Angel Oak Mortgage's Q4 2024: Securitization, Dividends, and Delinquencies—A Clash of Perspectives

These are the key contradictions discussed in Angel Oak Mortgage's latest 2024Q4 earnings call, specifically including: Securitization Economics, Dividend Sustainability, Net Interest Income (NII) expectations and growth, and Portfolio Delinquency Levels:



Financial Performance and Net Interest Margin:
- Angel Oak Mortgage REIT reported a 9% increase in net interest income for Q4, accompanied by reduced operating expenses and active loan purchases.
- The growth was supported by a discipline approach in executing a proven management model to drive consistent, sustainable growth.

Capital Deployment and Securitization:
- The company exceeded its goal of conducting one securitization per quarter, executing five securitizations in 2024, with a total unpaid principal balance of $855 million.
- This strategy increased capital flexibility, enhanced portfolio yield, and facilitated loan portfolio growth.

Book Value Decline and Market Volatility:
- There was a 9.8% decline in GAAP book value per share to $10.17 and a 6.6% decline in economic book value to $13.10 per share by the end of 2024.
- The decline was primarily due to interest rate and spread movements that resulted in unrealized losses on securitized and unsecuritized portfolios.

Credit Quality and Delinquency Rates:
- The weighted average percentage of loans 90 days plus delinquent increased to 2.4%, up from 1.85% at the end of Q3.
- This was anticipated as an economic stress period and is mitigated by low LTV and tight underwriting standards, which are expected to protect against losses throughout a cycle.