AOMR - Earnings call transcript Q1 2024 | Angel Oak Mortgage, Inc.

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Operator

Ladies and gentlemen, good morning, and welcome to the Angel Oak Mortgage First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, KC Kelleher, Head of Corporate Finance and Investor Relations. Please go ahead, sir.

KC Kelleher

Good morning. us Earnings Angel Conference joining First Mortgage for XXXX Quarter Call. you today Oak for REIT's Thank This morning, of we results, www.angeloakreit.com. which filed our press available the release in Investors section our at is website detailing these

a forward-looking include As call statements. remarks today's made conference reminder, may on

to future do forward-looking are results or not new obligation update to our undertake in cause subject those light information from statements and uncertainties any materially Forward-looking may discussed statements of that events. risks actual differ today. We to

more earnings a the to that this For filings. discussion detailed factors please and SEC may of results, company's refer affect our quarter release the most recent to our for

During contained information directly release the call, financial most filings. will non-GAAP in non-GAAP and GAAP SEC reconciliations certain measures. about measures financial our to this comparable More earnings are be financial we discussing these measures and

hosted Namit is Prabhu; Angel Mortgage call Officer, Investment Chief conference Officer, Chief Sreeni Oak Brandon Financial morning's by Filson; and Sinha. Executive Chief Officer, Angelo This Capital's REIT's

Management prepared comments, we to the which will make up your some will call questions. open after

www.angeloakreit.com. reviewing Additionally, website, on our supplement posted recommend our earnings we

Now I call will to turn Sreeni. the over

Sreeniwas Prabhu

you, Thank thank everyone to the for and joining today. you call us on KC,

reflected potential we and of have return profile. on earnings a of upward trajectory our the strategy that on executed The quarter momentum from first fortify and established portfolio's our XXXX Based year. we last continuation the XXXX, to grow

increased and sound reflecting net The first consistent income, of with in quarter portfolio of execution conjunction risk interest quarter our XXXX commitment consecutive securitization to marks our management. third strategic expansion

of quarter increased and and value prior versus the GAAP XXXX. earnings, Additionally, book all value book distributable the first quarter both economic

of of environment. success and unfavorable company growth to the beyond. for what the financial and positive Angle continues which resilience continued market-leading and combined ecosystem, our be origination despite the position securitization macro an and the throughout at uncertain is to We underscores both remainder model platforms, the of have Oak operating established this times, year This trend

the In last and enabled $X.X interest and strategy third end, highest achieved versus AOMT the X.X%. by income which XXXX-X quarter a million of Notably, same deal led is the expansion XXXX. balance current the effective sheet. XX% was purchases our on loans we coupon year of This of weighted quarter since quarter, net quarter average securitization million, we a a methodical securitization, after high-quality $XXX of with coupon level

on execution quarter. further leverage the income our We to add purchasing the a further and this loans advantage securitization business ecosystem in expect work, potential growth interest with proceeds serves market This and ability which net strong the to newly competitive coming model. highlights as the in drive originated we Oak strategically the deal, of expansion Angel

share X.X% book value per grew per As over prioritize increase our creation, we grew quarter. a long-term we increase X.X% continue to GAAP previous note share the And to the to quarter. value $XX.XX, over a previous that value economic book $XX.XX,

portfolio market decreases volatility. federal of a outlook in industry coupon is value dampens uncertain, magnitude and fixed income our the position impact and of remains funds federal timing impacted Though we rate rate yields, on portfolio current remainder volatility rate, some our interest positive decisions, While potential maintain XXXX. the the the this of funds by of for market the loans

portfolio representing of to decrease our the X.X% compared as XXXX, average of quarter RMBS loans the fourth performance, weighted as As XX-plus at delinquency the and of securitized whole credit approximately was XX%. a loans, of quarter day end for rate across X.X% of end

opposed towards would to averages We continue as historical represent event. a muted future to large-scale any upticks that delinquencies observe a believe and delinquency movement activity in

mortgage to risk relationship continue perform with is Credit our choose originator, credit specific competitive which a adjust comparably strength ecosystem's stated, us affiliated characteristics. ability on expect due provides the a is Angel management portfolio performance that previously our risk desired we well. the based As to we own, to credit to key Oak to believe our we offerings the and

it through the the us to With turn performance Brandon, in who that, quarter detail. will over first I'll walk for greater financial

Brandon Filson

Thank you, maintained company's expanded XXXX. first XXXX, third the Sreeni. earnings sustained and upward quarter, quarter a for we growth interest trend signaling the quarter consecutive have established of income third of that we profitability. the In The consistent beginning net

an in continue achieved recent to outlook our We with the confident portfolio. are profitably pleased maintain XXXX, for optimistic quarters the ability progress and to in grow

million million of is or GAAP earnings diluted loan and primarily per company earnings gains unrealized the per $X.XX share. our $XX.X by In had net quarter, fully share. Distributable GAAP and distributable loan common residential securitized driven $X.XX the in The between portfolios. or $X.X income were difference

