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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-40495

Angel Oak Mortgage REIT, Inc.

(Exact name of registrant as specified in its charter)


Maryland									37-1892154
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

3344 Peachtree Road Northeast, Suite 1725, Atlanta, Georgia 30326

(Address of Principal Executive Offices and Zip Code)

404-953-4900

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	AOMR	New York Stock Exchange
9.500% Senior Notes due 2029	AOMN	New York Stock Exchange
9.750% Senior Notes due 2030	AOMD	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant had 23,765,202 shares of common stock, $0.01 par value per share, outstanding as of August 6, 2025.

ANGEL OAK MORTGAGE REIT, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


Part I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			2
Condensed Consolidated Balance Sheets			2
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)			3
Condensed Consolidated Statements of Changes in Stockholders’ Equity			4
Condensed Consolidated Statements of Cash Flows			6
Notes to the Condensed Consolidated Financial Statements			8
Note 1. Organization and Basis of Presentation			8
Note 2. Variable Interest Entities			10
Note 3. Residential Mortgage Loans			11
Note 4. Investment Securities			12
Note 5. Financing			14
Note 6. Due to Broker			16
Note 7. Securities Sold Under Agreements to Repurchase			17
Note 8. Derivative Financial Instruments			17
Note 9. Fair Value Measurements			18
Note 10. Related Party Transactions			22
Note 11. Commitments and Contingencies			23
Note 12. Accumulated Other Comprehensive Income/(Loss)			23
Note 13. Other Assets			24
Note 14. Equity			24
Note 1 5 . Earnings per Share (“EPS”)			24
Note 1 6 . Subsequent Events			25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			60
Item 4. Controls and Procedures			62

Part II. Other Information
Item 1. Legal Proceedings			62
Item 1A. Risk Factors			62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			62
Item 3. Defaults Upon Senior Securities			62
Item 4. Mine Safety Disclosures			62
Item 5. Other Information			62
Item 6. Exhibits			63

Signatures			64

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except for share data)


	As of:
	June 30, 2025		December 31, 2024
ASSETS
Residential mortgage loans - at fair value	$	200,665	$	183,064
Residential mortgage loans in securitization trusts - at fair value	1,902,721		1,696,995
RMBS - at fair value	361,884		300,243

Cash and cash equivalents	40,500		40,762
Restricted cash	3,867		2,131
Principal and interest receivable	6,836		8,141

TBA securities and interest rate futures contracts - at fair value	—		1,515
Other assets	38,015		36,918
Total assets	$	2,554,488	$	2,269,769

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable	$	118,619	$	129,459
Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts (see Note 2)	1,767,929		1,593,612
Securities sold under agreements to repurchase	68,062		50,555
Senior unsecured notes	88,601		47,740
TBA securities and interest rate futures contracts - at fair value	4,355		—
Due to broker	254,228		201,994

Accrued expenses	2,812		2,291
Accrued expenses payable to affiliate	393		766
Interest payable	2,258		934
Income taxes payable	163		2,785
Management fee payable to affiliate	679		666
Total liabilities	$	2,308,099	$	2,030,802



STOCKHOLDERS' EQUITY

Common stock, $0.01 par value. As of June 30, 2025: 350,000,000 shares authorized, 23,765,202 shares issued and outstanding. As of December 31, 2024: 350,000,000 shares authorized, 23,500,175 shares issued and outstanding.	$	238	$	234
Additional paid-in capital	463,580		461,057
Accumulated other comprehensive income (loss)	(4,661)		(3,475)
Retained earnings (deficit)	(212,768)		(218,849)
Total stockholders' equity	$	246,389	$	238,967
Total liabilities and stockholders' equity	$	2,554,488	$	2,269,769

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(in thousands, except for share and per share data)


	Three Months Ended				Six Months Ended
	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
INTEREST INCOME, NET
Interest income	$	35,094	$	25,902	$	67,961	$	51,114
Interest expense	25,154		16,439		47,934		33,072
NET INTEREST INCOME	$	9,940	$	9,463	$	20,027	$	18,042

REALIZED AND UNREALIZED GAINS (LOSSES), NET
Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS	$	(2,499)	$	(6,770)	$	(5,681)	$	(8,192)
Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts	(1,576)		2,658		15,049		13,342
TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET	$	(4,075)	$	(4,112)	$	9,368	$	5,150

EXPENSES
Operating expenses	$	1,334	$	1,692	$	2,536	$	3,742
Operating expenses incurred with affiliate	453		456		869		971

Stock compensation	296		630		533		1,260
Securitization costs	1,866		1,410		1,866		1,583
Management fee incurred with affiliate	1,149		1,294		2,293		2,606
Total operating expenses	$	5,098	$	5,482	$	8,097	$	10,162

INCOME (LOSS) BEFORE INCOME TAXES	$	767	$	(131)	$	21,298	$	13,030
Income tax expense (benefit)	—		142		—		429


NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS	$	767	$	(273)	$	21,298	$	12,601
Other comprehensive income (loss)	(491)		125		(1,186)		1,828
TOTAL COMPREHENSIVE INCOME (LOSS)	$	276	$	(148)	$	20,112	$	14,429

Basic earnings (loss) per common share	$	0.03	$	(0.01)	$	0.90	$	0.51
Diluted earnings (loss) per common share	$	0.03	$	(0.01)	$	0.89	$	0.50

Weighted average number of common shares outstanding:
Basic	23,524,735		24,810,021		23,460,798		24,792,918
Diluted	23,787,823		24,810,021		23,719,650		24,973,501

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(in thousands)


	Three Months Ended June 30, 2025
	Common Stock at Par		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings (Deficit)		Total Stockholders’ Equity
Stockholder's equity as of March 31, 2025	$	234	$	461,294	$	(4,170)	$	(205,878)	$	251,480
Issuance of common stock, net of expenses	4		1,990		—		—		1,994
Dividends paid on common stock	—		—		—		(7,605)		(7,605)
Dividends accrued on performance shares	—		—		—		(52)		(52)
Stock compensation	—		296		—		—		296
Unrealized gain (loss) on RMBS and CMBS	—		—		(491)		—		(491)
Net income (loss)	—		—		—		767		767
Stockholders' equity as of June 30, 2025	$	238	$	463,580	$	(4,661)	$	(212,768)	$	246,389


	Three Months Ended June 30, 2024
	Common Stock at Par		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)		Total Stockholders’ Equity
Stockholders’ equity as of March 31, 2024	$	249	$	477,698	$	(3,272)	$	(211,351)	$	263,324
Dividends paid on common stock	—		—		—		(8,000)		(8,000)

