On August 6, 2024, Angel Oak Mortgage REIT Inc (AOMR, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Angel Oak Mortgage REIT Inc 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. The company's objective is to generate attractive risk-adjusted returns for its stockholders through cash distributions and capital appreciation across interest rate and credit cycles.
Performance Overview
Angel Oak Mortgage REIT Inc (AOMR, Financial) reported a net interest income of $9.5 million for Q2 2024, marking a 47% increase compared to Q2 2023. However, the company posted a GAAP net loss of $0.3 million, or ($0.01) per diluted share, and a Distributable Earnings loss of $2.3 million, or ($0.09) per diluted share. These figures fell short of analyst estimates, which projected earnings per share of $0.24 and revenue of $10.70 million for the quarter.
Financial Achievements and Challenges
Despite the net loss, Angel Oak Mortgage REIT Inc (AOMR, Financial) achieved significant milestones. The company executed the AOMT 2024-4 securitization, contributing loans with a scheduled unpaid principal balance of approximately $299.8 million and a 7.4% weighted average coupon. This securitization reduced the company's whole loan warehouse debt by $235.9 million and lowered financing costs by approximately 100 basis points.
Additionally, the company participated in the AOMT 2024-6 securitization, contributing loans with a scheduled unpaid principal balance of approximately $22.9 million. As of June 30, 2024, the weighted average coupon of the residential whole loans portfolio increased to 7.71%, up 60 basis points from the end of Q1 2024 and 287 basis points from the end of Q2 2023.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Interest Income | $9.5 million | $6.5 million |
| GAAP Net Loss | ($0.3) million | ($3.7) million |
| Distributable Earnings Loss | ($2.3) million | ($3.9) million |
| GAAP Book Value per Share | $10.23 | $10.55 |
| Economic Book Value per Share | $13.16 | $13.78 |
Balance Sheet and Capital Markets Activity
As of June 30, 2024, Angel Oak Mortgage REIT Inc (AOMR, Financial) reported total assets of $2.1 billion, down from $2.3 billion at the end of 2023. The company held residential mortgage whole loans valued at $158.9 million and had a recourse debt to equity ratio of 1.2x, which is expected to increase but remain below 2.5x as current-market coupon loans are purchased.
In July 2024, the company issued $50 million of senior unsecured notes due 2029 with a coupon of 9.50%. The proceeds are intended for general corporate purposes, including the acquisition of non-qualified residential mortgage loans and other target assets.
Dividend Declaration
On August 6, 2024, Angel Oak Mortgage REIT Inc (AOMR, Financial) declared a dividend of $0.32 per share of common stock, payable on August 30, 2024, to stockholders of record as of August 22, 2024.
Commentary
"We are proud to mark our fourth consecutive quarter of net interest income expansion with growth of 47% from the second quarter of 2023 to the second quarter of 2024, and a 36% increase from the first six months of 2023 to the first six months of 2024. This performance underscores the momentum we carry as we deploy the proceeds of our $50 million senior unsecured notes issuance in July, which we expect to catalyze the next phase of growth for AOMR," said Sreeni Prabhu, Chief Executive Officer and President of Angel Oak Mortgage REIT Inc.
Analysis
While Angel Oak Mortgage REIT Inc (AOMR, Financial) demonstrated strong growth in net interest income, the GAAP net loss and Distributable Earnings loss highlight ongoing challenges. The company's strategic securitizations and capital market activities are aimed at reducing costs and driving future growth. However, the decline in book value per share and economic book value per share indicates potential headwinds. Investors should monitor the company's ability to leverage its recent capital raise and securitization activities to achieve sustainable profitability.
Explore the complete 8-K earnings release (here) from Angel Oak Mortgage REIT Inc for further details.
