Angel Oak Mortgage REIT, Inc. Reports Fourth Quarter and Full Year 2023 Financial Results
Fourth Quarter Highlights
-
Q4 2023 GAAP net income of
$28.6 million , or$1.15 per diluted share of common stock. -
Q4 2023 Distributable Earnings of
$(6.5) million , or$(0.26) per diluted share of common stock. -
Declared dividend of
$0.32 per share of common stock, paid onFebruary 29, 2024 to common stockholders of record as ofFebruary 22, 2024 .
Full Year 2023 Highlights
-
GAAP book value of
$10.26 per share of common stock as ofDecember 31, 2023 . -
Economic book value of
$13.54 per share of common stock as ofDecember 31, 2023 . -
Total GAAP net income of
$33.7 million , or$1.35 per diluted share of common stock, for the year endedDecember 31, 2023 . -
Distributable Earnings of
$(28.1) million , or$(1.14) per diluted share of common stock, for the year endedDecember 31, 2023 .
Throughout 2023, the Company purchased over
Prabhu continued, “Through the second half of the year, we have steadily expanded net interest margin while maintaining operating expense reductions and growing the balance sheet. To that end, as of
Fourth Quarter Portfolio and Investment Activity
-
As of
December 31, 2023 , the weighted average coupon of our residential whole loans portfolio increased to 6.78%, nearly 100 basis points higher than at the end of the third quarter 2023. -
Prior to year-end, in
December 2023 , the Company participated in AOMT 2023-7 along other Angel Oak entities. The Company contributed loans with a scheduled unpaid principal balance of$42.0 million and a 5.30% weighted average coupon.
Full Year Portfolio and Investment Activity
-
Purchased approximately
$222.7 million of newly originated, market coupon non-QM residential mortgage loans with a weighted average coupon of 8.37% in 2023. -
In 2023, the Company participated in four residential non-QM securitizations, contributing
$662 million in aggregate unpaid principal balance of residential mortgage loans to such securitizations. -
Portfolio totaled
$2.1 billion of residential mortgage loans and other target assets as ofDecember 31, 2023 . -
Improved weighted average coupon of residential whole loans portfolio from 4.80% as of the end
December 31, 2022 to 6.78% as ofDecember 31, 2023 .
Capital Markets Activity
-
As of
December 31, 2023 , the Company was party to three financing lines which permit borrowings in an aggregate amount of up to$1.1 billion . -
Our total financing capacity as of
December 31, 2023 stands at$1.1 billion of which approximately$291 million is drawn, leaving capacity of approximately$760 million for new loan purchases. -
In
November 2023 the Company converted its$286 million static pool financing to a revolving facility with “mark to market” features, reducing the maximum borrowing capacity to$200 million , and reducing the variable interest rate by approximately 250 basis points as of the date of the conversion.
Balance Sheet
- The Company pragmatically grew the balance sheet amid an uncertain market while protecting liquidity and managing risk, increasing GAAP book value per share by 10.4% and economic book value per share by 2.6% versus the prior quarter.
-
Held residential mortgage whole loans with fair value of
$380.0 million as ofDecember 31, 2023 . -
Recourse debt to equity ratio was 1.9x as of
December 31, 2023 .-
Recourse debt to equity ratio was 1.3x as of
January 16, 2024 , which reflects the maturity of short-termUS Treasury securities and their corresponding repurchase agreements.
-
Recourse debt to equity ratio was 1.3x as of
Dividend
On
Conference Call and Webcast Information
The Company will host a live conference call and webcast today,
To Participate in the Telephone Conference Call:
Dial in at least 15 minutes prior to start time.