Stock compensation	—		630		—		—		630
Unrealized gain (loss) on RMBS and CMBS	—		—		125		—		125
Net income (loss)	—		—		—		(273)		(273)
Stockholders’ equity as of June 30, 2024	$	249	$	478,328	$	(3,147)	$	(219,624)	$	255,806

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(in thousands)


	Six Months Ended June 30, 2025
	Common Stock at Par		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)		Total Stockholders’ Equity
Stockholders’ equity as of December 31, 2024	$	234	$	461,057	$	(3,475)	$	(218,849)	$	238,967
Issuance of common stock, net of expenses	4		1,990		—		—		1,994
Dividends paid on common stock	—		—		—		(15,125)		(15,125)
Dividends accrued on performance shares	—		—		—		(92)		(92)
Stock compensation	—		533		—		—		533
Unrealized gain (loss) on RMBS and CMBS	—		—		(1,186)		—		(1,186)
Net income (loss)	—		—		—		21,298		21,298
Stockholders’ equity as of June 30, 2025	$	238	$	463,580	$	(4,661)	$	(212,768)	$	246,389


	Six Months Ended June 30, 2024
	Common Stock at Par		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Deficit)		Total Stockholders’ Equity
Stockholders’ equity as of December 31, 2023	$	249	$	477,068	$	(4,975)	$	(216,236)	$	256,106
Dividends paid on common stock	—		—		—		(15,989)		(15,989)

Stock compensation	—		1,260		—		—		1,260
Unrealized gain (loss) on RMBS and CMBS	—		—		1,828		—		1,828
Net income (loss)	—		—		—		12,601		12,601
Stockholders’ equity as of June 30, 2024	$	249	$	478,328	$	(3,147)	$	(219,624)	$	255,806

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30, 2025		June 30, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	21,298	$	12,601
Adjustments to reconcile net income (loss) to net cash provided or (used in) operating activities:
Net realized (gain) loss on mortgage loans, derivative contracts, RMBS, and CMBS	5,681		8,192
Net unrealized (gain) loss on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts	(15,049)		(13,342)
Amortization of debt issuance costs	338		14
Net amortization of premiums and discounts on mortgage loans	1,799		1,309
Accretion of non-recourse securitized obligation discount	2,202		2,335
Accretion of discount on U.S. Treasury securities	(61)		(483)
Stock compensation	533		1,260
Purchases of residential mortgage loans from affiliates	(82,757)		(98,069)
Purchases of residential mortgage loans from non-affiliates	(323,135)		(60,635)
Sale of residential mortgage loans	1,279		2,030
Sale of residential mortgage loans into affiliate's securitization trust	83,669		66,107
Principal payments on residential mortgage loans	13,190		11,702
Principal payments on residential mortgage loans in securitization trusts	115,627		80,252
Net change in:
Margin (paid) received from interest rate futures contracts and TBAs	(4,389)		5,964
Principal and interest receivable on residential mortgage loans	1,305		1,325
Other assets	(1,405)		(959)
Management fee payable to affiliate	13		(1,383)
Accrued expenses	431		(332)
Accrued expenses payable to affiliate	(373)		(351)
Income tax payable	(2,622)		(1,163)
Interest payable	1,323		(360)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	(181,103)		16,014

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

Angel Oak Mortgage REIT, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30, 2025		June 30, 2024
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments in RMBS, available for sale	(8,079)		(5,733)
Purchases of investments in RMBS, trading	(505,774)		(754,069)

Sale of investments in RMBS, trading	507,563		749,377
Purchase of investments in U.S. Treasury securities	(74,939)		(299,632)
Investments in majority-owned affiliates	—		(2,253)
Principal payments on RMBS and CMBS securities	448		1,230
Maturities of U.S. Treasury securities	75,000		300,000



Principal payments on commercial mortgage loans	12		19
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	(5,769)		(11,061)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuances of common stock, net of expenses	1,994		—
Dividends paid to common stockholders	(15,125)		(15,989)
Principal payments on non-recourse securitization obligation	(115,627)		(80,011)
Cash paid for debt issuance costs	(639)		(125)
Proceeds from securitization	269,915		274,793
Net proceeds from (payments on) securities sold under agreements to repurchase	17,507		7,395
Net proceeds from (payments on) notes payable	(10,840)		(189,410)
Net proceeds from issuance of senior notes	41,161		—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	188,346		(3,347)

CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	1,474		1,606
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period	42,893		44,496
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period	$	44,367	$	46,102

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	37,453	$	30,631

The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Basis of Presentation

Angel Oak Mortgage REIT, Inc. (together with its subsidiaries the “Company,” “we,” “our” or “us”) is a real estate finance company focused on acquiring and investing in first lien non-qualified residential mortgage (“non-QM”) loans and other mortgage‑related assets in the U.S. mortgage market. The Company’s strategy is to make credit-sensitive investments primarily in newly-originated first lien non‑QM loans that are primarily made to higher‑quality non‑QM loan borrowers and substantially sourced from the proprietary mortgage lending platform of its affiliate, Angel Oak Mortgage Solutions LLC (together with other non-operational affiliated originators, “Angel Oak Mortgage Lending”). The Company may also invest in other residential mortgage loans, residential mortgage‑backed securities (“RMBS”), and other mortgage‑related assets. The Company’s objective is to generate attractive risk‑adjusted returns for its stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles.

The Company is a Maryland corporation incorporated on March 20, 2018. The Company achieves certain of its investment objectives by investing a portion of its assets in its wholly‑owned taxable REIT subsidiary, Angel Oak Mortgage REIT TRS, LLC, a Delaware limited liability company formed on March 21, 2018, which invests its assets in Angel Oak Mortgage Fund TRS, a Delaware statutory trust formed on June 15, 2018.

The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol AOMR.

The Operating Partnership

On February 5, 2020, the Company formed Angel Oak Mortgage Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), through which substantially all of its assets are held and substantially all of its operations are conducted, either directly or through subsidiaries. The Company holds all of the limited partnership interests in the Operating Partnership and indirectly holds the sole general partnership interest in the Operating Partnership through the general partner, which is the Company’s wholly-owned subsidiary.

The Company’s Manager and REIT status

The Company is externally managed and advised by Falcons I, LLC (the “Manager”), a registered investment adviser with the Securities and Exchange Commission and an affiliate of Angel Oak Capital Advisors, LLC (“Angel Oak Capital”). The Company has elected to be taxed as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2019.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with the instructions to Article 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report on Form 10-K”).

