AOMR

Download the Complete Report Here The MITT transaction materially improves value realization for CHMI shareholders while preserving meaningful participation in the combined platform. CHMI entered into a definitive agreement to be acquired by TPG Mortgage Investment Trust (MITT), with closing targeted for 4Q26. The $3.10 signing value represents a 29% premium to CHMI’s unaffected $2.41 share price and approximately 0.98x June 30 BVPS of $3.16, while roughly 30% of announced consideration is cash and CHMI holders retain approximately 27% ownership of the combined company. Through the fixed 0.3063 exchange ratio, the stock component provides both near-term value realization and continued exposure to MITT’s earnings, book value and potential rerating following closing. Strategically, the merger creates a larger and more diversified residential mortgage REIT with a clearer path to earnings and valuation upside. The combined investment portfolio is expected to total approximately $9.0 billion, while management expects $7-$9 million of annual operating efficiencies, 2027 earnings accretion and lower pro forma economic leverage of roughly 2.9x. TPG’s direct ~$20 million / $0.52-per-share cash contribution, proprietary securitization capabilities and experience originating, acquiring and managing MSRs add further support, with greater scale, lower unit costs and broader capital-allocation flexibility providing multiple avenues for value creation across the combined platform. 2Q26 EAD beat expectations as stronger RMBS carry and dollar-roll income drove the best quarterly core earnings performance since 1Q25. EAD increased to $0.15/share from $0.14 in 1Q26 and $0.11 in 4Q25, while dividend coverage expanded to approximately 1.5x on the $0.10 quarterly payout. The stronger-than-expected print supported an upward revision in the Street’s 2026E EAD estimate to $0.59/share from $0.55, with current estimates of $0.15/share for both 3Q26E and 4Q26E. Lower funding costs and wider RMBS spreads improved the quality of 2Q26 earnings despite higher prepayments and modest book-value pressure. Net interest income rose to $4.7 million, RMBS net interest spread widened to approximately 3.45% from 2.90%, and aggregate leverage declined to 5.02x from 5.49x, while unrestricted cash increased to $52.1 million from $46.7 million. Offsetting these gains, RMBS CPR increased to 9.7%, MSR CPR rose to 6.3%, BVPS declined modestly to $3.16 from $3.23, and Real Genius required a $2.8 million impairment. Valuation is now anchored by the transaction, while MITT’s valuation gap versus peers and merger synergies preserve meaningful upside. At $2.79, CHMI trades at approximately 0.88x book and 4.7x 2026E EAD, while MITT trades at roughly 0.6x book and 5.6x NTM earnings versus peer averages of approximately 0.9x and 6.4x. The fixed exchange ratio therefore gives CHMI holders continued exposure to any normalization in MITT’s valuation, while expected annual operating efficiencies, 2027 earnings accretion, and greater scale provide additional avenues for value creation. CHMI entered into a definitive agreement to be acquired by TPG Mortgage Investment Trust (MITT), combining its Agency RMBS and conventional MSR platform with MITT’s broader residential credit franchise. Under the agreement signed August 9, 2026, each CHMI common share will receive 0.3063 MITT common shares plus $0.93 in cash, with $0.41/share funded by MITT and $0.52/share contributed by MITT’s external manager, AG REIT Management, an affiliate of TPG. Based on MITT’s August 7 closing price of $7.09, the consideration was worth $3.10 per CHMI share, implying an aggregate transaction value of approximately $117.5 million, a 29% premium to CHMI’s unaffected $2.41 closing price and a 32% premium to its 30-day VWAP. Importantly, approximately 30% of announced consideration is cash, including roughly $20 million funded by TPG and $15 million by MITT, providing CHMI holders with a meaningful element of certain value at closing while preserving upside participation through the stock component. The transaction is expected to close in 4Q26, subject to stockholder approvals and customary closing conditions. The transaction crystallizes much of CHMI’s standalone discount to book while retaining meaningful upside through ownership in the combined company. CHMI ended 2Q26 with BVPS of $3.16, versus an unaffected share price of $2.41, or approximately 0.76x book, while the $3.10 announced consideration equates to roughly 0.98x June 30 BVPS. The fixed 0.3063 exchange ratio, established using adjusted June 30 book values of CHMI and MITT, leaves CHMI holders with approximately 27% ownership of the combined company. MITT’s June 30 BVPS was $10.00 versus its $7.09 August 7 close, or approximately 0.71x book; accordingly, the exchange ratio represents approximately $3.06/share of MITT book value compared with $2.17/share of market value at announcement. Including the $0.93 cash component, the transaction presentation shows $3.99/share of illustrative value on a MITT book-value basis, approximately 66% above CHMI’s unaffected price. While $3.99 is not fixed transaction consideration, the structure allows CHMI holders to monetize most of CHMI’s discount to book while rolling the majority of consideration into MITT at a meaningful discount to its own book value, preserving potential upside if the combined company’s valuation normalizes. Strategically, the combination creates a ~$9.0 billion residential mortgage platform while materially broadening CHMI’s access to capital, financing and securitization capabilities. CHMI contributes an Agency-oriented platform centered on Agency RMBS and conventional MSRs, while MITT brings a larger residential credit franchise spanning Non-Agency mortgage assets and home equity. The combined investment portfolio is expected to total approximately $9.0 billion, comprising 72.0% Non-Agency Residential Credit, 14.4% Agency RMBS and MSRs, 12.6% Home Equity and 1.0% other investments. This should create a more diversified earnings mix, with CHMI’s Agency carry and MSR cash flows complementing MITT’s credit-oriented earnings profile. CHMI’s conventional MSR platform represented approximately $211 million of investment value and $15.2 billion of underlying UPB at June 30, adding a differentiated servicing asset to MITT’s broader credit platform. MITT management also expects the MSR portfolio to contribute to earnings immediately and provide an additional revenue stream, while TPG’s substantial experience originating, acquiring and managing MSRs strengthens the strategic fit of the servicing platform within MITT. Importantly, the combined company will gain access to the broader resources of TPG, a global alternative asset manager with approximately $327 billion of AUM, including its proprietary securitization platform and broader credit and asset-based finance capabilities. This should broaden financing options and improve capital-allocation flexibility across Agency and credit assets, while management also indicated that portions of the acquired portfolio may be retained or rotated over time as relative-value opportunities evolve. TPG’s backing adds an important layer of strategic and financial support to the combination. MITT’s external manager, an affiliate of TPG, is contributing approximately $20 million, or $0.52 per CHMI share, toward the cash consideration while also providing access to TPG’s $327 billion asset-management platform, proprietary securitization capabilities and residential mortgage expertise. TPG’s experience originating, acquiring and managing MSRs is particularly relevant to CHMI’s conventional servicing portfolio, while the broader platform should expand financing, capital-allocation and liquidity options for the combined company. The transaction also meaningfully improves operating scale and financial efficiency, providing a clear path to earnings accretion. The merger is expected to add approximately $1.3 billion, or 17%, to MITT’s investment portfolio, increase MITT’s market capitalization by approximately 36%, and expand total equity capital to roughly $742 million. The transaction also expands MITT through permanent equity capital without requiring incremental unsecured corporate debt, preserving balance-sheet flexibility as the combined platform scales. Management expects approximately $7-$9 million of annual operating expense efficiencies, net of incremental estimated management-fee expense, as the combined cost base is spread across a substantially larger equity platform. The transaction is expected to be earnings accretive in 2027, within one year of closing, while pro forma economic leverage is expected to settle at approximately 2.9x, which management views as derisking CHMI’s historical profile while maintaining a conservative balance sheet relative to peers. The combination should therefore translate greater scale into a lower effective expense burden, improved financing flexibility and a broader opportunity set for capital deployment, supporting stronger long-term earnings capacity across the residential mortgage platform. The transaction preserves substantially equivalent treatment for CHMI preferred shareholders while strengthening governance and alignment in the combined company. CHMI’s 8.20% Series A and 8.250% Series B preferred shares are expected to convert 1-for-1 into newly issued MITT preferred securities with substantially equivalent rights. MITT’s existing management team will continue to lead the combined company, while two CHMI-designated independent directors will join the board, increasing it to eight members. Alignment is further supported by an amendment to MITT’s manager incentive-fee framework, which will be based on the combined company’s pro forma book value and EAD. Approximately 11.608 million new MITT common shares are expected to be issued to CHMI holders. Execution and closing remain the principal near-term transaction considerations. Both boards unanimously approved the merger, but completion remains subject to CHMI and MITT stockholder approval, effectiveness of the Form S-4, required regulatory approvals, NYSE listing of the new securities and customary closing conditions. The companies are targeting a 4Q26 close, with an outside date of March 9, 2027, subject to a possible 60-day regulatory extension. From a CHMI shareholder perspective, the main variable through closing is MITT’s stock price: the fixed 0.3063 exchange ratio means the market value of the stock component—approximately 70% of announced consideration at signing—will move with MITT shares, while the $0.93/share cash component remains fixed. Accordingly, through closing, CHMI’s realized transaction value will be driven primarily by MITT’s share price, the fixed 0.3063 exchange ratio, the $0.93 cash component and successful completion of the merger, while standalone EAD and book value remain relevant principally as markers of underlying value through closing. Dividend treatment through closing provides additional continuity for CHMI shareholders. The merger agreement permits CHMI to declare a prorated dividend immediately prior to closing based on its then-most-recent quarterly