Angel Oak(AOMR)2024-11-07 12:52Financial Performance - Angel Oak Mortgage REIT, Inc. reported a net interest margin (NIM) increase in Q3 2024 compared to Q3 2023, driven by higher interest income from target assets [134]. - Distributable Earnings for the three months ended September 30, 2024, was a loss of 8.6 million for the same period in 2023 [148]. - Net income allocable to common stockholders for the three months ended September 30, 2024, was 8.3 million in 2023 [156]. - Interest income for the three months ended September 30, 2024, was 23.9 million in 2023 [156]. - Net interest income for the three months ended September 30, 2024, was 7.4 million in 2023 [156]. - Total comprehensive income for the three months ended September 30, 2024, was 6.7 million in 2023 [156]. - Total realized and unrealized gains for the three months ended September 30, 2024, were 5.3 million in the same period of 2023, with gains on securitization being a significant contributor [159]. Asset Management - The company purchased 316.8 million in scheduled unpaid principal balance of residential mortgage loans [141]. - The weighted average price of the residential whole loans portfolio increased by approximately 261 basis points since the end of Q2 2024 [132]. - As of September 30, 2024, the portfolio consisted of approximately 1.88 billion as of September 30, 2024, with allocated capital of 1.1 billion as of September 30, 2024 [142]. - The company has identified various sources of financing, including securitizations and public or private offerings, to meet both short-term and long-term liquidity needs [219]. - The company’s minimum liquidity requirement was 1,050 million, with 102.876 million as of September 30, 2024, with a weighted average interest rate of 5.65% and a remaining maturity of 11 days [248]. - The total drawn amount across all financing facilities as of September 30, 2024, was 290.61 million as of December 31, 2023 [243]. Operational Efficiency - Operating expenses for the three months ended September 30, 2024, decreased to 1.4 million in the same period of 2023 due to cost-saving measures [160]. - Management fees incurred with affiliates decreased to 1.4 million in the same period of 2023, attributed to a reduction in average equity [165]. - Operating expenses for the nine months ended September 30, 2024, totaled 15.58 million in the same period of 2023, indicating effective cost management [166]. - Stock compensation expense rose to 0.4 million in the same period of 2023, reflecting an increase in performance-based awards [163]. Market Conditions - Following the Federal Reserve's rate cut of 50 basis points in September 2024, the average 30-year fixed mortgage rate decreased by 78 basis points to 6.08% [132]. - As of the end of September 2024, inflation was reported at 2.4%, down from 2.9% at the end of June 2024, but still above the Fed's target [131]. Securitization Activities - The company participated in multiple securitizations throughout 2024, including AOMT 2024-3, AOMT 2024-4, and AOMT 2024-6, contributing significant amounts to each [138][139][140]. - The company expects to continue participating in securitization transactions to manage its mortgage-related assets effectively [218]. - The company participated in a securitization transaction in June 2024, issuing approximately 15.8 million in outstanding debt [255]. Risk Management - The company expects to utilize various derivative instruments to mitigate interest rate and credit risks [270]. - The company is subject to various financial covenants, including maintaining a minimum tangible net worth and a maximum ratio of total indebtedness to tangible net worth not exceeding 5:1 [221].