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- **Revenue Growth**: 13% YoY net interest income, 2% QoQ, driven by disciplined capital deployment.
- **Cost Efficiency**: 13% YoY operating expense decline, 19% YoY first 9 months improvement.
- **Portfolio Yield**: 8.7% weighted average coupon, 11% HELOCs, 7.37% non-QM loans.
- **Leverage Management**: 1.9x debt-to-equity, $707M undrawn capacity.
- **Strategic Moves**: $19M legacy capital redeployment, 10+ annual securitizations.
- **Credit Strength**: 2.2% delinquency rate, outperforming non-QM peers.
- **Future Outlook**: $200-300M/Q loan purchases, 11% HELOC yields, 12-14% returns on legacy capital.

**【CEO Summary Section】**
- Q3 2025 net interest income grew 13% YoY and 2% QoQ, driven by disciplined capital deployment and cost control.
- GAAP book value per share increased 2.2% to $10.60, with economic book value at $12.72, reflecting portfolio valuations and securitization activity.
- Retired $19M from legacy securitizations (AOMT 2019-2 and 2019-4), reinvested into higher-yielding loans and securitizations.
- 2025-10 securitization of $274M released $22M for redeployment, with senior bonds issued at 125bps over treasuries.
- Credit metrics: 2.2% delinquency rate (down 15bps QoQ), outperforming non-QM peers.

**【CFO Financial Commentary】**
- Operating expenses (excl. securitization costs) down 13% YoY and 5% QoQ, with 19% YoY decline in first 9 months.
- Interest income $36.7M (34% YoY growth), net interest income $10.2M (13% YoY growth).
- Weighted average coupon on portfolio 8.7%, with 7.37% for non-QM loans and 11.03% for HELOCs.
- Undrawn warehouse capacity $707.4M, recourse debt-to-equity ratio 1.9x as of Q3 end.
- 2025-10 securitization reduced debt-to-equity to ~1x post-transaction.

**【Q&A Key Highlights】**
- Legacy securitization calls: 6-7% retained yields upgraded to 12-14% through reinvestment.
- Competitive advantage: long-term relationships with originators, consistent execution vs. new entrants.
- Future growth: $200-300M/Q loan purchases, HELOCs at 11%+ coupons, and 10+ securitizations/year.
- Economic vs. GAAP book value: mark-to-market impact of legacy bonds vs. current portfolio valuations.
- HELOC focus: 75M-150M portfolio, 11%+ yields vs. 7.25% non-QM loans.
- Leverage strategy: terming out funding costs through frequent securitizations.

Angel Oak Mortgage REIT, Inc. (AOMR) Q3 2025 Earnings Call Transcript

- **Strategic Securitization Growth**: Completed $371.5M in securitizations and issued $42.5M unsecured debt, driving 5% YoY net interest income growth.
- **Improved Credit Metrics**: 90+ day delinquency rate down 44bps to 2.35%, outperforming peers in non-QM securitizations.
- **Cost Efficiency**: Year-to-date operating expenses down 22% YoY, with $5.7M in non-securitization costs.
- **Future Capital Moves**: Exploring preferred equity issuance and targeting Q3 securitization to capitalize on stable 7.5%-8.5% loan rates.
- **Resilient Portfolio**: 8.4%+ coupons on new loans, with prepayment speeds below modeled levels, mitigating refinancing risk.

**【Management Opening Remarks】**
- KC Kelleher provided an overview of the call, emphasizing forward-looking statements and non-GAAP financial measures. He highlighted the availability of the earnings supplement on the company’s website.

