Angel Oak Mortgage REIT, Inc. Reports Second Quarter 2024 Financial Results
Second Quarter and Year-to-Date Highlights
-
Q2 2024 net interest income of
$9.5 million , an increase of 47% versus Q2 2023. -
Net interest income of
$18.0 million in the first six months of 2024, an increase of 36% versus net interest income of$13.3 million in the first six months of 2023. -
Q2 2024 GAAP net loss of
($0.3) million , or ($0.01 ) per diluted share of common stock. -
Q2 2024 Distributable Earnings loss of
($2.3) million , or ($0.09 ) per diluted share of common stock. -
GAAP book value of
$10.23 per share of common stock as ofJune 30, 2024 , down from$10.55 per share of common stock as ofMarch 31, 2024 . -
Economic book value of
$13.16 per share of common stock as ofJune 30, 2024 , down from$13.78 per share of common stock as ofMarch 31, 2024 . -
Declared dividend of
$0.32 per share of common stock, to be paid onAugust 30, 2024 to common stockholders of record as ofAugust 22, 2024 .
Portfolio and Investment Activity
-
During the quarter, the Company executed the AOMT 2024-4 securitization as the sole contributor of loans. The Company contributed 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 reduced financing costs by approximately 100 basis points compared to the financing cost prior to securitization. -
Additionally, the Company participated in the AOMT 2024-6 securitization during the second quarter. AOMT 2024-6 was an approximately
$479.6 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans, to which the Company contributed loans with a scheduled unpaid principal balance of approximately$22.9 million . -
As of
June 30, 2024 , the weighted average coupon of our residential whole loans portfolio increased to 7.71%, 60 basis points higher than at the end of the first quarter 2024 and 287 basis points higher than at the end of the second quarter of 2023.
Capital Markets Activity
-
Subsequent to the end of the second quarter, on
July 25, 2024 , the Company issued$50 million of senior unsecured notes due 2029 with a coupon of 9.50%. This issuance is intended to be accretive, driving incremental asset expansion and earnings growth. The Company intends to use the majority of the net proceeds from the offering for general corporate purposes, which may include the acquisition of non-qualified residential mortgage loans and other target assets primarily sourced from the Company's affiliated proprietary mortgage lending platform or other target assets through the secondary market in a manner consistent with the Company's strategy and investment guidelines. Additionally, the Company used the net proceeds from the offering to repurchase 1,707,922 shares of the Company's common stock owned byXylem Finance, LLC , an affiliate ofDavidson Kempner Capital Management LP , for an aggregate repurchase price of approximately$20.0 million . -
As of
June 30, 2024 , the Company was a party to three loan financing lines which permit borrowings in an aggregate amount of up to$1.1 billion , of which approximately$101 million is drawn, leaving capacity of approximately$950 million for new loan purchases.
Balance Sheet
-
Target assets totaled
$1.9 billion as ofJune 30, 2024 . -
The Company held residential mortgage whole loans with fair value of
$158.9 million as ofJune 30, 2024 . -
The recourse debt to equity ratio was 1.2x as of
June 30, 2024 .-
As of today’s date, our recourse debt to equity ratio is approximately 0.9x. This reflects the maturity of short-term
U.S. Treasuries and their corresponding repurchase agreements held at the end of the second quarter, as well as the subsequent issuance of$50 million of senior unsecured notes and$20 million share repurchase. - Our recourse debt to equity ratio is expected to increase as current-market coupon loans are purchased, but is expected to remain below 2.5x.
-
As of today’s date, our recourse debt to equity ratio is approximately 0.9x. This reflects the maturity of short-term
Dividend
On
Conference Call and Webcast Information
The Company will host a live conference call and webcast today,
To Participate in the Telephone Conference Call:
Dial in at least 15 minutes prior to start time.
