Angel Oak Mortgage REIT, Inc. felt some financial pressure in 2023 event though it grew 11.2% year-over-year and ended with net interest income of $8.24 million.
For the full year, interest income was $96 million and net interest income was $28.9 million.
Despite falling short of Non-GAAP earnings per share (EPS) forecasts and net interest income expectations, Angel Oak acquired over $220 million in newly-originated loans with a weighted average coupon rate of 8.37% in 2023. As of December 31, 2023, the weighted average coupon of the company's residential whole loans portfolio increased to 6.78%, nearly 100 basis points higher than at the end of 3Q 2023.
Angel Oak also securitized over $660 million in scheduled, unpaid principal balance of loans, and reduced operating costs by $13.4 million, or approximately 40% versus 2022. The total financing capacity as of December 31, 2023 stood at $1.1 billion of which approximately $291 million is drawn, leaving a capacity of approximately $760 million for new loan purchases.
CEO Sreeni Prabhu emphasized the company's resilience amid macroeconomic volatility, citing portfolio repositioning, liquidity enhancements, and operational efficiencies. He said expanding net interest margin and systematic securitization are pivotal to AOMR's long-term value creation strategy.
"2023 represented a pivotal year for AO and a year in which we successfully delivered results by reducing our balance sheet risk, improving liquidity and expanding net interest income," Prabhu said during an earnings call. "We showcased the resilience of our operating model and positioned the company for continued growth."
He said that it is widely expected the Fed will begin easing monetary policy in the second half of 2024 and "we would expect earnings to increase due to lower financing costs and improved securitization execution."
Despite challenges, Prabhu said the strategic investments and operational adjustments reflect proactive navigation through economic complexities.
