Earnings call transcript: Angel Oak Mortgage beats Q1 2025 EPS forecast

Angel Oak Mortgage Inc. (AOMR), a mortgage REIT with a market capitalization of $224 million, reported stronger-than-expected earnings for the first quarter of 2025, with earnings per share (EPS) of $0.87, significantly surpassing the forecast of $0.29. The company’s performance sparked a positive pre-market reaction, with the stock price rising by 4.19% to $9.95. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, suggesting investors should carefully consider entry points.

Key Takeaways

• Angel Oak Mortgage’s EPS of $0.87 far exceeded expectations.
• Revenue and net income showed significant year-over-year growth.
• The stock price increased by 4.19% in pre-market trading.
• Strategic partnership with Brookfield Asset Management announced.
• Dividend of $0.32 per share declared.

Company Performance

Angel Oak Mortgage demonstrated robust performance in Q1 2025, driven by strong interest income and efficient operational strategies. The company reported a GAAP net income of $20.5 million, translating to $0.87 per diluted share. With a healthy P/E ratio of 8.27 and an impressive dividend yield of 13.4%, the company stands out in the mortgage REIT sector. This marks a notable improvement compared to previous quarters, reflecting the company’s focus on high-quality non-QM loans and disciplined credit selection. InvestingPro data reveals two key strengths: management’s aggressive share buybacks and strong liquidity position, with current assets significantly exceeding short-term obligations (current ratio of 4.97).

Financial Highlights

• Revenue: $32.9 million, a 30% increase year-over-year.
• Net interest income: $10.1 million, up 18% year-over-year.
• Book value per share: $10.70, a 5.2% increase.
• Economic book value per share: $13.41, a 2.4% increase.
• Operating expenses: $3 million, with a 29% decrease in non-cash expenses.

Earnings vs. Forecast

Angel Oak Mortgage’s EPS of $0.87 significantly outperformed the forecasted $0.29, resulting in a surprise percentage of approximately 200%. This strong performance is attributed to higher interest income and operational efficiencies. The magnitude of the earnings beat is substantial compared to previous quarters, indicating positive momentum.

Market Reaction

Following the earnings announcement, Angel Oak Mortgage’s stock saw a pre-market price increase of 4.19%, reaching $9.95. This movement reflects investor optimism driven by the company’s earnings beat and strategic initiatives. With a beta of 1.37, the stock tends to be more volatile than the broader market. The stock’s current price is closer to its 52-week low of $7.36, suggesting potential for further growth. For deeper insights into AOMR’s valuation and growth potential, subscribers to InvestingPro can access the comprehensive Pro Research Report, part of an extensive collection covering 1,400+ US stocks.

Outlook & Guidance

The company expects continued earnings growth, supported by a flexible capital deployment strategy and strong loan production in the mid-to-high 7% range. Future guidance remains positive, with projected EPS and revenue growth in the coming quarters and fiscal years.

Executive Commentary

CEO Srini Prabhu emphasized the company’s commitment to driving long-term earnings growth while managing risk: "Our priority is to drive long-term earnings accretion through our focused operational strategy while appropriately managing risk." He also highlighted the growth potential in the non-QM mortgage market: "The non-QM mortgage market has actually grown."

Risks and Challenges

• Rising interest rates could impact mortgage demand.
• Market volatility in securitization could affect asset valuation.
• Increased competition from traditional agency lenders.
• Economic uncertainty and potential regulatory changes.
• Dependence on the non-QM mortgage market’s growth trajectory.

Q&A

During the earnings call, analysts inquired about the securitization market’s volatility and the company’s prepayment speed expectations. Executives outlined strategies for loan purchase and securitization, emphasizing the importance of maintaining a competitive edge in the non-QM loan space.

Angel Oak Mortgage’s strong Q1 results and strategic initiatives position the company well for future growth, despite potential risks in the market environment. InvestingPro has identified several additional bullish factors for AOMR, with 6 more exclusive ProTips available to subscribers, along with detailed financial health scores and peer comparison tools that can help investors make more informed decisions.

Full transcript - Angel Oak Mortgage Inc (AOMR) Q1 2025:

Conference Operator: Good day, and welcome to the Angel Oak Mortgage REIT First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad.

