AOMR — Angel Oak Mortgage, Inc.

Summary of Angel Oak Mortgage REIT Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• GAAP Net Loss: $7.4 million, or $0.30 per diluted share, compared to a net income of $20.5 million or $0.87 per diluted share in Q1 2025.
• Distributable Earnings: $4.6 million, up from $4.1 million in Q1 2025.
• Interest Income: $40.7 million, a 24% increase year-over-year.
• Net Interest Income: $12.1 million, a 20% increase year-over-year.
• Operating Expenses: $5.2 million, with adjusted expenses (excluding noncash stock compensation) at $3.4 million.
• Book Value: GAAP book value per share decreased 4% to $10.31; economic book value decreased 3.3% to $12.28.
• Portfolio Metrics: Weighted average coupon of loans at 6.1%, funding cost at 4.5%, and 90+ day delinquency at 2.7%.

2. Strategic Updates and Business Highlights

• Completed the AOMT 2026-2 securitization in March, taking advantage of favorable market conditions before geopolitical tensions escalated.
• Continued focus on credit quality and funding discipline with a conservative approach to leverage.
• Loan purchases totaled $246.2 million, maintaining conservative credit profiles and attractive risk-adjusted returns.
• The company aims to maintain a disciplined securitization strategy, targeting approximately four securitizations per year.

3. Forward Guidance and Outlook

• Management expects to continue the trend of earnings growth and consistent securitization activity.
• The demand for non-QM lending solutions remains strong, and the company plans to maintain a cautious yet active posture in the market.
• Anticipates increased prepayment speeds as interest rates decline, with historical modeling suggesting returns of 20% to 30% over the life of securitizations.

4. Bad News, Challenges, or Points of Concern

• The company reported a GAAP net loss due to unrealized valuation changes linked to market volatility, particularly from geopolitical tensions.
• Delinquency rates increased slightly from the previous quarter, raising concerns about potential impacts on portfolio valuations.
• Whole loan pricing for non-QM loans decreased significantly, contributing to unrealized losses.
• The current market volatility and rising interest rates present challenges for future securitization opportunities and overall profitability.

5. Notable Q&A Insights

• Management is actively monitoring the potential to call legacy securitizations, with decisions dependent on market conditions and funding costs.
• The company is building its HELOC pipeline and anticipates another securitization in the coming months.
• Operating expenses have risen due to increased professional service fees and loan diligence fees, which are expected to stabilize in the near term.
• Current securitization spreads for AAA-rated bonds are around 135 to 145 basis points, reflecting market conditions.

This summary encapsulates the key points from the earnings call, highlighting both the positive aspects of the company's performance and the challenges it faces in a volatile economic environment.