel Oak shares have increased by approximately 3% since the beginning of the year, while the S&P 500 has declined by 0.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.30 on revenues of $30.95 million, and for the current fiscal year, it is $1.32 on revenues of $140.49 million [7] Group 3: Industry Context - The Financial - Mortgage & Related Services industry, to which Angel Oak belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Another company in the same industry, Finance of America Companies Inc. (FOA), is expected to report quarterly earnings of $0.45 per share, reflecting a year-over-year change of +150%, with revenues anticipated to be $79 million, down 71.4% from the previous year [9][10]

Financial Performance - Q4 2024 net interest income was $9.9 million, a 20% increase from Q4 2023's $8.2 million[4] - FY 2024 net interest income reached $36.9 million, reflecting a 28% increase compared to FY 2023's $28.9 million[4] - Q4 2024 GAAP net loss was $(15.1) million, or $(0.65) per diluted share[4] - FY 2024 GAAP net income was $28.8 million, or $1.17 per diluted share[4] - Net income allocable to common stockholders for the three months ended December 31, 2024, was a loss of $15,055,000 compared to a profit of $28,599,000 for the same period in 2023[24] - Distributable Earnings for the three months ended December 31, 2024, were $9,874,000, a significant recovery from a loss of $6,527,000 in the same period of 2023[24] - Annualized Distributable Earnings for the twelve months ended December 31, 2024, were $39,500,000, compared to a loss of $26,107,000 for the previous year[24] - Distributable Earnings Return on Average Equity improved to 15.7% for the three months ended December 31, 2024, compared to a negative 10.7% for the same period in 2023[24] Asset and Liability Management - Total assets decreased to $2,269,769,000 as of December 31, 2024, from $2,308,011,000 as of December 31, 2023, representing a decline of approximately 1.66%[22] - Total liabilities decreased to $2,030,802,000 as of December 31, 2024, from $2,051,905,000 as of December 31, 2023, a reduction of approximately 1.03%[22] - Common stock outstanding decreased from 24,965,274 shares as of December 31, 2023, to 23,500,175 shares as of December 31, 2024[26] - Book value per share of common stock decreased to $10.17 as of December 31, 2024, from $10.26 as of December 31, 2023[26] - Economic book value per share of common stock increased to $13.10 as of December 31, 2024, from $13.54 as of December 31, 2023[26] - Average total stockholders' equity for the twelve months ended December 31, 2024, was $255,860,000, compared to $240,524,000 for the previous year, reflecting an increase of approximately 6.4%[24] Securitization and Loan Activity - The Company participated in five securitization transactions in 2024, contributing a total of $855 million in scheduled unpaid principal balance of loans[5] - The Company purchased $683.7 million of newly-originated, market coupon non-QM residential mortgage loans in 2024[5] Debt Management - As of December 31, 2024, the Company's recourse debt to equity ratio was approximately 1.0x, expected to remain below 2.5x going forward[12] Dividend Declaration - The Company declared a dividend of $0.32 per share of common stock, paid on February 28, 2025[4] Loan Portfolio Metrics - As of December 31, 2024, the weighted average coupon of the residential whole loans portfolio was 7.39%, a 61 basis point increase from December 31, 2023[6]

Company Overview - Binary Tree Analytics (BTA) has a background in investment banking cash and derivatives trading, focusing on providing transparency and analytics for capital markets instruments and trades [1] - BTA specializes in Closed-End Funds (CEFs), Exchange-Traded Funds (ETFs), and Special Situations, aiming to deliver high annualized returns with a low volatility profile [1] - The company has over 20 years of investment experience, having obtained a Finance major from a top university [1]

