Skip to content
    AOMR
    Earnings call· Jun 2026(Q2 FY26)

    Angel Oak Mortgage REIT Q2 FY26 earnings call AOMR

    Aug 4, 2026 Source

    Executive summary

    Angel Oak Mortgage REIT Q2 FY26 — Strategic Actions Strengthen Portfolio Amidst Market Volatility

    Angel Oak Mortgage REIT navigated a volatile Q2 FY26 with strategic actions to fortify its portfolio, including bond monetization, share repurchases, and reduced financing costs. Despite unrealized mark-to-market losses and a slight increase in delinquencies, the company maintained solid net interest income growth and stable book value, emphasizing disciplined capital deployment and strategic securitization to build long-term shareholder value.

    Highlights

    5

    • Net interest income grew 8% year-over-year to $10.7 million in Q2 2026.

    • GAAP net income increased to $3.4 million ($0.14 per diluted share) in Q2 2026 from $0.8 million ($0.03 per diluted share) in Q2 2025.

    • Repurchased $15 million of common equity from a pre-IPO investor at accretive return levels.

    • Reduced interest rate spread on largest warehouse financing facility by 35 basis points.

    • Recourse debt-to-equity ratio decreased to approximately 1x post-quarter-end securitizations from 2.3x at quarter-end.

    Concerns

    4

    • Unrealized mark-to-market valuation decreases in unsecured securitized loan portfolio partially offset strong operating foundation.

    • GAAP book value per share decreased 1.7% to $10.13 from Q1 2026.

    • Economic book value decreased 0.3% to $12.24 from Q1 2026.

    • Portfolio-wide 90-day plus delinquencies increased by 9 basis points to approximately 2.8% from Q1 2026.

    Guidance & targets

    6
    CategoryTargetConfidence
    Securitization pace
    Roughly one securitization per quarter
    medium materiality
    Medium
    Operating expense levels
    Maintain similar operating expense levels
    low materiality
    Medium
    Securitization pace
    Roughly 1 securitization per quarter or 4 per year
    medium materiality
    Medium
    Non-QM securitization pace
    4 per year on average
    medium materiality
    Medium
    HELOC securitization
    Second HELOC securitization likely
    low materiality
    Medium
    Non-QM securitization
    Decent chance of second non-QM securitization
    low materiality
    Low

    Operational metrics

    29
    GAAP Net Income
    $3.4Mvs $0.8M in Q2 FY25
    Q2 FY26

    Driven by healthy net interest income and maintained operating expense levels, partially offset by unrealized mark-to-market losses.

    Distributable Earnings
    $9Mvs $2.6M in Q2 FY25
    Q2 FY26

    Difference from GAAP net income driven by $3.6M of unrealized losses in securitized and residential loan portfolios and $2.4M in derivative portfolio.

    Interest Income
    $41.4Mup 18% vs $35.1M in Q2 FY25
    Q2 FY26

    Supported by targeted asset purchases, decreased warehouse spreads, and consistent access to securitization markets.

    Net Interest Income
    $10.7Mup 8% vs $9.9M in Q2 FY25
    Q2 FY26

    Supported by targeted asset purchases, decreased warehouse spreads, and consistent access to securitization markets.

    Interest Income Growth
    21%vs H1 FY25
    H1 FY26

    Year-over-year growth for the first six months.

    Net Interest Income Growth
    14%vs H1 FY25
    H1 FY26

    Year-over-year growth for the first six months.

    Operating Expenses (excluding non-cash stock comp)
    $3.2Msmall increase compared to a year ago
    Q2 FY26

    Small increase due to increased loan diligence fees associated with larger target asset balances.

    Common Equity Repurchased
    $15M
    Q2 FY26

    Repurchased from a pre-IPO investor at accretive return levels.

    Warehouse Financing Spread Reduction
    35 bps
    Q2 FY26

    Successfully negotiated a significant spread reduction.

    Recourse Debt-to-Equity Ratio
    2.3xdecreased to ~1x post-securitizations
    Q2 FY26 end

    Ratio is consistent with expectations immediately preceding securitization.

    Cash
    $48.6M
    Q2 FY26 end

    Part of the balance sheet position.

    Undrawn Loan Financing Capacity
    $900M
    Q2 FY26 end

    Provides flexibility to respond to changing market conditions.

    Loans in Securitization Trust
    $2.1B
    Q2 FY26 end

    Part of the residential mortgage loan portfolio.

    RMBS
    $334M
    Q2 FY26 end

    Includes investment in commingled securitization entities, which are included in other assets on the balance sheet.

    Unsecuritized Residential Whole Loans (Fair Value)
    $439M
    Q2 FY26 end

    Financed with $365 million of warehouse debt.

    Warehouse Debt (financing unsecuritized loans)
    $365M
    Q2 FY26 end

    Finances the unsecuritized residential whole loans.

    Non-QM Securitization (AOMT 2026-3) UPB
    $280M
    Post Q2 FY26

    Executed just after quarter end, AOMR was the sole contributor.

    HELOC Securitization (AOMT 2026-HB1) UPB
    $221M
    Post Q2 FY26

    Recently priced commingled HELOC securitization.

    Non-QM Loan Purchases
    $204M
    Q2 FY26

    Loans reflect conservative credit profiles and moderate loan-to-value ratios.

    Loans in Securitization Trust Weighted Average Coupon
    6.04%
    Q2 FY26 end

    Weighted average coupon for the securitized loan portfolio.

    Loans in Securitization Trust Weighted Average Funding Cost
    4.5%
    Q2 FY26 end

    Weighted average funding cost for the securitized loan portfolio.

    Portfolio-wide 90-day+ Delinquencies
    2.8%up 9 bps from Q1 FY26
    Q2 FY26 end

    Inclusive of residential loan, securitized loan, and RMBS portfolios.

    3-month Prepay Speeds (non-QM RMBS securitized loan portfolios)
    13.6%vs 12.5% in Q1 FY26
    Q2 FY26 end

    Expected to increase as rates decrease and homeowners refinance.

    Modeled Returns (warehouse phase)
    13% to 14%
    Ongoing

    Returns seen during the warehouse period.

    Modeled Returns (securitization)
    15% to 20%
    Ongoing

    Returns seen upon securitization.

    HELOC Target Allocation
    10% to 15%
    Ongoing

    Target allocation for HELOCs relative to non-QM.

    Investor Cash Flow Loans (composition)
    around 50%
    Ongoing

    Composition of investor cash flow loans within the non-QM portfolio.

    HELOC Underwriting CLTV Target
    65%
    Ongoing

    Target for underwriting HELOCs.

    Dividend per Share
    $0.32
    Q2 FY26

    Common dividend payable on August 28, 2026, to common shareholders of record as of August 21, 2026.

    Industry KPIs

    1
    MetricValueDetails
    Investment volume closed$204MUSD

    Deals & partnerships

    5
    Pre-IPO investorCommon stock repurchase$15M

    Repurchased $15 million of common equity from a pre-IPO investor at accretive return levels.

    Largest warehouse financing providerInterest rate spread reduction35 bps

    Successfully negotiated a 35 basis point spread reduction on its largest warehouse financing facility.

    N/AMonetization of delevered legacy retained bonds

    Sold retained bonds from the AOMT 2020-3 securitization.

    N/A (AOMR sole contributor)Non-QM Securitization$280M UPB

    Executed AOMT 2026-3, to which AOMR was the sole contributor, with $280 million of unpaid principal balance.

    N/A (AOMR contributor)HELOC Securitization$221M commingled HELOC securitization

    Recently priced AOMT 2026-HB1, a $221 million commingled HELOC securitization, to which AOMR contributed $71 million of loans.

    Risks & headwinds

    5
    Macroeconomic uncertainty and market volatilityQ2 FY26 and ongoing

    unrealized mark-to-market valuation decreases in our unsecured securitized loan portfolio

    Mitigation: balanced approach of strategic value-driven decision-making and operating excellence; staying disciplined in capital deployment, preserving flexibility; maintaining liquidity and available financing capacity

    Increased 90-day+ delinquenciesQ2 FY26

    2.8%, an increase of approximately 9 basis points from Q1 2026

    Mitigation: proactive migration of the credit spectrum, conservative LTVs and disciplined underwriting approach

    Housing affordability and rising rates impacting originationOngoing

    market obviously is difficult from the origination side, right, because housing affordability slows down, obviously, as rates keep going up

    Mitigation: continue to originate and purchase selectively; disciplined underwriting approach

    Competitive pressures in non-QM marketOngoing

    extremely competitive because you have a whole addition of insurance companies that are stepping in at these higher rates

    Mitigation: be disciplined; avoid certain programs that we generally don't do

    General consumer credit weakness (outside AOMR's direct portfolio)Ongoing

    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.

    Mitigation: AOMR does not play in this space directly, but is cautious in related funds (mutual funds, ETFs)

    What to watch in Q3 FY26

    5

    Non-QM Securitization Pace

    Q3 FY26
    Current2 securitizations (AOMT 2026-3, AOMT 2026-HB1) executed post Q2 FY26
    TargetSecond non-QM securitization in Q3 FY26

    Why it matters

    Indicates continued access to funding markets and ability to rotate warehouse inventory, supporting earnings power.

    and there's a decent chance with the pipeline coming that we'll see💬 a second non-QM within Q3.

    Q&A highlights

    6

    What is the target allocation for HELOCs relative to first lien non-QM, and how large is the opportunity?

    Management sees the HELOC opportunity as a 10% to 15% allocation of the overall portfolio, with non-QM remaining predominant, based on size, scale, and credit box.

    “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.”

    asked by Marissa Lobo · answered by Sreeniwas Prabhu

    2 min read7 chapters

    Detailed Narrative

    01

    Strategic Portfolio Actions

    AOMR undertook several strategic initiatives in Q2 2026 to enhance portfolio strength and return profile. These included monetizing delevered legacy retained bonds from the AOMT 2020-3 securitization, repurchasing $15 million of common equity from a pre-IPO investor, and negotiating a 35 basis point spread reduction on its largest warehouse financing facility. These opportunistic and prudent actions are designed to fortify the strength and return profile of the portfolio over the short and long term.

    02

    Securitization Strategy and Market Conditions

    The company maintained a disciplined approach to securitization, executing AOMT 2026-3 ($280 million UPB) and AOMT 2026-HB1 ($221 million commingled HELOC securitization, with AOMR contributing $71 million) post-quarter-end. Management aims for approximately one securitization per quarter, focusing on balance sheet durability, reduced financing uncertainty, and long-term earnings power rather than volume-driven objectives. The securitization market remains constructive with tight spreads despite rate volatility.

    03

    Loan Origination and Credit Profile

    AOMR continues to source loans fitting its credit and return criteria, with Q2 purchases totaling $204 million. These loans exhibit conservative credit profiles, moderate loan-to-value ratios (weighted average CLTV of 70.5%), and strong credit scores (weighted average 759). The weighted average coupon of purchased loans was 7.34%. The company's non-QM collateral composition includes approximately 50% investor cash flow loans, and for HELOCs, they target underwriting to a 65% combined loan-to-value.

    04

    Financial Performance Highlights

    GAAP net income for Q2 2026 was $3.4 million ($0.14 per diluted share), a significant increase from $0.8 million ($0.03 per diluted share) in Q2 2025. Net interest income grew 8% year-over-year to $10.7 million. Distributable earnings were $9 million, compared to $2.6 million in Q2 2025. Interest income and net interest income grew by 21% and 14% respectively for the first six months of 2026 versus the prior year period.

    05

    Balance Sheet and Liquidity

    As of quarter-end, GAAP book value per share was $10.13, and economic book value was $12.24. The recourse debt-to-equity ratio was 2.3x at quarter-end, decreasing to approximately 1x after subsequent securitizations. The company held $48.6 million in cash and $900 million in undrawn loan financing capacity with four high-quality lending partners, maintaining flexibility to respond to changing market conditions.

    06

    Credit Performance and Delinquencies

    Portfolio-wide 90-day plus delinquencies stood at approximately 2.8%, a 9 basis point increase from Q1 2026. Despite this, management believes its proactive migration of the credit spectrum, conservative LTVs, and disciplined underwriting position the portfolio for strong performance. They expect their differentiated credit performance to translate into lower losses compared to other non-QM platforms across the full credit cycle.

    07

    Prepayment Speeds and Returns

    3-month prepay speeds for non-QM RMBS securitized loan portfolios increased to 13.6% from 12.5% in Q1 2026. While expecting speeds to tick upward if rates decrease, the company models returns based on historical average prepayment speeds of 20% to 30%. Returns are modeled at 13% to 14% during the warehouse phase and 15% to 20% upon securitization.

    AI-generated summary of the company’s earnings call. Not investment advice.