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. Such operating results may not be indicative of the expected results for any other interim periods or the entire year. The condensed consolidated financial statements include the accounts of the Company and its wholly‑owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements requires the Company to make a number of significant estimates. These include estimates of fair value of certain assets and liabilities, amounts and timing of credit losses, prepayment rates, and other estimates that affect the reported amounts of certain assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of certain revenues and expenses during the reported periods. It is likely that changes in these estimates (e.g., fair value changes due to inputs and underlying assumptions as described in Note 9 — Fair Value Measurements, credit performance, prepayments, interest rates, or other reasons) will occur in the near term. The Company’s estimates are inherently subjective in nature and actual results could differ from the Company’s estimates and the differences could be material.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Recent Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”). There were no recent ASUs that are expected to have a significant impact on the Company's condensed consolidated financial statements when adopted or had a significant impact on the Company's condensed consolidated financial statements upon adoption.

Segment Reporting

Operating segments are defined as a component of a public entity that engages in business activities from which it may recognize revenues and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information available. The Company’s CODM is its Chief Executive Officer, Mr. Sreeniwas Prabhu. The Company has determined it currently operates in a single operating segment and has one reportable segment, which is to acquire, invest in, and finance mortgage‑related assets. The CODM reviews net interest income (interest income less interest expense) earned on its portfolio of residential mortgage loans, residential mortgage loans in securitization trusts, RMBS, and other assets as presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. Net interest income as used by the CODM in this context is consistent with that presented within the Company’s consolidated financial statements. Segment assets are reflected on the accompanying Balance Sheet as “total assets” and significant segment expenses are listed on the accompanying statement of operations.

Summary of Significant Accounting Policies

The Company’s summary of significant accounting policies as set forth in its Annual Report on Form 10-K remain unchanged.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

2. Variable Interest Entities

Since its inception, the Company has utilized variable interest entities (“VIEs”) for the purpose of securitizing whole mortgage loans to obtain long-term non-recourse financing. The Company evaluates its interest in each VIE to determine if it is the primary beneficiary.

VIEs for Which the Company is the Primary Beneficiary

The Company entered into securitization transactions where it was determined that the Company has the power to direct the activities that most significantly impact the VIE’s economic performance. The Company was the sole entity to contribute residential whole mortgage loans to these securitization vehicles.

The retained beneficial interest in VIEs for which the Company is the primary beneficiary is the subordinated tranches of the securitization and further interests in additional interest‑only tranches. The following table summarizes the key details of the Company’s loan securitization transactions for which the Company is the primary beneficiary currently outstanding as of June 30, 2025 and December 31, 2024:


As of:	June 30, 2025			December 31, 2024
	($ in thousands)
Aggregate unpaid principal balance of residential whole loans sold	$	1,949,994		$	1,781,311
Fair value adjustment for residential mortgage loans in securitization trusts	(47,273)			(84,316)
Residential mortgage loans in securitization trusts, at fair value	$	1,902,721		$	1,696,995

Outstanding amount of Non-recourse securitization obligation, at amortized cost	$	1,786,393		$	1,630,083
Fair value adjustment for the portion of Non-recourse securitization obligation, at fair value option	(18,464)			(36,471)
Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts	$	1,767,929		$	1,593,612
Weighted average coupon rate for residential mortgage loans in securitization trusts	5.80		%	5.56		%
Weighted average fixed rate for Non-recourse securitization obligation issued	4.14		%	3.86		%


For the period ended:	June 30, 2025			December 31, 2024
	(in thousands)
Aggregate unpaid principal balance of residential whole loans sold, at deal date	$	2,611,290		$	2,326,980
Face amount of Non-recourse securitization obligation issued by the VIE and purchased by third-party investors, at deal date	$	2,464,868		$	2,194,774
Face amount of Senior Support Certificates received by the Company, at deal date	$	146,422		$	132,206
Cash received, at deal date	$	297,972		$	273,266

During the three months ended June 30, 2025, the Company and its affiliates issued and sold bonds with a current face value of $261.3 million to third-party investors for proceeds of $271.7 million, before offering costs and accrued interest. The bonds sold during the period ended June 30, 2025 are included in “Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts” on the Company’s condensed consolidated balance sheets.

As of June 30, 2025 and December 31, 2024, as a result of the transactions described above, securitized loans with outstanding principal balance of approximately $1.9 billion and $1.8 billion are included in “Residential mortgage loans in securitization trusts” on the Company’s condensed consolidated balance sheets, respectively. As of June 30, 2025 and December 31, 2024, the aggregate carrying value of bonds issued by consolidated VIEs was $1.8 billion and $1.6 billion, respectively. These bonds issued are disclosed as “Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts” on the Company’s condensed consolidated balance sheets. The holders of the securitized debt have no recourse to the general credit of the Company, but the Company does have the obligation, under certain circumstances, to repurchase assets from the VIE upon the breach of certain representations and warranties with respect to the residential whole loans sold to the VIE. In the absence of such a breach, the Company has no obligation to provide any other explicit or implicit support to any VIE.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The Company concluded that the entities created to facilitate the loan securitization transactions are VIEs. The Company completed an analysis of whether each VIE created to facilitate the securitization transactions should be consolidated by the Company, based on consideration of its involvement in each VIE and whether its involvement reflected a controlling financial interest that resulted in the Company being deemed the primary beneficiary of each VIE. In determining whether the Company would be considered the primary beneficiary, the following factors were assessed:

• whether the Company has both the power to direct the activities that most significantly impact the economic performance of the VIE; and

• whether the Company has a right to receive benefits or absorb losses of the entity that could be potentially significant to the VIE.

Based on its evaluation of the factors discussed above, including its involvement in the purpose and design of the entity, the Company determined that it was required to consolidate each VIE created to facilitate the loan securitization transactions.

VIEs for Which the Company is Not the Primary Beneficiary

The Company sponsored or participated along with other affiliates and entities managed by Angel Oak Capital in the formation of various entities that were considered to be VIEs. These VIEs were formed to facilitate securitization issuances that were comprised of secured residential whole loans and/or small balance commercial loans contributed to securitization trusts.

