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Angel Oak Mortgage, Inc. Reports First Quarter 2022 Financial Results

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ATLANTA, May 12, 2022--(BUSINESS WIRE)--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 ended March 31, 2022.

First Quarter Highlights

  • Q1 2022 GAAP net loss of $43.5 million, or $(1.77) per diluted share of common stock.

  • Q1 2022 Distributable Earnings of $37.3 million, or $1.49 per diluted share of common stock.

  • Declared dividend of $0.45 per share of common stock for the first quarter of 2022, payable on May 31, 2022, to common stockholders of record as of May 23, 2022.

  • GAAP book value of $16.80 per share as of March 31, 2022, down from $19.47 per share as of December 31, 2021.

Robert Williams, President and Chief Executive Officer of the Company, commented, "The first quarter of 2022 was challenging with historic volatility both in nominal interest rates and in the widening of interest rate spreads. This affected unrealized mark-to-market valuations of our whole loan portfolio, securitized loans, and retained RMBS, driving a negative impact to our book value. Despite these challenges, AOMR generated Distributable Earnings of $1.49 per fully diluted share of common stock, demonstrating an effective interest rate hedging strategy and the income-generating power of the portfolio. In the coming quarters, we expect our loan portfolio to begin to reflect higher coupon loan purchases and we will methodically and judiciously use the securitization market to reduce liquidity risk and interest rate risk, enabling us to continue to deliver on our core business model."

Portfolio and Investment Activity

  • Purchased $676.0 million of non-QM residential mortgage loans in the first quarter 2022.

  • Completed $537.6 million residential non-QM securitization at a 3.06% weighted average cost of funding.

  • Portfolio total $2.7 billion of residential mortgage loans and other target assets as of March 31, 2022.

Capital Markets Activity

As of March 31, 2022, the Company was party to six financing lines which permit borrowings in an aggregate amount of up to $1.3 billion. During the quarter ended March 31, 2022, we extended the maturity date with respect to multiple facilities. Subsequent to the quarter ended March 31, 2022, we added $340.0 million of additional financing capacity. We intend to continue financing with warehouse facilities of varied maturities, sizes, and counterparty types to manage our exposure to any individual counterparty.

Balance Sheet

  • $90.4 million of cash and cash equivalents as of March 31, 2022.

  • Recourse debt to equity ratio of 3.4x as of March 31, 2022.

  • Held residential mortgage loans with a fair value of $1.1 billion as of March 31, 2022.

Dividend

On May 12, 2022, the Company declared a dividend of $0.45 per share of common stock for the first quarter of 2022. The dividend is payable on May 31, 2022 to common stockholders of record as of May 23, 2022.

Conference Call and Webcast Information

The Company will host a live conference call and webcast today, May 12, 2022 at 5:00 p.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: 13729197
The playback can be accessed through May 26, 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.

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

March 31, 2022

March 31, 2021

INTEREST INCOME, NET

Interest income

$

27,109

$

10,033

Interest expense

10,170

832

NET INTEREST INCOME

16,939

9,201

REALIZED AND UNREALIZED (LOSSES) GAINS, NET

Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS

26,416

(2,288

)

Net unrealized (loss) gain on mortgage loans and derivative contracts

(80,181

)

4,518

TOTAL REALIZED AND UNREALIZED (LOSSES) GAINS, NET

(53,756

)

2,230

EXPENSES

Operating expenses

3,784

523

Operating expenses incurred with affiliate

855

439

Due diligence and transaction costs

770

64

Stock compensation

871

Securitization costs

2,019

Management fee incurred with affiliate

1,873

918

Total operating expenses

10,172

1,944

INCOME BEFORE INCOME TAXES

(46,998

)

9,487

Income tax benefit

(3,457

)

NET (LOSS) INCOME

$

(43,541

)

$

9,487

Preferred dividends

(4

)

(4

)

NET (LOSS) INCOME ALLOCABLE TO COMMON STOCKHOLDER(S)

