Angel Oak Mortgage, Inc. Q1 FY2026 earnings call

• Global environment had uneven economic growth and geopolitical tensions, but the platform performed well due to focus on credit quality, funding discipline, and repeatable processes. - Completed the AOMT 2026 - 2 Securitization before the Middle East conflict, taking advantage of favorable market conditions. - First quarter results showed net interest income expansion and prudent expense management despite valuation impacts from rates and spreads. - Priorities are growing earnings, executing reliably in capital markets, and positioning the portfolio for various economic outcomes. - Loan purchases during the quarter reflected conservative credit profiles, moderate loan - to - value ratios, and attractive market coupons. - Balance sheet was well - positioned with $42 million in cash, a recourse debt to equity ratio of 1.3 times, and undrawn loan financing capacity of approximately $1.1 billion.

First quarter results reflected established operating growth trend with net interest income expansion. Interest income for the quarter was $40.7 million, net interest income was $12.1 million, showing 24% and 20% growth respectively compared to Q1 2025. Securitized loan portfolio and residential loan portfolio combined for $13.1 million in unrealized losses, offset by $1.6 million net unrealized gains in trading securities and hedge portfolios. Loan purchases during the quarter totaled $246.2 million with a weighted average coupon of 7.3%, weighted average CLTV of 67%, and weighted average credit score of 759. Credit performance was solid with portfolio - wide 90 - plus day liquid fee at approximately 2.7%.

• Expect to maintain similar operating expense levels. - Intend to continue accessing securitization markets through a disciplined securitization strategy. - Model returns based on historical prepaid speeds of approximately 20 to 30%, and expect mortgage rates to fall meaningfully for significant impact on portfolio returns. - Monitoring the situation regarding calling legacy securitizations, with decision based on funding costs and market volatility, and long - term expectation of ROEs in the mid - teens to high 12s currently, hoping to get back to 15 - 20 when securitizing again.

• Global environment uncertainties such as geopolitical tensions and rate volatility weighed on risk sentiment. - Valuation impacts due to rates and spreads increasing and becoming more volatile. - Uncertainty in securitization market conditions affecting the ability to call legacy securitizations profitably. - Potential changes in credit performance and prepaid speeds affecting portfolio returns.

Q: On HELOCs, how is the HELOC pipeline building relative to non - QM?

A: Building the current HELOC pipeline, bought some HELOCs after securitization 2026 - 2, and looking forward to another HELOC securitization in the coming months.

Q: Regarding calling legacy securitizations, is that still the plan and re - securitization ROEs?

A: Monitoring daily, decision based on funding cost and market volatility; long - term expectation ROEs are mid - teens to high 12s currently, hope to get back to 15 - 20 when securitizing again.

Q: Regarding operating expenses, what increased it?

A: Professional service fees and loan diligence fees due to buying loans, with professional service fees related to an ATM program that didn't issue shares this quarter.

Q: How did whole loan pricing of non - QM loans hold up in March for securitization spreads and current spreads on AAAs?

A: Hold on pricing decreased quite a bit in Q1, and current spreads on AAAs in securitization are approximately 135 to 145 depending on timing and collateral.