Angel Oak Mortgage, Inc. (NYSE: AOMR) (the “Company,” “we,”
and “our”), a leading 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, today reported
financial results for the quarter and year to date ended September
30, 2022.
Third Quarter Highlights
- Q3 2022 GAAP net loss of $83.3 million, or $(3.40) per diluted
share of common stock.
- Q3 2022 distributable earnings of $20.8 million, or $0.84 per
diluted share of common stock.
- Declared dividend of $0.32 per share of common stock for the
third quarter of 2022, payable on November 30, 2022, to common
stockholders of record as of November 22, 2022.
- GAAP book value of $10.63 per share as of September 30,
2022.
- Economic book value of $12.94 per share as of September 30,
2022.
Sreeniwas Prabhu, Chief Executive Officer and President of the
Company, commented, “Third quarter results are demonstrative of the
continued dislocation of the fixed income market characterized by
historic spread-widening and limited capital market activity
coupled with an aggressive Federal Reserve increasing the Fed Funds
target rate two times during the quarter. As such, AOMR focused on
managing liquidity and protecting its capital structure. Unrealized
losses associated with our mark-to-market assets were the key
driver of our GAAP net loss and book value decline; however, it is
important to note that the credit performance of these assets
remains strong, and we believe that they are ultimately expected to
pay off at par, offsetting the mark-to-market losses. In order to
preserve additional capital and to right-size our dividend yield at
the current book value, we have made the decision to reduce the
quarterly dividend to $0.32 per share of common stock. Sticking to
our core business model, we will remain disciplined while prudently
accessing the securitization market to reduce interest rate risk,
allowing us to create long term value for our shareholders.”
Portfolio and Investment Activity
- Purchased $62.4 million of non-QM residential mortgage loans
with a weighted average coupon of 7.1% in the third quarter
2022.
- Securitized $184.7 million in unpaid principal balance of
residential mortgage loans.
- Sold $7.0 million in commercial loans in order to concentrate
on the core non-QM strategy of AOMR.
Capital Markets Activity
During the quarter ended September 30, 2022, we closed our
fourth securitization post-IPO, AOMT 2022-4, a $184.7 million
securitization backed by a pool of non-qualified residential
mortgage loans. The securitization was rated by both Fitch and KBRA
with the senior tranche receiving AAA ratings.
After quarter end a prior facility with a large money center
bank expired by its terms and all loans on the facility were moved
to additional facilities. Our total financing capacity as of
November 8, 2022 stands at $1.4 billion of which approximately
$870.0 million is drawn.
Balance Sheet
- Target assets totaled $3.2 billion as of September 30,
2022.
- Held residential mortgage whole loans with fair value of $1.1
billion as of September 30, 2022.
- Recourse debt to equity ratio was 3.7x as of September 30,
2022.
Dividend
On November 8, 2022, the Company declared a dividend of $0.32
per share of common stock for the third quarter of 2022. The
dividend is payable on November 30, 2022 to common stockholders of
record as of November 22, 2022.
Conference Call and Webcast Information
The Company will host a live conference call and webcast today,
November 8, 2022 at 8:30 a.m. Eastern time. To listen to the live
webcast, go to the Investors section of the Company’s website at
www.angeloakreit.com at least 15 minutes prior to the scheduled
start time in order to register and install any necessary audio
software.
To Participate in the Telephone Conference Call: Dial in
at least 15 minutes prior to start time. Domestic: 1-877-407-9716
International: 1-201-493-6779
Conference Call Playback: Domestic: 1-844-512-2921
International: 1-412-317-6671 Passcode: 13730433 The playback can
be accessed through November 22, 2022.
Non-GAAP metrics
Distributable Earnings is a non‑GAAP measure and is defined as
net income (loss) allocable to common stockholders as calculated in
accordance with GAAP, excluding (1) unrealized gains and losses on
our aggregate portfolio, (2) impairment losses, (3) extinguishment
of debt, (4) non-cash equity compensation expense, (5) the
incentive fee earned by our Manager, (6) realized gains or losses
on swap terminations and (7) certain other nonrecurring gains or
losses. We believe that the presentation of Distributable Earnings
provides investors with a useful measure to facilitate comparisons
of financial performance between our REIT peers but has important
limitations. We believe Distributable Earnings as described above
helps evaluate our financial performance without the impact of
certain transactions but is of limited usefulness as an analytical
tool. Therefore, Distributable Earnings should not be viewed in
isolation and is not a substitute for net income computed in
accordance with GAAP. Our methodology for calculating Distributable
Earnings may differ from the methodologies employed by other REITs
to calculate the same or similar supplemental performance measures,
and as a result, our Distributable Earnings may not be comparable
to similar measures presented by other REITs.
Distributable Earnings Return on Average Equity is a non-GAAP
measure and is defined as annual or annualized Distributable
Earnings divided by average total stockholders’ equity. We believe
that the presentation of Distributable Earnings Return on Average
Equity provides investors with a useful measure to facilitate
comparisons of financial performance among our REIT peers, but has
important limitations. Additionally, we believe Distributable
Earnings Return on Average Equity provides investors with
additional detail on the Distributable Earnings generated by our
invested equity capital. We believe Distributable Earnings Return
on Average Equity as described above helps evaluate our financial
performance without the impact of certain transactions but is of
limited usefulness as an analytical tool. Therefore, Distributable
Earnings Return on Average Equity should not be viewed in isolation
and is not a substitute for net income computed in accordance with
GAAP. Our methodology for calculating Distributable Earnings Return
on Average Equity may differ from the methodologies employed by
other REITs to calculate the same or similar supplemental
performance measures, and as a result, our Distributable Earnings
Return on Average Equity may not be comparable to similar measures
presented by other REITs.
“Economic book value” is a non-GAAP financial measure of our
financial position. To calculate our economic book value, the
portions of our non-recourse financing obligation held at amortized
cost are adjusted to fair value. These adjustments are also
reflected in our end of period common stockholders’ equity.
Management considers economic book value to provide investors with
a useful supplemental measure to evaluate our financial position as
it reflects the impact of fair value changes for our legally held
retained bonds, irrespective of the accounting model applied for
GAAP reporting purposes. Economic book value does not represent and
should not be considered as a substitute for book value per common
share or Stockholders’ Equity, as determined in accordance with
GAAP, and our calculation of this measure may not be comparable to
similarly titled measures reported by other companies.
Forward Looking Statements
This press release contains certain forward-looking statements
that are subject to various risks and uncertainties, including,
without limitation, statements relating to the performance of the
Company’s investments and its financing needs and arrangements.
Forward-looking statements are generally identifiable by use of
forward-looking terminology such as “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “believe,” “could,” “project,” “predict” and
“continue,” or by the negative of these words and phrases or other
similar words or expressions. Forward-looking statements are based
on certain assumptions; discuss future expectations; describe
existing or future plans and strategies; contain projections of
results of operations, liquidity and/or financial condition; or
state other forward-looking information. The Company’s ability to
predict future events or conditions, their impact or the actual
effect of existing or future plans or strategies is inherently
uncertain, in particular due to the uncertainties created by the
COVID-19 pandemic, including the projected impact of the COVID-19
pandemic on the Company’s business, financial results and
performance. Although the Company believes that such
forward-looking statements are based on reasonable assumptions,
actual results and performance in the future could differ
materially from those set forth in or implied by such
forward-looking statements. You are cautioned not to place undue
reliance on these forward‐looking statements, which reflect the
Company’s views only as of the date of this press release.
Additional information concerning factors that could cause actual
results and performance to differ materially from these
forward-looking statements is contained from time to time in the
Company’s filings with the Securities and Exchange Commission.
Except as required by applicable law, neither the Company nor any
other person assumes responsibility for the accuracy and
completeness of the forward‐looking statements. The Company does
not undertake any obligation to update any forward-looking
statements contained in this press release as a result of new
information, future events or otherwise.
About Angel Oak Mortgage, Inc.
Angel Oak Mortgage, 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. The Company is
externally managed and advised by an affiliate of Angel Oak Capital
Advisors, LLC, which, collectively with its affiliates, is a
leading alternative credit manager with a vertically integrated
mortgage origination platform. Additional information about the
Company is available at www.angeloakreit.com.
