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Angel Oak Mortgage, Inc. Reports Second Quarter 2021 Financial Results

Angel Oak Mortgage, Inc. (NYSE: AOMR) (the “Company,” “we,” and “our”), a leading real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market, today reported financial results for the quarter and six months ended June 30, 2021.

Second Quarter and Year-to-Date Highlights

  • Completed initial public offering (“IPO”) and concurrent private placement on June 21, 2021 with proceeds to the Company of $176.8 million
  • QTD GAAP net income of $2.2 million, or $0.13 per common share
  • YTD GAAP net income of $11.7 million, or $0.72 per common share
  • GAAP book value of $19.48 per share as of June 30, 2021, up from $19.26 per share immediately following the completion of the IPO
  • GAAP return on equity of 2.7% for the second quarter and 8.1% for the first half of 2021, in each case on an annualized basis
  • Declared dividend of $0.12 per share in the third quarter 2021, related to June earnings and investment activity
  • Distributable Earnings of $2.0 million for the quarter ended June 30, 2021

Robert Williams, President and Chief Executive Officer of the Company stated, “Our second quarter results were extremely strong, continuing the trends from earlier in the year as we benefit from the robust housing market and growing demand for non-QM loans. This is a new and fresh investment opportunity and provides access to a best-in-class mortgage originator that has been built over the past 12 years. The Angel Oak platform that supports our efforts continues to produce high quality originations, and in the second quarter, we acquired $395.5 million of new loans, with steady yields even as interest rates have shifted. Finally, we were also very pleased to have completed our IPO in June, in which we raised $176.8 million of capital to fuel further growth in the coming quarters, and we thank our investors and capital markets partners for their support.”

Portfolio and Investment Activity

  • Purchased $395.5 million of residential mortgage loans in the second quarter, and an additional $186.0 million through August 12, 2021
  • Purchased $500.7 million of other RMBS subsequent to the IPO to quickly deploy the IPO capital into earning assets
  • The Company did not complete any securitizations in the second quarter
  • Portfolio totaled $1.3 billion of residential mortgage loans and other target assets as of June 30, 2021

Capital Markets Activity

On June 21, 2021, the Company completed its IPO and issued 7,200,000 shares of common stock at $19.00 per share for gross proceeds of $136.8 million. Concurrent with the IPO, the Company also completed a private placement of 2,105,263 shares of common stock at $19.00 per share for gross proceeds of $40.0 million. The transactions resulted in aggregate proceeds to the Company of approximately $176.8 million, as all the offering costs and underwriting discounts were paid for by Angel Oak Capital Advisors, LLC (an affiliate of the Company’s external manager).

As of June 30, 2021, the Company was party to four financing lines which permit borrowings in an aggregate amount of up to $800.0 million.

We intend to continue financing with a variety of lenders to ensure that during the time frame within which we are aggregating whole loans in anticipation of a securitization transaction, any effects of a liquidity or other event will be minimized to the Company.

Balance Sheet

  • $28.9 million of cash and cash equivalents as of June 30, 2021
  • Debt to equity ratio of 2.2x as of June 30, 2021
  • Held residential mortgage loans with a fair value of $529.3 million as of June 30, 2021
  • Total liquidity of $513.9 million, including $484.9 million of remaining capacity on the Company’s financing lines as of June 30, 2021

Dividend

On August 12, 2021, the Company’s Board of Directors declared a common stock dividend of $0.12 per share for the third quarter of 2021. The dividend is payable on August 31, 2021 to common stockholders of record as of August 23, 2021.

Conference Call and Webcast Information

The Company will host a live conference call and webcast today, August 12, 2021 at 5:00 p.m. Eastern time. To listen to the live webcast, go to the Investors section of the Company’s website at www.angeloakreit.com at least 15 minutes prior to the scheduled start time in order to register and install any necessary audio software.

To Participate in the Telephone Conference Call:

Dial in at least 15 minutes prior to start time.

Domestic: 1-877-407-9716

International: 1-201-493-6779

Conference Call Playback:

Domestic: 1-844-512-2921

International: 1-412-317-6671

Passcode: 13722112

The playback can be accessed through August 26, 2021.