To withdraw your question, please press star then 2. Please note this event has been recorded. I would now like to turn the conference over to mister Casey Keller. Please go ahead.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Good morning. Thank you for joining us today for Angelo Mortgage REIT’s first quarter twenty twenty five earnings conference call. This morning, we filed our press release detailing these results, which is available in the Investors section on our website at www.angelogreat.com. As a reminder, remarks made on today’s conference call may include forward looking statements. Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today.

We do not undertake any obligation to update our forward looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company’s results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, we will be discussing certain non GAAP financial measures. More information about these non GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our earnings release and SEC filings. This morning’s conference call is hosted by Angel Oak Mortgage REIT’s Chief Executive Officer, Srini Prabhu and Chief Financial Officer, Brandon Filson.

Management will make some prepared comments, after which we will open up the call to your questions. Additionally, we recommend reviewing our earnings supplement posted on our website, ww.angeloakreit.com. Now, I’ll turn the call over to Srini.

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Thank you, Casey, and thank you all for joining us today. Our performance in the first quarter of twenty twenty five was highlighted by continued net interest margin growth, driven by accretive newly originated loan purchases, maintained operating expense savings, and valuation tailwinds that buoyed book value growth compared to the end of twenty twenty four. Cash flow and dividend coverage continue to expand as a result of our disciplined and value driven operating model, which enables us to grow the earnings power of the portfolio even in periods of sustained market volatility. Our priority is to drive long term earnings accretion through our focused operational strategy while appropriately managing risk. While we did not execute a securitization in the first quarter, we were the sole participant in the AOMT ’20 ’20 five-four securitization, which we closed shortly after quarter end and has provided us with capital to continue to purchase new loans and reduce some repurchase debt associated with our retained bond portfolio, both of which should drive incremental net interest income in the coming quarters.

Despite uncertainty surrounding international trade and tariff activity beginning the end of the first quarter, the foundation of our business model continues to be supportive, and we expect to continue the earnings growth trajectory established over the course of the past year and a half. Interest rates have declined meaningfully from the end of twenty twenty four, though the positive impact has likely been at least partially offset by previously mentioned international trade uncertainty, which has widened interest rate spreads. Mortgage rates have been stable as we continue to see our non QM loan originations in the mid to high 7% range. Overall, securitization markets have been resilient with a deep pool of market participants willing to participate in the market. That being said, there have been some variation in execution levels in terms of spreads depending on the timing with data points and or trade announcements.

We have ample opportunities for us to recycle capital and continue growing our target asset portfolio. Our capital deployment strategy will remain adaptive and flexible, aligning with evolving market dynamics in order to maximize expected shareholder returns. With regards to capital raises, we will remain flexible and will continue to evaluate opportunities from perspective of earnings and value accretion over near and long term as reflected by our accretive senior unsecured note issuances last year. As we move forward, our focus remains on executing in line with our earnings generating model and delivering positive outcomes for shareholders while positioning our balance sheet to be active buyer of high quality non QM loans. With that, I’ll turn it over to Brandon, who will walk us through our first quarter financial performance in greater detail.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Thank you, Srini. First quarter operating results were in line with expectations and continued our established earnings growth trend as we saw 18% net interest income growth versus the first quarter of twenty twenty four and over 2% net interest income growth compared to the fourth quarter of twenty twenty four. Operating expenses excluding securitization cost, stock compensation expense were $1,100,000 or 29% lower than in the first quarter of twenty twenty four and represent a $300,000 decrease compared to the fourth quarter of twenty twenty four. As Srini mentioned, valuations were a tailwind during the first quarter as rates came down relative to the end of twenty twenty four. The valuation increase was primarily observed in the loans underlying our 2021 and 2022 on balance sheet securitizations.

As of today, we expect that our book value is approximately flat compared to the end of the first quarter as decreases in base rates work to offset slight widening of spreads. For the first quarter of twenty twenty five, we had GAAP net income of $20,500,000 or $0.87 per diluted common share. Distributable earnings for the first quarter were $4,100,000 or $0.17 per diluted common share. The driver of the difference between GAAP net income and distributable earnings is the removal of unrealized gains primarily on our securitized and unsecured loan portfolios. In the first quarter, we had $18,700,000 of unrealized gains on our securitized and residential loan portfolios.