Financial Data and Key Metrics Changes - GAAP net income for Q3 2024 was $31.2 million, or $1.29 per diluted common share, while distributed earnings resulted in a loss of $3.4 million, or $0.14 per common share due to unrealized gains exclusion and realized losses on hedges [20][21] - Interest income increased to $27.4 million, a 6% increase from the prior quarter and a 15% increase compared to Q3 2023, driven by rapid capital deployment [21] - Net interest income was $9 million, showing a slight decrease from the prior quarter but a 22% improvement over Q3 2023 [23][29] - GAAP book value increased by 10.3% and economic book value increased by 6.5% compared to Q2 2024, reflecting significant valuation gains across the portfolio [29][30] Business Line Data and Key Metrics Changes - The company purchased $264.8 million of loans in Q3 2024, with a weighted average coupon of approximately 7.74% and a weighted average loan-to-value (LTV) of 70.0% [25] - The residential whole loan portfolio had a weighted average coupon of 7.73%, nearly a 200 basis point increase from Q3 2023 [25] - As of the end of Q3, the unsecuritized loan balance was just over $200 million, expected to grow for future securitization [26] Market Data and Key Metrics Changes - The company noted a constructive macroeconomic cycle for the mortgage REIT sector, with historical trends indicating potential for significant growth and heightened capital markets activity [14] - Delinquencies remained low, with the total portfolio weighted average percentage of loans 90 days delinquent at 1.95%, stable over the past six quarters [35] Company Strategy and Development Direction - The company is focused on a disciplined operational strategy aimed at delivering consistent and attractive investor returns, prioritizing sustainable earnings generation [10][13] - There is a commitment to high-quality loan acquisitions and disciplined capital management, with plans for future securitizations to enhance the balance sheet [34][41] - The management believes in capitalizing on new opportunities in the non-QM space, which is gaining positive momentum [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, anticipating meaningful net interest income growth due to recent Fed rate cuts and successful capital deployment [12][41] - The company expects to maintain its dividend level, supported by ongoing investments and anticipated net interest margin expansion [44][68] Other Important Information - The company declared a $0.32 per share common dividend, payable on November 27, 2024 [40] - The recent securitization (AOMT 2024-10) contributed to a reduction in funding costs by over 110 basis points, enhancing capital efficiency [32][80] Q&A Session Summary Question: Expectations for new investment volume in the next few quarters - Management expects mid $200 million in origination and purchases for the next few quarters [43] Question: Clarification on book value comments - Approximately half of the book value increase has been given back as of today [44] Question: Pace of securitizations - The company targets one securitization per quarter, expecting two in Q4 2024 [46] Question: Execution of recent securitization - The October securitization was executed well, with a significant portion of the capital structure sold and retained positions [48][49] Question: Opportunity for stock buybacks - Currently, stock buybacks are not on the table, but management monitors the situation closely [56][58] Question: Loan delinquencies and modification activity - Modification activity is low due to home price appreciation, with delinquencies remaining stable [59] Question: Recycling legacy securitizations - Management discussed the potential to recycle legacy securitizations into new production to enhance returns [66][68] Question: Securitization economics and competition - The current securitization economics are favorable, with a focus on consistency and service over price competition [71][73]