dividend for the period since the last dividend record date, together with any additional distribution required to preserve REIT qualification. This should help preserve the economic value of CHMI’s dividend accrual through the closing date, subject to the terms of the merger agreement. Core earnings continued to improve in 2Q26, with EAD reaching the strongest quarterly level since 1Q25 and dividend coverage expanding further. EAD attributable to common shareholders increased to $5.5 million, or $0.15/share, in 2Q26, from $0.14/share in 1Q26 and $0.11/share in 4Q25, marking CHMI’s strongest quarterly EAD performance since 1Q25 and exceeding the $0.13/share Street estimate. The sequential improvement was supported by stronger RMBS carry, lower borrowing costs and higher TBA dollar-roll income of $1.4 million versus $0.4 million in 1Q26, partially offset by higher G&A. As a result, coverage of the $0.10 common dividend improved to approximately 1.5x, from 1.4x in 1Q26 and 1.1x in 4Q25. The stronger earnings run-rate also supported an upward revision in the Street’s 2026E EAD estimate (source: TIKR) to $0.59/share from $0.55 previously. GAAP results improved as well, with net income applicable to common shareholders of $1.3 million, or $0.04/share, compared with a $(0.05)/share loss in 1Q26. The improvement in EAD reflects stronger recurring carry as lower financing costs continued to lift net interest income and RMBS spreads. Net interest income increased to $4.7 million from $4.5 million, while interest expense declined to $10.0 million from $11.4 million, helping RMBS net interest spread widen to approximately 3.5% from 2.90% in 1Q26. Importantly, the improvement came despite a smaller financed asset base, with average repo borrowings declining roughly 10% q/q, indicating better earnings efficiency rather than growth driven by higher leverage. Total other loss narrowed to $4.2 million from $7.7 million, as a $12.1 million realized derivative gain partially offset continued unrealized derivative and portfolio losses, including the $2.8 million Real Genius impairment. Operating expenses increased to $4.0 million from $3.3 million, partly reflecting transaction-related costs. Overall, the quarter showed stronger underlying spread economics and recurring earnings, while continued realized and unrealized mark volatility reinforces EAD as the cleaner measure of core portfolio performance. Book value pressure moderated materially from 1Q26, while total economic return turned positive as stronger carry and the dividend helped absorb a still-volatile rate backdrop. BVPS ended 2Q26 at $3.16 versus $3.23 at March 31, a 2.2% sequential decline, compared with a much sharper 6.1% decline in 1Q26. Including the $0.10/share quarterly dividend, CHMI generated a 0.9% total economic gain, a meaningful improvement from the negative economic return in the prior quarter. The backdrop remained challenging as Treasury yields moved higher and lower-coupon Agency RMBS weakened, yet the comparatively modest $0.07/share decline in book value suggests that stronger carry, portfolio construction and hedging provided substantially better downside absorption than in 1Q26. BVPS remains below the $3.44 year-end 2025 level, but the quarter showed a notably better balance between distributable earnings and book-value preservation. The RMBS portfolio remained the primary earnings engine, with improved spread economics more than offsetting a smaller securities balance and somewhat faster prepayments. RMBS carrying value declined to $1.08 billion, from $1.21 billion at the year-end while the portfolio remained entirely Agency-backed and represented 79% of invested assets excluding cash. Despite the smaller asset base, net interest income increased 6.3% q/q to $4.7 million, as lower financing costs and stronger asset yields drove net interest spread to 3.45% from 2.90% in 1Q26, a 55-bp sequential improvement. Prepayments accelerated, with RMBS CPR increasing to 9.7% from 8.0%, creating some incremental reinvestment and premium-amortization risk, but CHMI also increased its RMBS hedge ratio to 65% from 63%. Overall, the combination of wider spreads, lower funding costs and greater hedge protection supported stronger core earnings despite reduced balance-sheet exposure and higher prepayment activity. MSRs continued to provide complementary servicing cash flow, although portfolio runoff and faster prepayments weighed on sequential results. Net servicing income declined 7.0% q/q to $7.4 million from $7.9 million, as servicing fee income fell to $9.7 million from $10.2 million while servicing costs remained broadly stable at $2.3 million. MSR UPB declined to approximately $15.2 billion from $15.6 billion, with carrying value easing to $211.1 million, while MSRs represented roughly 21% of investments excluding cash and Servicing Related Assets represented approximately 39% of equity. Prepayment activity increased, with net CPR rising to 6.3% from 4.5% in 1Q26, though the portfolio’s low 3.49% weighted-average mortgage coupon continues to provide meaningful refinance protection. Credit quality also remained solid, with a 755 original FICO, 76.5% original LTV and 1.1% 60+ day delinquencies. Recapture was minimal at 0.2%, limiting the offset to natural runoff, but the low-coupon collateral profile continues to support the durability of servicing cash flows. Hedge positioning continued to absorb rate and basis volatility, while lower net mark-to-market pressure supported the sequential improvement in earnings. CHMI generated $8.4 million of realized derivative gains excluding swap periodic income, led by gains on TBAs, Treasury futures and Eris SOFR futures, while $3.7 million of periodic swap interest income provided additional support to EAD. These benefits were partially offset by a $9.3 million unrealized derivative loss, reflecting continued quarter-to-quarter mark volatility. Despite this, total other loss narrowed to $4.2 million from $7.7 million in 1Q26, contributing to the improvement in GAAP results. Hedge positioning also continued to evolve, with interest-rate swap notional at $767 million, net TBA notional declining to $267 million, and Eris SOFR futures increasing to $82 million at quarter-end. Overall, the hedge book continued to enhance carry and protect against rate and basis risk even as unrealized derivative valuations remained volatile. The $2.8 million Real Genius credit loss and impairment reduces the near-term optionality of CHMI’s digital-origination initiative. The charge relates to CHMI’s investment in Real Genius LLC and associated promissory note, representing a notable reversal from the optionality attributed to the platform in prior quarters. CHMI recorded a $2.3 million credit-loss allowance against the $3.2 million promissory note, leaving a net carrying value of approximately $0.9 million. Importantly, the impairment is excluded from EAD, helping explain why distributable earnings improved to $0.15/share even as the investment weakened economically and contributed to GAAP pressure. We therefore assign substantially less standalone value to Real Genius, with future value more dependent on recovery of the remaining exposure than on scaling the origination platform. Its strategic importance also becomes less significant under the proposed MITT combination, where CHMI’s $15.2 billion MSR portfolio would sit within a broader ~$9 billion residential mortgage platform with access to TPG’s larger origination, investment and securitization capabilities. Liquidity and leverage improved as CHMI reduced financed RMBS exposure, leaving the balance sheet more conservatively positioned entering the proposed MITT merger. Aggregate leverage declined to 5.02x from 5.49x in 1Q26, while quarter-end repo borrowings fell to $1.01 billion from $1.12 billion and the weighted-average repo rate improved to 3.76%. Unrestricted cash increased approximately 12% q/q to $52.1 million from $46.7 million, with total unrestricted and restricted cash of $77.5 million, while notes payable declined to $140.6 million. The reduction in leverage and financed assets, together with lower funding costs and higher liquidity, provides greater protection against margin pressure and additional balance-sheet flexibility ahead of the targeted 4Q26 transaction close. Capital allocation remains conservative, with CHMI prioritizing liquidity and portfolio economics rather than accessing the ATM or repurchasing shares. No common shares were issued through the ATM during 1H26, leaving approximately $34.6 million of capacity under the $150 million common-stock ATM program; this contrasts with 2025, when CHMI issued 4.9 million shares at an average $3.00/share and raised approximately $14.7 million of gross proceeds. CHMI also made no common or preferred-stock repurchases during the quarter, leaving approximately $4.7 million available under the common repurchase authorization, while the existing preferred-stock repurchase program authorizes up to $50 million of repurchases. With BVPS at $3.16, unrestricted cash of $52.1 million, 5.0x leverage and the common dividend covered 1.5x by EAD, the lack of ATM issuance or discretionary share repurchases is consistent with preserving balance-sheet flexibility rather than materially changing capital structure immediately before the subsequent transaction announcement. The stronger 1H26 earnings run-rate supports a higher second-half baseline, with improved RMBS carry providing a firmer foundation for standalone earnings through the expected merger close. CHMI generated $0.29/share of EAD in 1H26 versus $0.27/share in 1H25, while Street estimates sourced from TIKR now show $0.15/share in both 3Q26 and 4Q26, implying $0.30/share for 2H26 and lifting the full-year estimate from $0.55 to $0.59/share. Quarterly EAD has improved from $0.11 in 4Q25 to $0.14 in 1Q26 and $0.15 in 2Q26, and the revised second-half estimates effectively assume that the 2Q run-rate is sustained. Support for the upward revision comes from lower funding costs and stronger RMBS spread economics, with 2Q NII of $4.7 million and RMBS net interest spread of approximately 3.5%, while higher MSR CPR of 6.3%, RMBS CPR of 9.7%, and operating expenses of approximately $4.0 million versus $3.3 million in 1Q26 remain key offsets. At the revised $0.59/share estimate, CHMI’s $0.40 annualized common dividend remains comfortably covered at roughly 1.5x. Given the expected 4Q26 merger close, we view the revised estimate primarily as a measure of the standalone earnings capacity CHMI brings into the transaction. Disclaimer: Exec Edge does not publish proprietary estimates, ratings, price targets, or investment recommendations. The valuation discussion below is illustrative only and is based on company filings, management commentary, and third-party data and estimates. It does not constitute a recommendation, price target, rating, or prediction of future pricing. The transaction creates value for CHMI shareholders through a combination of near-book value realization, meaningful cash consideration and retained participation in a larger platform with further rerating potential. The $3.10 signing value equates to