$

(43,545

)

$

9,483

Other comprehensive (loss) income

(12,987

)

529

TOTAL COMPREHENSIVE (LOSS) INCOME

$

(56,532

)

$

10,012

Basic (loss) earnings per common share

$

(1.77

)

$

0.60

Diluted (loss) earnings per common share

$

(1.77

)

$

0.60

Weighted average number of common shares outstanding:

Basic

24,642,961

15,724,050

Diluted

24,642,961

15,724,050

Angel Oak Mortgage, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except for share data)

As of:

March 31, 2022

December 31, 2021

ASSETS

Residential mortgage loans - at fair value

$

1,103,773

$

1,061,912

Residential mortgage loans in securitization trusts - at fair value

1,077,967

667,365

Commercial mortgage loans - at fair value

20,704

18,664

RMBS - at fair value

491,287

485,634

CMBS - at fair value

10,055

10,756

U.S. Treasury securities - at fair value

349,992

249,999

Cash and cash equivalents

90,445

40,801

Restricted cash

5,448

11,508

Principal and interest receivable

28,012

25,984

Unrealized appreciation on TBAs and interest rate futures contracts - at fair value

17,027

2,428

Other assets

3,491

2,878

Total assets

$

3,198,201

$

2,577,929

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES

Notes payable

$

956,165

$

853,408

Non-recourse securitization obligation, collateralized by residential mortgage loans - at fair value

1,031,200

616,557

Securities sold under agreements to repurchase

477,422

609,251

Unrealized depreciation on TBAs and interest rate futures contracts - at fair value

728

Due to broker

298,654

Collateral due to counterparties

8,024

Accrued expenses

530

442

Accrued expenses payable to affiliate

1,204

1,425

Interest payable

1,709

1,283

Income taxes payable

1,600

Management fee payable to affiliate

1,857

1,845

Total liabilities

$

2,776,765

$

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 March 31, 2022 and December 31, 2021

101

101

Common stock, $0.01 par value. As of March 31, 2022: 350,000,000 shares authorized, 25,085,796 shares issued and outstanding. As of December 31, 2021: 350,000,000 shares authorized, 25,227,328 shares issued and outstanding.

252

252

Additional paid-in capital

463,088

476,510

Accumulated other comprehensive (loss) income

(9,987

)

3,000

Retained (deficit) earnings

(32,018

)

11,527

Total stockholders’ equity

$

421,436

$

491,390

Total liabilities and stockholders’ equity

$

3,198,201

$

2,577,929

Angel Oak Mortgage, Inc.

Reconciliation of Net Income (Loss) to Distributable Earnings

and Distributable Earnings Return on Average Equity

(Unaudited)

(in thousands)

Three Months Ended

March 31, 2022

March 31, 2021

(in thousands)

Net (loss) income allocable to common stockholder(s)

$

(23,101

)

$

9,483

Adjustments:

Net other-than-temporary credit impairment losses

Net unrealized (gains) losses on derivatives

(15,326

)

(1,610

)

Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation

30,210

Net unrealized (gains) losses on residential loans

64,587

(2,892

)

Net unrealized (gains) losses on commercial loans

496

(142

)

Net unrealized (gains) losses on financial instruments at fair value

(Gains) losses on extinguishment of debt

Non-cash equity compensation expense

871

Incentive fee earned by the Manager

Realized gains (losses) on terminations of interest rate swaps

Total other non-recurring (gains) losses

Distributable Earnings

$

37,293

$

4,839

Three Months Ended

March 31, 2022

March 31, 2021

($ in thousands)

Annualized Distributable Earnings

$

149,171

$

19,356

Average total stockholder(s)’ equity

$

456,415

$

281,481

Distributable Earnings Return on Average Equity

32.7

%

6.9

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220512006031/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 Contact:
Randy Chrisman, Chief Marketing & Corporate Investor Relations Officer, Angel Oak Capital Advisors
404-953-4969
randy.chrisman@angeloakcapital.com

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