Interest income for the first quarter was $32,900,000 and net interest income was $10,100,000 marking a 30% improvement in interest income and an 18% improvement in net interest income compared to the first quarter of twenty twenty four. Compared to the fourth quarter of twenty twenty four, interest income increased by 3% and net interest income increased by over 2%. We expect interest income to continue to grow as we purchase accretive loans, employ sound portfolio management and leverage effectively Angel Oak’s securitization platform. Our $259,000,000 purchases this quarter carried a weighted average coupon of 7.67%, weighted average loan to value ratio of 70%, and a weighted average FICO score of seven fifty one. The weighted average coupon of our residential whole loan portfolio as of the end of the quarter was 7.55%, representing an increase of 44 basis points since the first quarter of twenty twenty four.

Including loan purchases and securitization activity subsequent to the end of the quarter, our weighted average coupon is approximately 7.6%. Current loan production in locks continue to be in the mid to high 7% range. Following the fourth quarter twenty twenty four, in which we completed two securitizations, we did not execute a securitization in the first quarter. However, shortly after quarter end, we completed the AOMT twenty twenty five-four seconduritization as a sole contributor, contributing $284,300,000 in loans. The weighted average coupon of AOT twenty twenty five-four was 7.5% with a weighted average LTV of 70.9 and a weighted average credit score of 752.

The deal paid down $242,400,000 of warehouse debt and released $24,700,000 of cash, which was used to purchase new loans and reduce outstanding repurchase debt on our retained bond portfolio to reduce financing risk and costs. As of the end of the quarter, our loans and securitization trust portfolio carried a weighted average coupon rate of 5.6%, weighted average funding cost of approximately 4.3%. We expect that following the AOMT twenty twenty five-four seconduritization, the weighted average coupon rate of our loans and securitization trust portfolio increased to 5.8%. The securitization market remains active, and we plan to continue to access it via our methodical securitization strategy. Operating expenses for the first quarter were $3,000,000 Excluding non cash stock compensation expenses and securitization costs, first quarter operating expenses were $2,800,000 This represents a 29% decrease compared to the same metric in the first quarter of twenty twenty four and a 10% decrease compared to the same metric in the fourth quarter of twenty twenty four.

Going forward, we expect to maintain similar operating expense levels. Looking at our balance sheet, as of the end of the quarter, we had $38,700,000 of cash and our recourse debt to equity ratio was 2.3 times. Subsequent to the end of the quarter, the execution of AOT twenty twenty five-four drove our recourse debt to equity ratio down to approximately 1.3 times. GAAP book value increased 5.2% to $10.7 as of 03/31/2025 from $10.17 as of 12/31/2024. Economic book value, which fair values all non recourse securitization obligations, was $13.41 per share as of 03/31/2025, up 2.4% from $13.1 per share as of 12/31/2024.

The increase in book value was driven primarily by the aforementioned unrealized gains on our securitized and unsecuredized portfolio, supported by portfolio earnings growth.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: We ended the quarter with residential whole loans at a value of 439,500,000 financed with $360,500,000 of warehouse debt,

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: dollars 1,700,000,000.0 of residential mortgage loans and securitization trusts, and $419,000,000 of RMBS, including $20,800,000,000 of investments in commingled securitization entities, which are included in other assets on our balance sheet. We finished the quarter with undrawn loan financing capacity of approximately $690,000,000 Now looking at credit. We ended the quarter with a total portfolio weighted average percentage of loans ninety plus days delinquent at two point seven nine percent, inclusive of our residential loan, securitized loan and RMBS portfolios, an increase of 35 basis points from the first quarter of twenty twenty four. As we stated previously, we expect this type of nominal increase as we return to normalized historical credit performance levels. The AOMT securitization shelf has an exceptional credit performance history and has proven its ability to execute in choppy markets.

We’ve laid a strong foundation by making an intentional effort to move up in credit for our loan originations and purchases over the past couple of years, which provides us with the confidence that we’ll continue to deliver amid potential periods of volatility. Thus, as credit performance normalizes, we expect our credit to outperform relative to peers. Additionally, we expect that our portfolio wide low LTV, diligent underwriting standards, and inherent credit selection to mitigate losses throughout a credit cycle if credit becomes an issue. Three month prepay speeds for our RMBS and securitized loan portfolios were 6.6% to end the quarter, reflecting a decrease compared to the end of twenty twenty four. As borrowing rates remain steady, we do not expect prepayment speeds to exhibit any meaningful increases on the 2021 to twenty twenty three seconduritizations.

