Operator: Good morning, and welcome to the Angel Oak Mortgage REIT Second Quarter 2026 Earnings Conference Call. Please note at this time, all lines are in listen-only mode, and following the presentation, we look to conduct a question and answer session. If at any time during this call you require any assistance, please press star zero for the operator. This event is being recorded Tuesday, August 4th, 2026. I will now turn the conference call over to Mr. Casey Kelleher. Please go ahead.

Moderator: Good morning, and thank you for joining us today for Angel Oak Mortgage REIT’s Second Quarter 2026 Earnings Conference Call. This morning, we filed our press release detailing these results, which is available in the Investors section of our website at www.angeloakreit.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. I will 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. While the macroeconomic outlook remained unclear in the second quarter, AOMR responded with a balanced approach of strategic value-driven decision making and operating excellence to strengthen the return profile and the long-term durability of our portfolio. We saw continued demand for well-structured non-QM credit, but markets also moved through periods of caution as investors weighed the path of inflation, Federal Reserve policy, and broader global uncertainty throughout the quarter. Against that backdrop, our focus was on staying disciplined in capital deployment, preserving flexibility, and executing on opportunities to expand upon the earnings and the operating improvements we have achieved over the past several quarters. Our platform demonstrated resilience with solid year-over-year growth in net interest income, stable book value, and durable credit performance.

Notably, we took several strategic actions to strengthen the portfolio, including monetization of de-levered legacy retained bonds, the repurchase of common stock from a pre-IPO investor at accretive return levels, and successfully negotiated a significant spread reduction on our largest warehouse financing facility. These opportunistic, prudent actions are designed to fortify the strength and the return profile of our portfolio over the short term and long term. We continue to source loans that fit our credit and return criteria. Though we did not have a securitization in the second quarter, we executed AOMT 2026-3 and 2026-HB1 following the end of the quarter. We expect to continue a pace of roughly one securitization per quarter. Importantly, we are not simply focused on issuing transactions. We are focused on issuing transactions that strengthen the durability of our balance sheet, reduce financing uncertainty, and support long-term earnings power.

As we move in the back half of the year, our priorities are clear. While we cannot control macroeconomic conditions or day-to-day valuation changes, we can continue to make thoughtful, value-driven decisions to maintain a business that is both robust and flexible. We will continue to originate and purchase selectively, maintain a conservative approach to leverage, and use securitization as a strategic funding tool rather than volume-driven objective. We believe this approach positions AOMR to navigate uncertain markets while continuing to build value for shareholders over time. With that, I will turn it over to Brandon, who will walk us through our second quarter financial performance in greater detail.

Moderator: Thank you, Srini. Our second quarter results were reflective of a strong operating foundation that we built despite offset stemming from unrealized mark-to-market valuation decreases in our unsecured securitized loan portfolio. Notably, as Srini mentioned, consistent with our focus on controlling what we can control, we took several strategic actions during the quarter to further strengthen our portfolio going forward. We sold our retained bonds from the AOMT 2020-3 securitization and have reinvested those proceeds into purchases of newly originated loans with higher modeled yields. We repurchased $15 million of common equity from a pre-IPO investor at accretive return levels, and we reduced the interest rate spread on our largest warehouse financing provider by 35 basis points.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: We expect to realize the positive impacts of these actions in the coming quarters and years. In the second quarter, we had GAAP net income of $3.4 million, or $0.14 per diluted common share. The result was driven by healthy net interest income and maintained operating expense levels, partially offset by unrealized mark-to-market losses. Comparatively, in the second quarter of 2025, we had GAAP net income of $800,000, or $0.03 per diluted common share. Distributable earnings for the quarter were $9 million. Our securitized loan portfolio and our residential loan portfolio combined for $3.6 million of unrealized losses, and our derivative portfolio drove $2.4 million of unrealized loss, driving the difference between GAAP net income and distributable earnings. In the second quarter of 2025, distributable earnings were $2.6 million. Interest income for the quarter was $41.4 million, and net interest income was $10.7 million.

