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Angel Oak Mortgage REIT, Inc. (AOMR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong net interest income ($9.9M, +20% YoY) but a GAAP net loss of $(15.1)M due to late-quarter rate and spread moves driving unrealized losses; Distributable Earnings (DE) were positive at $9.9M, covering 90% of the dividend on a cash basis per management commentary .
  • Book value per share fell to $10.17 (GAAP) and $13.10 (economic) at year-end, reflecting unrealized marks; management noted book value recovered ~3% net of dividend by Feb 28, 2025, as spreads improved, a positive near-term catalyst .
  • Capital deployment and securitization execution were robust: five deals in FY24 totaling $855M UPB; Q4 included AOMT 2024-10 ($316.8M, 7.79% WAC) and participation in AOMT 2024-13 ($167.2M contributed; $288.9M total, 7.37% WAC) .
  • Management guided to continued net interest margin expansion and maintained reduced OpEx levels in 2025 amid flexible capital markets participation; recourse debt-to-equity expected to remain below 2.5x, supporting disciplined growth .

What Went Well and What Went Wrong

What Went Well

  • Net interest income increased to $9.9M (+20% YoY; +9% QoQ) as loan purchases and methodical securitizations widened net interest margin; “we expect [NII] to continue to grow throughout ’25” .
  • Securitizations surpassed cadence guidance (five in FY24, exceeding one-per-quarter), with Q4 AOMT 2024-10 lowering funding costs by >110 bps and recycling capital for accretive loan purchases .
  • Operating discipline persisted: OpEx excluding stock comp and securitization fell ~16% YoY in Q4; management emphasized “maintenance of reduced operating expense levels” and disciplined, accretive capital allocation .

What Went Wrong

  • GAAP net loss of $(15.1)M and book value decline (GAAP $10.17; economic $13.10) driven by unrealized losses amid a late Q4 selloff and spread widening; management expects recoupment over time via paydowns or tighter spreads .
  • 90+ day delinquencies rose to 2.4% from 1.85% in Q3, consistent with normalization; CPR held low at 8.4%, dampening near-term BV convergence to economic book without a larger rate decline .
  • Warehouse leverage and balance sheet mix continue to require active securitization and capital recycling to sustain dividend coverage; dividend paid $0.32 while DE was $0.42/diluted share in Q4, indicating progress but dependence on ongoing execution .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Interest Income ($USD Millions)$24.55 $27.44 $31.87
Net Interest Income ($USD Millions)$8.24 $9.02 $9.86
GAAP Net Income (Loss) ($USD Millions)$28.60 $31.20 $(15.06)
Diluted EPS ($)$1.15 $1.29 $(0.65)
Distributable Earnings ($USD Millions)$(6.53) $(3.37) $9.87
Distributable Earnings per Diluted Share ($)N/A$(0.14) $0.42
Balance Sheet & Book ValueQ4 2023Q3 2024Q4 2024
Cash and Cash Equivalents ($USD Millions)$41.63 $42.05 $40.76
GAAP Book Value per Share ($)$10.26 $11.28 $10.17
Economic Book Value per Share ($)$13.54 $14.02 $13.10
Recourse Debt-to-Equity (x)N/A1.8x ~1.0x