If rates do fall, increasing prepayment speeds, our securitized loan and RMBS portfolios are weighted towards loans that are well below current rates, reducing or eliminating a homeowner’s incentive to refinance as NonQM has historically prepaid at approximately 25 to 30 CPR. Lastly, we do have the ability to use capital to re securitize and re lever securitizations, which will increase the effective yield. Finally, the company has declared a $0.32 per share common dividend, which will be paid on 05/30/2025, to common shareholders of record as of 05/22/2025. For additional color on our financial results, please review the earnings supplement available on the website. I will now turn it back to Srini for closing remarks.

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Thank you, Brandon. Additionally, and as many of you know, we were pleased to have recently announced a strategic partnership between Brookfield Asset Management and Angel Oak Companies. We are excited for the new growth and innovation opportunities that this partnership can provide across the Angel Oak platform. We do not expect any material changes to the day to day management of AOMR as a result of this transaction. I would like to thank the entire Angelo team for their hard work towards building what we believe is the best non QM loan origination purchase and securitization platform by focusing on diligent credit selection, consistent securitization execution, and value driven decision making.

We look forward to continuing to build long term value for our shareholders in the coming quarters and years. With that, we’ll open up the call to questions. Operator?

Conference Operator: Thank you. We will now begin the question and answer session. If you’re using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

The first question comes from Do Harter with UBS. Please go ahead.

Doug Harter, Analyst, UBS: Thanks and good morning. I’m hoping you could talk a little bit about the securitization you did in April, kind of how kind of what the execution of that looked like in the volatility and how that impacted returns on that versus some of the more recent deals you did.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Yeah. Hey, good morning, Doug. Yeah, we issued that securitization out right into some of the volatility. We still got good execution because if you look back, think to where we were before, treasury rates were a bit higher than where we issued. We did have to widen out the spread on the AAA really to get it done to like 180 over.

That’s now tightened back up if we were to do it again today. But all in all, I think it was a good deal for us and probably just not we’ve talked every quarter about 15 to 20 expected securitization yield. That one is probably now like a 13%

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: to

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: 17% yield, depending on how long things stay outstanding, but still very accretive and freed up the capital for us to continue buying newer loans, which have been relatively stable in terms of coupon, up a little higher than maybe we were purchasing over the last quarter. So more like high 7s recently in terms of locks.

Conference Operator: Thank you. The next question comes from Randy Binner with B. Riley FBR. Please go ahead.

Randy Binner, Analyst, B. Riley FBR: Hey, good morning. Thanks. Yes, I had a couple. So, I guess picking up on, the comments about prepayment speeds and the securitizations, just kind of like on a headline basis, is that is it would mortgage rates have to be like 5% before that’s an issue? Just like, I’m kind of looking for a less technical explanation, but is that the kind of the margin you have versus where mortgage rates traveling closer to 7% today is?

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Yeah, I would think there would be we kind of have a very barbelled securitized loan portfolio. We’ve got the 5.5% under portfolio that was post IPO and then through 2023 vintage, 24%, twenty five %, those are 7.5% plus coupon. The earlier deals that are in the fives were 200 basis points of moves away on mortgage rates to where you would probably see some speeds click up. And I’d say that the current coupon, yeah, you’re probably 100 basis points to see a meaningful increase. But then just to remind you, our portfolio wide prepayment speed right now is about a 10 CPR.

When we do our modeled returns and historically non QM has prepaying like the 25 to 30 level. So we still have a bit of room for speeds to increase and still have good results.

Randy Binner, Analyst, B. Riley FBR: Got it. And then I had another one. I think this is for Srini. Just some commentary about the securitization market being good, but maybe variation in execution and conditions, I guess, when there’s like off days for the market. Just wondering if I heard that correctly.

I mean, it makes sense intuitively, but that effect you kind of just doing one large and good deal looking back the market volatility kind of started in early April and this one got done, I think, kind of in the April. But yeah, just curious kind of how that is day by day and just to understand how the macro is affecting that.