Domestic: 1-844-826-3033
International: 1-412-317-5185
Conference Call Playback:
Domestic: 1-844-512-2921
International: 1-412-317-6671
Passcode: 10185779
The playback can be accessed through
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 generally accepted accounting principles in
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 total 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 share of common stock 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. 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,” “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 or their impact or the actual effect of existing or future plans or strategies is inherently uncertain. 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
About
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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
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(Unaudited) |
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(in thousands, except for share and per share data) |
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Three Months Ended |
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Twelve Months Ended |
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|
|
|
|
|
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INTEREST INCOME, NET |
|
|
|
|
|
|
|
||||||||
Interest income |
$ |
24,550 |
|
|
$ |
28,585 |
|
|
$ |
95,953 |
|
|
$ |
115,544 |
|
Interest expense |
|
16,310 |
|
|
|
21,175 |
|
|
|
67,052 |
|
|
|
63,024 |
|
NET INTEREST INCOME |
|
8,240 |
|
|
|
7,410 |
|
|
|
28,901 |
|
|
|
52,520 |
|
|
|
|
|
|
|
|
|
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REALIZED AND UNREALIZED GAINS (LOSSES), NET |
|
|
|
|
|
|
|
||||||||
Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS |
|
(10,470 |
) |
|
|
(65,141 |
) |
|
|
(37,526 |
) |
|
|
(8,717 |
) |
Net unrealized gain (loss) on mortgage loans, debt at fair value option, and derivative contracts |
|
35,621 |
|
|
|
53,268 |
|
|
|
63,489 |
|
|
|
(201,753 |
) |
TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET |
|
25,151 |
|
|
|
(11,873 |
) |
|
|
25,963 |
|
|
|
(210,470 |
) |
|
|
|
|
|
|
|
|
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EXPENSES |
|
|
|
|
|
|
|
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Operating expenses |
|
2,293 |
|
|
|
1,790 |
|
|
|
9,889 |
|
|
|
16,651 |
|
Stock compensation |
|
494 |
|
|
|
574 |
|
|
|
1,689 |
|
|
|
5,753 |
|
Securitization costs |
|
158 |
|
|
|
3 |
|
|
|
2,484 |
|
|
|
3,137 |
|
Management fee incurred with affiliate |
|
1,382 |
|
|
|
1,969 |
|
|
|
5,842 |
|
|
|
7,799 |
|
Total operating expenses |
|
4,327 |
|
|
|
4,336 |
|
|
|
19,904 |
|
|
|
33,340 |
|
|
|
|
|
|
|
|
|
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INCOME (LOSS) BEFORE INCOME TAXES |
|
29,064 |
|
|
|
(8,799 |
) |
|
|
34,960 |
|
|
|
(191,290 |
) |
Income tax expense (benefit) |
|
465 |
|
|
|
— |
|
|
|
1,246 |
|
|
|
(3,457 |
) |
NET INCOME (LOSS) |
$ |
28,599 |
|
|
$ |
(8,799 |
) |
|
$ |
33,714 |
|
|
$ |
(187,833 |
) |
Preferred dividends |
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(14 |
) |
NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS |
$ |
28,599 |
|
|
$ |
(8,801 |
) |
|
$ |
33,714 |
|
|
$ |
(187,847 |
) |
Other comprehensive income (loss) |
|
3,197 |
|
|
|
(12,148 |
) |
|
|
16,152 |
|
|
|
(24,127 |
) |
TOTAL COMPREHENSIVE INCOME (LOSS) |
$ |
31,796 |
|
|
$ |
(20,949 |
) |
|
$ |
49,866 |
|
|
$ |
(211,974 |
) |
|
|
|
|
|
|
|
|
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Basic earnings (loss) per common share |
$ |
1.15 |
|
|
$ |
(0.36 |
) |
|
$ |
1.36 |
|
|
$ |
(7.65 |
) |
Diluted earnings (loss) per common share |
$ |
1.15 |
|
|
$ |
(0.36 |
) |
|
$ |
1.35 |
|
|
$ |
(7.65 |
) |
|
|
|
|
|
|
|
|
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Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
24,768,921 |
|
|
|
24,586,340 |
|
|
|
24,722,285 |
|
|
|
24,547,916 |
|
Diluted |
|
24,965,271 |
|
|
|
24,586,340 |
|
|
|
24,941,758 |
|
|
|
24,547,916 |
|
|
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Condensed Consolidated Balance Sheets |
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(Unaudited) |
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(in thousands, except for share and per share data) |
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As of: |
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ASSETS |
|
|
|
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Residential mortgage loans - at fair value |
$ |
380,040 |
|
|
$ |
770,982 |
|
Residential mortgage loans in securitization trusts - at fair value |
|
1,221,067 |
|
|
|
1,027,442 |
|
RMBS - at fair value |
|
472,058 |
|
|
|
1,055,338 |
|
|
|
149,927 |
|
|
|
— |
|
Cash and cash equivalents |
|
41,625 |
|
|
|
29,272 |
|
Restricted cash |
|
2,871 |
|
|
|
10,589 |
|
Principal and interest receivable |
|
7,501 |
|
|
|
17,497 |
|
Unrealized appreciation on TBAs and interest rate futures contracts - at fair value |
|
— |
