• Net Interest Income Growth: 9% increase in Q4 2024 compared to Q3 2024.
• GAAP Net Loss: $15 million or $0.65 per common share for Q4 2024.
• GAAP Net Income: $28.8 million or $1.17 per diluted common share for the full year 2024.
• Distributable Earnings: $9.9 million or $0.42 per diluted common share for Q4 2024.
• Interest Income: $31.9 million for Q4 2024, a 30% increase compared to Q4 2023.
• Net Interest Income: $9.9 million for Q4 2024, a 20% increase compared to Q4 2023.
• Loan Purchases: $684 million in 2024 with a weighted average coupon of 7.64%.
• Securitizations: $855 million in 2024 across five securitizations.
• Operating Expenses: $5.5 million for Q4 2024; $3.1 million excluding noncash stock compensation and securitization costs.
• GAAP Book Value Per Share: Decreased 9.8% to $10.17 as of December 31, 2024.
• Economic Book Value Per Share: $13.10 as of December 31, 2024, down 6.6% from September 30, 2024.
• Cash: $40.8 million as of December 31, 2024.
• Recourse Debt-to-Equity Ratio: 1 times at the end of 2024.
• Dividend: $0.32 per share common dividend paid on February 28, 2025.

• Warning! GuruFocus has detected 3 Warning Signs with AOMR.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Angel Oak Mortgage REIT Inc (NYSE:AOMR) reported a 9% growth in net interest income compared to the third quarter, indicating strong financial performance.
• The company completed five securitizations in 2024, exceeding their target of one per quarter, enhancing capital flexibility and portfolio yield.
• Interest income for the full year increased by 15% compared to 2023, showcasing effective loan purchasing and securitization strategies.
• Operating expenses decreased by approximately 14% for the full year, demonstrating improved cost management.
• The company maintained a strong credit quality with a weighted average FICO score of 749 and a weighted average loan-to-value ratio of 70.2% for loan purchases in 2024.

Negative Points

• Angel Oak Mortgage REIT Inc (NYSE:AOMR) experienced a GAAP net loss of $15 million for the fourth quarter, primarily due to unrealized losses in their securitized loan portfolio.
• The company's GAAP book value per share decreased by 9.8% to $10.17 as of December 31, 2024, reflecting challenges in portfolio valuation.
• Interest rate volatility negatively impacted portfolio valuation, leading to a decline in book value during the fourth quarter.
• The percentage of loans 90 days plus delinquent increased to 2.4% by the end of the year, up from 1.85% in the previous quarter.
• Economic book value per share decreased by 6.6% from the previous quarter, indicating challenges in maintaining asset valuations.

Q & A Highlights

Q: How insulated are the 2021 to 2023 vintages from prepayments given the current rate environment? A: Brandon Filson, CFO, explained that the 2021 to 2023 vintages have weighted average coupons in the 5% range. Significant rate declines, around 150 to 200 basis points, would be needed to trigger substantial prepayments. The current environment suggests these vintages are well insulated from prepayments.

Q: What is the expected incremental yield from re-securitizing older securitizations? A: Brandon Filson noted that older securitizations, like the 2019 vintages, have delevered and currently yield around 8%. Re-securitizing could increase yields to approximately 12% during the aggregation phase and 15% once securitized.

Q: Can you discuss the outlook for net interest income (NII) growth in 2025? A: Brandon Filson stated that NII is expected to continue growing throughout 2025, supported by ongoing securitization activities and a strong loan pipeline. The company is confident in its ability to maintain and increase NII as it capitalizes on current market conditions.

Q: How do you view the non-QM market in light of potential regulatory changes? A: Brandon Filson expressed optimism about the non-QM market, suggesting that potential regulatory changes could expand the market by shifting loans away from GSEs. However, he acknowledged that regulatory outcomes remain uncertain.

Q: What is the company's stance on using cash from securitizations for stock repurchases? A: Brandon Filson indicated that while the senior unsecured market is open, the company prefers to use capital for investments yielding 15% to 20% returns rather than stock repurchases, given the current dividend yield of around 13%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.