Financial Performance - Angel Oak Mortgage REIT, Inc. reported a net interest margin (NIM) increase in Q3 2024 compared to Q3 2023, driven by higher interest income from target assets [134]. - Distributable Earnings for the three months ended September 30, 2024, was a loss of $3.4 million, compared to a loss of $8.6 million for the same period in 2023 [148]. - Net income allocable to common stockholders for the three months ended September 30, 2024, was $31.2 million, up from $8.3 million in 2023 [156]. - Interest income for the three months ended September 30, 2024, was $27.4 million, compared to $23.9 million in 2023 [156]. - Net interest income for the three months ended September 30, 2024, was $9.0 million, an increase from $7.4 million in 2023 [156]. - Total comprehensive income for the three months ended September 30, 2024, was $33.9 million, compared to $6.7 million in 2023 [156]. - Total realized and unrealized gains for the three months ended September 30, 2024, were $28.8 million, compared to $5.3 million in the same period of 2023, with gains on securitization being a significant contributor [159]. Asset Management - The company purchased $264.8 million of newly-originated non-QM residential mortgage loans in Q3 2024, with a weighted average coupon of 7.74%, a weighted average loan-to-value ratio (LTV) of 70.0%, and a weighted average credit score of 754 [137]. - The company executed the AOMT 2024-10 securitization in October 2024, contributing approximately $316.8 million in scheduled unpaid principal balance of residential mortgage loans [141]. - The weighted average price of the residential whole loans portfolio increased by approximately 261 basis points since the end of Q2 2024 [132]. - As of September 30, 2024, the portfolio consisted of approximately $2.2 billion in residential mortgage loans, RMBS, and other target assets [177]. - The total whole loan portfolio fair value was $1.88 billion as of September 30, 2024, with allocated capital of $195.0 million, representing 73.6% of total capital [178]. - The weighted average interest rate of residential mortgage loans in the portfolio was 7.73% as of September 30, 2024, with a range from 3.63% to 11.88% [182]. Financing and Liquidity - Total borrowing capacity was $1.1 billion as of September 30, 2024 [142]. - The company has identified various sources of financing, including securitizations and public or private offerings, to meet both short-term and long-term liquidity needs [219]. - The company’s minimum liquidity requirement was $10 million as of September 30, 2024 [221]. - Total unused borrowing capacity as of September 30, 2024, is $1,050 million, with $716.958 million available for financing [246]. - The company has short-term repurchase agreements totaling $102.876 million as of September 30, 2024, with a weighted average interest rate of 5.65% and a remaining maturity of 11 days [248]. - The total drawn amount across all financing facilities as of September 30, 2024, was $333.04 million, compared to $290.61 million as of December 31, 2023 [243]. Operational Efficiency - Operating expenses for the three months ended September 30, 2024, decreased to $1.3 million from $1.4 million in the same period of 2023 due to cost-saving measures [160]. - Management fees incurred with affiliates decreased to $1.2 million for the three months ended September 30, 2024, from $1.4 million in the same period of 2023, attributed to a reduction in average equity [165]. - Operating expenses for the nine months ended September 30, 2024, totaled $13.98 million, a decrease from $15.58 million in the same period of 2023, indicating effective cost management [166]. - Stock compensation expense rose to $0.6 million for the three months ended September 30, 2024, compared to $0.4 million in the same period of 2023, reflecting an increase in performance-based awards [163]. Market Conditions - Following the Federal Reserve's rate cut of 50 basis points in September 2024, the average 30-year fixed mortgage rate decreased by 78 basis points to 6.08% [132]. - As of the end of September 2024, inflation was reported at 2.4%, down from 2.9% at the end of June 2024, but still above the Fed's target [131]. Securitization Activities - The company participated in multiple securitizations throughout 2024, including AOMT 2024-3, AOMT 2024-4, and AOMT 2024-6, contributing significant amounts to each [138][139][140]. - The company expects to continue participating in securitization transactions to manage its mortgage-related assets effectively [218]. - The company participated in a securitization transaction in June 2024, issuing approximately $479.6 million in bonds and repaying $15.8 million in outstanding debt [255]. Risk Management - The company expects to utilize various derivative instruments to mitigate interest rate and credit risks [270]. - The company is subject to various financial covenants, including maintaining a minimum tangible net worth and a maximum ratio of total indebtedness to tangible net worth not exceeding 5:1 [221].

Core Viewpoint - Angel Oak Mortgage reported a quarterly loss of $0.14 per share, missing the Zacks Consensus Estimate of $0.21, and showing an earnings surprise of -166.67% [1][2] Financial Performance - The company posted revenues of $27.44 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 7.60%, compared to $23.9 million in the same quarter last year [2] - Over the last four quarters, Angel Oak has not surpassed consensus EPS estimates and has topped revenue estimates only once [2] Stock Performance - Angel Oak shares have declined approximately 14.7% since the beginning of the year, while the S&P 500 has gained 21.2% [3] - The current Zacks Rank for Angel Oak is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $32.6 million, and for the current fiscal year, it is $0.48 on revenues of $113.4 million [7] - The trend of estimate revisions for Angel Oak is mixed, which may change following the recent earnings report [6] Industry Context - The Financial - Mortgage & Related Services industry is currently in the top 8% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]