These securities were issued as a result of the unconsolidated securitizations where the Company retained bonds from the issuances of securitizations issued by a depositor that the Company does not control. The Company determined that it was not then and is not now the primary beneficiary of any of these securitization entities, and thus has not consolidated the operating results or statements of financial position of any of these entities. The Company performs ongoing reassessments of all VIEs in which the Company has participated since its inception as to whether changes in the facts and circumstances regarding the Company’s involvement with a VIE would cause the Company’s consolidation conclusion to change, and the Company’s assessment of these VIEs remains unchanged.

The securities received in the securitization transactions for which the Company is not the primary beneficiary are either classified as “available for sale” upon receipt and are included in “RMBS - at fair value”, or are classified as “Other assets” and held at amortized cost on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, and details on the accounting treatment and fair value methodology of the securities can be found in Note 9 — Fair Value Measurements. See also Note 4 — Investment Securities, for the fair value of Angel Oak Mortgage Trust (“AOMT”) securities held by the Company, and Note 13 - Other Assets, for investments in majority-owned affiliates (“MOAs”), as of June 30, 2025 and December 31, 2024 that were retained by the Company as a result of these securitization transactions.

3. Residential Mortgage Loans

Residential mortgage loans are measured at fair value. The following table sets forth the cost, unpaid principal balance, net premium on mortgage loans purchased, fair value, weighted average interest rate, and weighted average remaining contractual maturity of the Company’s residential mortgage loan portfolio as of June 30, 2025 and December 31, 2024:


	June 30, 2025			December 31, 2024
	($ in thousands)
Cost	$	199,900		$	183,149

Unpaid principal balance	$	193,268		$	178,373
Net premium on mortgage loans purchased	6,632			4,776
Change in fair value	765			(85)
Fair value	$	200,665		$	183,064

Weighted average interest rate	8.37		%	7.39		%

Weighted average remaining contractual maturity (years)	29			30

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

At times, various forms of margin maintenance may be required by certain financing facility counterparties. See Note 5 — Financing.

The following table sets forth data regarding the number of residential mortgage loans secured by residential real property ninety (90) or more days past due and also those in formal foreclosure proceedings, and the recorded investment and unpaid principal balance of such loans as of June 30, 2025 and December 31, 2024:


As of:	June 30, 2025		December 31, 2024
	($ in thousands)
Number of mortgage loans 90 or more days past due	1		—
Recorded investment in mortgage loans 90 or more days past due	$	1,367	$	—
Unpaid principal balance of loans 90 or more days past due	$	1,326	$	—

Number of mortgage loans in foreclosure	2		—
Recorded investment in mortgage loans in foreclosure	$	917	$	—
Unpaid principal balance of loans in foreclosure	$	888	$	—

4. Investment Securities

As of June 30, 2025, investment securities were comprised of: (i) non‑agency RMBS (“AOMT RMBS”) and (ii) Freddie Mac and Fannie Mae whole pool agency RMBS (“Whole Pool Agency RMBS”, and together with AOMT RMBS, “RMBS”).

The following table sets forth a summary of RMBS at cost as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
	(in thousands)
AOMT RMBS	$	108,495	$	101,801
Whole Pool Agency RMBS	$	254,228	$	201,994

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following tables sets forth certain information about the Company’s investments in RMBS at fair value as of June 30, 2025:


June 30, 2025	Real Estate Securities at Fair Value		Securities Sold Under Agreements to Repurchase		Allocated Capital
	(in thousands)
AOMT RMBS (1)

Mezzanine	$	12,831	$	(11,172)	$	1,659
Subordinate	80,509		(25,874)		54,636
Interest Only/Excess	10,992		—		10,992
Retained RMBS in VIEs (2)	—		(31,016)		(31,016)
Total AOMT RMBS	$	104,332	$	(68,062)	$	36,270




Whole Pool Agency RMBS (3)
Fannie Mae	$	17,957	$	—	$	17,957
Freddie Mac	239,595		—		239,595
Total Whole Pool Agency RMBS	$	257,552	$	—	$	257,552
Total RMBS	$	361,884	$	(68,062)	$	293,822

(1) AOMT RMBS held as of June 30, 2025 included both retained tranches of AOMT securitizations in which the Company participated and additional AOMT securities purchased in secondary market transactions.

(2) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $178.3 million, are not reflected in the consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its condensed consolidated balance sheets.

(3) The whole pool RMBS presented as of June 30, 2025 were purchased from a broker to whom the Company owes approximately $254 million, payable upon the settlement date of the trade. See Note 6 - Due to Broker.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth certain information about the Company’s investments in RMBS at fair value as of December 31, 2024:


December 31, 2024	Real Estate Securities at Fair Value		Securities Sold Under Agreements to Repurchase		Allocated Capital
	(in thousands)
AOMT RMBS (1)

Mezzanine	$	12,735	$	(5,440)	$	7,295
Subordinate	73,548		(19,829)		53,719
Interest Only/Excess	12,508		—		12,508
Retained RMBS in VIEs (2)	—		(25,286)		(25,286)
Total AOMT RMBS	$	98,791	$	(50,555)	$	48,236




Whole Pool Agency RMBS (3)
Fannie Mae	$	161,878	$	—	$	161,878
Freddie Mac	39,574		—		39,574
Total Whole Pool Agency RMBS	$	201,452	$	—	$	201,452
Total RMBS	$	300,243	$	(50,555)	$	249,688

(1) AOMT RMBS held as of December 31, 2024 included both retained tranches of AOMT securitizations in which the Company participated and additional AOMT securities purchased in secondary market transactions.

(2) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $163.9 million, are not reflected in the consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its consolidated balance sheets.

(3) The whole pool RMBS presented as of December 31, 2024 were purchased from a broker to whom the Company owes approximately $202 million, payable upon the settlement date of the trade. See Note 6 - Due to Broker.

5. Financing

The Company has the ability to finance residential and commercial whole loans, utilizing lines of credit (notes payable) from various counterparties, as further described below. Outstanding borrowings bear interest at floating rates depending on the lending counterparty, the collateral pledged, and the rate in effect for each interest period, as the same may change from time to time at the end of each interest period. Some agreements include upfront fees, fees on unused balances, covenants and concentration limits on types of collateral pledged which vary based on the counterparty. Occasionally, a lender may require certain margin collateral to be posted on a warehouse line of credit. There was no margin collateral required as of June 30, 2025 or December 31, 2024.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth the details of all the lines of credit available to the Company for whole loan purchases as of June 30, 2025 and December 31, 2024:


		Interest Rate Pricing Spread	Drawn Amount
Note Payable	Base Interest Rate		June 30, 2025		December 31, 2024
			(in thousands)
Multinational Bank 1 (1)	Average Daily SOFR	1.65% - 2.10%	$	77,603	$	100,711
Global Investment Bank 2 (2)	1 month Term SOFR	1.75% - 3.35%	143		15,111
Global Investment Bank 3 (3)	Compound SOFR	1.90% - 4.75%	40,873		13,637
Total			$	118,619	$	129,459

(1) On June 24, 2025, this financing facility was extended through December 25, 2025 in accordance with the terms of the agreement, which contemplates six-month renewals. The interest rate pricing spread remained unchanged from the prior extension at a range from 1.65% to 2.10%.

