AOMR

Angel Oak Mortgage REIT, Inc. (AOMR) - Q2 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2026. Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first and second lien non-qualified residential mortgage (non-QM) loans and other mortgage-related assets. The Company is externally managed by Falcons I, LLC and operates as a single segment business. As of August 4, 2026, there were 23,214,877 shares of common stock outstanding.

Key Financial Metrics

Material Changes vs. Prior Period

• Portfolio Growth: Total assets increased to $2.99 billion from $2.75 billion at year-end 2025. Residential mortgage loans in securitization trusts grew to $2.13 billion, and direct residential mortgage loans increased to $439 million.
• Net Interest Income: Increased 8% quarter-over-quarter (Q2 2026 vs. Q2 2025) driven by higher asset balances. Interest income rose $6.3 million, outpacing a $5.5 million increase in interest expense.
• Realized/Unrealized Gains/Losses: The Company reported a net loss of $3.7 million for Q2 2026, primarily due to valuation decreases in securitization trusts and residential loans, partially offset by realized gains on hedging activity ($4.3 million on interest rate futures). YTD 2026 shows a significant net loss of $18.1 million compared to a $9.4 million gain in YTD 2025, driven by market volatility and valuation adjustments.
• Financing Activity: Notes payable increased to $364.6 million from $218.8 million at year-end 2025. The Company renewed and extended several warehouse facilities, including a reduction in pricing spreads for Multinational Bank 1.
• Share Repurchase: In May 2026, the Company repurchased 1,794,353 shares for $15.0 million in a privately negotiated transaction.

Guidance, Outlook, and Risks

• Market Environment: Management notes a volatile interest rate environment with the Federal Reserve maintaining a neutral-to-restrictive stance (3.50% - 3.75% target range). Geopolitical uncertainty and inflation concerns have contributed to rate volatility, creating negative valuation impacts on the portfolio.
• Securitization Activity: The Company continues to execute securitizations to lock in funding costs. Subsequent to quarter-end, the Company issued AOMT 2026-3 ($279.6 million) in July and participated in AOMT 2026-HB1 ($221.4 million) in August.
• Liquidity: The Company maintains $885.4 million in unused borrowing capacity across four warehouse facilities. Cash balances are sufficient to meet liquidity covenants and potential margin calls.
• Risks: Key risks include interest rate volatility, credit performance of non-QM loans, prepayment speeds, and the ability to refinance or securitize assets on favorable terms. The Company faces potential valuation declines due to rising rates and spread widening.

Investor Verification Checklist

• Valuation Sensitivity: Verify the impact of interest rate changes on the fair value of the $2.13 billion securitized loan portfolio and the $439 million direct loan portfolio.
• Financing Covenants: Confirm compliance with minimum tangible net worth ($200 million + 50% of capital contributions) and liquidity covenants ($10 million minimum) across all warehouse facilities.
• Non-QM Credit Quality: Review delinquency rates (0.7% for direct loans, 2.1% for securitized loans) and loss severity assumptions used in Level 3 fair value measurements.
• Dividend Sustainability: Assess the ability to maintain the declared dividend of $0.32 per share given the YTD GAAP net loss of $4.0 million, relying on Distributable Earnings of $13.6 million.
• Broker Settlements: Note the $255.9 million "Due to Broker" liability related to unsettled Whole Pool Agency RMBS trades, which settled in July 2026.