|
|
|
14,756 |
|
Other assets |
|
32,922 |
|
|
|
20,336 |
|
Total assets |
$ |
2,308,011 |
|
|
$ |
2,946,212 |
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
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|
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LIABILITIES |
|
|
|
||||
Notes payable |
$ |
290,610 |
|
|
$ |
639,870 |
|
Non-recourse securitization obligations, collateralized by residential mortgage loans in securitization trusts |
|
1,169,154 |
|
|
|
1,003,485 |
|
Securities sold under agreements to repurchase |
|
193,656 |
|
|
|
52,544 |
|
Unrealized depreciation on TBAs and interest rate futures contracts - at fair value |
|
1,334 |
|
|
|
— |
|
Due to broker |
|
391,964 |
|
|
|
1,006,022 |
|
Accrued expenses |
|
985 |
|
|
|
1,288 |
|
Accrued expenses payable to affiliate |
|
748 |
|
|
|
2,006 |
|
Interest payable |
|
820 |
|
|
|
2,551 |
|
Income taxes payable |
|
1,241 |
|
|
|
— |
|
Management fee payable to affiliate |
|
1,393 |
|
|
|
1,967 |
|
Total liabilities |
$ |
2,051,905 |
|
|
$ |
2,709,733 |
|
|
|
|
|
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Commitments and contingencies |
|
|
|
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|
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|
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STOCKHOLDERS’ EQUITY |
|
|
|
||||
Common stock, |
|
249 |
|
|
|
249 |
|
Additional paid-in capital |
|
477,068 |
|
|
|
475,379 |
|
Accumulated other comprehensive income (loss) |
|
(4,975 |
) |
|
|
(21,127 |
) |
Retained (deficit) earnings |
|
(216,236 |
) |
|
|
(218,022 |
) |
Total stockholders’ equity |
$ |
256,106 |
|
|
$ |
236,479 |
|
Total liabilities and stockholders’ equity |
$ |
2,308,011 |
|
|
$ |
2,946,212 |
|
|
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Reconciliation of Net Income (Loss) to Distributable Earnings |
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and Distributable Earnings Return on Average Equity |
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(Unaudited) |
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|
Three Months Ended |
|
Twelve Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
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|
(in thousands) |
||||||||||||||
Net income (loss) allocable to common stockholders |
$ |
28,599 |
|
|
$ |
(8,801 |
) |
|
$ |
33,714 |
|
|
$ |
(187,847 |
) |
Adjustments: |
|
|
|
|
|
|
|
||||||||
Net unrealized (gains) losses on trading securities |
|
(7,618 |
) |
|
|
— |
|
|
|
(484 |
) |
|
|
— |
|
Net unrealized (gains) losses on derivatives |
|
9,191 |
|
|
|
(11,484 |
) |
|
|
16,985 |
|
|
|
(13,054 |
) |
Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation |
|
(21,674 |
) |
|
|
(11,896 |
) |
|
|
(15,890 |
) |
|
|
67,401 |
|
Net unrealized (gains) losses on residential loans |
|
(15,511 |
) |
|
|
(29,973 |
) |
|
|
(64,009 |
) |
|
|
146,347 |
|
Net unrealized (gains) losses on commercial loans |
|
(8 |
) |
|
|
85 |
|
|
|
(91 |
) |
|
|
844 |
|
Non-cash equity compensation expense |
|
494 |
|
|
|
573 |
|
|
|
1,689 |
|
|
|
5,753 |
|
Distributable Earnings |
$ |
(6,527 |
) |
|
$ |
(61,496 |
) |
|
$ |
(28,086 |
) |
|
$ |
19,444 |
|
|
Three Months Ended |
|
Twelve Months Ended |
||||||||
|
|
|
|
|
|
|
|
||||
|
($ in thousands) |
||||||||||
Annualized Distributable Earnings |
$ |
(26,108) |
|
$ |
(245,984) |
|
$ |
(28,086) |
|
$ |
19,444 |
Average total stockholders’ equity |
$ |
243,794 |
|
$ |
249,954 |
|
$ |
240,524 |
|
$ |
355,944 |
Distributable Earnings Return on Average Equity |
|
(10.71%) |
|
|
(98.41%) |
|
|
(11.68)% |
|
|
5.46% |
|
|||||||||||||||
Reconciliation of Stockholders’ Equity to Stockholders’ Equity Including Economic Book Value Adjustments |
|||||||||||||||
and Economic Book Value per Common Share |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
(in thousands, except for share and per share data) |
||||||||||||||
GAAP total stockholders’ equity |
$ |
256,106 |
$ |
231,802 |
$ |
232,676 |
$ |
244,378 |
$ |
236,479 |
|||||
Adjustments: |
|
|
|
|
|
||||||||||
Fair value adjustment for securitized debt held at amortized cost |
|
81,942 |
|
97,592 |
|
95,326 |
|
89,284 |
|
90,348 |
|||||
Stockholders’ equity including economic book value adjustments |
$ |
338,048 |
$ |
329,394 |
$ |
328,002 |
$ |
333,662 |
$ |
326,827 |
|||||
|
|
|
|
|
|
||||||||||
Number of shares of common stock outstanding at period end |
|
24,965,274 |
|
24,955,566 |
|
24,924,886 |
|
24,925,357 |
|
24,925,357 |
|||||
Book value per share of common stock |
$ |
10.26 |
$ |
9.29 |
$ |
9.34 |
$ |
9.80 |
$ |
9.49 |
|||||
Economic book value per share of common stock |
$ |
13.54 |
$ |
13.20 |
$ |
13.16 |
$ |
13.39 |
$ |
13.11 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240305782780/en/
Investors:
investorrelations@angeloakreit.com
855-502-3920
IR Agency Contact:
312-445-2870
AOMR@alpha-ir.com
Company Contact:
KC Kelleher, Head of Corporate Finance & Investor Relations
404-528-2684
kc.kelleher@angeloakcapital.com
Source: