<div id="readability-page-1"><p>Angel Oak Mortgage, Inc. ((AOMR)) has held its Q1 earnings call. Read on for the main highlights of the call.</p><h3>Claim 55% Off TipRanks</h3><ul><li>Unlock  hedge fund-level data  and  powerful investing tools  for smarter, sharper decisions  </li><li> Discover top-performing stock ideas and upgrade to a portfolio of market leaders with  Smart Investor Picks  </li></ul> <p>Angel Oak Mortgage, Inc. reported a quarter that balanced solid core performance against market-driven headwinds. Management emphasized rising interest income, expanding net interest income and higher distributable earnings, but these gains were overshadowed by sizable mark-to-market losses that produced a GAAP net loss and pressured book value. Even so, the tone remained resolutely focused on liquidity, credit quality and securitization execution as levers to ride out rate volatility.</p> <h2>Interest and Net Interest Income Show Solid Momentum</h2> <p>Angel Oak’s interest income rose to $40.7 million, up 24% from $32.9 million a year earlier, while net interest income climbed 20% to $12.1 million from $10.1 million. Sequentially, interest income increased 4% and net interest income jumped 11% versus Q4 2025, underscoring the benefit of higher portfolio yields and relatively stable funding costs in a still-choppy rate backdrop.</p> <h2>Distributable Earnings Extend Upward Operating Trend</h2> <p>Distributable earnings reached $4.6 million for the quarter, up roughly 12% from $4.1 million in Q1 2025, reflecting another period of net interest income expansion. Management highlighted this as further evidence that the company’s core earnings engine continues to strengthen, even as GAAP figures are buffeted by unrealized valuation swings tied to volatile interest rates and spreads.</p> <h2>Securitization Engine Delivers with AOMT 2026-2</h2> <p>The company closed its AOMT 2026-2 securitization in March, backed by $272 million of unpaid principal with a weighted average coupon of 7.1%, credit score of 757 and CLTV of 70.7%. AAA bonds priced about 113 basis points over Treasuries, and management reiterated its goal of roughly four securitizations per year, positioning this program as a key funding and capital-recycling tool.</p> <h2>Disciplined Loan Purchases Underscore Credit Conservatism</h2> <p>Angel Oak acquired $246.2 million of loans in the quarter with a weighted average coupon of 7.3%, CLTV of 67% and credit score of 759, highlighting a conservative borrower profile. Management framed these metrics as evidence of tightening underwriting standards and a focus on accretive, higher-yielding assets that can sustain earnings while keeping credit risk in check.</p> <h2>Liquidity and Balance Sheet Support Flexibility</h2> <p>The company ended the quarter with $42 million in cash and about $1.1 billion of undrawn financing capacity across four lending partners, alongside a recourse debt-to-equity ratio of 1.3 times. This combination gives Angel Oak meaningful balance sheet flexibility to fund new loan purchases, execute securitizations and respond quickly to shifts in market spreads and rates.</p> <h2>Positive Portfolio Funding Spread Fuels Earnings</h2> <p>Across the portfolio, the weighted average coupon stood at 6.1% against an approximate funding cost of 4.5%, preserving a healthy spread. Management pointed to this positive margin as a core driver of net interest income growth and a buffer against near-term volatility in asset valuations and deal economics.</p> <h2>Dividend Maintained as Capital Return Signal</h2> <p>Angel Oak declared a common dividend of $0.32 per share payable later in the quarter, underscoring a commitment to ongoing shareholder returns despite GAAP earnings pressure. The distribution suggests confidence in the durability of distributable earnings and the company’s liquidity position, even as market marks weigh on reported net income.</p> <h2>GAAP Net Loss Reflects Market-Driven Valuation Swings</h2> <p>The company posted a GAAP net loss of $7.4 million, or $0.30 per diluted share, compared with net income of $20.5 million, or $0.87 per share, in Q1 2025. Management attributed the reversal primarily to unrealized valuation declines tied to late-quarter moves in rates and spreads, stressing that these marks are non-cash and may reverse if markets stabilize.