Executive Summary

Q3 2025 delivered a clean EPS beat and sequential improvement: diluted EPS $0.46 vs S&P Global consensus $0.31; net interest income rose to $10.2M (+2.4% q/q, +12.9% y/y) as portfolio valuations improved and operating expenses were held in check . S&P Global estimates shown with an asterisk; values retrieved from S&P Global.
Management executed portfolio optimization: called and retired two 2019 securitizations, re-securitized (AOMT 2025-R1), and post-quarter executed AOMT 2025-10; additionally added a new $200M repo facility at Term SOFR +1.60%, lowering funding costs and diversifying lenders .
Book value per share increased q/q on a GAAP basis ($10.60, +2.2%), while economic book value per share declined modestly ($12.72, -1.9%), reflecting fair value adjustments to securitized debt .
Dividend maintained at $0.32 per share; sequential earnings growth and capital markets execution are the near-term stock catalysts, alongside a clear EPS beat and active securitization pipeline .

What Went Well and What Went Wrong

What Went Well

Portfolio reallocation and securitization activity: called AOMT 2019‑2 and 2019‑4, re-securitized into AOMT 2025‑R1 releasing $19.4M of cash; subsequently issued AOMT 2025‑10 ($274.3M UPB), repaid ~$237.4M debt, and freed $22.1M for loan purchases/operations .
Funding and cost of capital: established a new $200M repurchase facility at Term SOFR +1.60%, diversifying creditor base and reducing interest expense; CEO emphasized “constructive environment” and “resumed quarterly sequential net income growth” with expense discipline .
Core earnings momentum: net interest income rose to $10.2M (+2.4% q/q, +12.9% y/y), with GAAP net income of $11.4M; book value per share increased to $10.60 (+2.2% q/q) .

Management quote: “We demonstrated our ability to capitalize on opportunities to drive accretive growth… called and retired two legacy securitizations… established a new credit facility at attractive rates, diversifying our creditor base and driving reduced interest expense” .

What Went Wrong

Economic book value per share declined to $12.72 (−1.9% q/q) due to fair value adjustments of securitized debt despite GAAP book value rising, highlighting sensitivity to market valuations .
Non-GAAP Distributable Earnings were only $0.5M ($0.02 per diluted share), substantially below GAAP net income, reflecting the exclusion of significant unrealized gains in DE methodology .
Year-over-year GAAP net income fell (Q3 2025 $11.4M vs Q3 2024 $31.2M) as realized/unrealized gains normalized versus elevated Q3 2024 levels (Total realized/unrealized gains $4.7M in Q3 2025 vs $28.8M in Q3 2024) .

Financial Results

Income Statement and EPS vs prior periods

Metric	Q3 2024	Q2 2025	Q3 2025
Interest Income ($USD)	$27.44M	$35.09M	$36.66M
Interest Expense ($USD)	$18.42M	$25.15M	$26.48M
Net Interest Income ($USD)	$9.02M	$9.94M	$10.18M
Total Realized & Unrealized Gains/Losses ($USD)	$28.84M	$(4.08)M	$4.72M
Total Operating Expenses ($USD)	$3.82M	$5.10M	$3.19M
GAAP Net Income to Common ($USD)	$31.20M	$0.77M	$11.41M
Diluted EPS ($USD)	$1.29	$0.03	$0.46
Distributable Earnings ($USD)	$(3.36)M	$2.64M	$0.53M

Book Value per Share and Economic BV

Metric	Q3 2024	Q2 2025	Q3 2025
GAAP Book Value/Share ($)	$11.28	$10.37	$10.60
Economic Book Value/Share ($)	$14.02	$12.97	$12.72

Portfolio Composition and Leverage

Metric	Dec 31, 2024	Q2 2025	Q3 2025
Whole Loans – Fair Value ($USD)	$183.06M	$200.67M	$425.78M
Loans in Securitization Trusts – Fair Value ($USD)	$1.697B	$1.903B	$1.862B
RMBS – Fair Value ($USD)	$300.24M	$361.88M	$235.02M
Cash & Equivalents ($USD)	$40.76M	$40.50M	$51.60M
Recourse Debt to Equity (x)	—	~1.1x	~1.9x

KPIs and Activity

KPI	Q1 2025	Q2 2025	Q3 2025
Loan Purchases ($USD)	$259.0M	$146.6M	$237.6M
Whole Loan WAC (%)	7.55%	8.37%	7.98%
Weighted Avg CLTV (%)	70.0%	68.4%	69.4%
Weighted Avg Credit Score	751	757	759
Dividend/Share ($)	$0.32	$0.32	$0.32

Actual vs S&P Global Consensus (Q3 2025)

Metric	Consensus	Actual	Surprise
Primary EPS ($)	0.308*	0.46	+0.15 (beat)
Revenue ($USD)	$10.56M*	$10.18M (Net Interest Income)	−$0.38M (near)