(2) On March 28, 2024, the Company and two of its subsidiaries terminated the existing facility with Global Investment Bank 2 and the Company and two different subsidiaries entered into a new facility with Global Investment Bank 2 wherein the Company is guarantor, one of the subsidiaries is seller and Global Investment Bank 2 is buyer. This updated facility is extended through March 27, 2026. On October 25, 2024, the facility was amended to, among other changes, reduced the interest rate pricing spread to a range from 1.75% and 3.35%; prior to this amendment, the interest rate pricing spread was a range from 2.10% and 3.45%.

(3) On November 1, 2024, the facility’s termination date was extended to November 1, 2025. In addition, the interest rate pricing spread was reduced to a range from 1.90% to 4.75% and the index spread adjustment of 20 basis points was eliminated; prior to this extension, the interest rate pricing spread was a range from 2.00% to 4.50%.

The following table sets forth the total unused borrowing capacity of each financing line as of June 30, 2025:


Note Payable	Borrowing Capacity		Balance Outstanding		Available Financing
	(in thousands)
Multinational Bank 1	$	600,000	$	77,603	$	522,397
Global Investment Bank 2	250,000		143		249,857
Global Investment Bank 3	200,000		40,873		159,127
Total	$	1,050,000	$	118,619	$	931,381

Although available financing is uncommitted for each of these lines of credit, the Company’s unused borrowing capacity is available if it has eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements.

Senior Unsecured Notes

In May, the Company closed an underwritten public offering and sale of, and issued, $42.5 million in aggregate principal amount of its 9.750% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes bear interest at a rate of 9.750% per annum, payable quarterly in arrears on March 1, June 1, September 1, and December 1 of each year, beginning on September 1, 2025. The 2030 Notes will mature on June 1, 2030, unless earlier redeemed or repurchased by the Company, and are held at amortized cost. After deducting the underwriting discount and other debt issuance costs, the Company received net proceeds of approximately $40.6 million.

The Company may redeem the 2030 Notes in whole or in part at any time on or after June 1, 2027, at a redemption price equal to 100% of the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon the occurrence of certain events relating to a change of control of the Company, the Company must make an offer to repurchase all outstanding 2030 Notes at a price in cash equal to 101% of the principal amount of the 2030 Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.

The 2030 Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Operating Partnership, including the due and punctual payment of principal of, premium, if any, and interest on the 2030 Notes, whether at stated maturity, upon acceleration, call for redemption or otherwise.

At June 30, 2025, the outstanding principal amount of the 2030 Notes was $42.5 million and the accrued interest payable on the 2030 Notes was $0.5 million. At June 30, 2025 the unamortized deferred debt issuance cost was $0.6 million, and the net interest expense recognized in the quarter ended June 30, 2025 was $0.6 million. The unamortized debt issuance costs will be amortized until maturity, which will be no later than June 1, 2030.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

On July 25, 2024, the Company closed an underwritten public offering and sale of, and issued, $50.0 million in aggregate principal amount of its 9.500% Senior Notes due 2029 (the “2029 Notes”). The 2029 Notes bear interest at a rate of 9.500% per annum, payable quarterly in arrears on January 30, April 30, July 30 and October 30 of each year. The 2029 Notes will mature on July 30, 2029, unless earlier redeemed or repurchased by the Company and are held at amortized cost. After deducting the underwriting discount and other debt issuance costs, the Company received net proceeds of approximately $47.5 million.

The Company may redeem the 2029 Notes in whole or in part at any time or from time to time at its option on or after July 30, 2026 at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon the occurrence of certain events relating to a change of control of the Company, the Company must make an offer to repurchase all outstanding 2029 Notes at a price in cash equal to 101% of the principal amount of the 2029 Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.

The 2029 Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Operating Partnership, including the due and punctual payment of principal of, premium, if any, and interest on the 2029 Notes, whether at stated maturity, upon acceleration, call for redemption or otherwise.

At June 30, 2025, the outstanding principal amount of the 2029 Notes was $50.0 million and the accrued interest payable on the 2029 Notes was $0.8 million. At June 30, 2025, the unamortized deferred debt issuance cost was $0.8 million, and the net interest expense recognized in the quarter ended June 30, 2025 was $1.3 million. The unamortized debt issuance costs will be amortized until maturity, which will be no later than July 30, 2029.

At December 31, 2024, the outstanding principal amount of the 2029 Notes was $50.0 million and the accrued interest payable on the 2029 Notes was $0.8 million. At December 31, 2024, the unamortized debt issuance cost was $1.4 million. The unamortized debt issuance costs will be amortized until maturity, which will be no later than July 30, 2029.

6. Due to Broker

The “Due to broker” account on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, respectively, in the amounts of $254.2 million and $202.0 million relates to the purchase of Whole Pool Agency RMBS at quarter-end in the second and fourth quarters of 2025 and 2024, respectively. Purchases are accounted for on a trade date basis, and, at times, there may be a timing difference between accounting periods for the trade date and the settlement date of a trade. The trade dates of these purchases were prior to the applicable quarter-end dates. These trades settled during July 2025 and January 2025, respectively, at which time these assets were simultaneously sold.

The purchase transactions of these Whole Pool Agency RMBS are excluded from the condensed consolidated statements of cash flows until settled as they are noncash transactions.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

7. Securities Sold Under Agreements to Repurchase

Transactions involving securities sold under agreements to repurchase are treated as collateralized financial transactions, and are recorded at their contracted repurchase amounts. Margin (if required) for securities sold under agreements to repurchase represents margin collateral amounts held to ensure that the Company has sufficient coverage for securities sold under agreements to repurchase in case of adverse price changes. Restricted cash of margin collateral for securities sold under agreements to repurchase was $1.2 million and $1.2 million as of June 30, 2025 and December 31, 2024, respectively.