This compares to interest income of $35.1 million and net interest income of $9.9 million in Q2 2025, showcasing 18% and 8% growth respectively. For the first six months of 2026, interest income and net interest income grew by 21% and 14% respectively versus the first six months of 2025. The non-QM coupon rates have come down compared to the first half of 2025. Performance has been supported by targeted asset purchases, decreased warehouse spreads, and consistent access to securitization markets. Operating expenses for the second quarter were $3.6 million. Excluding non-cash stock compensation expenses, second quarter operating expenses were $3.2 million. The small increase compared to a year ago was due to increased loan diligence fees associated with larger target asset balances. Going forward, we expect to maintain similar operating expense levels and will continue to be as efficient as possible with our expense structure.

Loan purchases during the quarter totaled $204 million and continued to reflect conservative credit profiles, moderate loan-to-value ratios, and current market coupons that we believe remain attractive on a risk-adjusted basis. The weighted average coupon of loans purchased during the quarter was 7.34%. The weighted average CLTV was 70.5%, and the weighted average credit score was 759. Our credit underwriting metrics have continued to reflect our desired credit and return profile. As of the end of the quarter, our loans and securitization trust portfolio carry a weighted average coupon of 6.04% with a weighted average funding cost of approximately 4.5%. We intend to continue to access securitization markets through our disciplined, methodical securitization strategy. As mentioned, we executed the AOMT 2026-3 securitization just after the end of the quarter.

We’re the sole contributor to the deal, which had $280 million of unpaid principal balance and a weighted average coupon of 6.9%, weighted average non-zero credit score of 757, and a weighted average CLTV of 69%. The AAA-rated senior bonds priced at 130 basis point spread over the Treasury yield curve. Additionally, we recently priced AOMT 2026-HB1, $221 million commingled HELOC securitization, to which we contributed $71 million of loans. Loans underlying the deal had a weighted average coupon of 9.79%, weighted average non-zero credit score of 744, and a weighted average CLTV of 64.8%. Securitization markets have remained constructed amid market uncertainty, and we continue to expect to execute roughly one securitization per quarter or four per year. As of quarter end, GAAP book value per share was $10.13. Economic book value, which fair values all non-recourse securitization obligations, was $12.24.

Compared to the end of first quarter 2026, GAAP book value per share decreased 1.7%, and economic book value decreased 0.3%. Changes in book value during the quarter were reflective of operating income, offset by a quarterly dividend payment and aforementioned market-driven unrealized valuation changes within the portfolio. While the market continues to display volatility tied to macroeconomic and geopolitical factors, we estimate that as of today, book value has remained relatively flat since the end of second quarter. Our balance sheet remained well-positioned with cash of $48.6 million and recourse debt-to-equity ratio of 2.3 times. As such, following the AOMT 2026-3 and AOMT 2026-HB1 securitizations, recourse debt to equity decreased to approximately one time. We aim to maintain liquidity and available financing capacity to provide flexibility to respond to changing market conditions.

We ended the quarter with unsecuritized residential whole loans at a fair value of $439 million, financed with $365 million of warehouse debt, $2.1 billion of residential mortgage loans and securitization trusts, and $334 million of RMBS, including $26 million of investment 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 $900 million with four high-quality lending partners. Credit performance continued to be solid with portfolio-wide 90-day plus delinquencies at approximately 2.8%, which is inclusive of our residential loan, securitized loan, and RMBS portfolios. This represents an increase of approximately nine basis points from Q1 2026. Performance across the Angel Oak shelf remains strong, and we believe that the performance of our collateral relative to the non-QM securitization market is a key differentiator for our platform.

I’ll reiterate our expectation that our differentiated credit performance will translate into lower losses in comparable non-QM platforms across a full credit cycle. This view is supported by our proactive migration of the credit spectrum, conservative LTVs, and disciplined underwriting approach, which we believe position the portfolio to perform consistently, even in more challenging environments. Three-month prepayment speeds for our non-QM RMBS securitized loan portfolios were 13.6% to end the quarter, compared to 12.5% in the first quarter of 2026. As we have mentioned in previous quarters, we expect prepayment speeds to continue to increase as rates decrease and homeowners are incentivized to refinance. With that said, we model our returns based on historical average prepayment speeds of 20%-30%.

