Angel Oak Mortgage REIT, Inc. reported second-quarter 2025 results marked by active securitization and capital markets activity, alongside improved credit performance in its Non-QM portfolio, but the company missed earnings expectations by a large margin.
The Atlanta-based mortgage REIT completed two securitizations, issued $42.5 million in senior unsecured notes, and purchased $146.6 million in newly originated, current-market coupon Non-QM residential mortgage loans and HELOCs.
CEO and President Sreeni Prabhu said the transactions are designed to “support our strategic goal of earnings growth through accretive capital markets participation and diligent capital deployment,” adding that the company expects quarterly sequential net interest income growth to resume in Q3, similar to last year’s senior unsecured notes issuance.
Securitization And Loan Activity
In April, Angel Oak was the sole participant in AOMT 2025-4, a $284.3 million securitization that repaid $242.4 million in debt and released $24.7 million in cash for new loans and operational purposes. In May, it contributed $87.2 million in loans to the $349.7 million AOMT 2025-6 securitization alongside other Angel Oak entities, paying down $73.1 million in debt and releasing $9.2 million in cash.
The quarter’s loan purchases carried a weighted average coupon of 8.68%, a combined loan-to-value ratio of 68.4%, and a weighted average credit score of 757. As of June 30, the residential whole loans portfolio’s weighted average coupon was 8.37% — up 66 basis points year-over-year and influenced by high-coupon HELOC acquisitions averaging nearly 11%.
Credit Performance
Executives highlighted a portfolio-wide decline in 90-plus-day delinquencies to 2.35% (inclusive of residential whole loans, securitized loans, and residential mortgage-backed securities), down 44 basis points from Q1. The improvement was led by loans securitized in 2023-2024, which had driven increases in prior quarters.
“The AOMT shelf has begun to distinguish itself among its peers with regards to delinquency performance, which is a direct reflection of our expertise as credit managers,” Prabhu said.
Financial Metrics
GAAP net income for Q2 was $0.8 million, or $0.03 per diluted share, compared to $20.5 million, or $0.87 per share, in Q1. That’s a sharp EPS miss — analyst consensus ranged from $0.27 to $0.29 per share, while actual diluted EPS landed at $0.03, about 90% below estimates.
About $1.6 million in unrealized residential/securitized portfolio losses weighed on GAAP income and book value. The market reacted as Angel Oak’s shares dipped about 5%-6% after the company’s earnings news.
Net interest income totaled $9.9 million, up 5% from Q2 2024 but down 1.5% from Q1 2025, with executives attributing the sequential dip to higher interest expense from the new notes issuance. Distributable earnings were $2.6 million, or $0.11 per share.
Book value per share declined 3.1% from Q1 to $10.37, while economic book value per share fell 3.3% to $12.97, with unrealized losses and dividend payments outweighing operating earnings. The company’s recourse debt-to-equity ratio stood at 1.1x, with $931 million in undrawn loan financing capacity.
Market Outlook And Strategy
CFO Brandon Filson told analysts the company has several securitizations in the pipeline, with the next deal likely in September, and is exploring potential preferred equity issuance if market conditions remain favorable. He also noted that while competitors are increasing Non-QM investment, overall market growth means this is not cutting into Angel Oak’s origination volumes.
The company declared a $0.32 per share common dividend, payable August 29 to shareholders of record as of August 22.