Segment breakdown: Not applicable; AOMR reports mortgage-credit portfolio results and financing/mark-to-market impacts .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Recourse Debt-to-EquityOngoing“Expected to remain below 2.5x” (Q3 release) “Expected to remain below 2.5x going forward” (Q4 release) Maintained
Net Interest Margin / NIIFY 2025“Expect continued earnings growth into Q4 and beyond” (Q3) “Expect continued growth in net interest margin… in 2025” (Q4) Maintained (confidence increased)
Securitization CadenceFY 2024 → FY 2025“Target of one per quarter” (implied) Exceeded target in FY24 (five deals); continue methodical strategy Exceeded (execution)
Dividend per ShareQ3/Q4$0.32 declared (Q3) $0.32 declared (paid Feb 28, 2025) Maintained
Operating ExpensesFY 2025Cost discipline underway (Q2/Q3) Maintain reduced OpEx; ~10% YoY decrease excl. securitization costs in FY24 Maintained/Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Rates/Macro & ValuationQ2: sequential NII growth; cautious on marks . Q3: constructive macro; Sept rate cut; expected continued growth .Late Q4 selloff widened spreads, driving unrealized losses; book value down but improving QTD into Feb .Mixed: near-term headwind, early Q1 recovery
Securitization StrategyQ2: AOMT 2024-4 sole; AOMT 2024-6 participation . Q3: AOMT 2024-10 sole, >110 bps funding cost reduction .Q4: AOMT 2024-10 and AOMT 2024-13 participation; plan continued methodical execution .Strengthening execution
Capital Markets & Unsecured NotesQ2: Announced $50M notes (9.5%) in July . Q3: Accretive within one quarter; used for loan purchases and partial buyback .Continue to monitor unsecured market; focus on ROE vs buybacks; accretive opportunities prioritized .Opportunistic, disciplined
Credit/DelinquenciesQ2: Portfolio credit metrics strong (WAC 7.71%; weighted avg FICO 749) . Q3: improving marks; strong loan quality .90+ delinquency 2.4% (from 1.85% Q3); normalized range 2–3% expected; slight improvement in January payments .Normalizing to historical
Prepayment Speeds (CPR)Limited change; tight rate environment .CPR 8.4%; insulated 2021–2023 vintages likely need 150–200 bps rate decline to materially lift prepayments .Stable/low
Dividend CoverageProgressing with NII growth .~90% cash coverage in Q4; management expects coverage to improve across ’25 .Improving

Management Commentary

  • “We closed out 2024 with another quarter of net interest margin expansion… increasing cash flow and dividend coverage… designed to drive consistent, sustainable growth” – CEO Sreeni Prabhu .
  • “Rates sold off and spreads widened… the valuation decrease was almost exclusively driven by unrealized losses in our securitized loan portfolio… these unrealized losses will be recouped as the loans pay off and/or rates and spreads decline” – CFO Brandon Filson .
  • “We completed 5 securitizations exceeding our target of one per quarter… enhancing capital flexibility, increasing portfolio yield and funding further loan portfolio growth” – CEO Sreeni Prabhu .
  • “We expect continued growth in net interest margin and maintenance of reduced operating expense [in 2025]… supported by opportunistic capital markets participation” – CEO Sreeni Prabhu .

Q&A Highlights

  • Prepayments and vintage insulation: 2021–2023 securitized vintages (WAC ~5–5.25%) likely require 150–200 bps rate decline to materially accelerate CPR; current CPR at 8.4% seen as well insulated .
  • Resecuritization yield potential: delevered 2019 securitizations could be re-levered to ~12% ROE during whole-loan aggregation and ~15% with securitized-on-securitized structures, depending on deal specifics .
  • Book value trajectory: as of Feb 28, BV up just over 6% ex-dividend; net of dividend ~3% up versus Dec 31 economic BV of $13.10, reflecting early Q1 mark improvements .
  • NII outlook: pipeline strong, rates mid-to-high 7s on new production; management expects NII growth each quarter through 2025, aided by imminent next securitization freeing capital .
  • Regulatory outlook for non-QM: potential GSE changes could expand non-QM market, though highly fluid; stance remains opportunistic .

KPIs

KPIQ2 2024Q3 2024Q4 2024
Weighted Avg Coupon – Residential Whole Loans (%)7.71 7.73 7.39
Cash & Cash Equivalents ($USD Millions)$43.96 $42.05 $40.76
Recourse Debt-to-Equity (x)1.2x 1.8x ~1.0x
Loan Financing Lines – Undrawn Capacity ($USD Millions)~$950 ~$720 ~$921
CPR (RMBS & securitized loan portfolios) (%)N/AN/A8.4
90+ Day Delinquency (%)N/A1.85 2.4
Securitizations – UPB Contributed ($USD Millions)~$322.7 (AOMT 2024-4: $299.8; AOMT 2024-6: $22.9) $316.8 (AOMT 2024-10) ~$484.0 (AOMT 2024-10: $316.8; AOMT 2024-13: $167.2)
Securitized Loan Portfolio – WAC / Funding Cost (%)N/AN/A~5.6 / ~4.0

Note: FY 2024 total securitizations: 5 deals; total UPB contributed $855M .

Estimates Context

  • Wall Street consensus (S&P Global) for EPS, revenue, and EBITDA for Q4 2024 was unavailable at time of request due to SPGI request limits. As a result, no “vs. estimate” comparisons are shown. We will monitor for availability and update post-publication.