approximately 0.98x CHMI’s June 30 BVPS of $3.16, versus roughly 0.76x book at the unaffected $2.41 share price, while approximately 30% of announced consideration is cash and CHMI holders retain about 27% ownership of the combined company. Importantly, the stock component rolls CHMI shareholders into MITT, which trades at approximately 0.6x book and 5.6x NTM earnings versus peer averages of roughly 0.9x and 6.4x. Successful realization of $7-$9 million of annual operating efficiencies, expected 2027 earnings accretion and greater scale and liquidity therefore provide multiple avenues for further value creation beyond the initial transaction premium. The signing valuation validates the standalone value identified in our prior CHMI framework, while the improved earnings outlook strengthens the underlying transaction economics. The $3.10 announced value falls within the approximately $3.0-$3.9/share range highlighted in our last EPS note and represents a substantial recovery from CHMI’s unaffected $2.41 price. The deal was also struck against improving fundamentals: 2Q26 EAD increased to $0.15/share, the strongest quarterly level since 1Q25, while 2026E EAD/share has been revised higher to $0.59 from $0.55. At the current $2.79 share price, CHMI trades at approximately 0.88x June 30 book, 4.7x 2026E EAD and a 14.3% annualized dividend yield, with a market capitalization of approximately $103 million. We therefore view the transaction as recognizing substantially more of CHMI’s underlying book value and earnings capacity than was reflected in the pre-deal public-market valuation. MITT’s valuation provides the principal source of retained longer-term upside for CHMI shareholders following closing. At approximately 0.6x book and 5.6x NTM earnings, MITT trades well below peer averages of roughly 0.9x and 6.4x, respectively, while its 15.2% dividend yield is broadly in line with the peer average of 15.3%. This suggests MITT’s discount is concentrated primarily in its book-value and earnings multiples rather than its income proposition. Because CHMI holders receive a fixed 0.3063 MITT shares per CHMI share, they retain direct exposure to any normalization in MITT’s valuation as the combined platform realizes expected cost efficiencies, earnings accretion and greater operating scale. The transaction therefore both recognizes CHMI at close to book value and preserves additional upside through participation in a potential rerating of MITT. Near-term transaction value remains sensitive to MITT’s share price, but we view this separately from the longer-term value-creation opportunity. At MITT’s current $6.32 share price, the fixed 0.3063 exchange ratio plus $0.93 cash implies consideration of approximately $2.87/share, compared with the $3.10 signing-date value based on MITT’s $7.09 August 7 close. Against CHMI at $2.79, the current merger spread is approximately 2.7%. While the mark-to-market consideration will continue to fluctuate through closing, CHMI holders retain approximately 27% of the combined company, making successful transaction completion, preservation of book value and realization of the expected annual efficiencies and 2027 earnings accretion the more important longer-term valuation drivers. Read Exec Edge’s Initiation on Cherry Hill Here Subscribe to our Weekly Newsletter to Receive All Research Contact: Executives-Edge.com [email protected] -0- The post Cherry Hill Mortgage’s 29% Premium Deal: $9B Merger Opens Door to Bigger Upside – Quarterly Update Report appeared first on ExecEdge.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 8:30 a.m. ET Head of Corporate Finance & Investor Relations - KC Kelleher Chief Executive Officer - Sreeniwas Prabhu Chief Financial Officer - Brandon Filson Operator: Good morning, and welcome to the Angel Oak Mortgage REIT's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This event is being recorded Tuesday, August 4, 2026. I would now like to turn the conference call over to Mr. KC Kelleher. Please go ahead. KC Kelleher: Good morning, and thank you for joining us today for Angel Oak Mortgage REIT's Second Quarter 2026 Earnings Conference Call. This morning, we filed our press release detailing these results, which is available in the Investors section of our website at www.angeloakreit.com. As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, we will be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our earnings release and SEC filings. This morning's conference call is hosted by Angel Oak Mortgage REIT's Chief Executive Officer, Sreeni Prabhu; and Chief Financial Officer, Brandon Filson. Management will make some prepared comments, after which we will open up the call to your questions. Additionally, we recommend reviewing our earnings supplement posted on our website. Now I will turn the call over to Sreeni. Sreeniwas Prabhu: Thank you, KC, and thank you all for joining us today. While the macroeconomic outlook remains unclear in the second quarter, AOMR responded with a balanced approach of strategic value-driven decision-making and operating excellence to strengthen the return profile and the long-term durability of our portfolio. We saw continued demand for well-structured non-QM credit, but the markets also moved through periods of caution as investors weighed the path of inflation, Federal Reserve policy and broader global uncertainty throughout the quarter. Against that backdrop, our focus was on staying disciplined in capital deployment, preserving flexibility and executing on opportunities to expand upon the earnings and the operating improvements we have achieved over the past several quarters. Our platform demonstrated resilience with solid year-over-year growth in net interest income, stable book value and durable credit performance. Notably, we took several strategic actions to strengthen the portfolio, including monetization of delevered legacy retained bonds, the repurchase of common stock from a pre-IPO investor at accretive return levels and successfully negotiated a significant spread reduction on our largest warehouse financing facility. These opportunistic prudent actions are designed to fortify the strength and the return profile of our portfolio over the short term and long term. We continue to source loans that fit our credit and return criteria. Though we did not have a securitization in the second quarter, we executed AOMT 2026-3 and AOMT 2026-HB1 following the end of the quarter. We expect to continue a pace of roughly one securitization per a quarter. Importantly, we are not simply focused on issuing transactions. We are focused on issuing transactions that strengthen the durability of our balance sheet, reduce financing uncertainty and support long-term earnings power. As we move in the back half of the year, our priorities are clear. While we cannot control macroeconomic conditions or day-to-day valuation changes, we can continue to make thoughtful value-driven decisions to maintain a business that is both robust and flexible. We will continue to originate and purchase selectively, maintain a conservative approach to leverage and use securitization as a strategic funding tool rather than volume-driven objective. We believe this approach positions AOMR to navigate uncertain markets while continuing to build value for shareholders over time. With that, I'll turn it over to Brandon, who will walk us through our second quarter financial performance in greater detail. Brandon Filson: Thank you, Sreeni. Our second quarter results were reflective of the strong operating foundation that we built despite offsets stemming from unrealized mark-to-market valuation decreases in our unsecured securitized loan portfolio. Notably, as Sreeni mentioned, consistent with our focus on controlling what we can control, we took several strategic actions during the quarter to further strengthen our portfolio going forward. We sold our retained bonds from the AOMT 2020-3 securitization and have reinvested those proceeds into purchases of newly originated loans with higher modeled yields. We repurchased $15 million of common equity from a pre-IPO investor at accretive return levels, and we reduced the interest rate spread on our largest warehouse financing provider by 35 basis points. We expect to realize the positive impacts of these actions in the coming quarters and years. In the second quarter, we had GAAP net income of $3.4 million or $0.14 per diluted common share. The result was driven by healthy net interest income and maintained operating expense levels, partially offset by unrealized mark-to-market losses. Comparatively, in the second quarter of 2025, we had GAAP net income of $800,000 or $0.03 per diluted common share. Distributable earnings for the quarter were $9 million. Our securitized loan portfolio and our residential loan portfolio combined for $3.6 million of unrealized losses, and our derivative portfolio drove $2.4 million of unrealized loss, driving the difference between GAAP net income and distributable earnings. In the second quarter of 2025, distributable earnings were $2.6 million. Interest income for the quarter was $41.4 million and net interest income was $10.7 million. This compares to interest income of $35.1 million and net interest income of $9.9 million in Q2 '25, showcasing 18% and 8% growth, respectively. For the first 6 months of 2026, interest income and net interest income grew by 21% and 14%, respectively, versus the first 6 months of 2025. The non-QM coupon rates have come down compared to the first half of 2025, performance has been supported by targeted asset purchases, decreased warehouse spreads and consistent access to securitization markets. Operating expenses for the second quarter were $3.6 million. Excluding non-cash stock compensation expenses, second quarter operating expenses were $3.2 million. The small increase compared to a year ago was due to increased loan diligence fees associated with larger target asset balances. Going forward, we expect to maintain similar operating expense levels and we'll continue to be as efficient as possible with our expense structure. Loan purchases during the quarter totaled $204 million and continue to reflect conservative credit profiles, moderate loan-to-value ratios and current market coupons that we believe remain attractive on a risk-adjusted basis. The weighted average coupon of loans purchased during the quarter was 7.34%. The weighted average CLTV was 70.5% and the weighted average credit score was 759. Our credit underwriting metrics have continued to reflect our desired credit and return profile. As of the end of the quarter, our loans in securitization trust portfolio carried a weighted average coupon of 6.04% with a weighted average funding cost of approximately 4.5%. We intend to continue to access securitization markets through our disciplined methodical securitization strategy. As mentioned, we executed the AOMT 2026-3 securitization just after the end of the quarter. We were the sole contributor to the deal, which had $280 million of unpaid principal balance and a weighted average coupon of 6.9%, weighted average non-zero credit score of 757 and a weighted average CLTV of 69%. The AAA-rated