Angel Oak Mortgage, Inc. (NYSE: AOMR) (the “Company,” “we,”
and “our”), a leading real estate finance company focused on
acquiring and investing in first lien non-QM loans and other
mortgage-related assets in the U.S. mortgage market, today reported
financial results for the quarter and year ended December 31,
2022.
Please note that the Company’s name will change to Angel Oak
Mortgage REIT, Inc., effective on or about March 10, 2023. The
Company’s website, CUSIP, and New York Stock Exchange ticker symbol
will remain unchanged. Additionally, we would like to announce the
resignation of Dory Black as the Company’s Secretary and the
appointment of David Gordon to the same role, effective March 8,
2023.
Fourth Quarter Highlights
- Q4 2022 GAAP net loss of $8.8 million, or $(0.36) per diluted
share of common stock.
- Q4 2022 distributable earnings of $(61.5) million, or $(2.50)
per diluted share of common stock.
- Declared dividend of $0.32 per share of common stock, payable
on March 31, 2023, to common stockholders of record as of March 22,
2023.
Full Year 2022 Highlights
- Total GAAP net loss of $187.8 million, or $(7.65) per diluted
share of common stock, for the full year ended December 31,
2022.
- Distributable Earnings of $19.4 million, or $0.78 per diluted
share of common stock, for the full year ended December 31,
2022.
- GAAP book value of $9.49 per share of common stock as of
December 31, 2022.
- Economic book value of $13.11 per share of common stock as of
December 31, 2022.
Since the end of Q3 2022, the Company has reduced its whole loan
warehouse debt by 51 % and its mark to market percentage of total
warehouse debt1 by 62% while releasing additional cash. These
accomplishments have protected our capital structure to withstand
volatility and will allow us to focus on growing the earning
potential of its portfolio while continuing to prioritize sound
risk and liquidity management.
Sreeni Prabhu, Chief Executive Officer and President of the
Company, commented, “While 2022 was characterized by surging global
inflation, extreme interest rate volatility, and wider credit
spreads across various asset classes, we were able to gain positive
momentum in the fourth quarter that has carried into 2023. We
continue to make significant progress against our strategic plan to
reposition our portfolio, improve liquidity, and reduce risk, all
of which were demonstrated through the loan sales and non-mark to
market financing conversion announced in Q4, as well as the AOMT
2023-1 securitization in January 2023. We plan to resume purchases
of newly originated, higher-coupon loans and to methodically
execute securitizations throughout 2023. I’m proud of our team and
thank them for their hard work and contributions as we seek to
build long term value for our shareholders.”
1 Mark-to-market percentage of total warehouse debt is
calculated as the total unpaid balance of mark-to-market warehouse
financing divided by the total unpaid balance of all warehouse
financing.
Fourth Quarter Portfolio and Investment Activity
- In November 2022, the Company sold certain non-QM and investor
cash flow residential mortgage loans with a gross weighted average
coupon of approximately 4.5%, and a cost basis of approximately
$315.6 million and a prior month carrying value of $267.6 million.
The purchase price for the mortgage loans was $252.7 million, and
$221.2 million of warehouse debt was repaid as a result of the
transaction.
- Sold $7.0 million in commercial loans in order to concentrate
on the core non-QM strategy of AOMR.
- Subsequent to year end, in January 2023, the Company
participated in AOMT 2023-1, an approximately $580.5 million
scheduled principal balance securitization backed by a pool of
residential mortgage loans. The Company contributed loans with a
scheduled principal balance of $241.3 million. In addition to
releasing capital, the Company retained its pro rata share of the
rated bonds from the securitization.
Full Year Portfolio and Investment Activity
- Purchased approximately $995.2 million of residential mortgage
loans in 2022.
- In 2022, the Company completed two residential non-QM
securitizations, totaling $722.3 million in aggregate unpaid
principal balance. The Company’s contribution to AOMT 2023-1 in
January 2023 brings the total securitized unpaid principal balance
since December 31, 2021 to approximately $1.0 billion.
- Portfolio totaled $2.9 billion of residential mortgage loans
and other target assets as of December 31, 2022, representing 28%
growth since December 31, 2021.
Capital Markets Activity
- In December 2022, the Company converted approximately $286
million of mark-to-market debt to non-mark-to-market financing for
continually performing loans.
- As of December 31, 2022, the Company was party to five
financing lines which permit borrowings in an aggregate amount of
up to $1.2 billion.
- Our total financing capacity as of March 9, 2023 stands at $1.2
billion of which approximately $440 million is drawn, leaving
capacity of approximately $767 million for new loan purchases.