While prepayment speeds are likely to tick upward if newly originated coupon rates continue to decrease, the majority of our portfolio still has coupon rates that are below newly originated coupon rates, and we expect that mortgage rates would need to fall meaningfully in order to produce a significant impact to the returns to our portfolio. Lastly, the company declared a $0.32 per share common dividend payable on August 28th, 2026, to common shareholders of record as of August 21st, 2026. For additional detail on our financial results and portfolio composition, please refer to the earnings supplement available on our website.

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Thank you, Brandon. To close, we remain confident in the advantages of the Angel Oak platform. Our access to differentiated origination, our experience in securitization, and our emphasis on credit discipline gives us multiple levers to manage through changing market conditions. We are focused on continuing to translate those trends into consistent earnings, thoughtful balance sheet growth, and long-term shareholder value. With that, we’ll open up the call for your questions. Operator.

Operator: Thank you. Ladies and gentlemen, we’ll now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Marissa Lobo from UBS. Please go ahead.

Marissa Lobo, Analyst, UBS: Good morning. Thanks for taking my question. Just thinking about the new securitization. How large do you see the HELOC opportunity for AOMR? What’s your target allocation relative to first lien non-QM?

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Go ahead. Hi, Sreeni here. I’ll answer that. We like the HELOC opportunity. Obviously, it’s all about the size and scale and the product, the credit box that we want to play in. We think of it as a 10%-15% allocation of our overall allocation. We’ll still be predominantly non-QM, and then selectively we’ll look into HELOCs based on our credit boxes.

Marissa Lobo, Analyst, UBS: Got it. Okay. Thank you. Just looking at non-QM composition, seeing that investor loans are largely about 50% of the market. How does AOMR’s collateral compare to that, and to what extent are you growing on DSCR exposure?

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: I think our composition on investor cash flow loans is around that same amount. It’s been a good source for growth for us over the past several years that we still predominantly play in that space and the bank statement borrowing underwriting program to small business owners.

Marissa Lobo, Analyst, UBS: Okay. Thank you for taking my questions.

Operator: Thank you. Your next question comes from Doug Harter from BTIG. Please go ahead.

Doug Harter, Analyst, BTIG: Thanks. In your prepared remarks, you mentioned that one of your warehouse financing facilities improved by 35 basis points. Can you talk about the returns you see sort of during the warehouse period versus the returns you see upon securitization?

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Yeah, I think during the warehouse period, it will change a little bit because of that spread, depending on how we mix our financing. But typically, right now, I think we’re seeing about 13%-14% return in the warehouse phase. In securitization, it’s that 15%-20% we often quote, depending exactly on where securitizations execute.

Doug Harter, Analyst, BTIG: Great. Just a clarifying question. In your supplement

It looks like the cost of the warehouse debt has kind of bounced around the past couple quarters. Is there any kind of noise in there that we should be thinking about as we calculate that number on a quarterly basis?

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Yeah, I think it just really depends exactly how levered we are throughout the quarter and exactly how we’re financing because obviously we just closed two securitizations. Well, we’ll close the HELOC securitization today. 26.3 already closed just after quarter end. We have a lot of fresh capital. We’ll go and buy loans unlevered and then slowly add in the debt where I think last quarter is kind of the opposite situation where in Q2, we had more leverage throughout the quarter than we normally would have as there was no securitization. You should see that kind of clean up and clean out a little bit into Q3.

Doug Harter, Analyst, BTIG: Okay, that makes sense. Thank you.

Operator: Thank you. Just as a reminder, if you do have a question, please press star one. Your next question comes from Jason Weaver from JonesTrading. Please go ahead.

Jason Weaver, Analyst, JonesTrading: Hey, guys. Good morning. Just looking at the 2026-3 deal, it looks like we’re seeing a fair amount of spread compression there versus the last securitization. With lower collateral WAC and higher spreads on the AAAs, can you talk a little bit about the forward assumptions here if it’s still in that high teens range? If there was anything deal specific that drove that net spread tighter?

