Angel Oak Mortgage REIT, Inc. Q4 FY2024 earnings call

• Closed 2024 with net interest margin expansion but Q4 portfolio valuation declined due to rates.
• Disciplined execution of management model, focusing on long-term earnings accretion.
• Completed 5 securitizations in 2024, enhancing capital flexibility.
• Capital deployment strategy adaptive to market dynamics.
• Senior unsecured note issuance accretive to earnings.
• Dividend declared at $0.32 per share.

Fourth quarter operating results followed expectations with a 9% net interest income growth versus the third quarter. GAAP net loss for Q4 was $15 million or $0.65 per common share. Full year GAAP net income was $28.8 million or $1.17 per diluted common share. Distributable earnings for Q4 were $9.9 million or $0.42 per diluted common share. Interest income in Q4 was $31.9 million, net interest income $9.9 million. Full year interest income was $110.4 million, net interest income $36.9 million. Operating expenses in Q4 were $5.5 million, full year $19.4 million. Balance sheet as of Dec 31, 2024: $40.8 million cash, recourse debt-to-equity ratio 1x, GAAP book value per share $10.17, economic book value $13.10 per share. Residential whole loans, securitized loan portfolio details also mentioned.

• Expect NII to continue growing in 2025 as they purchase accretive loans, manage portfolio, and execute securitizations.
• Pipeline from mortgage company is strong, confident NII will grow throughout 2025.
• Plan to continue accessing securitization market with tight spreads.

• Interest rate and volatility impact portfolio valuation.
• California wildfires had small exposure, property insurance mitigates losses.
• Potential credit issues with portfolio, but low LTV and tight underwriting standards mitigate.

Q: How insulated are '21-'23 vintages from rate declines?

A: Those vintages are pretty insulated; need 150-200 basis points of rate move for significant prepayments.

Q: Incremental yield from re-securitization?

A: Depends on securitization, pre-IPO vintages have high levered yield.

Q: Relevant benchmark for accretive opportunities?

A: Economic book value is important, but GAAP book value also considered.

Q: Delinquencies and mark-to-market?

A: Trend towards 2-3% normalized delinquencies, mark-to-market responds to delinquency changes.

Q: Seasonality in delinquencies?

A: Slight decrease in delinquency level in January.