**【CEO Summary Section】**
- **Securitization and Capital Deployment**: Completed 2 securitizations ($284.3M and $87.2M) and issued $42.5M of unsecured debt, deploying capital into high-quality loans. New senior unsecured notes expected to be accretive within the next quarter.
- **Financial Performance**: 5% YoY growth in net interest income (Q2 2025 vs. Q2 2024), with year-to-date growth of 11%. Book value per share decreased 3.1% to $10.37 due to unrealized losses and dividend payments.
- **Credit Quality**: 90+ day delinquency rate improved to 2.35% (down 44bps vs. Q1 2025), driven by better performance in recent securitizations. AOMT shelf outperforms peers in delinquency metrics.
- **Market Strategy**: Focused on purchasing loans with mid-7% to high-8% coupons, maintaining stable rates amid market uncertainty. HELOCs with 11% coupons were a key growth driver.

**【CFO Financial Commentary】**
- **GAAP Results**: Q2 GAAP net income of $0.03 per share, distributable earnings of $0.11 per share. Unrealized losses of $1.6M impacted book value.
- **Operating Expenses**: Year-to-date operating expenses (excluding securitization costs) down 22% YoY. Q2 interest income up 35% YoY to $35.1M, net interest income up 5% YoY to $9.9M.
- **Balance Sheet**: $40.5M cash, recourse debt-to-equity ratio of 1.1x. Loans and trust portfolio weighted average coupon 5.8%, funding cost 4.1%.
- **Credit Metrics**: Weighted average FICO score 757, LTV ratio 68.4%. Prepayment speeds 11.1% (Q2 2025), below modeled 20-30% range.

**【Q&A Key Highlights】**
- **Growth Pathway**: Exploring preferred equity issuance (e.g., Annaly’s 9% deal) and leveraging existing unsecured debt capacity. Future securitizations (~$200M-$300M) expected in Q3 2025.
- **Book Value**: Flat to slightly up as of late Q2, with potential recovery from lower funding costs if rates decline.
- **HELOC Strategy**: Slowed purchases to prepare for securitization, targeting 8.4%+ coupons. Long-term focus on non-QM loans with stable rates.
- **Market Dynamics**: Increased competition in non-QM space, but overall market growth and disciplined credit standards mitigate risk. Hybrid ARMs not yet viable due to yield curve dynamics.


Angel Oak Mortgage REIT, Inc. (AOMR) Q2 2025 Earnings Call Transcript

- **Q1 2025 Growth**: 18% YoY net interest income growth, $20.5M GAAP net income, and 5.2% book value increase to $10.70 per share.
- **Securitization Success**: AOMT 2025-4 deal freed $24.7M for new loans, executed at 180bps AAA spreads amid volatility.
- **Credit Resilience**: 2.79% 90+ DPD rate, 70% LTV loans, and 7.6% WAC originations support stable performance.
- **Cost Efficiency**: 29% YoY decline in operating expenses, 1.3x debt-to-equity ratio post-securitization.
- **Market Position**: Non-QM market expands to $100B+ annually; AOMR maintains credit quality amid competitive landscape.

**【CEO Opening Remarks】**
- Q1 2025 net interest margin growth driven by accretive loan purchases, with valuation tailwinds boosting book value by 5.2% to $10.70 per share.
- Maintained operating expense savings (29% YoY decline) and executed AOMT 2025-4 securitization post-quarter end, freeing $24.7M for new loan purchases.
- Despite international trade volatility, non-QM loan originations stable in mid-7% range; securitization market remains resilient with 180bps AAA spreads during April execution.
- Strategic partnership with Brookfield Asset Management to enhance growth opportunities, with no immediate changes to AOMR operations.

**【CFO Financial Highlights】**
- GAAP net income: $20.5M ($0.87/diluted share); distributable earnings: $4.1M ($0.17/diluted share), driven by $18.7M unrealized gains on loan portfolios.
- Net interest income up 18% YoY to $10.1M; loan purchases of $259M carried 7.67% WAC, 70% LTV, and 751 FICO score.
- Post-AOMT 2025-4, weighted average coupon on loans and securitization trust portfolio expected to rise to 5.8% from 5.6%.
- Operating expenses (ex. non-cash items) down 29% YoY to $2.8M; recourse debt-to-equity ratio reduced to 1.3x post-securitization.
- Economic book value increased 2.4% to $13.41 per share, supported by portfolio earnings growth and valuation gains.

