Angel Oak Mortgage REIT Book Value Falls 11.5% on Q3 Rate Squeeze

Angel Oak Mortgage REIT lost $16.7 million, or $0.72 a share, in the third quarter, and its book value fell 11.5% to $8.97 a share, the non-QM mortgage lender said in results filed with the SEC before the market opened on Tuesday, Nov. 3. A year earlier it earned $11.4 million, or $0.46 a diluted share.

Angel Oak Mortgage REIT (NYSE: AOMR) buys and holds first and second lien non-QM residential mortgage loans and home equity lines of credit, mostly funding them through securitizations. It declared a fourth-quarter dividend of $0.32 a share, the same as in the second quarter, payable Nov. 30 to holders of record on Nov. 23.

Why did Angel Oak's book value fall?

Rising rates cut the value of its loans. The company booked $22.6 million of net unrealized losses on mortgage loans, debt carried at fair value and derivatives in the quarter. A year earlier it had $11.3 million of unrealized gains. Economic book value, which also marks some securitized debt to fair value, fell 6.5% to $11.45 a share.

"The higher-rate environment has created near-term pressure on portfolio valuations and what we believe to be a short term squeeze on the potential returns on new investments," CEO Sreeni Prabhu said in the release. He said the company completed two securitizations early in the quarter, "ahead of the bulk of the increase in rates."

Quarter end	GAAP book value per share	Economic book value per share
Sept. 30, 2025	$10.60	$12.72
Dec. 31, 2025	$10.74	$12.70
March 31, 2026	$10.31	$12.28
June 30, 2026	$10.13	$12.24
Sept. 30, 2026	$8.97	$11.45

Source: Angel Oak Mortgage REIT third-quarter 2026 results release, Nov. 3, 2026.

Is Angel Oak earning its dividend?

Not this quarter. Distributable earnings, the company's non-GAAP measure that excludes unrealized gains and losses, were $6.4 million, or $0.28 a share, against the $0.32 dividend. In the second quarter they were $0.37 a share, according to its Aug. 4 release.

Net interest income was flat at $10.2 million. Interest income rose 15.8% from a year earlier to $42.5 million, but interest expense rose 21.7% to $32.2 million. The company bought $233 million of new non-QM loans and HELOCs in the quarter, with a weighted average coupon of 7.29%, a combined loan-to-value ratio of 69.8% and an average credit score of 758. For how those coupons compare with benchmarks, see hard money and private lending rates today.

How does Angel Oak fund its loans?

With bank financing lines until loans are securitized. On Sept. 30 it had four loan financing lines allowing up to $1.3 billion of borrowing, with about $255 million drawn, it said. It held $303.7 million of whole loans awaiting securitization. Its recourse debt-to-equity ratio was 2 times on Sept. 30 and fell to about 1.2 times after its AOMT 2026-6 securitization in October.

Two of those lines got cheaper in September, an 8-K filed Sept. 29 shows. A facility with a lender the company calls "Global Investment Bank 3" was extended to Sept. 25, 2027, and its pricing spread range cut to 1.35%–4.75% from 1.75%–4.75%. A line with "Multinational Bank 1" was extended to Dec. 28, 2026, under rolling three-month renewals, with its spread range cut to 1.20%–2.10% from 1.30%–2.10%. Our warehouse line of credit guide explains how these repurchase facilities fund a lender's loans until they are sold or securitized.

The results follow Arbor Realty's dividend suspension last week. Angel Oak scheduled its earnings call for 8:30 a.m. ET on Tuesday.