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Yeah, I mean, across the year, you always have these bouts of volatility. So you look for two things. One is the cost of execution, and then the second one is absolute illiquidity. And what we saw, even with a lot of the tariff issues and volatility in the equity markets and the bond markets, there was no illiquidity. So that’s number one.

We could at least do a securitization, so it was not like, hey, we cannot get anything done and the liquidity has dried up. And what we have to do is we have to be consistent in terms of execution. It’s all risk management, right? So the question at that point we have is do we widen out spreads to see where execution happens, or do we take the securitization back? And what we have taught to the investment community consistently is we want to be prudent risk managers, so one of the things you want to do at that point is see where the liquidity is, where the spreads are, and execute.

Spreads probably went from 130, 1 hundred 30 5 beginning of the year all the way to first quarter, and we printed that deal at 180. Spreads have now tightened in the 160s, probably could be even in the 150s. So the stuff moves. There was a lot of pain probably for the first two weeks of April. But what I would tell you is that not just us, but even our peers, the capital markets were open, and that was the most important thing.

I hope that answers the question.

Randy Binner, Analyst, B. Riley FBR: Yeah, that’s perfect. Appreciate it. Thank you.

Conference Operator: Thank you. The next question comes from Matthew Edner with Jones Trading. Please go ahead.

Matthew Edner, Analyst, Jones Trading: Hey, good morning guys. Thanks for taking the question. Could you talk a little bit about loan purchases post securitization and if you’ve seen any difference in the market there? And then kind of as a follow-up to that, you mentioned playing up a little bit more in credit. Are you guys paying a little more for expanded credit there?

Just kind of want to get your thoughts on post securitization loan purchases. Thanks.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Yeah. So in the securitization, we’re freed up $24,000,000 of capital, which we’ll use. We did earmark some of that to reduce some repurchase debt outstanding. But we’ll have enough capital to really go through another, call it, dollars 100,000,000, 1 hundred and 50 million in loan purchases over the next couple of quarters. And then I think you’ll be able to see us at that point do some commingled securitizations with other Angel Oak entities as well.

Like I mentioned a little bit ago, current coupons are back to the high 7s. I expect then with maybe the retrenchment of volatility to go back to the mid 7s. But we’re kind of seeing things range bound well over 7, but under eight is kind of what we’re seeing in almost a day to day basis of no matter what the volatility or reduction volatility is.

Matthew Edner, Analyst, Jones Trading: Got it. That’s helpful. Thank you, guys.

Conference Operator: Thank you. The next question comes from Eric Hagen with BTIG. Please go ahead.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Hey, thanks. Good morning. Just following up here a little bit. I mean, with the macro being a little bit more sensitive, I mean, how do you expect valuations in the secondary market to differ going forward for the bank statement loans versus the investor, DSCR loans? And are you guys do you have an appetite for one versus the other, maybe a little bit more right now?

Thank you, guys.

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Yeah, I mean, good question. I think one part of your question is also the credit of the borrowers as we enter a new environment. Obviously, what we’ve seen is other parts of consumer credit ex housing has weakened considerably over the last probably nine to twelve months. We are not seeing that generally in residential credit, but we are seeing some shoots in that. The way I would answer that is, if you look at it from a pure returns perspective, DSCR loans obviously do better just because of prepay penalties in there, but they’re also aligned to rental income, aligned to more investment purposes, etcetera, versus bank statement loans.

Right now, I think we’ll keep the current mix. We don’t plan to increase anything or decrease anything, but we have more scrutiny probably around the HCI loans, and the way we are solving it, and this is a bigger question that you can have a chat with Named, who’s the CIO, because he can go into a lot more detail. But generally, in DSCR side, have to be careful about Airbnb or what type of purposes are they using these loans. But there’s been a little bit more scrutiny. We have obviously gone tremendously up in credit.

We can provide you details on that. So the mix won’t change, but there’s more scrutiny, I would say.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: That’s really helpful detail. Thank you. Following up on the comments around re securitization, should we think of that as being mostly connected to interest rates potentially falling? And in the event that you guys are able to resecuritize, how long should we expect those loans to maybe sit on a warehouse line of funding before you’re able to turn them around into securitization? And are you guys seeing any relief on the warehouse funding costs relative to benchmarks like so far and stuff?