</p> <h2>Unrealized Losses on Loans and Hedges Drag Results</h2> <p>Unrealized losses totaled $13.1 million across securitized and residential loan portfolios, partially offset by $1.6 million of net unrealized gains on trading securities and hedges. The net negative mark substantially reduced GAAP performance, highlighting the sensitivity of the company’s asset valuations to shifts in whole loan pricing and risk premiums.</p> <h2>Book Value Feels Impact of Market Volatility</h2> <p>GAAP book value per share ended the quarter at $10.31, while economic book value was $12.28, reflecting a 4% and 3.3% decline, respectively, since year-end 2025. Management acknowledged the pressure but framed it as largely mark-to-market in nature, arguing that disciplined credit selection and securitization should support book value over the longer term.</p> <h2>Whole Loan Pricing Compression Hits Deal Economics</h2> <p>Whole loan pricing fell by roughly one point during Q1, a key factor behind the quarter’s unrealized valuation losses and softer near-term economics on new deals. Management indicated that while this reduces immediate profitability on securitizations, it also creates selective opportunities to buy loans at more attractive entry yields when risk-adjusted returns are compelling.</p> <h2>Delinquency and Prepayment Trends Edge Higher</h2> <p>Ninety-plus day delinquencies held around 2.7% portfolio-wide, flat versus a year ago but about 50 basis points above Q4 2025, signaling some incremental credit normalization. Three-month CPR prepayment speeds ticked up to 12% from 11.2%, a modest rise that could pressure longer-term yields if rates fall meaningfully and refinance activity accelerates.</p> <h2>ROE Compression Highlights Tougher Return Environment</h2> <p>Management noted that expected returns on new deals have compressed from prior mid-teens guidance to the low-teens or high-12% range amid higher Treasury yields and wider spreads. Historically, HELOC strategies targeted ROEs in the low-20% area, but those figures are now subject to the same market volatility that is challenging economics across the non-agency mortgage space.</p> <h2>Higher Operating and Securitization Costs Weigh on Margins</h2> <p>Operating expenses totaled $5.2 million for the quarter, or $3.4 million after excluding noncash stock compensation and securitization-related items. Management cited higher professional services and loan diligence costs tied to stepped-up purchase activity, plus expenses associated with the at-the-market program and noted that securitization costs, around 50 basis points on smaller ~$300 million deals, remain sensitive to transaction size.</p> <h2>Guidance: Steady Securitizations, Conservative Leverage and Targeted ROEs</h2> <p>Looking ahead, Angel Oak aims to maintain a disciplined securitization cadence of roughly one deal per quarter while keeping operating expenses, liquidity levels and leverage ratios broadly in line with current levels. Management reiterated long-term ROE targets in the mid-teens, with current executions closer to low-teens, and plans to stay selective on loan purchases, relying on strong credit profiles, a 6.1% portfolio coupon funded at about 4.5% and robust financing capacity to drive accretive growth.</p> <p>Angel Oak Mortgage’s latest earnings call painted a picture of a platform whose core earnings and credit discipline are intact, even as market marks dent GAAP results and book value. Investors will need to weigh the strength in net interest income, securitization execution and liquidity against compressed ROE expectations and valuation volatility, but management’s steady tone suggests confidence in navigating through the current rate cycle.</p></div>

AOMR

<p>Angel Oak Mortgage, Inc. held its Q1 earnings call, reporting a GAAP net loss of $7.4 million due to market-driven valuation swings, despite a 24% increase in interest income to $40.7 million. The company emphasized liquidity and credit quality, maintaining a dividend of $0.32 per share. Distributable earnings rose 12% to $4.6 million, reflecting solid core performance. The company closed its AOMT 2026-2 securitization, acquiring $246.2 million in loans with a conservative borrower profile. GAAP book value per share declined to $10.31, attributed to market volatility.</p>

Angel Oak Mortgage Earnings Call Balances Growth and Volatility