The following table summarizes certain characteristics of the Company’s repurchase agreements as of June 30, 2025 and December 31, 2024:

June 30, 2025

Repurchase Agreements

Amount Outstanding

Weighted Average Interest Rate

Weighted Average Remaining Maturity (Days)

($ in thousands)

AOMT RMBS (1)

68,062

5.85

December 31, 2024

Repurchase Agreements

Amount Outstanding

Weighted Average Interest Rate

Weighted Average Remaining Maturity (Days)

AOMT RMBS (1)

50,555

5.76

(1) A portion of repurchase debt outstanding as of both June 30, 2025 and December 31, 2024 includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). See Note 4 - Investment Securities.

Although the transactions under repurchase agreements represent committed borrowings until maturity, the lenders retain the right to mark the underlying collateral at fair value. A reduction in the value of pledged assets would require the Company to provide additional collateral or fund margin calls.

8. Derivative Financial Instruments

In the normal course of business, the Company enters into derivative financial instruments to manage its exposure to market risk, including interest rate risk and prepayment risk on its whole loan investments. The derivatives in which the Company invests, and the market risk that the economic hedge is intended to mitigate are further discussed below. Derivative instruments as of June 30, 2025 and December 31, 2024 included interest rate futures contracts. Restricted cash relating to interest rate futures margin collateral in interest rate futures accounts under the Company’s sole control as of June 30, 2025 and December 31, 2024 included $2.7 million and $0.9 million, respectively.

The Company uses interest rate futures as economic hedges to hedge a portion of its interest rate risk exposure. Interest rate risk is sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, as well as other factors. The Company’s credit risk with respect to economic hedges is the risk of default on its investments that result from a borrower’s or counterparty’s inability or unwillingness to make contractually required payments.

The Company may at times hold To-Be-Announced (“TBA”) securities in order to mitigate its interest rate risk on certain specified mortgage-backed securities. Amounts or obligations owed by or to the Company are subject to the right of set-off with the TBA counterparty. As part of executing these trades, the Company may enter into agreements with its TBA counterparties that govern the transactions for the TBA purchases or sales made, including margin maintenance, payment and transfer, events of default, settlements, and various other provisions.

Changes in the value of derivatives designed to protect against mortgage-backed securities fair value fluctuations, or economic hedging gains and losses, are reflected in the tables below. All realized and unrealized gains and losses on derivative contracts are recognized in earnings, in “net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS” for realized gains and losses, and “net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts” for unrealized gains and losses.

The Company considers the notional amounts, categorized by primary underlying risk, to be representative of the volume of its derivative activities.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth the derivative instruments presented on the condensed consolidated balance sheets and notional amounts as of June 30, 2025 and December 31, 2024:


							Notional Amounts
As of:	Derivatives Not Designated as Hedging Instruments	Number of Contracts	Assets		Liabilities		Long Exposure		Short Exposure
			(in thousands)
June 30, 2025	Interest rate futures	1,953	$	—	$	1,147	$	—	$	195,300
June 30, 2025	TBAs	N/A	$	—	$	3,208	$	—	$	251,700

December 31, 2024	Interest rate futures	2,800	$	987	$	—	$	—	$	280,000
December 31, 2024	TBAs	N/A	$	528	$	—	$	—	$	213,400

The gains and losses arising from these derivative instruments in the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2025 and June 30, 2024 are set forth as follows:


	Derivatives Not Designated as Hedging Instruments	Net Realized Gains (Losses) on Derivative Instruments		Net Change in Unrealized Appreciation (Depreciation) on Derivative Instruments
		(in thousands)
Three Months Ended June 30, 2025	Interest rate futures	$	(1,064)	$	(199)
Three Months Ended June 30, 2025	TBAs	$	(3,016)	$	(4,629)

Three Months Ended June 30, 2024	Interest rate futures	$	290	$	844
Three Months Ended June 30, 2024	TBAs	$	1,818	$	1,748


	Derivatives Not Designated as Hedging Instruments	Net Realized Gains (Losses) on Derivative Instruments		Net Change in Unrealized Appreciation (Depreciation) on Derivative Instruments
		(in thousands)
Six Months Ended June 30, 2025	Interest rate futures	$	(2,536)	$	(2,134)
Six Months Ended June 30, 2025	TBAs	$	(1,853)	$	(3,737)

Six Months Ended June 30, 2024	Interest rate futures	$	3,839	$	1,048
Six Months Ended June 30, 2024	TBAs	$	2,124	$	1,988

9. Fair Value Measurements

For financial reporting purposes, we follow a fair value hierarchy established under GAAP that is used to determine the fair value of financial instruments. This hierarchy prioritizes relevant market inputs in order to determine an “exit price” at the measurement date, or the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale. Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets. Level 2 inputs are observable inputs other than quoted prices for an asset or liability that are obtained through corroboration with observable market data. Level 3 inputs are unobservable inputs (e.g., our own data or assumptions) that are used when there is little, if any, relevant market activity for the asset or liability required to be measured at fair value.

In certain cases, inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level at which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. Our assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured.

As of June 30, 2025, our valuation policy and processes had not changed from those described in our consolidated financial statements for the year ended December 31, 2024 included in the Annual Report on Form 10-K. Included in Note 10 — Fair Value Measurements to the Consolidated Financial Statements for the year ended December 31, 2024 included in the Annual Report on Form 10-K is a detailed description of our other financial instruments measured at fair value and their significant inputs, as well as the general classification of such instruments pursuant to the Level 1, Level 2, and Level 3 valuation hierarchy.

The fair value of cash, restricted cash, principal and interest receivable, other assets (excluding investments in majority-owned affiliates (“MOAs”)), notes payable, securities sold under agreements to repurchase, amounts due to broker and accrued expenses (including

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

those payable to an affiliate and management fees payable to an affiliate), and interest payable approximate their carrying values due to the nature of these assets and liabilities.