Balance Sheet
- Target assets totaled $2.87 billion as of December 31,
2022.
- Held residential mortgage whole loans with fair value of $771.0
million as of December 31, 2022.
- Recourse debt to equity ratio was 2.9x as of December 31,
2022.
- During 2022, we repurchased approximately 429,333 shares of
common stock at an average price of $15.86 per share, for a total
of $6.9 million.
Dividend
On March 9, 2023, the Company declared a dividend of $0.32 per
share of common stock for the fourth quarter of 2022. The dividend
is payable on March 31, 2023 to common stockholders of record as of
March 22, 2023.
Conference Call and Webcast Information
The Company will host a live conference call and webcast today,
March 9, 2023 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:
1-877-407-9716 International: 1-201-493-6779
Conference Call Playback:
Domestic: 1-844-512-2921 International: 1-412-317-6671 Passcode:
13735149 The playback can be accessed through March 23, 2023.
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 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 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 common 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, Inc.
Angel Oak Mortgage, Inc. is a real estate finance company
focused on acquiring and investing in first 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 a vertically integrated
mortgage origination platform. Additional information about the
Company is available at www.angeloakreit.com.
Angel Oak Mortgage,
Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except for share
and per share data)
Three Months Ended
Twelve Months Ended
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
INTEREST INCOME, NET
Interest income
$
28,585
$
22,792
$
115,544
$
60,555
Interest expense
21,175
6,199
63,024
11,476
NET INTEREST INCOME
7,410
16,593
52,520
49,079
REALIZED AND UNREALIZED GAINS (LOSSES),
NET
Net realized gain (loss) on mortgage
loans, derivative contracts, RMBS, and CMBS
(65,141
)
14,730
(8,717
)
(4,926
)
Net unrealized gain (loss) on mortgage
loans, debt at fair value option, and derivative contracts
53,268
(18,543
)
(201,753
)
(2,392
)
TOTAL REALIZED AND UNREALIZED GAINS
(LOSSES), NET
(11,873
)
(3,813
)
(210,470
)
(7,318
)
EXPENSES
Operating expenses
1,790
4,529
16,651
11,439
Stock compensation
574
1,715
5,753
1,715
Securitization costs
3
—
3,137
—
Management fee incurred with affiliate
1,969
1,879
7,799
5,894
Total operating expenses
4,336
8,123
33,340
19,048
INCOME (LOSS) BEFORE INCOME
TAXES
(8,799
)
4,657
(191,290
)
22,713
Income tax benefit
—
1,600
(3,457
)
1,600
NET INCOME (LOSS)
$
(8,799
)
$
3,057
$
(187,833
)
$
21,113
Preferred dividends
(2
)
(4
)
(14
)
(15
)
NET INCOME (LOSS) ALLOCABLE TO COMMON
STOCKHOLDERS
$
(8,801
)
$
3,053
$
(187,847
)
$
21,098
Other comprehensive income (loss)
(12,148
)
(1,394
)
(24,127
)
4,039
TOTAL COMPREHENSIVE INCOME
(LOSS)
$
(20,949
)
$
1,659
$
(211,974
)
$
25,137
Basic earnings (loss) per common share
$
(0.36
)
$
0.12
$
(7.65
)
$
1.02
Diluted earnings (loss) per common
share
$
(0.36
)
$
0.12
$
(7.65
)
$
1.01
Weighted average number of common
shares outstanding:
Basic
24,586,340
24,835,377
24,547,916
20,601,964
Diluted
24,586,340
25,306,794
24,547,916
20,852,554
Angel Oak Mortgage,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except for share
and per share data)
As of:
December 31, 2022
December 31, 2021
ASSETS
Residential mortgage loans - at fair
value
$
770,982
$
1,061,912
Residential mortgage loans in
securitization trusts - at fair value
1,027,442
667,365
Commercial mortgage loans - at fair
value
9,458
18,664
RMBS - at fair value
1,055,338
485,634
CMBS - at fair value
6,111
10,756
U.S. Treasury securities - at fair
value
—
249,999
Cash and cash equivalents
29,272
40,801
Restricted cash
10,589
11,508
Principal and interest receivable
17,497
25,984
Deferred tax asset
3,457
—
Unrealized appreciation on TBAs and
interest rate futures contracts - at fair value
14,756
2,428
Other assets
1,310
2,878
Total assets
$
2,946,212
$
2,577,929
LIABILITIES AND STOCKHOLDERS’
EQUITY
LIABILITIES
Notes payable
$
639,870
$
853,408
Non-recourse securitization obligation,
collateralized by residential mortgage loans in securitization
trusts
1,003,485
616,557
Securities sold under agreements to
repurchase
52,544
609,251
Unrealized depreciation on TBAs and
interest rate futures contracts - at fair value
—
728
Due to broker
1,006,022
—
Accrued expenses
1,288
442
Accrued expenses payable to affiliate
2,006
1,425
Interest payable
2,551
1,283
Income taxes payable
—
1,600
Management fee payable to affiliate
1,967
1,845
Total liabilities
$
2,709,733
$
2,086,539
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Series A preferred stock, $0.01 par value.
