10-Q: Angel Oak Mortgage REIT Reports Q1 2026 Results

Angel Oak Mortgage REIT, Inc. reported a net loss for the first quarter of 2026, with a decrease in total assets and a shift in net interest income.

Summary

• Angel Oak Mortgage REIT, Inc. (AOMR) reported a net loss of $7.4 million for the first quarter ended March 31, 2026, a significant change from a net income of $20.5 million in the same period of 2025.
• Total assets decreased to $2.81 billion as of March 31, 2026, from $2.75 billion as of December 31, 2025.
• Net interest income increased by 20% to $12.1 million for the quarter ended March 31, 2026, compared to $10.1 million for the same period in 2025, driven by an increase in target assets.
• The company experienced a net unrealized loss of $11.6 million on mortgage loans, debt at fair value option, derivative contracts, and trading securities, compared to a net unrealized gain of $16.6 million in the prior year.
• Securitization activity included the issuance of AOMT 2026-2, a $272.3 million securitization, which was used to repay debt and fund new loan purchases.
• The company maintained its REIT status and its exclusion from regulation as an investment company.
• Distributable Earnings, a non-GAAP measure, was $4.6 million for the quarter, compared to $4.1 million in the prior year.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the reported net loss and the significant decrease in unrealized gains compared to the prior year, despite an increase in net interest income.

Positives

• Net interest income increased by 20% to $12.1 million for the quarter ended March 31, 2026, compared to $10.1 million in the prior year, driven by an increase in target assets.
• The company maintained its REIT status and its exclusion from regulation as an investment company.
• Distributable Earnings, a non-GAAP measure, increased to $4.6 million for the quarter, compared to $4.1 million in the prior year.
• The company successfully completed a $272.3 million securitization (AOMT 2026-2) in March 2026, using proceeds to repay debt and fund operations.
• The company amended its loan financing facility with Global Investment Bank 2, extending the termination date to April 21, 2028, and updating seller underwriting guidelines.

Negatives

• The company reported a net loss of $7.4 million for the first quarter of 2026, a significant decline from a net income of $20.5 million in the same period of 2025.
• Total assets decreased to $2.81 billion as of March 31, 2026, from $2.75 billion as of December 31, 2025.
• The company experienced a net unrealized loss of $11.6 million on various financial instruments, a reversal from a net unrealized gain of $16.6 million in the prior year.
• Total operating expenses increased to $5.2 million from $3.0 million in the prior year, primarily due to securitization costs and increased operating expenses incurred with affiliates.
• Book value per share decreased to $10.31 from $10.74 at the end of the previous year.

Risks

• The company's financial performance is subject to the level and volatility of prevailing interest rates and credit spreads.
• Adverse conditions in the financial markets and the economy could impact the company's ability to acquire target assets.
• Changes in the availability of attractive loans and other investment opportunities, including non-QM loans, pose a risk.
• The company faces risks related to the ability to profitably execute securitization transactions and obtain favorable financing terms.
• Increased rates of default and/or decreased recovery rates on investments could negatively impact financial results.
• The company is exposed to risks associated with natural disasters in states where its collateral is concentrated, such as Florida and California.
• The future role of Fannie Mae and Freddie Mac in the mortgage market and related regulatory changes present uncertainty.

Future Outlook

The company expects continued acquisition of newly originated loans throughout 2026, supporting portfolio performance and securitization execution in a constructive capital markets environment. Current expectations are for a relatively stable interest rate environment through the balance of 2026, assuming continued progress on inflation and sustained, albeit moderating, economic growth.

Management Comments

• The company believes its ability to identify and acquire target assets through the secondary market is bolstered by Angel Oaks experience in the mortgage industry and expertise in structured credit investments.
• The company believes it has significant competitive advantages due to Angel Oaks analytical investment tools, extensive relationships in the financial community, financing and capital structuring skills, investment surveillance capabilities, and operational expertise.
• The company expects quarter-to-quarter GAAP earnings volatility from its business activities, particularly changes in the fair values of consolidated assets and liabilities.
• The company believes it maintains sufficient cash to continue to meet margin calls on its financing facilities, should such margin calls occur.

Industry Context

StockSavvy.ai notes that Angel Oak Mortgage REIT's Q1 2026 results reflect the ongoing dynamics within the mortgage finance sector, characterized by a stable but data-dependent interest rate environment and continued securitization market activity. The company's focus on non-QM loans and its vertically integrated platform with Angel Oak Mortgage Lending are key differentiators in this competitive landscape.

Comparison to Industry Standards

• The company's Distributable Earnings Return on Average Equity of 7.1% for the quarter ended March 31, 2026, should be compared to industry benchmarks for mortgage REITs, which can vary significantly based on strategy and leverage.
• The net interest margin (NIM) of 20% increase for the quarter is a positive indicator, but its sustainability depends on prevailing interest rate spreads and the company's ability to manage its cost of capital effectively against its asset yields.
• The company's reliance on securitization for long-term financing is a standard practice in the industry, but the success of these transactions is sensitive to market conditions and investor demand for mortgage-backed securities.

Legal Proceedings

• As of March 31, 2026, the company was not aware of any legal claims that could materially impact its financial condition.

Related Party Transactions

• The company has residential mortgage loan purchase agreements with various affiliates.
• The company pays its Manager a fixed management fee of 1.5% per annum of the company's Equity.
• The Manager is entitled to an incentive fee based on the company's Distributable Earnings.
• The company reimburses the Manager for certain general and administrative expenses, substantially comprised of payroll reimbursements.

Stakeholder Impact

• Shareholders may be impacted by the decrease in book value per share and the reported net loss.
• Creditors and lenders are subject to the company's ability to meet its financing obligations, which are detailed in the financing arrangements section.
• Suppliers and service providers, including affiliates, will continue to engage with the company based on its ongoing operational needs.

Next Steps

• Continue to acquire newly originated loans throughout 2026.
• Support portfolio performance and securitization execution.
• Monitor interest rate environment and economic growth.
• Evaluate lender base and potentially enter into new financing agreements or exit existing ones.
• Continue to manage interest rate risk through hedging strategies.

Key Dates

Recommendation

While the company reported a net loss and a decrease in book value per share, the increase in net interest income and positive Distributable Earnings suggest underlying operational stability. The company's strategic focus on non-QM loans and its established financing and securitization infrastructure provide a foundation for potential recovery. However, the negative shift in unrealized gains and the overall market uncertainty warrant a cautious 'hold' rating pending further performance improvements and clearer economic trends.

Keywords

Angel Oak Mortgage REIT, AOMR, 10-Q, Quarterly Report, Mortgage REIT, Non-QM Loans, Securitization, Residential Mortgage Loans, RMBS, Financing, Interest Rate Risk, REIT