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,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
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,
|
|
December 31,
|
|||
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,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
|
(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,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
|
($ 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,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
||||||||
|
(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/
Contacts
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