Domestic: 1-844-826-3033
International: 1-412-317-5185
Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Pass code: 10190401
The playback can be accessed through
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 generally accepted accounting principles in
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 total 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 share of common stock 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. 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,” “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 or their impact or the actual effect of existing or future plans or strategies is inherently uncertain. 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
About
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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
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(Unaudited) |
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(in thousands, except for share and per share data) |
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Three Months Ended |
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Six Months Ended |
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|
|
|
|
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INTEREST INCOME, NET |
|
|
|
|
|
|
|
||||||||
Interest income |
$ |
25,902 |
|
|
$ |
23,763 |
|
|
$ |
51,114 |
|
|
$ |
47,503 |
|
Interest expense |
|
16,439 |
|
|
|
17,311 |
|
|
|
33,072 |
|
|
|
34,252 |
|
NET INTEREST INCOME |
$ |
9,463 |
|
|
$ |
6,452 |
|
|
$ |
18,042 |
|
|
$ |
13,251 |
|
|
|
|
|
|
|
|
|
||||||||
REALIZED AND UNREALIZED GAINS (LOSSES), NET |
|
|
|
|
|
|
|
||||||||
Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS |
$ |
(6,770 |
) |
|
$ |
(4,169 |
) |
|
$ |
(8,192 |
) |
|
$ |
(15,012 |
) |
Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts |
|
2,658 |
|
|
|
379 |
|
|
|
13,342 |
|
|
|
10,569 |
|
TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET |
$ |
(4,112 |
) |
|
$ |
(3,790 |
) |
|
$ |
5,150 |
|
|
$ |
(4,443 |
) |
|
|
|
|
|
|
|
|
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EXPENSES |
|
|
|
|
|
|
|
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Operating expenses |
$ |
1,333 |
|
|
$ |
2,214 |
|
|
$ |
3,333 |
|
|
$ |
4,418 |
|
Operating expenses incurred with affiliate |
|
456 |
|
|
|
607 |
|
|
|
971 |
|
|
|
1,073 |
|
Due diligence and transaction costs |
|
359 |
|
|
|
21 |
|
|
|
409 |
|
|
|
21 |
|
Stock compensation |
|
630 |
|
|
|
207 |
|
|
|
1,260 |
|
|
|
748 |
|
Securitization costs |
|
1,410 |
|
|
|
1,027 |
|
|
|
1,583 |
|
|
|
1,910 |
|
Management fee incurred with affiliate |
|
1,294 |
|
|
|
1,493 |
|
|
|
2,606 |
|
|
|
3,015 |
|
Total operating expenses |
$ |
5,482 |
|
|
$ |
5,569 |
|
|
$ |
10,162 |
|
|
$ |
11,185 |
|
|
|
|
|
|
|
|
|
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INCOME (LOSS) BEFORE INCOME TAXES |
$ |
(131 |
) |
|
$ |
(2,907 |
) |
|
$ |
13,030 |
|
|
$ |
(2,377 |
) |
Income tax expense |
|
142 |
|
|
|
781 |
|
|
|
429 |
|
|
|
781 |
|
NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS |
$ |
(273 |
) |
|
$ |
(3,688 |
) |
|
$ |
12,601 |
|
|
$ |
(3,158 |
) |
Other comprehensive income (loss) |
|
125 |
|
|
|
(242 |
) |
|
|
1,828 |
|
|
|
14,562 |
|
TOTAL COMPREHENSIVE INCOME (LOSS) |
$ |
(148 |
) |
|
$ |
(3,930 |
) |
|
$ |
14,429 |
|
|
$ |
11,404 |
|
|
|
|
|
|
|
|
|
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Basic earnings (loss) per common share |
$ |
(0.01 |
) |
|
$ |
(0.15 |
) |
|
$ |
0.51 |
|
|
$ |
(0.13 |
) |
Diluted earnings (loss) per common share |
$ |
(0.01 |
) |
|
$ |
(0.15 |
) |
|
$ |
0.50 |
|
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
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Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
24,810,021 |
|
|
|
24,686,881 |
|
|
|
24,792,918 |
|
|
|
24,674,875 |
|
Diluted |
|
24,810,021 |
|
|
|
24,686,881 |
|
|
|
24,973,501 |
|
|
|
24,674,875 |
|
|
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Condensed Consolidated Balance Sheets |
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(Unaudited) |
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(in thousands, except for share and per share data) |
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As of: |
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|
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|
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ASSETS |
|
|
|
||||
Residential mortgage loans - at fair value |
$ |
158,940 |
|
|
$ |
380,040 |
|
Residential mortgage loans in securitization trusts - at fair value |
|
1,447,901 |
|
|
|
1,221,067 |
|
RMBS - at fair value |
|
266,752 |
|
|
|
472,058 |
|
|
|
149,957 |
|
|
|
149,927 |
