Angel Oak(US:AOMR)2025-11-06 21:20Financial 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].