Thank you.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Yeah. So the re securitization, we almost have two different components. We have the pre IPO securitizations, which honestly, the securitization market and those loans look pretty similar to today. But that’s been outstanding now for those securitizations have been outstanding for almost six years. So they’re massively delevered.

So any re securitization of those would be a releveraging play to free up capital. We do not intend, if we securitize, to take the loans back for a meaningful period of time. We really would like execute a media call and re So we wouldn’t take our fixed funding costs, convert it back to variable, and then have the market risk through that time. So if we did it, we would do effectively a same day re securitization or sale of some of the loans underlying those securitizations. But funding cost because I think today’s funding cost, we’re not quite at a point where we look at the funding cost through really any of our deals.

It’s similar to the old stuff. Post IPO is very cheap. And then the new things are coming in. Our new securitization, the funding cost is very similar to the way it was back in 2019. And then on the warehouse funding side, we are seeing a lot of our warehouse lenders begin to work with us to cut spreads.

We’ve gone from things a little bit earlier. We had facilities at like two ten over with a 20 basis point SOFR adjustment on top. Now those have gone to no SOFR adjustment and a 190. Some of our lines were at 175 and then one of them is at 165 currently. So we’ve seen a good move back, which provides a little bit more tailwind on the returns as well.

I expect it to as long as the market stays kind of stable here and we keep executing that, we’ll be able to negotiate a little tighter spreads in the coming periods as well.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Good detail from you guys this morning. I appreciate it. Thank you.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Thank

Conference Operator: you. The next question comes from Don Fandetti with Wells Fargo. Please go ahead.

Doug Harter, Analyst, UBS: Hi. Can you talk a bit about the competitive landscape for non QM currently? And then how you’re thinking about it long term if the GSE footprint shrinks?

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Ryan, question. So I would say as rates went up in ’twenty two, a few things happened. I’ll talk about the supply and the demand. So as the rates went up in ’twenty two, you would think that the overall non cure mortgage would shrink as the agency mortgage market shrunk, but that’s not what’s happened. The non QM mortgage market has actually grown.

We’ll probably finish this year at 100 plus billion, and last year I think we were around 80,000,000,000 plus or minus, depending on who you talk to. So the supply side, what’s happened is as the agency volumes have shrunk, you have a lot of guys who generally do six, seven agency loans that are now doing one or two agency loans, and so they are more proactive in non QM, and so the supply of that has grown. On the buy side, you have tremendous demand from insurance companies. So the market’s definitely become decently more commoditized, and these are the markets where don’t expect Angelo from the origination or from the REIT side to try to capture market share. We’ve just gone up in quality and stood there, but it’s a relationship with the brokers that we’ve been doing business.

I mean, if you think about all the people that have come in and out of the market over the last eight plus years, I think it’s probably us and maybe one more entity that might have been there through the entire thick and thin of this. So our relationship with the brokers allow us to get what we want to get relative to the competitive landscape that it is. So if we try to grow it beyond what the market gives us, we’ll have to squeeze spreads and increase or widen out our credit box, which we don’t intend to do. So we’re happy where we are, but the market is definitely competitive. Now when does that change?

That changes as rates come down, because interestingly enough, when the rates come down, from the demand side, insurance company demand may slow down. Don’t know, there’s a lot of appetite, so let’s see how much comes down. But on the supply side, I think the model then reverts back to the agency guys doing more agency loans. There’s a lot of seven, seven point five, eight percent coupons sitting out in the agency market that’ll have to be refinanced. And so those guys will refocus back on the agency business, lose focus on the non QM business, and that’s when our business model then becomes even more active.

So today we are happy, our market is getting more commoditized, no doubt about it, everybody knows it. But this is when you stay true to credit. But from a relationship perspective, our core relationships, what we have developed in a mortgage company over the last almost ten years now, is playing out the way we wanted it to play out.

Doug Harter, Analyst, UBS: Great, thank you.

Conference Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Brandon Filson for any closing remarks.

Casey Keller, Investor Relations, Angel Oak Mortgage REIT: Thank you everyone for your time and interest in Angel Oak Mortgage REIT. We look forward to connecting with you again next quarter. In the meantime, if you have any questions, please feel free to reach out to us and have a great day.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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