Angel Oak Mortgage,
Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except for share
and per share data)
Three Months Ended
Nine Months Ended
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
INTEREST INCOME, NET
Interest income
$
30,148
$
15,587
$
86,959
$
37,763
Interest expense
18,408
2,599
41,849
5,277
NET INTEREST INCOME
11,740
12,988
45,110
32,486
REALIZED AND UNREALIZED GAINS (LOSSES),
NET
Net realized gain (loss) on mortgage
loans, derivative contracts,
RMBS, and CMBS
17,290
(7,144
)
56,423
(19,656
)
Net unrealized gain (loss) on mortgage
loans, debt at fair value
option (see Note 2), and derivative
contracts
(100,855
)
6,821
(255,021
)
16,151
TOTAL REALIZED AND UNREALIZED
GAINS
(LOSSES), NET
(83,565
)
(323
)
(198,598
)
(3,505
)
EXPENSES
Operating expenses
2,764
2,545
9,525
3,423
Operating expenses incurred with
affiliate
2,141
645
3,834
1,617
Due diligence and transaction costs
213
452
1,502
946
Stock compensation
3,340
833
5,179
924
Securitization costs
1,115
—
3,134
—
Management fee incurred with affiliate
1,951
1,846
5,830
4,015
Total operating expenses
11,524
6,321
29,004
10,925
INCOME (LOSS) BEFORE INCOME
TAXES
(83,349
)
6,344
(182,492
)
18,056
Income tax benefit
—
—
(3,457
)
—
NET INCOME (LOSS)
$
(83,349
)
$
6,344
$
(179,035
)
$
18,056
Preferred dividends
(4
)
(4
)
(11
)
(11
)
NET INCOME (LOSS) ALLOCABLE TO COMMON
STOCKHOLDERS
$
(83,353
)
$
6,340
$
(179,046
)
$
18,045
Other comprehensive income (loss)
(10,227
)
1,818
(11,979
)
5,433
TOTAL COMPREHENSIVE INCOME
(LOSS)
$
(93,580
)
$
8,158
$
(191,025
)
$
23,478
Basic earnings (loss) per common share
$
(3.40
)
$
0.25
$
(7.30
)
$
0.94
Diluted earnings (loss) per common
share
$
(3.40
)
$
0.25
$
(7.30
)
$
0.93
Weighted average number of common
shares outstanding:
Basic
24,505,438
24,999,891
24,534,967
19,190,827
Diluted
24,505,438
25,470,226
24,534,967
19,366,679
Angel Oak Mortgage,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except for share
data)
As of:
September 30, 2022
December 31, 2021
ASSETS
Residential mortgage loans - at fair
value
$
1,069,476
$
1,061,912
Residential mortgage loans in
securitization trusts - at fair value
1,062,585
667,365
Commercial mortgage loans - at fair
value
9,554
18,664
RMBS - at fair value
1,068,672
485,634
CMBS - at fair value
8,857
10,756
U.S. Treasury securities - at fair
value
—
249,999
Cash and cash equivalents
20,549
40,801
Restricted cash
8,955
11,508
Principal and interest receivable
44,272
25,984
Deferred tax asset
3,457
—
Unrealized appreciation on TBAs and
interest rate futures contracts - at fair value
8,534
2,428
Other assets
851
2,878
Total assets
$
3,305,762
$
2,577,929
LIABILITIES AND STOCKHOLDERS’
EQUITY
LIABILITIES
Notes payable
$
906,321
$
853,408
Non-recourse securitization obligation,
collateralized by residential mortgage loans in securitization
trusts (see Note 2)
1,048,953
616,557
Securities sold under agreements to
repurchase
67,454
609,251
Unrealized depreciation on TBAs and
interest rate futures contracts - at fair value
—
728
Due to broker
1,005,231
—
Accrued expenses
3,328
442
Accrued expenses payable to affiliate
3,060
1,425
Interest payable
4,452
1,283
Income taxes payable
—
1,600
Management fee payable to affiliate
2,006
1,845
Total liabilities
$
3,040,805
$
2,086,539
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Series A preferred stock, $0.01 par value,
12% cumulative, non-voting, 125 shares issued and outstanding as of
September 30, 2022 and December 31, 2021
$
101
$
101
Common stock, $0.01 par value. As of
September 30, 2022: 350,000,000 shares authorized, 24,925,357
shares issued and outstanding. As of December 31, 2021: 350,000,000
shares authorized, 25,227,328 shares issued and outstanding.