senior bonds priced at 130 basis point spread over the treasury yield curve. Additionally, we recently priced AOMT 2026-HB1, $221 million commingled HELOC securitization, to which we contributed $71 million of loans. Loans underlying the deal had a weighted average coupon of 9.79%, weighted average non-zero credit score of 744 and a weighted average CLTV of 64.8%. Securitization markets have remained constructive amid market uncertainty, and we continue to expect to execute roughly 1 securitization per quarter or 4 per year. As of quarter end, GAAP book value per share was $10.13. Economic book value, which fair values all non-recourse securitization obligations, was $12.24. Compared to the end of first quarter 2026, GAAP book value per share decreased 1.7% and economic book value decreased 0.3%. Changes in book value during the quarter were reflective of operating income, offset by a quarterly dividend payment and aforementioned market-driven unrealized valuation changes within the portfolio. While the market continues to display volatility tied to macroeconomic and geopolitical factors, we estimate that as of today, book value has remained relatively flat since the end of the second quarter. Our balance sheet remains well positioned with cash of $48.6 million and recourse debt-to-equity ratio of 2.3x. This ratio is consistent with what we would expect immediately preceding the securitization. As such, following the AOMT 2026-3 and AOMT 2026-HB1 securitizations, recourse debt-to-equity decreased to approximately 1x. We aim to maintain liquidity and available financing capacity to provide flexibility to respond to changing market conditions. We ended the quarter with unsecuritized residential whole loans at a fair value of $439 million, financed with $365 million of warehouse debt. $2.1 billion of residential mortgage loans in securitization trust and $334 million of RMBS, including $26 million of investment in commingled securitization entities, which are included in other assets on our balance sheet. We finished the quarter with undrawn loan financing capacity of approximately $900 million with 4 high-quality lending partners. Credit performance continued to be solid with portfolio-wide 90-day plus delinquencies at approximately 2.8%, which is inclusive of our residential loan, securitized loan and RMBS portfolios. This represents an increase of approximately 9 basis points from Q1 2026. Performance across the Angel Oak shelf remains strong, and we believe that the performance of our collateral relative to the non-QM securitization market is a key differentiator for our platform. I'll reiterate our expectation that our differentiated credit performance will translate into lower losses and comparable non-QM platforms across the full credit cycle. This view is supported by our proactive migration of the credit spectrum, conservative LTVs and disciplined underwriting approach, which we believe position the portfolio to perform consistently even in more challenging environments. 3-month prepay speeds for our non-QM RMBS securitized loan portfolios were 13.6% to end the quarter compared to 12.5% in the first quarter of 2026. As we have mentioned in previous quarters, we expect prepayment speeds to continue to increase as rates decrease and homeowners are incentivized to refinance. With that said, we model our returns based on historical average prepayment speeds of 20% to 30%. While prepay speeds are likely to tick upward and newly originated coupon rates continue to decrease, the majority of our portfolio still has coupon rates that are below newly originated coupon rates, and we expect that mortgage rates would need to fall meaningfully in order to produce a significant impact to the returns to our portfolio. Lastly, the company declared a $0.32 per share common dividend payable on August 28, 2026, to common shareholders of record as of August 21, 2026. For additional detail on our financial results and portfolio composition, please refer to the earnings supplement available on our website. Sreeniwas Prabhu: Thank you, Brandon. To close, we remain confident in the advantages of the Angel Oak platform. Our access to differentiated origination, our experience in securitization and our emphasis on credit discipline gives us multiple levers to manage through changing market conditions. We are focused on continuing to translate those trends into consistent earnings, thoughtful balance sheet growth and long-term shareholder value. With that, we'll open up the call for your questions. Operator? Operator: [Operator Instructions] And your first question comes from Marissa Lobo from UBS. Ameeta Lobo Nelson: Just thinking about the new securitization, how large do you see the HELOC opportunity for AOMR? And what's your target allocation relative to first lien non-QM? Sreeniwas Prabhu: Sreeni here. I'll answer that. So we like the HELOC opportunity. Obviously, it's all about the size and scale and the product -- the credit box that we want to play in. So we think of it as a 10% to 15% allocation of our overall allocation. So we'll still be predominantly non-QM and then selectively we'll look into HELOCs based on our credit boxes. Ameeta Lobo Nelson: Got it. And just looking at non-QM composition, seeing that investor loans are largely about 50% of the market. And how does AOMR's collateral compared to that? And to what extent are you growing DSCR exposure? Brandon Filson: I think our composition on investor cash flow loans is around that same amount. It's been a good source for growth for us over the past several years, but we still predominantly play in that space and the bank statement borrowing underwriting programs to like small business owners. Operator: And your next question comes from Doug Harter from BTIG. Douglas Harter: In your prepared remarks, you mentioned that one of the warehouse -- your warehouse financing facilities improved by 35 basis points. Can you talk about the returns you see sort of during the warehouse period versus the returns you see upon securitization? Brandon Filson: Yes. I think during the warehouse period, it will change a little bit because of that spread depending on whatever how we mix our financing. But typically, right now, I think we're seeing about 13% to 14% return in the warehouse phase. And then in securitization, it's that 15% to 20% we often quote depending exactly on where securitizations execute. Douglas Harter: Great. And then just a clarifying question. In your supplement, it looks like the cost of the warehouse debt has kind of bounced around the past couple of quarters. Is there any kind of noise in there that we should be thinking about as we calculate that number on a quarterly basis? Brandon Filson: Yes. I think it just really depends exactly how levered we are throughout the quarter and exactly how we're financing because obviously, we just closed 2 securitizations. We'll close the HELOC securitization today (AOMT) 2026-3 already closed just after quarter end. We use now -- we have a lot of fresh capital. We'll go and buy loans unlevered and slowly add in the debt where I think last quarter, it was kind of the opposite situation where we had -- in Q2, we had more leverage throughout the quarter than we normally would have because there was no securitization, but you should see that kind of clean up and clean out a little bit into Q3. Operator: [Operator Instructions] And your next question comes from Jason Weaver from JonesTrading. Jason Weaver: Just looking at the (AOMT) 2026-3 deal, it looks like we're seeing a fair amount of spread compression there versus the last securitization. With lower collateral WAC and higher spreads on the AAAs, can you talk a little bit about the forward assumptions here if it's still in that high teens range? And if there was anything deal specific that drove that net spread tighter. Brandon Filson: Yes. I think that we're still expecting the 15% to 20%. Of course, that can bounce around from time to time. This last one was your portfolio composition was a little lower coupon than what we're currently buying. But now in response to the higher rates, our average mortgage coupons have gone up by 35, 40 basis points on average. And today, we're buying loans closer back to that mid-7s level from a non-QM perspective. And I mean the spreads in the securitization market have been relatively tight. The securitization market is healthy in the non-QM space, lots of buyers, lots of activity. So that is moving in the correct direction. Even in the face of the volatility in rates hasn't really translated into widening or volatile spreads. Jason Weaver: Got it. And I wonder, just broadly, if you can talk a bit about what you're seeing on just broad consumer credit trends and non-QM underwriting standards, any more tightness there? Sreeniwas Prabhu: Yes. So broadly, the market obviously is difficult from the origination side, right, because housing affordability slows down, obviously, as rates keep going up. That being said, the non-QM market, amazingly enough over the last 2 years continues to grow. Competitively, it's extremely competitive because you have a whole addition of insurance companies that are stepping in at these higher rates. So you definitely have to be disciplined. In terms of weaker underwriting competitively across the market, there are weak points that are starting to show up in certain programs that we generally don't do what some of our competitors are doing, whether they're in the REIT space or whether they're just across the board in the market. And there's a chart that I think we have that we can send to you, and I don't want to talk about anything individually. But there are a couple of programs that we just don't do that we are starting to see in the marketplace. But that being said, across the board, generally, the underwriting has been prudent and disciplined still in the marketplace, not just Angel Oak, but just generally across the board. On consumer credit, I mean, obviously, HELOCs gets closer to consumer credit from our side. You have to be careful there in terms of what you're underwriting. We're generally trying to underwrite LTV going to 65% combined loan-to-value. That's what we are trying to underwrite and depending on what type of consumer we're going through. So -- and that's what I was mentioning to you before, we don't want to scale that program for the sake of scaling it because obviously, the IRRs are good. You have to be thoughtful about the credit you're underwriting, especially in this peak of the housing price that we are seeing. The general consumer credit that I say consumer ex housing generally is the one that also probably has not gotten any benefit of the equity markets. I think that consumer continues to be weaker. We are in that space through our mutual funds, ETFs and our other funds. So that's where we are being very cautious. But obviously, we don't play that in AOMR. Operator: And your last question comes from Timothy D'Agostino from (B. Riley) Securities. Timothy D'Agostino: I guess just on securitizations, obviously, you closed 2 post quarter. And it sounds kind of like the language is changing a little bit so you're not really going towards quantity of securitization. So I was just wondering, how do you think about the 4 non-QM securitizations per quarter and the 2 HELOC securitizations? And does the pipeline for non-QM potentially support a second securitization in the third quarter or no? Brandon Filson: Yes. I think our projection is still to have 4 non-QM or on average of 4 a year securitizations in the non-QM space. I think the second HELOC securitization is also pretty likely this year, and there's a decent chance with the pipeline coming that we'll see a second non-QM within Q3. But certainly, if it doesn't squeak into September, it'd probably be October, much like happened now. Of course, all depending on what's happening in the market and things like that, we'll be ready to go by then. Timothy D'Agostino: Okay. Great. And then are you -- I guess, staying on the non-QM side, are you still seeing good demand there in terms of what you're able to invest in? Just any color there would be great. Brandon Filson: Yes. No, I think there's plenty of non-QM demand. I mean that space is continuing. Our mortgage company continues to put out a good amount of loans. As Sreeni mentioned, there's plenty of buyers on the other side, which drives capital formation in the space. So we think there's plenty of appetite and demand there and should continue throughout the rest of the year. Operator: And there are no further questions at this time. You may proceed with your conference. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day. Before you buy stock in Angel Oak Mortgage REIT, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Angel Oak Mortgage REIT wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Angel Oak Mortgage REIT (AOMR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management focused on a balanced approach of value-driven decision-making and operating excellence to strengthen the return profile and long-term durability of the portfolio. Performance was supported by healthy net interest income and stable operating expenses, though results were partially offset by unrealized mark-to-market valuation decreases in the securitized loan portfolio. Strategic actions included the monetization of delevered legacy retained bonds from the AOMT 2020-3 securitization, with proceeds reinvested into newly originated loans with higher modeled yields. The company successfully negotiated a 35-basis point spread reduction on its largest warehouse financing facility, which is expected to improve future earnings power. Capital was deployed into the repurchase of $15 million in common stock from a pre-IPO investor at return levels management characterized as accretive. Management emphasized a shift toward using securitization as a strategic funding tool to reduce financing uncertainty rather than a volume-driven objective. Credit performance remained a key differentiator, with portfolio-wide 90-day plus delinquencies at approximately 2.8%, reflecting a disciplined underwriting approach and proactive migration up the credit spectrum. Management expects to maintain a consistent securitization pace of approximately one transaction per quarter, or four per year, to support long-term earnings. The company anticipates a second HELOC securitization is likely before the end of 2026, with a potential second non-QM securitization targeted for late Q3 or early Q4. Operating expenses are expected to remain at current levels as the company continues to focus on maintaining an efficient expense structure. Management models returns based on historical average prepayment speeds of 20% to 30%, noting that mortgage rates would need to fall meaningfully to significantly impact current portfolio returns. Strategic priorities for the second half of the year include selective loan purchases, maintaining conservative leverage, and preserving liquidity to respond to changing market conditions. GAAP net income of $3.4 million was impacted by $3.6 million in unrealized losses from the securitized and residential loan portfolios and $2.4 million in derivative losses. Recourse debt-to-equity ratio stood at 2.3x at quarter-end but decreased to approximately 1x following post-quarter securitization activities. Management flagged housing affordability as a potential headwind for origination volume as interest rates remain elevated. The company noted increased competition in the non-QM space from insurance companies, necessitating continued discipline in credit selection. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management views HELOCs as a 10% to 15% allocation of the overall portfolio, remaining predominantly focused on non-QM loans. The company is targeting a conservative 65% combined loan-to-value ratio for HELOC underwriting to mitigate risks at peak housing prices. Current returns during the warehouse phase are approximately 13% to 14%. Upon securitization, management expects returns to increase to a range of 15% to 20%, depending on execution spreads. Management observed some weak points in competitor underwriting programs but stated they avoid those specific high-risk segments. Broad consumer credit outside of housing is showing signs of weakness, particularly for consumers who have not benefited from equity market gains. Despite lower collateral coupons in recent deals, management still expects high-teens returns as newly purchased loans now carry coupons in the mid-7% range. The securitization market remains healthy with tight spreads and high buyer activity despite broader interest rate volatility.

Angel Oak Mortgage (AOMR) came out with quarterly earnings of $0.37 per share, beating the Zacks Consensus Estimate of $0.36 per share. This compares to earnings of $0.11 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +2.78%. A quarter ago, it was expected that this real estate finance company would post earnings of $0.3 per share when it actually produced earnings of $0.18, delivering a surprise of -40%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Angel Oak, which belongs to the Zacks REIT and Equity Trust industry, posted revenues of $41.4 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.9%. This compares to year-ago revenues of $35.09 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Angel Oak shares have added about 2% since the beginning of the year versus the S&P 500's gain of 11%. While Angel Oak has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Angel Oak was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.39 on $43.2 million in revenues for the coming quarter and $1.25 on $169.8 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Granite Point Mortgage Trust (GPMT), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This real estate investment trust is expected to post quarterly loss of $0.18 per share in its upcoming report, which represents a year-over-year change of +80.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Granite Point Mortgage Trust's revenues are expected to be $8.2 million, up 1.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Angel Oak Mortgage REIT Inc. (AOMR) : Free Stock Analysis Report Granite Point Mortgage Trust Inc. (GPMT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Angel Oak Mortgage REIT Inc.? Here are five stocks we like better. Second-quarter profitability improved significantly: GAAP net income rose to $3.4 million, or $0.14 per share, while distributable earnings increased to $9 million from $2.6 million a year earlier. Higher interest income, net interest income and controlled expenses offset unrealized portfolio and derivative losses. Angel Oak strengthened its portfolio and financing position: It purchased $204 million of loans, reduced its largest warehouse spread by 35 basis points and lowered recourse debt-to-equity to approximately 1.0 times after two post-quarter-end securitizations. Management continues to prioritize selective capital deployment and conservative leverage. Securitization activity and credit trends remain central: The company completed two securitizations after quarter-end and expects roughly four annually, while considering additional non-QM and HELOC deals. Portfolio-wide 90-day-plus delinquencies edged up to 2.8%, and HELOCs are expected to remain a limited 10%–15% allocation of the overall portfolio. Angel Oak Mortgage REIT (NYSE:AOMR) reported second-quarter 2026 GAAP net income of $3.4 million, or $0.14 per diluted common share, compared with $800,000, or $0.03 per diluted common share, in the prior-year period. The mortgage REIT said higher net interest income and controlled operating expenses supported results, while unrealized mark-to-market losses reduced GAAP earnings. Distributable earnings totaled $9 million for the quarter, up from $2.6 million in the second quarter of 2025. Chief Financial Officer and Treasurer Brandon Filson said unrealized losses of $3.6 million in the company’s securitized loan and residential loan portfolios, along with $2.4 million of unrealized losses in derivatives, accounted for the difference between GAAP net income and distributable earnings. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Interest income increased 18% year over year to $41.4 million, while net interest income rose 8% to $10.7 million. For the first half of 2026, interest income and net interest income grew 21% and 14%, respectively, from the first six months of 2025. Filson said performance was aided by targeted asset purchases, lower warehouse financing spreads and continued access to securitization markets, despite lower non-QM coupon rates than in the first half of 2025. Management highlighted several actions taken during the quarter to improve the portfolio’s return profile and financing structure. The company sold retained bonds from its AOMT 2020-3 securitization and reinvested the proceeds into newly originated loans with higher modeled yields. It also repurchased $15 million of common equity from a pre-IPO investor and negotiated a 35-basis-point reduction in the spread on its largest warehouse financing facility. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? “We expect to realize the positive impacts of these actions in the coming quarters and years,” Filson said. Loan purchases totaled $204 million during the quarter. The purchased loans had a weighted average coupon of 7.34%, a weighted average combined loan-to-value ratio of 70.5%, and a weighted average credit score of 759. At quarter-end, the company’s loans and securitization trust portfolio had a weighted average coupon of 6.04% and an approximate weighted average funding cost of 4.5%. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Chief Executive Officer and President Sreeni Prabhu said the company remains selective in deploying capital and intends to maintain a conservative leverage approach. He said securitization is being used as a strategic funding tool rather than as a volume-driven objective. Cash at quarter-end was $48.6 million. Recourse debt-to-equity was 2.3 times at quarter-end, declining to about 1.0 times following two post-quarter-end securitizations. Undrawn loan financing capacity totaled approximately $900 million across four lending partners. Unsecuritized residential whole loans had a fair value of $439 million and were financed with $365 million of warehouse debt. Although Angel Oak did not complete a securitization during the second quarter, it executed two transactions after the period ended. The AOMT 2026-3 transaction included $280 million of unpaid principal balance, with Angel Oak as the sole contributor. The underlying collateral had a weighted average coupon of 6.9%, a weighted average non-zero credit score of 757, and a weighted average CLTV of 69%. The AAA-rated senior bonds priced at a spread of 130 basis points over the Treasury yield curve. The company also recently priced AOMT 2026-HB1, a $221 million commingled HELOC securitization to which Angel Oak contributed $71 million of loans. The loans in that transaction had a weighted average coupon of 9.79%, a weighted average non-zero credit score of 744, and a weighted average CLTV of 64.8%. Management continues to expect roughly one securitization per quarter, or about four annually, in the non-QM market. During the question-and-answer session, Filson said a second non-QM securitization in the third quarter was possible depending on market conditions and pipeline timing. He added that a second HELOC securitization this year is “pretty likely.” Filson said warehouse-period returns are currently about 13% to 14%, while securitized returns are generally in the 15% to 20% range, depending on execution conditions. He said spreads in the non-QM securitization market have remained relatively tight, with substantial buyer activity despite volatility in interest rates. Portfolio-wide 90-day-plus delinquencies were approximately 2.8% at quarter-end, up about nine basis points from the first quarter. The measure includes the company’s residential loan, securitized loan and RMBS portfolios. Filson said management believes Angel Oak’s conservative loan-to-value ratios, credit migration strategy and underwriting approach should support lower losses than comparable non-QM platforms over a full credit cycle. Three-month prepayment speeds in the company’s non-QM RMBS securitized loan portfolios increased to 13.6% from 12.5% in the first quarter. Management expects prepayments to rise if rates decline, though Filson said the company models returns using historical average prepayment speeds of 20% to 30% and expects mortgage rates would need to fall meaningfully to materially affect portfolio returns. Prabhu said the company views HELOCs as an opportunity but expects the product to remain a limited portion of the portfolio. “We think of it as a 10%-15% allocation of our overall allocation,” he said, adding that Angel Oak will remain predominantly focused on non-QM first-lien loans. Management also said investor cash-flow loans represent about half of its non-QM composition, alongside bank-statement lending to small-business owners. Prabhu said non-QM underwriting remains generally prudent across the industry, though the company is seeing weaker competitive underwriting in certain programs it does not offer. GAAP book value per share ended the quarter at $10.13, down 1.7% from the end of the first quarter. Economic book value per share was $12.24, down 0.3%. Filson attributed the changes to operating income offset by the quarterly dividend and market-driven unrealized valuation changes. He said management estimated book value had remained relatively flat since the end of the second quarter. The company declared a quarterly common dividend of $0.32 per share, payable Aug. 28 to shareholders of record as of Aug. 21. Angel Oak Mortgage REIT, Inc (NYSE: AOMR) is a real estate investment trust that specializes in a diversified portfolio of residential mortgage assets. The company primarily invests in non-agency residential mortgage-backed securities (RMBS), residential whole loans and credit risk transfer securities issued by government-sponsored enterprises. By focusing on these structured credit instruments, Angel Oak Mortgage REIT seeks to generate attractive risk-adjusted returns through a combination of net interest income and potential capital appreciation. The firm employs leverage through repurchase financing facilities and actively manages duration and credit exposure to adapt to changing market conditions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Angel Oak Mortgage REIT Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

ATLANTA, August 04, 2026--(BUSINESS WIRE)--Angel Oak Mortgage REIT, Inc. (NYSE: AOMR) (the "Company," "we," and "our"), a leading real estate finance company focused on acquiring and investing in first and second lien non-QM loans and other mortgage-related assets in the U.S. mortgage market, today reported financial results for the quarter ended June 30, 2026. Second Quarter and Year to Date 2026 Highlights Q2 2026 GAAP net income of $3.4 million, or $0.14 per diluted share of common stock. Q2 2026 net interest income of $10.7 million, an increase of 8% versus Q2 2025 net interest income of $9.9 million. Net interest income of $22.9 million for the six months ended June 30, 2026, an increase of 14.1% compared to the six months ended June 30, 2025. Q2 2026 GAAP book value of $10.13 per share and economic book value of $12.24 per share, decreases of 1.7% and 0.3%, respectively, compared to the first quarter of 2026. Q2 2026 Distributable Earnings of $9.0 million, or $0.37 per diluted share of common stock. Declared a dividend of $0.32 per share of common stock, which will be paid on August 28, 2026, to common stockholders of record as of August 21, 2026. Sreeni Prabhu, Chief Executive Officer and President of Angel Oak Mortgage REIT, Inc., said, "Our second quarter results demonstrated resilience amid an uncertain macroeconomic environment, highlighted by year-to-date growth of 21% in interest income and 14% in net interest income. Importantly, these results were supported by decisive actions we took during the quarter to strengthen the return profile, liquidity, and long-term durability of our portfolio. We monetized delevered retained bonds from a legacy securitization and redeployed that capital into higher-yielding newly originated loans, repurchased approximately $15 million of common stock from a pre-IPO investor at accretive levels, and secured additional spread reductions on our largest warehouse financing facility. Together, these opportunistic, prudent, and value-oriented actions demonstrate the discipline of our approach and the differentiated strengths of the Angel Oak platform. Looking ahead, we remain focused on the factors within our control: maintaining disciplined credit, expanding earnings, and staying active in the securitization market." Portfolio and Investment Activity During the quarter ended June 30, 2026, we purchased $204 million of newly-originated, current market coupon non-QM residential mortgage loans and home equity lines of credit ("HELOCs"), with a weighted average coupon of 7.34%, weighted average combined loan-to-value ratio ("CLTV") of 70.5% and non-zero weighted average credit score of 759. As of June 30, 2026, the weighted average coupon of our residential whole loans portfolio was 7.51%, marking a 13 basis point increase compared to December 31, 2025. Subsequent to the quarter ended June 30, 2026, in July 2026, we issued AOMT 2026-3, a $279.6 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans. We issued AOMT 2026-3 as the sole contributor in the securitization. We used the proceeds to repay outstanding debt of approximately $247.4 million, and the $22.3 million of cash released was used for new loan purchases and operational purposes. Additionally, subsequent to the quarter ended June 30, 2026, in August 2026, we participated in AOMT 2026-HB1, a $221.4 million scheduled unpaid principal balance securitization backed by HELOCs, contributing loans with a scheduled unpaid principal balance of $71.2 million. Capital Markets Activity As of June 30, 2026, the Company was a party to four loan financing lines which permit borrowings in an aggregate amount of up to $1.3 billion, of which approximately $365 million was drawn, leaving capacity of approximately $0.9 billion for new loan purchases. Balance Sheet Target assets totaled $2.9 billion as of June 30, 2026 The Company held residential mortgage whole loans awaiting securitization with fair value of $438.8 million as of June 30, 2026. As of June 30, 2026, the Company's recourse debt to equity ratio was 2.3x. The Company's recourse debt to equity ratio decreased to 1.0x following the AOMT 2026-3 and AOMT 2026-HB1 securitizations. Dividend On August 4, 2026, the Company declared a dividend of $0.32 per share of common stock, which will be paid on August 28, 2026, to common stockholders of record as of August 21, 2026. Conference Call and Webcast Information The Company will host a live conference call and webcast today, August 4, 2026 at 8:30 a.m. Eastern time. To listen to the live webcast, go to the Investors section of the Company’s website at www.angeloakreit.com at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software. To Participate in the Telephone Conference Call: Dial in at least 15 minutes prior to start time.Domestic: 1-800-717-1738International: 1-646-307-1865 Conference Call Playback: Domestic: 1-844-512-2921International: 1-412-317-6671Pass code: 1143169The playback can be accessed through August 18, 2026. 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 the United States of America ("GAAP"), excluding (1) unrealized gains and losses on our aggregate portfolio, (2) impairment losses, (3) extinguishment of debt, (4) non-cash equity compensation expense, (5) the incentive fee earned by Falcons I, LLC, our external manager (our "Manager"), (6) realized gains or losses on swap terminations and (7) certain other nonrecurring gains or losses. We believe that the presentation of Distributable Earnings provides investors with a useful measure to facilitate comparisons of financial performance among our real estate investment trust ("REIT") peers, but has important limitations. We believe Distributable Earnings 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 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 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 may not be comparable to similar measures presented by other REITs. 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 Securities and Exchange Commission. Except as required by applicable law, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward‐looking statements. The Company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise. About Angel Oak Mortgage REIT, Inc. Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first and second lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. The Company’s objective is to generate attractive risk-adjusted returns for its stockholders through cash distributions and capital appreciation across interest rate and credit cycles. The Company is externally managed and advised by an affiliate of Angel Oak Capital Advisors, LLC, which, collectively with its affiliates, is a leading alternative credit manager with market leadership in mortgage credit that includes asset management, lending, and capital markets. Additional information about the Company is available at www.angeloakreit.com View source version on businesswire.com: https://www.businesswire.com/news/home/20260804381811/en/ Contacts Investors: [email protected] 855-502-3920IR Agency Contact: Nick Teves or Joseph Caminiti, Alpha IR [email protected] Company Contact: KC Kelleher, Head of Corporate Finance & Investor [email protected]