Values with an asterisk retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
EPS/Revenue	Q4 2025	Not provided	Not provided	Maintained (no formal guidance)
Dividend/Share	Q3 2025	$0.32	$0.32	Maintained
Funding Costs	Forward	N/A	New $200M repo at Term SOFR+1.60%	Introduced facility (lower cost)
Capital Deployment	Forward	N/A	Proceeds from AOMT 2025‑10 to repay ~$237.4M debt; $22.1M cash for purchases/ops	Programmatic issuance maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Programmatic securitization	Q1: Executed AOMT 2025‑4 (sole contributor), reduced recourse debt; plan to expand earnings via new purchases . Q2: Issued AOMT 2025‑4 and participated in 2025‑6; expect sequential NII growth next quarter .	Issued AOMT 2025‑10 post‑quarter, called 2019 deals and re‑securitized into 2025‑R1 .	Strengthening cadence; consistent issuance.
Funding diversification/costs	Q2: 3 loan financing lines, $931.4M capacity .	New $200M repo facility at Term SOFR+1.60%; lower interest expense and diversified creditor base .	Funding costs improving.
Portfolio growth/quality	Q1–Q2: Purchases $259.0M (Q1) and $146.6M (Q2); WAC rising; disciplined deployment .	Purchases $237.6M; WAC 7.74% for new purchases; overall WAC 7.98% .	Steady volumes; attractive coupons.
Macro/tariffs	Q1: Noted uncertainty around tariffs affecting market volatility .	CEO cited constructive environment; observed valuation increases across portfolio .	Macro tone more favorable.
Operating expenses	Q1: Operating expense savings highlighted . Q2: OpEx $5.10M .	OpEx $3.19M (down q/q and y/y) .	Expense discipline improved.
Leverage/recourse debt	Q1: Recourse debt to equity ~2.3x; reduced post‑AOMT 2025‑4 to ~1.3x . Q2: ~1.1x .	~1.9x at Q3 2025 given active balance sheet actions .	Higher q/q, still moderate.

Management Commentary

Strategic message: “We resumed quarterly sequential net income growth… maintained operating expense levels, and observed increases in valuations across the portfolio compared to the second quarter of 2025… executed the AOMT 2025‑10 securitization with favorable terms” — Sreeni Prabhu, CEO .
Capital markets focus: “Called and retired two legacy securitizations… established a new credit facility at attractive rates, diversifying our creditor base and driving reduced interest expense” — Sreeni Prabhu, CEO .
Balance sheet positioning: Capacity of ~$707.4M on financing lines to purchase new loans; target assets $2.5B; recourse debt-to-equity ~1.9x .

Q&A Highlights

Returns from calling legacy deals: management discussed moving from ~6% returns to ~14% base case on redeployed capital after calling 2019 securitizations and re‑securitizing; ~$19.4M cash released for operations and loan purchases .
Programmatic issuance: company prefers consistent securitization cadence over waiting for larger deal sizes to tighten spreads and manage risk .
Growth runway: management indicated a steady purchase pace of ~$200–$300M per quarter amid competitive non‑QM market, supported by Angel Oak Mortgage Solutions sourcing .
Funding costs clarity: new $200M repo facility (Term SOFR+1.60%) seen as supportive to lower interest expense and earnings trajectory .
Transcript sources: Seeking Alpha posted the full Q3 2025 call transcript and slides .

Estimates Context

EPS beat: Primary EPS consensus $0.31* vs actual diluted EPS $0.46; strong positive surprise likely prompts estimate revisions higher. Values retrieved from S&P Global.
Revenue consensus: S&P Global “Revenue Consensus Mean” $10.56M*; company reports net interest income at $10.18M, approximately in line (methodology differences may exist between reported “revenue” and NII for mortgage REITs). Values retrieved from S&P Global.
Coverage/count: 5 EPS estimates; 1 revenue estimate; target price consensus $11.55* based on 5 estimates. Values retrieved from S&P Global.

Key Takeaways for Investors

Near‑term: clear EPS beat and sequential NII/GAAP net income improvement plus lower funding cost facility support a constructive setup into Q4; dividend maintained at $0.32 .
Medium‑term: programmatic securitizations (AOMT 2025‑10) and calling delevered legacy deals reallocate capital into higher‑yield whole loans, improving ROE trajectory .
Watch valuation sensitivity: economic BV per share dipped q/q (-1.9%), reflecting fair value dynamics; monitor spread movements and securitization marks .
Expense discipline: OpEx reduced y/y and q/q, aiding earnings durability; continued control is supportive in a competitive non‑QM environment .
Leverage: recourse debt-to-equity rose to ~1.9x; expect leverage to oscillate with securitization timing; facility diversification mitigates funding risk .
Pipeline and sourcing: steady $200–$300M quarterly purchase cadence underpinned by Angel Oak Mortgage Solutions; competitive edge via consistent non‑QM program and originator relationships .
Risks: competition in non‑QM, valuation marks on retained bonds, and macro/tariff uncertainty noted earlier; monitor economic BV, realized/unrealized gains volatility, and repo spreads .

Notes and Sources:

Q3 2025 8-K Earnings Press Release and financial statements .
Q3 2025 press release mirror .
Q2 2025 press release and financials .
Q1 2025 8-K press release and financials .
Earnings call transcript and highlights: Seeking Alpha and Investing.com/Yahoo/GuruFocus .
S&P Global consensus estimates shown with an asterisk; values retrieved from S&P Global.

Angel Oak Mortgage REIT, Inc. (AOMR)·Q3 2025 Earnings Summary