Key Takeaways for Investors

  • NII momentum intact: sequential NII growth and widening net interest margin underpin improving dividend coverage; management expects continued NII growth through 2025, supported by steady securitization cadence .
  • Book value sensitivity: late-Q4 marks created a GAAP loss, but early Q1 recovery indicates improving BV; watch rates/spreads and prepayment dynamics for further mark-to-market tailwinds .
  • Execution edge: five FY24 securitizations lowered funding costs and recycled capital; near-term securitizations remain a catalyst to redeploy into high-yield non-QM loans (mid-to-high 7s coupons) .
  • Credit normalization: 90+ delinquency trending to 2–3% range; underwriting (WALTV ~70%; FICO ~749) and tight credit selection mitigate potential loss content; CPR remains low at 8.4% .
  • Capital flexibility: ~$921M undrawn financing capacity at year-end and access to unsecured notes market support accretive growth; management prioritizes ROE over buybacks at current economics .
  • Trading implications: near-term catalysts include next securitization close, ongoing NII expansion, and confirmation of BV recovery; macro rate/spread direction remains the swing factor for marks and economic-to-GAAP BV convergence .
  • Medium-term thesis: vertically integrated origination-securitization model, disciplined leverage (<2.5x recourse target), and consistent capital recycling position AOMR to compound earnings as non-QM demand persists .
Footnotes:
- “Securitizations – UPB Contributed” quarter totals are sums of cited contributions; individual deal UPB and characteristics are sourced directly from company press releases **[1766478_855302c9c5ee455895f57fc9f9f6906b_1]** **[1766478_bf0c81795d5a4f9a878b736bf6dde182_1]** **[1766478_0001766478-25-000015_fy2024earningspressrelease.htm:0]** **[1766478_5ff5f922a1574649aeb89eb3c09ff413_0]**.
- Estimates: S&P Global consensus unavailable at time of request; will be incorporated when accessible.

Sources:
- Q4 2024 8-K and press release: **[1766478_0001766478-25-000015_aomr-20250304.htm:1]** **[1766478_0001766478-25-000015_fy2024earningspressrelease.htm:0]** **[1766478_0001766478-25-000015_fy2024earningspressrelease.htm:1]** **[1766478_0001766478-25-000015_fy2024earningspressrelease.htm:4]** **[1766478_0001766478-25-000015_fy2024earningspressrelease.htm:5]** **[1766478_0001766478-25-000015_fy2024earningspressrelease.htm:6]**
- Q4 2024 earnings call transcript: **[1766478_AOMR_3419082_1]** **[1766478_AOMR_3419082_2]** **[1766478_AOMR_3419082_3]** **[1766478_AOMR_3419082_4]** **[1766478_AOMR_3419082_5]** **[1766478_AOMR_3419082_6]** **[1766478_AOMR_3419082_7]** **[1766478_AOMR_3419082_8]** **[1766478_AOMR_3419082_9]** **[1766478_AOMR_3419082_11]**
- Q3 2024 press release: **[1766478_bf0c81795d5a4f9a878b736bf6dde182_0]** **[1766478_bf0c81795d5a4f9a878b736bf6dde182_1]** **[1766478_bf0c81795d5a4f9a878b736bf6dde182_5]** **[1766478_bf0c81795d5a4f9a878b736bf6dde182_6]** **[1766478_bf0c81795d5a4f9a878b736bf6dde182_7]**
- Q2 2024 press release: **[1766478_855302c9c5ee455895f57fc9f9f6906b_0]** **[1766478_855302c9c5ee455895f57fc9f9f6906b_1]** **[1766478_855302c9c5ee455895f57fc9f9f6906b_2]** **[1766478_855302c9c5ee455895f57fc9f9f6906b_6]** **[1766478_855302c9c5ee455895f57fc9f9f6906b_7]** **[1766478_855302c9c5ee455895f57fc9f9f6906b_8]** **[1766478_855302c9c5ee455895f57fc9f9f6906b_9]**
- Additional Q4 press releases: AOMT 2024-10 **[1766478_411c98bbcd9b467cafa53f7c84d636da_0]**; AOMT 2024-13 **[1766478_5ff5f922a1574649aeb89eb3c09ff413_0]**