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 from $32.9 million in Q1 2025.
• Net Interest Income: $12.1 million, a 20% increase from $10.1 million in Q1 2025.
• Operating Expenses: $5.2 million; excluding non-cash stock compensation and securitization costs, operating expenses were $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 purchased was 7.3%, with a weighted average CLTV of 67% and a credit score of 759.

2. Strategic Updates and Business Highlights

• Completed the AOMT 2026-2 securitization in early March, leveraging favorable market conditions before geopolitical tensions escalated.
• Maintained a disciplined approach to funding and credit quality, focusing on sound structures and conservative leverage.
• Continued to see strong demand for non-QM lending solutions, with a commitment to executing approximately four securitizations per year.
• Loan purchases totaled $246.2 million, reflecting conservative credit profiles and attractive market coupons.

3. Forward Guidance and Outlook

• Management remains optimistic about the durability of non-QM lending solutions and plans to maintain a cautious but active posture in the market.
• Expectation of continued earnings growth and consistent access to securitization markets.
• Anticipated prepayment speeds to increase as mortgage rates decrease, but significant impacts on portfolio returns are not expected unless rates fall meaningfully.

4. Bad News, Challenges, or Points of Concern

• The company reported a GAAP net loss primarily due to unrealized valuation changes linked to macroeconomic volatility, particularly from the renewed conflict in the Middle East.
• Delinquency rates increased to approximately 2.7%, up 50 basis points from Q4 2025, although still considered manageable.
• The valuation of whole loans decreased, contributing to unrealized losses in the portfolio.
• Challenges in the securitization market due to increased spreads and volatility, with current ROEs trending lower than previous quarters.

5. Notable Q&A Insights

• Management confirmed plans to continue building the HELOC pipeline and anticipates another securitization in the coming months.
• Discussions on legacy securitizations indicate ongoing monitoring for potential calls, with decisions dependent on market conditions.
• Operating expenses were elevated due to professional service fees and loan diligence fees, linked to the company's ATM program.
• Current spreads for AAA-rated securitizations are between 135 to 145 basis points, reflecting market conditions.

Overall, while Angel Oak Mortgage REIT faced challenges in Q1 2026, including a net loss and increased delinquency rates, the company demonstrated strong operational performance and maintained a positive outlook for future earnings growth and market positioning.