This between quarter, and environment. distributable GAAP a expectation for to earnings distributable in was our the long-term reflective relationship normalized macro GAAP and more of converge earnings

purchases growth our Interest over X% grew strategy. coupon year high-quality, XX% million a This marking over is interest first quarter, income while net to over ago was of compared continued income improvement $XX.X point XXXX. market low and and XX% decreased nearly securitization Interest our QX $X.X income of of was quarter current effective driven by expense for interest the X%. the improvement a and XXXX non-QM loans the the quarter million,

to to achieve past SOFR, on the to are continue over do tied lines, stubbornly interest been we expect we've net have which While sustained growth, interest year, income high able remained our rates so. which warehouse financing to

increase directly of find plan. are in as of costs operating the does costs, compensation. was our we the quarter business stock-based as compensation fees When costs our of expenses inclusion and stock first stock million, well as increase with returns well as to impact line expenses for XXXX. and the from noncash XXXX execution first audit securitization from unvested modest compensation securitization estimate This our exclude useful quarter, we the expenses, analyze an as a by year-end a it prior legal but to not driven cash most were previous the related our quarter, the In decrease versus activity our $X.X quarter XX%

$X.X operating quarter was of million $X.X million XXXX expenses, to first compared expense these our XXXX. the first Excluding in quarter

operational We maintain our to our as cost expect current with further further expense for reductions levels opportunities structure. identify optimize work we some to potential to

sheet. on our Focusing balance

of March million had $XX.X we As XX, hand. of on cash

and Note Our our our recourse on debt-to-equity of at quarter end increase term as we of of X.Xx. will ratio to the repurchase ratio the April will U.S. likely X.Xx December basis. Further, the recourse compared reduced expect of the that X, treasury impact quarter this low was AOMT purchase XXXX, end, a XXXX. our roughly agreements ratio recourse X.Xx as X.Xx X.Xx of Since maturity to XXXX-X debt-to-equity date. recourse debt-to-equity to as below assets but on our in continue we reduced short and long-term to ratio corresponding loans, the remain short-term debt-to-equity approximately today's XX, that

sheet. at other investments financed Our of of million loans assets balance are and with billion securitization million loan in portfolio $XXX $XXX value which of $XXX whole $XX debt, majority-owned residential residential a of of $X.X mortgage quarter RMBS, stood in of fair in end, warehouse included our million affiliates, including as and million trust

scheduled pleased The first debt a which securitization with quarter loans principal are of allowed points of end, X.X%. the year, removed stand-alone to average coupon approximately to the XXX AOMT million us contained of and million financing unpaid the subsequent our deal contributed on the deal. save of approximately rate balance loans warehouse weighted basis $XXX the with We XXXX-X at execution of we to of $XXX within

from securitization this portfolio. a order mortgage originator, removed further capital high expand released effectively net Notably, of margin coupon our the basis. legacy-aged the high-quality, X% loans to our impact deal targeting interest above from loans, affiliated primarily the from into deploying coupons our on go-forward the We're in non-QM

funding grow Additionally, we'll in by capital the costs. an income to effort other reduce to borrowings interest use reducing opportunistically

unsecuritized Following goal which quarter we portfolio balance, a complete quickly with securitization coupon to average. one the on market are securitization, in loans. smaller confident remain to replenish our this carrying high-quality expect We current each we year loan

as to March per per share XX, $XX.XX quarter. on, in from of increased GAAP the up Moving book our $XX.XX fourth value X.X% share

securitization from book XX, quarter of Our economic fourth end GAAP values as of the that of obligations book date. $XX.XX with share to roughly flat all the X.X% estimate to value share March non-recourse are economic and per as was We value up the $XX.XX quarter. today's fair per compared

picks activity the the weighted months. We average The following weighted purchased FICO average have of our and loans a million points since XXX. fourth quarter. X.XX%, as weighted second basis of an quarter carried XX of residential in purchases representing was of the $XX.X the the quarter end in slower loan accelerated a the first of of as X.X% coupon coupon approximately and whole the XX.X% LTV quarter, increase origination Loan of for average weighted average that portfolio winter end of a up

And we XXXX-X have for release the securitization. increased capital AOMT

Following that a to loan committed and coupon the was purchases million, of increased our approximately average principal securitization, the X%. of weighted with portfolio loan unpaid weighted purchases balance Since $XX average approximately loan X.X%. then, whole coupon have backup

year. average disciplined for residential of increase intended post-AOMT ability plans for the credit remain in programmatic remainder loans. remain coupon quickly, coupon Because continued the of our the with to and XXXX-X, reduced loan selection our will our the of purchases continue We the market of current optimistic loan weighted size portfolio purchases in

declared of of the share as company be XXXX, $X.XX on record paid XX, stockholders a per XXXX. will May Finally, XX, which dividend, common to May

financial our For please earnings additional supplement available color website. on our review the on results,

turn now it I will to Sreeni closing for remarks. back

Sreeniwas Prabhu

Thank Brandon. you,

growth continue we there be an the meaningful from of we is our execute on to we a captured have goals. achieved and upside execution long-term proud are We to standpoint, believe as

recourse dashboard and is reductions other our debt-to-equity accretive from in capital other new as from for sheet released deploy into today. borrowings Our effectively balance to a XXXX purposes. of plan delevered loan We standpoint purchases,

markets. an stem results. economics expect further, company and As power engage would that earnings of that capital accretive any actionable we With with our said, to business to that may opportunity grow the we elect look activity to with our know from portfolio directly the we be to

we and to remainder the As quarter year, positive returns second our of we towards the to look forward delivering the look shareholders. enter

we'll With that, questions. Operator? up call your open the to

Operator

question with Harter first line the [Operator of from Doug Instructions] is UBS. Our