As of December 31, 2022: no shares issued and outstanding. As of
December 31, 2021, 12% cumulative, non-voting, 125 shares issued
and outstanding.
$
—
$
101
Common stock, $0.01 par value. As of
December 31, 2022: 350,000,000 shares authorized, 24,925,357 shares
issued and outstanding. As of December 31, 2021: 350,000,000 shares
authorized, 25,227,328 shares issued and outstanding.
249
252
Additional paid-in capital
475,379
476,510
Accumulated other comprehensive income
(21,127
)
3,000
Retained (deficit) earnings
(218,022
)
11,527
Total stockholders’ equity
$
236,479
$
491,390
Total liabilities and stockholders’
equity
$
2,946,212
$
2,577,929
Angel Oak Mortgage,
Inc.
Reconciliation of Net Income
(Loss) to Distributable Earnings
and Distributable Earnings
Return on Average Equity
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
(in thousands)
Net income (loss) allocable to common
stockholders
$
(8,801
)
$
3,053
$
(187,847
)
$
21,098
Adjustments:
Net other-than-temporary credit impairment
losses
—
—
—
—
Net unrealized (gains) losses on
derivatives
(11,484
)
1,558
(13,054
)
7,688
Net unrealized (gains) losses on
residential loans in securitization trusts and non-recourse
securitization obligation
(11,896
)
1,949
67,401
1,949
Net unrealized (gains) losses on
residential loans
(29,973
)
15,068
146,347
1,956
Net unrealized (gains) losses on
commercial loans
85
(10
)
844
(231
)
Net unrealized (gains) losses on financial
instruments at fair value
—
—
—
—
(Gains) losses on extinguishment of
debt
—
—
—
—
Non-cash equity compensation expense
573
791
5,753
1,715
Incentive fee earned by the Manager
—
—
—
—
Realized gains (losses) on terminations of
interest rate swaps
—
—
—
—
Total other non-recurring (gains)
losses
—
—
—
—
Distributable Earnings
$
(61,496
)
$
22,409
$
19,444
$
34,175
Three Months Ended
Twelve Months Ended
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
($ in thousands)
Annualized Distributable Earnings
$
(245,984
)
$
89,636
$
19,444
$
34,175
Average total stockholders’ equity
$
249,954
$
496,125
$
355,944
$
369,749
Distributable Earnings Return on Average
Equity
(98.41
%)
18.07
%
5.46
%
9.24
%
Angel Oak Mortgage, Inc.
Reconciliation of
Stockholders’ Equity to Stockholders’ Equity Including Economic
Book Value Adjustments
and Economic Book Value per
Common Share
(Unaudited)
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
December 31,
2021
(in thousands, except for per
share data)
GAAP total stockholders’ equity
$
236,479
$
264,957
$
367,284
$
421,436
$
491,390
Preferred stock
—
(101
)
(101
)
(101
)
(101
)
GAAP total common stockholders’ equity for
book value per share of common stock
$
236,479
$
264,856
$
367,183
$
421,335
$
491,289
Adjustments:
Fair value adjustment for securitized debt
held at amortized cost
90,348
57,596
32,863
20,443
1,079
Stockholders’ equity including economic
book value adjustments
$
326,827
$
322,452
$
400,046
$
441,778
$
492,368
Number of shares of common stock
outstanding at period end
24,925,357
24,925,357
24,925,930
25,085,796
25,227,328
Book value per share of common stock
$
9.49
$
10.63
$
14.73
$
16.80
$
19.47
Economic book value per share of common
stock
$
13.11
$
12.94
$
16.05
$
17.61
$
19.52
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230309005318/en/
Investors: investorrelations@angeloakreit.com
855-502-3920
Media: Bernardo Soriano, Gregory FCA for Angel Oak
Mortgage, Inc. 914-656-3880 bernardo@gregoryfca.com
Company: Randy Chrisman, Chief Marketing & Corporate
Investor Relations Officer, Angel Oak Capital Advisors 404-953-4969
randy.chrisman@angeloakcapital.com
Angel Oak Mortgage REIT (NYSE:AOMR)
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