This article first appeared on GuruFocus. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Angel Oak Mortgage REIT Inc (NYSE:AOMR) reported strong year-over-year growth in net interest income, with an 18% increase in interest income and 8% growth in net interest income for Q2 2026 compared to Q2 2025. The company executed strategic actions to strengthen its portfolio, including selling delevered legacy retained bonds and reinvesting in higher-yielding newly originated loans, repurchasing $15 million of common stock at accretive levels, and reducing warehouse financing spread by 35 basis points. Angel Oak Mortgage REIT Inc (NYSE:AOMR) successfully completed two securitizations post-quarter (AOMT 2026-3 and AOMT 2026-HB1), demonstrating continued access to securitization markets and a disciplined approach to funding. Credit performance remained solid with portfolio-wide 90-day plus delinquencies at approximately 2.8%, reflecting a disciplined underwriting approach and conservative credit profiles, which the company believes will lead to lower losses across the credit cycle. The company maintained a strong balance sheet with cash of $48.6 million and reduced recourse debt-to-equity to approximately 1x following the post-quarter securitizations, providing flexibility to navigate market conditions. Angel Oak Mortgage REIT Inc (NYSE:AOMR) declared a $0.32 per share common dividend, maintaining shareholder returns despite market volatility. The company expects to continue executing roughly one securitization per quarter, with a potential second non-QM securitization in Q3 2026, indicating a robust pipeline and ongoing capital deployment opportunities. Angel Oak Mortgage REIT Inc (NYSE:AOMR) experienced unrealized mark-to-market losses in its securitized loan portfolio and derivatives, leading to a 1.7% decrease in GAAP book value per share and a 0.3% decrease in economic book value during Q2 2026. The company did not execute a securitization during the second quarter, which may have limited its ability to lock in financing costs and reduce leverage during a period of market uncertainty. Portfolio-wide 90-day plus delinquencies increased by approximately 9 basis points from Q1 2026 to 2.8%, indicating a slight uptick in credit stress. Prepayment speeds increased to 13.6% from 12.5% in Q1 2026, and the company expects them to continue rising as rates decrease, which could impact portfolio returns if mortgage rates fall significantly. The macroeconomic outlook remains unclear, with inflation, Federal Reserve policy, and global uncertainty causing market volatility and caution among investors, which could affect future performance. Operating expenses increased slightly due to higher loan diligence fees associated with larger target asset balances, potentially impacting profitability. The company noted that newly originated non-QM coupon rates have come down compared to the first half of 2025, which could reduce future interest income if not offset by increased volume or other factors. Warning! GuruFocus has detected 7 Warning Signs with AOMR. Is AOMR fairly valued? Test your thesis with our free DCF calculator. Q: How large do you see the HELOC opportunity for AOMR, and what's your target allocation relative to first lien non-QM?A: Sreeni Prabhu (CEO) stated that they like the HELOC opportunity, but it's all about size, scale, and the credit box. They view it as a 10% to 15% allocation of the overall portfolio, with the majority remaining in non-QM loans, and they will selectively look into HELOCs based on their credit criteria. Q: Can you talk about the returns you see during the warehouse period versus the returns you see upon securitization?A: Brandon Filson (CFO) explained that during the warehouse phase, they are currently seeing about a 13% to 14% return. Upon securitization, the return increases to the often-quoted 15% to 20% range, depending on where securitizations execute. Q: With lower collateral WAC and higher spreads on the AAAs in the AOMT 2026-3 deal, can you talk about the forward assumptions if it's still in that high teens range, and if anything deal-specific drove that net spread tighter?A: Brandon Filson (CFO) confirmed they still expect a 15% to 20% return. The last deal had a lower coupon portfolio, but in response to higher rates, their average mortgage coupons have gone up by 35-40 basis points, and they are now buying loans closer to mid-7s. He noted that securitization spreads have been relatively tight and the market is healthy, with volatility in rates not translating into wider spreads. Q: Can you talk about what you're seeing on broad consumer credit trends and non-QM underwriting standards, and any more tightness there?A: Sreeni Prabhu (CEO) noted that the non-QM market continues to grow despite housing affordability issues, but it is extremely competitive with insurance companies entering the space. He mentioned that weak points are starting to show up in certain competitor programs that they generally don't do. On consumer credit, he emphasized caution, especially with HELOCs, and noted that the general consumer ex-housing is weaker and hasn't benefited from equity markets, but that's not a space AOMR plays in. Q: How do you think about the 4 non-QM securitizations per year and the 2 HELOC securitizations? Does the pipeline for non-QM potentially support a second securitization in the third quarter?A: Brandon Filson (CFO) stated that their projection is still to have an average of 4 non-QM securitizations a year. He indicated that a second HELOC securitization is also pretty likely this year, and there's a decent chance with the pipeline that they'll see a second non-QM within Q3, or if not, it would likely be in October. Q: Are you still seeing good demand in terms of what you're able to invest in on the non-QM side?A: Brandon Filson (CFO) confirmed there is plenty of non-QM demand. Their mortgage company continues to put out a good amount of loans, and there are plenty of buyers on the other side, which drives capital formation in the space. He expects this appetite and demand to continue throughout the rest of the year. Q: Looking at non-QM composition, investor loans are largely about 50% of the market. How does AOMR's collateral compare, and to what extent are you growing DSCR exposure?A: Brandon Filson (CFO) stated that their composition on investor cash flow loans is around the same amount. It has been a good source of growth for them over the past several years, but they still predominantly play in that space and in bank statement borrowing underwriting programs for small business owners. Q: In your supplement, the cost of warehouse debt has bounced around the past couple of quarters. Is there any noise in there that we should be thinking about as we calculate that number on a quarterly basis?A: Brandon Filson (CFO) explained that the cost depends on how levered they are throughout the quarter and how they are financing. Since they just closed two securitizations, they have a lot of fresh capital and will buy loans unlevered, slowly adding debt. In Q2, they had more leverage throughout the quarter than normal because there was no securitization, but that should clean up into Q3. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Blackstone Mortgage Trust (BXMT) came out with quarterly earnings of $0.48 per share, beating the Zacks Consensus Estimate of $0.38 per share. This compares to earnings of $0.19 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +26.32%. A quarter ago, it was expected that this real estate finance company would post earnings of $0.38 per share when it actually produced earnings of $0.49, delivering a surprise of +28.95%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Blackstone Mortgage, which belongs to the Zacks REIT and Equity Trust industry, posted revenues of $82.57 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.20%. This compares to year-ago revenues of $94.81 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Blackstone Mortgage shares have lost about 14.3% since the beginning of the year versus the S&P 500's gain of 6.9%. While Blackstone Mortgage has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Blackstone Mortgage was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.37 on $86.31 million in revenues for the coming quarter and $1.37 on $342.49 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust is currently in the bottom 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Angel Oak Mortgage (AOMR), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 4. This real estate finance company is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of +227.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Angel Oak Mortgage's revenues are expected to be $42.2 million, up 20.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Blackstone Mortgage Trust, Inc. (BXMT) : Free Stock Analysis Report Angel Oak Mortgage REIT Inc. (AOMR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

GAAP net loss of $7.4 million in Q1 was driven by unrealized valuation declines tied to late-quarter rate and spread volatility, but the company reported positive distributable earnings of $4.6 million after removing fair-value moves. Operating performance showed growth: interest income rose to $40.7 million and net interest income to $12.1 million (up ~24% and 20% YoY), while loan purchases totaled $246.2 million with strong credit metrics and continued securitization activity (AOMT 2026-2 completed). Balance sheet and capital actions: GAAP book value per share was $10.31 (economic book value $12.28), the company had $42 million cash, ~1.3x recourse debt-to-equity and ~$1.1 billion undrawn financing capacity, and declared a $0.32 per-share dividend payable May 29, 2026. Interested in Angel Oak Mortgage REIT Inc.? Here are five stocks we like better. Angel Oak Mortgage REIT (NYSE:AOMR) reported first-quarter 2026 results that management said reflected continued operating earnings growth, offset by market-driven valuation declines tied to late-quarter volatility in rates and spreads. CEO Sreeni Prabhu said the quarter began in a “global environment that was largely supportive,” but noted that uneven economic growth and geopolitical tensions, including renewed conflict in the Middle East, weighed on investor sentiment toward the end of the period. Prabhu added that inflation improved gradually and labor markets cooled modestly, while the Federal Reserve maintained a “measured data-driven approach” to policy decisions. → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries Against that backdrop, Prabhu said the company’s platform performed well, supported by “credit quality, funding discipline, and repeatable processes.” He also said securitization markets remained open through the quarter, with demand favoring high-quality collateral and experienced issuers even as spreads reflected headlines and rate volatility. CFO Brandon Filson said results were “in line with expectations” from an interest income and expense standpoint and extended the earnings growth trend established in 2025, including “another consecutive quarter of net interest income growth.” Filson attributed performance to asset additions and cost control, while noting that spread widening and rate increases associated with global tensions drove book value declines. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Angel Oak Mortgage REIT posted a GAAP net loss of $7.4 million, or ($0.30) per diluted common share. Filson said the loss was driven by unrealized valuation changes on securitized and unsecuritized loan portfolios tied to macro market volatility late in the quarter, which offset operating growth. In the first quarter of 2025, the company reported GAAP net income of $20.5 million, or $0.87 per diluted common share, which Filson said was attributable to unrealized valuation gains as well as operating income. Distributable earnings were $4.6 million in the quarter. Filson said the difference versus GAAP results was primarily the removal of unrealized fair value movements. The company’s securitized loan portfolio and residential loan portfolio produced $13.1 million of unrealized losses, partially offset by $1.6 million of net unrealized gains in trading securities and hedge portfolios. Distributable earnings were $4.1 million in the first quarter of 2025. → Tyson Foods' Total Returns: Tasty Treats for Income Investors? Filson reported interest income of $40.7 million and net interest income of $12.1 million for the quarter, compared with $32.9 million and $10.1 million, respectively, in the first quarter of 2025. He characterized that as 24% growth in interest income and 20% growth in net interest income year over year. Compared with the fourth quarter of 2025, interest income increased 4% and net interest income increased 11%. Operating expenses totaled $5.2 million. Excluding non-cash stock compensation and securitization costs, operating expenses were $3.4 million. Filson said the increase from a year earlier and from the prior quarter was tied to professional service fees and loan diligence fees “associated with a larger overall balance and consistent purchases of target assets.” He said the company expects to maintain similar operating expense levels and to remain focused on efficiency. Loan purchases in the quarter totaled $246.2 million. Filson said purchases reflected conservative credit profiles, moderate loan-to-value ratios, and “current market coupons that we believe remain attractive on a risk-adjusted basis.” The weighted average coupon on purchased loans was 7.3%, with a weighted average CLTV of 67% and a weighted average credit score of 759. As of quarter-end, the company’s loans and securitization trust portfolio carried a weighted average coupon of 6.1% and a weighted average funding cost of about 4.5%. Filson said the company intends to continue accessing securitization markets through its “disciplined, methodical” strategy and expects to maintain a pace of about four securitizations per year, or roughly one per quarter. During the quarter, the company completed the AOMT 2026-2 securitization in March. Prabhu said the deal was completed shortly before the onset of renewed conflict in the Middle East, which he described as underscoring the benefits of a repeatable approach. Filson said Angel Oak Mortgage REIT was the sole contributor to the transaction, which had: $272 million unpaid principal balance 7.1% weighted average coupon 757 weighted average non-QM credit score 70.7% weighted average CLTV Filson added that the AAA-rated senior bonds priced at a 113 basis point spread over the Treasury curve. At quarter-end, the company reported GAAP book value per share of $10.31 and economic book value per share of $12.28, with Filson noting that economic book value reflects fair value on all non-recourse securitization obligations. Compared with year-end 2025, GAAP book value per share decreased 4% and economic book value decreased 3.3%. Filson said the change reflected operating income offset by the quarterly dividend payment and market-driven valuation decreases. He also said the company estimated book value had increased slightly since quarter-end due to accretive asset purchases and incremental earnings generation. Filson said the balance sheet remained well-positioned, including $42 million of cash and recourse debt-to-equity of 1.3x. The company ended the quarter with unsecuritized residential whole loans at a fair value of $245.5 million financed with $192.2 million of warehouse debt, as well as $2.2 billion of residential mortgage loans and securitization trust and $238.3 million of RMBS. Filson said the company had about $1.1 billion of undrawn loan financing capacity with four lending partners. Credit performance remained “solid,” Filson said, with portfolio-wide 90+ day delinquency of about 2.7%, which he said was materially flat versus the first quarter of 2025 but about 50 basis points higher than the fourth quarter of 2025. Three-month prepaid speeds on non-QM RMBS and securitized loan portfolios were 12% at quarter-end, compared with 11.2% in the prior quarter. Filson reiterated that the company models returns using historical prepayment speeds of roughly 20% to 30% and said mortgage rates would need to fall meaningfully to have a significant impact on returns given that much of the portfolio still carries coupons below newly originated coupon rates. The company declared a $0.32 per share common dividend payable May 29, 2026, to shareholders of record as of May 22, 2026. In the question-and-answer session, management said it was building its HELOC pipeline and anticipated another HELOC securitization “in the coming months.” Management also said it continued to monitor the potential to call legacy 2021 and 2022 securitizations, with decisions dependent on funding costs, capital structure considerations, and a reduction in rate-market volatility. Asked about whole loan pricing, management said pricing “decreased quite a bit” in the quarter, with about a one-point decline in first-quarter whole loan pricing reflecting current spreads and Treasury rates. Management also said AAA securitization spreads were “probably” around 135 to 145 basis points, depending on timing and collateral. Angel Oak Mortgage REIT, Inc (NYSE: AOMR) is a real estate investment trust that specializes in a diversified portfolio of residential mortgage assets. The company primarily invests in non-agency residential mortgage-backed securities (RMBS), residential whole loans and credit risk transfer securities issued by government-sponsored enterprises. By focusing on these structured credit instruments, Angel Oak Mortgage REIT seeks to generate attractive risk-adjusted returns through a combination of net interest income and potential capital appreciation. The firm employs leverage through repurchase financing facilities and actively manages duration and credit exposure to adapt to changing market conditions. The article "Angel Oak Mortgage REIT Q1 Earnings Call Highlights" was originally published by MarketBeat.

Achieved a consecutive quarter of net interest income expansion, driven by contributions from newly added assets and a sustained focus on cost control. Completed the AOMT 2026-2 securitization in early March, strategically timing the market to secure favorable pricing before geopolitical tensions in the Middle East increased risk appetite volatility. Reported a GAAP net loss primarily due to unrealized valuation changes in the loan portfolio, which management attributes to temporary spread widening and rate increases rather than credit deterioration. Maintained a high-quality credit profile with a weighted average credit score of 759 and a conservative 67% loan-to-value ratio on first-quarter loan purchases. Attributed the 24% year-over-year growth in interest income to targeted asset purchases and a growing net interest margin supported by consistent securitization market access. Emphasized that the platform's differentiated credit performance, characterized by proactive credit spectrum migration, is expected to result in lower losses than peers across the full credit cycle. Maintains a target of executing approximately four securitizations per year, or roughly one per quarter, to maintain a methodical and repeatable capital markets strategy. Expects prepay speeds to remain stable or tick upward only if mortgage rates fall meaningfully, as the majority of the current portfolio carries coupons below newly originated rates. Anticipates maintaining current operating expense levels, focusing on efficiency while managing professional fees associated with loan diligence and asset growth. Models long-term return on equity (ROE) expectations in the mid-teens for non-QM and low 20s for HELOCs, though current market volatility has temporarily compressed these to the low teens. Projects that book value has already begun to recover slightly post-quarter end due to continued accretive asset purchases and incremental earnings generation. Identified a 50 basis point increase in 90+ day delinquencies from Q4 2025 to 2.7%, though management noted this remains materially flat year-over-year and reflects strong collateral performance. Noted that whole loan pricing decreased by approximately 1 point in Q1, reflecting the direct impact of wider spreads and higher treasury base rates on portfolio valuations. Highlighted a $1.7 million increase in professional service fees, partially driven by expensing costs related to the ATM program during a period where no shares were issued. Flagged that the decision to call legacy 2021 and 2022 securitizations is currently on hold pending a reduction in rate market volatility to ensure the actions are accretive. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management confirmed they are currently building the HELOC pipeline and intend to co-mingle assets with other Angel Oak entities for a securitization in the coming months. The projected pace remains steady at approximately two HELOC securitizations per year. Management explained a natural hedging effect where increased speeds decrease the value of interest-only (IO) bonds but increase the valuation of junior unrated equity pieces as they are paid off sooner. The 2024 vintage is seeing higher speeds due to higher initial coupons, which was expected as rates began to moderate. Current ROEs for new deals are trending in the high 12% to lower teens range due to increased treasuries and spreads, down from mid-teens in the prior quarter. AAA spreads are currently estimated between 135 and 145 basis points depending on timing and specific collateral. The decision to call '21 and '22 deals depends on funding costs, leverage levels, and current market volatility. Management requires a "cessation or dramatic reduction" in rate volatility before committing to these calls to ensure they are accretive to the firm. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.