Non-GAAP metrics

Distributable Earnings is a non-GAAP measure and is defined as net income (loss) allocable to common stockholders as calculated in accordance with GAAP, excluding (1) unrealized gains and losses on our aggregate portfolio, and realized gains (losses) on derivatives, (2) impairment losses, (3) extinguishment of debt, (4) non-cash equity compensation expense, (5) the incentive fee earned by our Manager, (6) realized gains or losses on swap terminations and (7) certain other nonrecurring gains or losses. We believe that the presentation of Distributable Earnings provides investors with a useful measure to facilitate comparisons of financial performance between our REIT peers, but has important limitations. We believe Distributable Earnings as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings may not be comparable to similar measures presented by other REITs.

Forward Looking Statements

This press release contains certain forward-looking statements that are subject to various risks and uncertainties, including, without limitation, statements relating to the performance of the Company’s investments and its financing needs and arrangements. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “project,” “predict” and “continue,” or by the negative of these words and phrases or other similar words or expressions. Forward-looking statements are based on certain assumptions; discuss future expectations; describe existing or future plans and strategies; contain projections of results of operations, liquidity and/or financial condition; or state other forward-looking information. The Company’s ability to predict future events or conditions, their impact or the actual effect of existing or future plans or strategies is inherently uncertain, in particular due to the uncertainties created by the COVID-19 pandemic, including the projected impact of the COVID-19 pandemic on the Company’s business, financial results and performance. Although the Company believes that such forward-looking statements are based on reasonable assumptions, actual results and performance in the future could differ materially from those set forth in or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company’s views only as of the date of this press release. Additional information concerning factors that could cause actual results and performance to differ materially from these forward-looking statements is contained from time to time in the Company’s filings with the Securities and Exchange Commission. Except as required by applicable law, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The Company does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

About Angel Oak Mortgage, Inc.

Angel Oak Mortgage, Inc. is a real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. The Company’s objective is to generate attractive risk-adjusted returns for its stockholders through cash distributions and capital appreciation across interest rate and credit cycles. The Company is externally managed and advised by an affiliate of Angel Oak Capital Advisors, LLC, which, collectively with its affiliates, is a leading alternative credit manager with a vertically integrated mortgage origination platform. Additional information about the Company is available at www.angeloakreit.com.

Angel Oak Mortgage, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(in thousands, except for share and per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

INTEREST INCOME, NET

 

 

 

 

 

 

 

Interest income

$

12,143

 

 

$

12,926

 

 

$

22,177

 

 

$

22,543

 

Interest expense

1,846

 

 

3,711

 

 

2,678

 

 

6,665

 

NET INTEREST INCOME

10,297

 

 

9,215

 

 

19,499

 

 

15,878

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES), NET

 

 

 

 

 

 

 

Net realized loss on derivative contracts, RMBS, CMBS, and mortgage loans

(10,224

)

 

(2,847

)

 

(12,512

)

 

(15,616

)

Net unrealized gain (loss) on derivative contracts and mortgage loans

4,813

 

 

24,009

 

 

9,330

 

 

(4,985

)

TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET

(5,411

)

 

21,162

 

 

(3,182

)

 

(20,601

)

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Operating and investment expenses

876

 

 

725

 

 

1,462

 

 

1,610

 

Operating expenses incurred with affiliate

533

 

 

345

 

 

972

 

 

536

 

Securitization costs

 

 

2,094

 

 

 

 

2,094

 

Management fee incurred with affiliate

1,250

 

 

988

 

 

2,169

 

 

1,545

 

Total operating expenses

2,659

 

 

4,152

 

 

4,603

 

 

5,785

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

$

2,227

 

 

$

26,225

 

 

$

11,714

 

 

$

(10,508

)

Preferred dividends

(4

)

 

(4

)

 

(8

)

 

(8

)

NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDER(S)

$

2,223

 

 

$

26,221

 

 

$

11,706

 

 

$

(10,516

)

Other comprehensive income (loss)

3,085

 

 

(944

)

 

3,615

 

 

(10,225

)

