Angel Oak(AOMR)2024-08-10 16:09Financial Data and Key Metrics Changes - The company reported a GAAP net loss of 0.01 per common share for Q2 2024, while distributable earnings resulted in a loss of 0.09 per common share [11] - Net interest income expanded for the fourth consecutive quarter, growing nearly 50% compared to Q2 2023, with interest income for the quarter at 9.5 million [12][13] - GAAP book value per share decreased 3% to 10.55 in the first quarter, while economic book value decreased 4.5% to 114.4 million of loans with a weighted average coupon of approximately 7.9% during the quarter [19] Market Data and Key Metrics Changes - The weighted average 90-day delinquency rate across the portfolio was 1.7%, slightly down from 1.8% at the end of Q1 2024, indicating stable credit quality [9] - The company expects to maintain a recourse debt-to-equity ratio below 2.5 times on a long-term basis, with a current ratio of approximately 0.9 times [15] Company Strategy and Development Direction - The company plans to utilize the 50 million in senior unsecured notes to fund growth [7][21] - The strategy includes disciplined capital allocation, credit underwriting, and liquidity management, with a focus on acquiring high-quality, newly originated loans [10][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for a more accommodative rate environment, which could lead to reduced financing costs and increased portfolio valuations [22] - Concerns about potential economic downturns and heightened credit risk were acknowledged, but management believes their credit risk management capabilities provide a competitive advantage [23] Other Important Information - The company declared a 50 million offering of senior unsecured notes due 2029, intended to support growth [20] Q&A Session Summary Question: Can you talk about maintaining the current dividend level with increasing NII? - Management indicated that they expect to maintain the dividend level, with coverage improving to about 80% this quarter [26] Question: What is your economic book value in July and August? - Management noted that they have not calculated the economic book value since the recent rate moves but expect it to be flat or up compared to June 30 [28] Question: How much growth do you think the unsecured issuance can provide net of the repurchase? - Management estimated that the net proceeds from the issuance could support approximately $1 billion in residential loan purchases over the next several quarters [31][45] Question: Are you seeing competition in the non-QM space? - Management stated that they consider themselves a leader in the non-QM space, with limited competition from the REIT industry, primarily facing competition from insurance companies [47]