The Company’s “investments in majority-owned affiliates” included in other assets (see Note 13 — Other Assets) and a portion of “non-recourse securitization obligation, collateralized by residential mortgage loans” are held at amortized cost. The fair value of these assets and liabilities is disclosed further below in the section titled “Assets and Liabilities Held at Amortized Cost - Fair Value Disclosure”

The following table sets forth information about the Company’s financial assets and liabilities measured at fair value as of June 30, 2025:


	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets, at fair value
Residential mortgage loans	$	—	$	199,043	$	1,622	$	200,665
Residential mortgage loans in securitization trusts	—		1,872,751		29,970		1,902,721
Investments in securities
AOMT RMBS (1)	—		104,332		—		104,332
Whole Pool Agency RMBS	—		257,552		—		257,552
U.S Treasury Securities	—		—		—		—
Other Assets, at fair value (2)	—		10,498		—		10,498
Unrealized appreciation on futures contracts	—		—		—		—
Unrealized appreciation on TBAs	—		—		—		—
Total assets, at fair value	$	—	$	2,444,176	$	31,592	$	2,475,768

Liabilities, at fair value
Non-recourse securitization obligation, collateralized by residential mortgage loans (3)	$	—	$	1,401,980	$	—	$	1,401,980
Unrealized depreciation on futures contracts	1,147		—		—		1,147
Unrealized depreciation on TBAs	3,208		—		—		3,208
Total liabilities, at fair value	$	4,355	$	1,401,980	$	—	$	1,406,335

(1) AOMT RMBS held as of June 30, 2025 included both retained tranches of AOMT securitizations in which the Company participated, additional AOMT securities purchased in secondary market transactions, and other RMBS purchased in secondary market transactions.

(2) Includes Commercial Loans and AOMT commercial mortgage backed securities (“CMBS)” assets. All AOMT CMBS held as of June 30, 2025 was comprised of a small-balance commercial loan securitization issuance in which the Company participated.

(3) Only the portion subject to fair value measurement, as adjusted for fair value, is presented above. See below for the disclosure of the full debt at fair value.

Transfers from Level 2 to Level 3 were comprised of residential loans more than 90 days overdue (including those in foreclosure) and commercial mortgage loans in special servicing or otherwise considered “non‑performing” by the Company’s third‑party valuation providers. Transfers between Levels are deemed to take place on the first day of the reporting period in which the transfer has taken place. These transfers were not deemed material.

We use third‑party valuation firms who utilize proprietary methodologies to value our residential and commercial loans. These firms generally use both market comparable information and discounted cash flow modeling techniques to determine the fair value of our Level 3 assets. Use of these techniques requires determination of relevant input and assumptions, some of which represent significant unobservable inputs such as anticipated credit losses, prepayment rates, default rates, or other valuation assumptions. Accordingly, a significant increase or decrease in any of these inputs in isolation may result in a significantly lower or higher fair value measurement.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth information regarding the Company’s significant Level 3 inputs as of June 30, 2025:


				Input Values
Asset	Fair Value		Unobservable Input	Range	Average
	(in thousands)
Residential mortgage loans, at fair value	$	1,622	Prepayment rate (annual CPR)	13% - 13%	13.28%
			Default rate	15% - 15%	15.34%
			Loss severity	(25.00)% - 10.00%	(7.81)%
			Expected remaining life	1.33 - 4.08 years	2.83 years

Residential mortgage loans in securitization trust, at fair value	$	29,970	Prepayment rate (annual CPR)	5.51% - 22.76%	10.44%
			Default rate	7.36% - 39.21%	16.35%
			Loss severity	(25.00)% - 25.00%	0.28%
			Expected remaining life	1.33 - 11.82 years	4.90 years

Assets and Liabilities Held at Amortized Cost — Fair Value Disclosure

Portion of Non-Recourse Securitization Obligations, Collateralized by Residential Mortgage Loans — Held at Amortized Cost

To determine the fair value of the Company’s non-recourse securitization obligation, collateralized by residential mortgage loans, net, held at amortized cost, the Company uses the same method of valuation as described in the Annual Report on Form 10-K, Note 10 — Fair Value Measurements for both the portion of the obligation measured at fair value and the portion of the obligation held at amortized cost, for which fair value is disclosed below.

As of June 30, 2025, the total amortized cost basis and fair value of our non-recourse securitization obligations was $1.79 billion and $1.71 billion, respectively, a difference of approximately $80.3 million (we have elected to hold our non-recourse securitization obligations at fair value, with the exception of AOMT 2021-7 and AOMT 2021-4, which are carried at amortized cost, as the fair value option was not elected at the time of the creation of these obligations). The difference between the amortized cost and fair value solely attributable to AOMT 2021-4 and 2021-7 is approximately $61.8 million. The difference between the amortized cost basis value and the fair value is derived from the difference between the period-end market pricing of the underlying bonds, as referred to above, and the amortized cost of the obligation. The fair value of the non-recourse securitization debt is not indicative of the amounts at which we could settle this debt.

As of December 31, 2024, the total amortized cost basis and fair value of our non-recourse securitization obligations was $1.65 billion and $1.52 billion, respectively, a difference of approximately $124.3 million (we have elected to hold our non-recourse securitization obligations at fair value, with the exception of AOMT 2021-7 and AOMT 2021-4, which are carried at amortized cost, as the fair value option was not elected at the time of the creation of these obligations). The fair value solely attributable to AOMT 2021-4 and 2021-7 is approximately $68.8 million less than the amortized cost. The difference between the amortized cost basis value and the fair value is derived from the difference between the period-end market pricing of the underlying bonds, as referred to above, and the amortized cost of the obligation. The fair value of the non-recourse securitization debt is not indicative of the amounts at which we could settle this debt.

Investments in Majority-Owned Affiliates

To determine the fair value of the Company’s investments in majority-owned affiliates, which are held at amortized cost and included in “other assets”, the Company uses the prices of the underlying bonds in the investments to determine fair value. The Company utilizes PriceServe, Bank of America’s independent fixed income pricing service, as the primary valuation source for these bonds. PriceServe obtains its price quotes from actual sales or quotes for sale of the same or similar securities and/or provides model‑based valuations that consider inputs derived from recent market activity including default rates, conditional prepayment rates, loss severity, expected yield to maturity, baseline discount margin/yield, recovery assumptions, tranche type, collateral coupon, age and loan size, and other inputs specific to each security. We believe that these quotes are most reflective of the price that would be achieved if the bonds were sold to an independent third party on the date of the condensed consolidated financial statements.