|
Cash and cash equivalents |
|
43,956 |
|
|
|
41,625 |
|
Restricted cash |
|
2,146 |
|
|
|
2,871 |
|
Principal and interest receivable |
|
6,174 |
|
|
|
7,501 |
|
Unrealized appreciation on TBAs and interest rate futures contracts - at fair value |
|
1,702 |
|
|
|
— |
|
Other assets |
|
36,246 |
|
|
|
32,922 |
|
Total assets |
$ |
2,113,774 |
|
|
$ |
2,308,011 |
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
LIABILITIES |
|
|
|
||||
Notes payable |
$ |
101,200 |
|
|
$ |
290,610 |
|
Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts |
|
1,372,272 |
|
|
|
1,169,154 |
|
Securities sold under agreements to repurchase |
|
201,051 |
|
|
|
193,656 |
|
Unrealized depreciation on TBAs and interest rate futures contracts - at fair value |
|
— |
|
|
|
1,334 |
|
Due to broker |
|
181,847 |
|
|
|
391,964 |
|
Accrued expenses |
|
653 |
|
|
|
985 |
|
Accrued expenses payable to affiliate |
|
397 |
|
|
|
748 |
|
Interest payable |
|
460 |
|
|
|
820 |
|
Income taxes payable |
|
78 |
|
|
|
1,241 |
|
Management fee payable to affiliate |
|
10 |
|
|
|
1,393 |
|
Total liabilities |
$ |
1,857,968 |
|
|
$ |
2,051,905 |
|
|
|
|
|
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Commitments and contingencies |
|
|
|
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|
|
|
|
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STOCKHOLDERS’ EQUITY |
|
|
|
||||
Common stock, |
$ |
249 |
|
|
$ |
249 |
|
Additional paid-in capital |
|
478,328 |
|
|
|
477,068 |
|
Accumulated other comprehensive income (loss) |
|
(3,147 |
) |
|
|
(4,975 |
) |
Retained earnings (deficit) |
|
(219,624 |
) |
|
|
(216,236 |
) |
Total stockholders’ equity |
$ |
255,806 |
|
|
$ |
256,106 |
|
Total liabilities and stockholders’ equity |
$ |
2,113,774 |
|
|
$ |
2,308,011 |
|
|
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Reconciliation of Net Income (Loss) to Distributable Earnings |
|||||||||||||||
and Distributable Earnings Return on Average Equity |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in thousands) |
|
|
|
|
||||||||||
Net income (loss) allocable to common stockholders |
$ |
(273 |
) |
|
$ |
(3,688 |
) |
|
$ |
12,601 |
|
|
$ |
(3,158 |
) |
Adjustments: |
|
|
|
|
|
|
|
||||||||
Net unrealized (gains) losses on trading securities |
|
1,813 |
|
|
|
3,882 |
|
|
|
1,814 |
|
|
|
2,277 |
|
Net unrealized (gains) losses on derivatives |
|
(2,592 |
) |
|
|
(12,179 |
) |
|
|
(3,037 |
) |
|
|
12,357 |
|
Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation |
|
2,579 |
|
|
|
4,777 |
|
|
|
(2,568 |
) |
|
|
11,104 |
|
Net unrealized (gains) losses on residential loans |
|
(4,431 |
) |
|
|
3,278 |
|
|
|
(9,502 |
) |
|
|
(36,159 |
) |
Net unrealized (gains) losses on commercial loans |
|
(27 |
) |
|
|
(136 |
) |
|
|
(49 |
) |
|
|
(147 |
) |
Non-cash equity compensation expense |
|
630 |
|
|
|
207 |
|
|
|
1,260 |
|
|
|
748 |
|
Distributable Earnings |
$ |
(2,301 |
) |
|
$ |
(3,859 |
) |
|
$ |
519 |
|
|
$ |
(12,978 |
) |
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands) |
|
|
|
|
||||||||||
Annualized Distributable Earnings |
$ |
(9,204 |
) |
|
$ |
(15,436 |
) |
|
$ |
1,038 |
|
|
$ |
(25,956 |
) |
Average total stockholders’ equity |
$ |
259,565 |
|
|
$ |
239,991 |
|
|
$ |
258,412 |
|
|
$ |
238,345 |
|
Distributable Earnings Return on Average Equity |
|
(3.5 |
)% |
|
|
(6.4 |
)% |
|
|
0.4 |
% |
|
|
(10.9 |
)% |
|
||||||||||
Reconciliation of Stockholders’ Equity to Stockholders’ Equity Including Economic Book Value Adjustments |
||||||||||
and Economic Book Value per Share of Common Stock |
||||||||||
(Unaudited) |
||||||||||
|
|
|
|
|
|
|||||
|
(in thousands, except for share and per share data) |
|||||||||
GAAP total stockholders’ equity |
$ |
255,806 |
$ |
263,324 |
$ |
256,106 |
$ |
231,802 |
$ |
232,676 |
Adjustments: |
|
|
|
|
|
|||||
Fair value adjustment for securitized debt held at amortized cost |
|
73,053 |
|
80,599 |
|
81,942 |
|
97,592 |
|
95,326 |
Stockholders’ equity including economic book value adjustments |
$ |
328,859 |
$ |
343,923 |
$ |
338,048 |
$ |
329,394 |
$ |
328,002 |
|
|
|
|
|
|
|||||
Number of shares of common stock outstanding at period end |
|
24,998,549 |
|
24,965,274 |
|
24,965,274 |
|
24,955,566 |
|
24,924,886 |
Book value per share of common stock |
$ |
10.23 |
$ |
10.55 |
$ |
10.26 |
$ |
9.29 |
$ |
9.34 |
Economic book value per share of common stock |
$ |
13.16 |
$ |
13.78 |
$ |
13.54 |
$ |
13.20 |
$ |
13.16 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240806456884/en/
Investors:
investorrelations@angeloakreit.com
855-502-3920
312-445-2870
AOMR@alpha-ir.com
Company:
KC Kelleher, Head of Corporate Finance & Investor Relations
404-528-2684
kc.kelleher@angeloakcapital.com
Source: