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Angel Oak Mortgage Reports Second Straight Quarterly Loss

Steve Goode
Aug 10, 2022
Angel Oak Lending

Non-QM lender reported net loss of $52.1 million.

Angel Oak Mortgage Inc. reported its second-consecutive quarterly loss on Tuesday, citing "a challenging economic environment."

The real estate finance company, which focuses on Non-QM loans, reported a net loss of $52.1 million, or $2.13 per diluted share, for the second quarter of 2022. That followed a net loss of $43.5 million, or $1.77 per dilute share in the first quarter.

Angel Oak also reported GAAP book value of $14.73 per share, down from $16.80 in the first quarter and from $19.47 in the fourth quarter of 2021, and declared a dividend of 45 cents per share of common stock for the second quarter of 2022.

“We continued to experience a challenging economic environment in the second quarter of 2022," Angel Oak President & CEO Robert Williams said in a news release. "Historic inflationary pressures resulted in continued volatility, both in nominal interest rates and in the widening of interest-rate spreads, driving unrealized losses on our portfolio of target assets."

“Responding to inflation," he continued, "the Federal Reserve recently increased interest rates by 75 basis points twice in a row, which increased market volatility. Despite these challenges, we generated distributable earnings of $0.90 per fully diluted share of common stock, continuing to demonstrate the income-generating power of the portfolio.”

Williams added he expects, in the coming quarters, that Angel Oak, will “judiciously use the securitization market to lock in term financing to reduce spread widening and interest rate risk, enabling us to continue to deliver shareholder value.”

The company reported purchasing $257 million of non-QM residential mortgage loans in the second quarter, down 62% from $676 million in purchases in the first quarter. It sold $7 million in commercial loans after the second quarter ended, which officials said will increase liquidity for future residential loan purchases.

Officials also noted that although they missed the mark for closing a securitization in the second quarter, the company closed a fourth securitization post-IPO after the quarter ended, detailing a $184.7 million securitization backed by a pool of non-qualified residential mortgage loans. According to Angel Oak officials, the securitization was rated by Fitch and KBRA with the senior tranche receiving AAA ratings.

Company officials said that, as of the close of the second quarter, Angel Oak:

  • Had target assets of $3.2 billion;
  • Held residential mortgage whole loans with fair market value of $1.3 billion; and
  • Held unencumbered target assets of about $160 million.
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