TOTAL COMPREHENSIVE INCOME (LOSS)

$

5,308

 

 

$

25,277

 

 

$

15,321

 

 

$

(20,741

)

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

$

0.13

 

 

$

1.67

 

 

$

0.72

 

 

$

(0.67

)

Diluted earnings (loss) per common share

$

0.13

 

 

$

1.67

 

 

$

0.72

 

 

$

(0.67

)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

Basic

16,746,606

 

 

15,724,050

 

 

16,238,153

 

 

15,724,050

 

Diluted

16,798,660

 

 

15,724,050

 

 

16,264,323

 

 

15,724,050

 

Angel Oak Mortgage, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except for share data)

 

As of:

 

June 30, 2021

 

December 31, 2020

ASSETS

 

 

 

Residential mortgage loans - at fair value

$

529,329

 

 

$

142,030

 

Commercial mortgage loans - at fair value

6,464

 

 

7,466

 

RMBS - at fair value

723,368

 

 

149,936

 

CMBS - at fair value

11,943

 

 

8,796

 

U.S. Treasury securities - at fair value

274,992

 

 

149,995

 

Cash and cash equivalents

28,893

 

 

43,569

 

Restricted cash

4,135

 

 

2,404

 

Principal and interest receivable

18,445

 

 

5,072

 

Other assets

2,990

 

 

388

 

Total assets

$

1,600,559

 

 

$

509,656

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

LIABILITIES

 

 

 

Notes payable

$

315,079

 

 

$

81,905

 

Securities sold under agreements to repurchase

787,176

 

 

178,291

 

Unrealized depreciation on futures contracts - at fair value

 

 

198

 

Accrued expenses

581

 

 

121

 

Accrued expenses payable to affiliate

574

 

 

732

 

Interest payable

368

 

 

100

 

Total liabilities

$

1,103,778

 

 

$

261,347

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Series A preferred stock, $0.01 par value, 12% cumulative, non-voting, 125 shares issued and outstanding as of June 30, 2021 and December 31, 2020

101

 

 

101

 

Common stock, $0.01 par value. As of June 30, 2021: 350,000,000 shares authorized, 25,502,997 shares issued and outstanding. As of December 31, 2020: 90,000,000 shares authorized, 15,724,050 shares issued and outstanding.

255

 

 

157

 

Additional paid-in capital

479,542

 

 

246,489

 

Accumulated other comprehensive income (loss)

2,576

 

 

(1,039

)

Retained earnings

14,307

 

 

2,601

 

Total stockholders’ equity

$

496,781

 

 

$

248,309

 

Total liabilities and stockholders’ equity

$

1,600,559

 

 

$

509,656

 

Angel Oak Mortgage, Inc.

Reconciliation of Net Income to Distributable Earnings

(Unaudited)

(in thousands)

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

 

(in thousands)

Net income (loss) allocable to common stockholder(s)

$

2,223

 

 

$

26,221

 

 

$

11,706

 

 

$

(10,516

)

Adjustments:

 

 

 

 

 

 

 

Net other-than-temporary credit impairment losses

 

 

 

 

 

 

 

Net realized and unrealized (gains) losses on derivatives

3,903

 

 

(1,169

)

 

2,294

 

 

176

 

Net unrealized (gains) losses on residential loans

(4,062

)

 

(22,586

)

 

(6,954

)

 

2,839

 

Net unrealized (gains) losses on commercial loans

(123

)

 

(254

)

 

(265

)

 

1,970

 

Net unrealized (gains) losses on financial instruments at fair value

 

 

(8

)

 

 

 

10

 

(Gains) losses on extinguishment of debt

 

 

 

 

 

 

 

Non-cash equity compensation expense

90

 

 

 

 

90

 

 

 

Inventive fee earned by our Manager

 

 

 

 

 

 

 

Realized gains (losses) on terminations of interest rate swaps

 

 

 

 

 

 

 

Total other non-recurring (gains) losses

 

 

 

 

 

 

 

Distributable Earnings

$

2,031

 

 

$

2,204

 

 

$

6,871

 

 

$

(5,521

)

 

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