**【Q&A Key Takeaways】**
- **Securitization Execution**: April 2025-4 deal executed amid volatility at 180bps AAA spreads, now tightening to 160bps; expected 13-17% yield vs. 15-20% historical target.
- **Prepayment Risk**: Portfolio-wide prepay speeds at 10 CPR, well below 25-30 CPR historical non-QM norms; 7.5%+ coupon loans insulate against refi incentives.
- **Market Dynamics**: Non-QM market grows to $100B+ annually, driven by agency lenders shifting focus; AOMR maintains credit discipline, avoiding market share chase.
- **Funding Costs**: Warehouse spreads reduced to 165-190bps over SOFR, providing tailwind for future net interest income growth.
- **Credit Performance**: 90+ DPD rate at 2.79%, up 35bps YoY but consistent with normalized credit cycles; low LTV (70%) and underwriting standards mitigate risk.


Angel Oak Mortgage (AOMR)-5 May 25-2025 Q1 Earnings call transcript

- **NIM Growth and Dividend Support**: Q4 net interest income up 9% QoQ, with distributable earnings covering $0.32 dividend.
- **Securitization Success**: 5 deals in 2024 ($855M UPB) drove yield expansion, with re-levering older deals targeting 15%+ ROE.
- **Rate Resilience**: Non-QM loans at 7.5% coupons insulated from prepayment risk; book value sensitivity to rates moderating in 2025.
- **Credit Stability**: 2.4% 90+ DPD rate on strong underwriting (70% LTV, 749 FICO), with Feb 2025 book value up 3% vs. Dec 2024.

**【CEO Summary Section】**
- **Net Interest Margin Expansion**: Q4 2024 saw continued NIM growth, driven by disciplined portfolio management and 5 securitizations exceeding the target of 1 per quarter.
- **Cash Flow and Dividend Coverage**: Maintained strong cash flow generation, with distributable earnings of $9.9 million in Q4, supporting the $0.32 dividend payout.
- **Long-Term Outlook**: Despite Q4 book value decline due to rate volatility, management remains optimistic on the non-QM market, with 2024 loan purchases carrying a 7.64% weighted average coupon and 70.2% LTV.
- **Capital Strategy**: Flexible approach to raising funds, with senior unsecured notes issued in 2024 proving accretive within one quarter.

**【CFO Financial Commentary】**
- **Q4 Financials**: GAAP net loss of $15 million vs. distributable earnings of $9.9 million, reflecting $24.4 million in unrealized losses on securitized loans. Full-year distributable earnings were $7 million.
- **Interest Income Growth**: Q4 interest income up 16% QoQ and 30% YoY, with net interest income up 9% QoQ and 28% YoY. 2024 loan purchases totaled $684 million.
- **Expense Management**: Operating expenses (excluding non-cash items) down 16% QoQ and 14% YoY, at $3.1 million in Q4.
- **Balance Sheet Health**: $40.8 million cash, 1.0x recourse debt-to-equity, and $920 million undrawn warehouse capacity.

**【Q&A Highlights】**
- **Prepayment Risk**: 2021-2023 securitizations have 8% CPR, stable due to loans at 5.25% coupons vs. 7.5% current rates. Re-levering older securitizations could add 15%+ ROE.
- **Rate Sensitivity**: Non-QM loans are "cash-flow positive" at current rates, with minimal refinancing incentive. Book value trends depend on rate stability; Feb 2025 book value up ~3% vs. Dec 2024 levels.
- **Regulatory Outlook**: Potential GSE reforms under new administration could expand non-QM market, though execution remains uncertain.
- **Credit Quality**: 90+ DPD rate at 2.4% (up from 1.85% Q3), within expected range for normalized credit cycles. LTVs <70% and FICOs >740 provide downside protection.


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