CEO attributes losses to market turmoil
Angel Oak Mortgage REIT recorded a net loss of $3.7 million in the second quarter after seeing an improvement in the previous quarter.
The non-QM-focused REIT posted a Q2 net loss of $3.7 million, or $0.15 per share. These results compare to reported earnings of $530,000 in Q1 2023 and a net loss of $61.3 million in Q2 2022.
In its press conference call, Angel Oak CEO Sreeni Prabhu said widening interest rates and spreads continued to negatively impact mark-to-market valuations of the company’s portfolio and draw down earnings and book value.
Amid the market volatility, Angel Oak said it focused on executing its growth strategy, wherein it began purchasing newly originated loans, securitizing a pool of low-coupon loans, and reducing its expenses.
“We are pleased to have accelerated purchases of newly originated, higher-coupon loans in the second quarter, which we expect to have a compounding positive effect on net interest income and securitization execution going forward,” Prabhu said. “We believe our results in the first half of the year have demonstrated the resilience and adaptability of our business model, and now our focus is on growth.”
In June, the REIT issued a $284.5 million securitization backed by a pool of non-QM loans. The transaction reduced its whole loan warehouse debt by approximately 45.6% versus the end of Q1 2023, according to its release.
The securitization released over $35 million of capital, which Angel Oak has started to deploy toward loan purchasing activity and liquidity enhancement.
“Credit continues to perform well across the portfolio, and we will remain judicious with our approach and diligent in credit selection as we expand new purchases,” Prabhu added. “Though the macroeconomic landscape remains uncertain, our improved balance sheet and increased liquidity have positioned the company for success. As we head into the second half of the year, our emphasis is on executing our growth strategy and delivering attractive returns for our shareholders.”
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