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SEC filingAngel Oak Mortgage REIT reported a net loss of $7.4M for Q1 2026, reversing last year’s $20.5M profit, primarily driven by valuation declines in securitization trust assets — a dynamic reflecting ongoing sensitivity to interest rate and credit market assumptions.
Net income for Q1 2026 was -$7.4 million, compared to $20.5 million in Q1 2025, representing a YoY decline of 135.9%. Diluted earnings per share were -$0.30, down from $0.87 in the prior-year quarter. This reversal reflects the absence of prior-year gains and the emergence of net unrealized losses tied to asset valuations — not operational deterioration in core lending or servicing functions.
As stated in Management’s Discussion, the net unrealized loss for the quarter was primarily due to a decrease in the valuation of loans held in securitization trusts, net of associated non-recourse securitization obligations and residential whole loan portfolios. These valuations are inherently sensitive to assumptions about interest rates, prepayment speeds, credit performance, and broader market liquidity — all of which experienced notable volatility during the quarter. Management further observes that such estimates are likely to change in the near term, reinforcing that this result reflects accounting outcomes rather than a fundamental shift in portfolio credit quality or origination capability.
Net cash used in operating activities totaled -$143.7 million, an improvement from -$201.7 million in Q1 2025. While still negative, this reduction suggests more favorable timing of cash receipts and disbursements — potentially linked to the settlement cycle of securitization-related balances or adjustments in accrued liabilities. Notably, this metric does not reflect the full economic impact of valuation changes, as those are non-cash items excluded from operating cash flow under GAAP.
While macroeconomic conditions showed modest improvement year-over-year, uncertainty persisted due to inflation data, labor market signals, and shifting expectations around monetary policy. In response, management affirms its intent to adjust plans as appropriate — a stance grounded in responsiveness rather than rigid forecasting. This adaptability is critical given the acknowledged volatility in valuation inputs and the absence of forward-looking financial guidance in the filing.