Douglas Harter

talk lines, cost about is the could about define instruments at? to what we you along accessing Hoping those up touch kind capital looking And how would would think you about how accretive type of your maybe you Can just you point and of of of be capital last shareholders? kind kind you markets. on what brought of

Brandon Filson

We balance XXX% real secret, our with Doug, Brandon. -- I sheet financed it's right, with really that we're common it's think no equity.

likely we're most debt the of So at markets, would any raise looking capital right now, in somewhere kind be as space.

us points into low XX% current securitization high -- back execution of Our kind gets us return hurdle. teens,

So recently a I that, mean I market. think, anything a MFA in baby coupon bond did on current X% deal about deal.

well. the have of gone Some deals secured as up senior

accretive So the grow. that would we to holders think and to anything range, to be continue in allow very us common

again, previous like raise just of capital, refinance a done going cost we we've for to But now, like it's much refinance debt the an especially messaging, choose around, saying capital us move pipe. right accretive and versus in be a of capital." of do to the things higher -- "If nothing We're a cost necessarily lower there's with we're of debt, in quarters,

Douglas Harter

duration guess that, be the of of any and comfort I you'd raise your just figures? with X the Brandon. you that on you could I those the maturity duration putting about assets the how debt or versus do think appreciate

Brandon Filson

securitization of being -- of kind duration somewhere instrument. senior execution a the bonds again, we X- the of life to average would to debt those like hold, current with the the really bonds a instrument, think X-year close typical be I or X-year

for. be terms use good what and I would then issued it So in capital would what a of think we we match pretty that

Operator

[Operator next Fargo. Don is line Fandetti question from with the of Instructions] Wells Our

Donald Fandetti

whole you're QX contributed there. just Can million from Oak? you you're securitization, new you originating about Just portfolios? I $XXX residential mean the some trying pretty pipeline talk would it's for on you the get Or how was $XX seasonality talking But I at about about to of new million. are little feeling targets some acquisition low. the of balance to raising more a And a acquisitions. then debt. at potentially you Angel sense look loans, loan QX? your if Obviously, mean light

Brandon Filson

Yes.

was Our some little a lighter the 'XX-X, it been was preparing than that quarter and just past, had we -- getting which you're right. And was into closed as we're end. and QX in seasonality. after also

case to debt capital retained of Since in on position. now closed, that of sorry, or have deal repo the is to, that reduce some essentially buy used -- bond some we loans all warehouse

issue be throughout quarter already used to on from QX. likely So million $XX -- in QX stand-alone that we'll get basis. a We'll current capital of levering working us an most unlevered in securitization early position another we've that essentially this where coupon

So we're from of targeting opportunities in million starting of the then that I to see to with to obviously, decent fill $XXX would third-party say forth. and And back That that profiles this can own origination X/X acquisitions. our loans we affiliated originators, the similar X/X we're to probably $XXX well worth but use as our remaining number quarter, is to can bucket. pieces originated about million be toggle credit we going to

Douglas Harter

you that? feel at minus look you'll your Okay. below I dividend. grow do I the just it's expenses, And guess into guess like I NII, if just

Brandon Filson

was than we lower quarter in other couple quarters in loans been buying started little this has of a And 'XX. QX a that right. exactly it in that's earnest in since metric growth of Yes,

with This XX, points off, saving -- XXX rate there. off financing with quarter basis again, we're going 'XX-X of about

Buying $XX worth million positions, X% was that kind loan of loans unlevered thereabouts. already

the then the was And was on with SOX final So math. we went kind through just a because back as the compliance. year-end higher of side, It year little you can audit. first our into expense

past a meetings K expensive get in like back and QX, and were where as interest in it expenses been the moderate and little net audit will QX continuing Those load like also go that. We to et cetera, the more a bit we just had and things had through of than proxy annual expense QX, QX, margin. terms well QX, in grow that then as we'll and a

Operator

further I over no hand [Operator Instructions] closing Brandon Brandon? Filson for the are conference now there questions, comments. would As his to

Brandon Filson

Mortgage forward all, please next you, time in the Oak again feel connecting Angel for free with if reach at to any quarter. and to day. and everyone, In you We have your meantime, look have great a interest Thank out, you REIT. questions

Operator

participation. Thank you. now concluded. The Thank conference has of your for Mortgage Angel Oak you

now disconnect your may You lines.

Angel Oak Mortgage (AOMR) 7 May 242024 Q1 Earnings call transcript