For the first quarter of 2022, Angel Oak Mortgages reported a net loss of $43.5 million, or $(1.77) per diluted share of common stock. In the first quarter of 2021, the non-QM lender reported net income of $9.4 million and 60 cents per diluted share.
Robert Williams, Angel Oak president and CEO, said, “The first quarter of 2022 was challenging with historic volatility both in nominal interest rates and in the widening of interest rate spreads. This affected unrealized mark-to-market valuations of our whole loan portfolio, securitized loans, and retained RMBS [residential mortgage-backed securities], driving a negative impact to our book value.”
During an earnings call, Williams said the company expects the “headwinds” caused by the Federal Reserve Bank’s efforts to control inflation will continue. “I feel Angel Oak is in a good place to withstand the volatility,” he predicted.
Williams said Angel Oak was able to generate distributable earnings of $1.49 per fully disputed share of common stock, despite the company’s net income challenges. He said that demonstrates “an effective interest rate hedging strategy and the income-generating power of the portfolio.”
The distributable earnings of $37.2 million were attributable largely to $64.5 million in net unrealized losses on residential loans and $30.2 million in net unrealized losses on residential loans in securitization trusts and non-recourse securitization obligations. They offset the $15.3 million in net unrealized gains on derivatives and $23.1 million net loss allocable to common stockholders.
Williams added, “In the coming quarters, we expect our loan portfolio to begin to reflect higher coupon loan purchases and we will methodically and judiciously use the securitization market to reduce liquidity risk and interest rate risk, enabling us to continue to deliver on our core business model.”
Since the company’s IPO last June, Williams said on the earnings call, Angel Oak has shown 113% growth in its target base.