249
252
Additional paid-in capital
474,830
476,510
Accumulated other comprehensive income
(loss)
(8,979
)
3,000
Retained (deficit) earnings
(201,244
)
11,527
Total stockholders’ equity
$
264,957
$
491,390
Total liabilities and stockholders’
equity
$
3,305,762
$
2,577,929
Angel Oak Mortgage,
Inc.
Reconciliation of Net Income
(Loss) to Distributable Earnings
and Distributable Earnings
Return on Average Equity
(Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
(in thousands)
Net income (loss) allocable to common
stockholders
$
(83,353
)
$
6,340
$
(179,046
)
$
18,045
Adjustments:
Net other-than-temporary credit impairment
losses
—
—
—
—
Net unrealized (gains) losses on
derivatives
(10,936
)
3,837
(1,570
)
6,130
Net unrealized (gains) losses on
residential loans in securitization trusts and non-recourse
securitization obligation
38,822
—
79,298
—
Net unrealized (gains) losses on
residential loans
73,195
(6,157
)
176,320
(13,112
)
Net unrealized (gains) losses on
commercial loans
(226
)
43
759
(221
)
Net unrealized (gains) losses on financial
instruments at fair value
—
—
—
—
(Gains) losses on extinguishment of
debt
—
—
—
—
Non-cash equity compensation expense
3,340
833
5,179
924
Incentive fee earned by the Manager
—
—
—
—
Realized gains (losses) on terminations of
interest rate swaps
—
—
—
—
Total other non-recurring (gains)
losses
—
—
—
—
Distributable Earnings
$
20,842
$
4,896
$
80,940
$
11,766
Three Months Ended
Nine Months Ended
September 30, 2022
September 30, 2021
September 30, 2022
September 30, 2021
($ in thousands)
Annualized Distributable Earnings
$
83,368
$
19,584
$
107,920
$
15,688
Average total stockholders’ equity
$
316,070
$
498,895
$
386,191
$
361,673
Distributable Earnings Return on Average
Equity
26.38
%
3.93
%
27.94
%
4.34
%
Angel Oak Mortgage,
Inc.
Reconciliation of
Stockholders’ Equity to Stockholders’ Equity Including Economic
Book Value Adjustments
and Economic Book Value per
Common Share
(Unaudited)
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
(in thousands except for share
and per share amounts presented)
GAAP total stockholders’ equity
$
264,957
$
367,284
$
421,436
$
491,390
Preferred stock
(101
)
(101
)
(101
)
(101
)
GAAP total common stockholders’ equity for
book value per
share of common stock
$
264,856
$
367,183
$
421,335
$
491,289
Adjustments:
Fair value adjustment for securitized debt
held at amortized
cost
57,596
32,863
20,443
1,079
Stockholders’ equity including economic
book value
adjustments
$
322,452
$
400,046
$
441,778
$
492,368
Number of shares of common stock
outstanding at period end
24,925,357
24,925,930
25,085,796
25,227,328
Book value per share of common stock
$
10.63
$
14.73
$
16.80
$
19.47
Economic book value per share of common
stock
$
12.94
$
16.05
$
17.61
$
19.52
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108005488/en/
Investors: investorrelations@angeloakreit.com
855-502-3920
Media: Bernardo Soriano, Gregory FCA for Angel Oak
Mortgage, Inc. 914-656-3880 bernardo@gregoryfca.com
Company: Randy Chrisman, Chief Marketing & Corporate
Investor Relations Officer, Angel Oak Capital Advisors 404-953-4969
randy.chrisman@angeloakcapital.com
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