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Yeah, I think that we’re still expecting the 15%-20%. Of course, that can bounce around from time to time. This last one was your portfolio composition was a little lower coupon than what we’re currently buying. Now in response to the higher rates, our mortgage coupons have gone up by 35, 40 basis points on average. Today we’re buying loans closer back to that mid-sevenths level from a non-QM perspective. I mean, the spreads in the securitization market have been relatively tight. The securitization market’s healthy in the non-QM space. Lots of buyers, lots of activity. That is moving the correct direction. Even in the face of the volatility in rates hasn’t really translated into widening or volatile spreads.

Jason Weaver, Analyst, JonesTrading: Got it. I wonder just broadly if you could talk a bit about what you’re seeing on just broad consumer credit trends and non-QM underwriting standards. Any more tightness there?

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Yeah. Broadly, the market obviously is difficult from the origination side, right? Because housing affordability slows down obviously as rates keep going up. That being said, the non-QM market, amazingly enough, over the last two years continues to grow. Competitively, it’s extremely competitive because you have a whole addition of insurance companies that are stepping in at these higher rates. You definitely have to be disciplined. In terms of weaker underwriting competitively across the market, there are weak points that are starting to show up in certain programs that we generally don’t do but some of our competitors are doing, whether they’re in the REIT space or whether they’re just across the board in the market. There’s a chart that I think we have that we can send to you.

I don’t want to talk about anything individually, but there are a couple of programs that we just don’t do that we are starting to see in the marketplace. That being said, across the board, generally the underwriting has been prudent and disciplined still in the marketplace, not just Angel Oak, but just generally across the board. On consumer credit, I mean, obviously HELOCs gets closer to consumer credit from our side. You have to be careful there in terms of what you’re underwriting. We generally try and underwrite 40 LTV going to 65 combined loan-to-value. That’s what we are trying to underwrite. Depending on what type of consumer we’re going to. That’s where I was mentioning too before we don’t want to scale that program for the sake of scaling it because obviously the IRRs are good.

You have to be thoughtful about the credit you’re underwriting, especially in this peak of the housing price that we’re seeing. The general consumer credit that I say consumer ex-housing generally is the one that also probably has not gotten any benefit of the equity markets. I think that consumer continues to be weaker. We add that space to our mutual funds, ETFs, and our other funds. That’s where we are being very cautious. Obviously we don’t play that in AOMR.

Jason Weaver, Analyst, JonesTrading: Got you. Thank you for that color.

Srini Prabhu, Chief Executive Officer, Angel Oak Mortgage REIT: Yeah.

Operator: Thank you. Your last question comes from Timothy D’Agnostino from B. Riley Securities. Please go ahead.

Timothy D’Agnostino, Analyst, B. Riley Securities: Yeah. Hi. Thank you. Good morning. I guess just on securitizations, obviously you closed two post-quarter. It sounds kind of like the language is changing a little bit to you’re not really going towards quantity of securitization. I was just wondering how do you think about the four non-QM securitizations per quarter and the two HELOC securitizations, and does the pipeline for non-QM potentially support a second securitization in the third quarter or no? Thank you.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Yeah, I think our projection is still to have four non-QM or on average four a year securitizations in the non-QM space. I think the second HELOC securitization is also pretty likely this year, and there’s a decent chance with the pipeline coming that we’ll see a second non-QM within Q3. Certainly, if it doesn’t squeak into September, it’d probably be October much like happened now. Of course, all depending on what’s happening in the market and things like that. We’ll be ready to go by then.

Timothy D’Agnostino, Analyst, B. Riley Securities: Okay, great. Are you, I guess staying on the non-QM side, are you still seeing good demand there in terms of what you’re able to invest in? Just any color there would be great. Thank you.

Brandon Filson, Chief Financial Officer, Angel Oak Mortgage REIT: Yeah. No, I think there’s plenty of non-QM demand. I mean, that space is continuing or our mortgage company continues to put out a good amount of loans. As Srini mentioned, there’s plenty of buyers on the other side which drives capital formation in the space. We think there’s plenty of appetite and demand there and should continue throughout the rest of the year.

Timothy D’Agnostino, Analyst, B. Riley Securities: Okay. Thank you so much for taking the questions today.

Operator: Thank you. There are no further questions at this time. You may proceed with your conference. Ladies and gentlemen, this does conclude your conference call for today. We thank you very much for your participation. You may now disconnect. Have a great day.