The amortized cost and fair value of this investment as of June 30, 2025 was approximately $21.0 million and $16.9 million, respectively. The amortized cost and fair value of these investments as of December 31, 2024 was approximately $20.6 million and $16.6 million, respectively.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2024:


	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets, at fair value
Residential mortgage loans	$	—	$	183,064	$	—	$	183,064
Residential mortgage loans in securitization trusts	—		1,664,921		32,074		1,696,995
Investments in securities
AOMT RMBS (1)	—		98,791		—		98,791
Whole Pool Agency RMBS	—		201,452		—		201,452

Unrealized appreciation on futures contracts	987		—		—		987
Unrealized appreciation on TBAs	528		—		—		528
Other Assets, at fair value (2)	—		10,807		—		10,807
Total assets, at fair value	$	1,515	$	2,159,035	$	32,074	$	2,192,624

Liabilities, at fair value
Non-recourse securitization obligation, collateralized by residential mortgage loans (3)	$	—	$	1,524,828	$	—	$	1,524,828


Total liabilities, at fair value	$	—	$	1,524,828	$	—	$	1,524,828

(1) AOMT RMBS held as of December 31, 2024 included both retained tranches of AOMT securitizations in which the Company participated, additional AOMT securities purchased in secondary market transactions, and other RMBS purchased in secondary market transactions.

(2) Includes Commercial Loans and AOMT CMBS assets. All AOMT CMBS held as of December 31, 2024 was comprised of a small-balance commercial loan securitization issuance in which the Company participated.

(3) Only the portion subject to fair value measurement, as adjusted for fair value, is presented above. See below for the disclosure of the full debt at fair value.

All unrealized gains and losses arising from valuation changes in residential and commercial mortgage loans, TBAs, and futures contracts are recognized in net income for the periods presented.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth information regarding the Company’s significant Level 3 inputs as of December 31, 2024:

Input Values

Asset

Fair Value

Unobservable Input

Range

Average

(in thousands)

Residential mortgage loans in securitization trust, at fair value

32,074

Prepayment rate (annual CPR)

3.64% - 19.83%

8.48%

Default rate

6.94% - 42.76%

16.77%

Loss severity

(23.04)% - 16.94%

(1.96)%

Expected remaining life

1.33 - 5.92 years

2.68 years

10. Related Party Transactions

Residential Mortgage Loan Purchases

The Company has residential mortgage loan purchase agreements with various affiliates of the Company. The purchase price of the loans is generally equal to the outstanding principal of the mortgage, adjusted by a premium or discount, depending on market conditions. The Company purchases the mortgage loans on a servicing retained basis. The residential mortgage loans are on residences located in various states with a concentration in California and Florida.

The following table sets forth certain financial information pertaining to whole loan activity purchased from affiliates during the period and year ended as of June 30, 2025 and December 31, 2024, respectively:


As of and for the Year-to-Date/Year Ended:	Amount of Loans Purchased from Affiliates during the Year-to-Date/Year Ended (in thousands)		Number of Loans Purchased from Affiliates during the Year-to-Date/Year Ended	Number of Loans Purchased from Affiliates, Owned and Held as of Year-to-Date/Year Ended (1):
June 30, 2025	$	82,757	194	31

December 31, 2024	$	255,368	558	83

(1) Excludes loans held in consolidated securitizations.

Securitization Transactions and Majority-Owned Affiliate

From time to time, the Company participates in securitization transactions with other affiliates of Angel Oak Capital. See Note 2 — Variable Interest Entities, “VIEs for Which the Company is Not the Primary Beneficiary” and Note 13 — Other Assets.

Management Fee

The Company and the Operating Partnership have entered into an Amended and Restated Management Agreement with the Manager, dated as of May 1, 2024 (the “Management Agreement”). Per the Management Agreement, on a quarterly basis in arrears, the Company shall pay its Manager an aggregate, fixed management fee equal to 1.5% per annum of the Company’s Equity (as defined in the Management Agreement).

Incentive Fee

Under the Management Agreement, the Manager is also entitled to an incentive fee, which is calculated and payable in cash with respect to each calendar quarter (or part thereof that the Management Agreement is in effect) in arrears in an amount, not less than zero, equal to the excess of (1) the product of (a) 15% and (b) the excess of (i) the Company’s Distributable Earnings (as defined in the Management Agreement) for the previous 12-month period, over (ii) the product of (A) the Company’s Equity in the previous 12-month period, and (B)

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

8% per annum, over (2) the sum of any incentive fee earned by the Manager with respect to the first three calendar quarters of such previous 12-month period. To date, the incentive fee has not been earned.

Operating Expense Reimbursements

The Company is also required to pay the Manager reimbursements for certain general and administrative expenses pursuant to the Management Agreement. Accrued expenses payable to affiliate and operating expenses incurred with affiliate are substantially comprised of payroll reimbursements.

11. Commitments and Contingencies

The Company, from time to time, may be party to litigation relating to claims arising in the normal course of business. As of June 30, 2025, the Company was not aware of any legal claims that could materially impact its financial condition. As of June 30, 2025, the Company had no unfunded commitments.

The Company has entered into forward purchase commitments with counterparties whereby the Company commits to purchasing residential mortgage loans at a particular price, provided the residential mortgage loans close with the counterparties. As of June 30, 2025 the Company had total purchase commitments of $181.0 million related to both Angel Oak Mortgage Lending and third parties. These commitments represent off-balance sheet risk where the Company may be required to extend credit. As of December 31, 2024, the Company had total purchase commitments of $152.6 million related to both Angel Oak Mortgage Lending and third parties.

12. Accumulated Other Comprehensive Income/(Loss)

The following table sets forth the net unrealized gain/(loss) on available-for-sale (“AFS”) securities for the three and six months ended June 30, 2025 and 2024, which is the sole component of the changes in the Company’s Accumulated Other Comprehensive Income/(Loss) (“AOCI”) for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30, 2025		Three Months Ended June 30, 2024
	(in thousands)
AOCI balance, beginning of period	$	(4,170)	$	(3,272)


Net unrealized gain/(loss) on AFS securities	(491)		125
AOCI balance, end of period	$	(4,661)	$	(3,147)


	Six Months Ended June 30, 2025		Six Months Ended June 30, 2024
	(in thousands)
AOCI balance, beginning of period	$	(3,475)	$	(4,975)


Net unrealized gain/(loss) on AFS securities	(1,186)		1,828
AOCI balance, end of period	$	(4,661)	$	(3,147)

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

13. Other Assets

The following table sets forth the detail of other assets included in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
	(in thousands)
Investments in Majority-Owned Affiliates	$	20,992	$	20,680
Commercial Mortgage Loans, at fair value	5,201		5,214
CMBS, at fair value	5,297		5,593
Deferred tax asset	3,457		3,457
Prepaid expenses	2,447		1,095
Protective advances and other assets	621		879
Total other assets	$	38,015	$	36,918

Investments in Majority-Owned Affiliates

The Company has participated in securitization transactions which involved MOAs in which the Company received investments in each case proportional to its share of the unpaid principal balance of the residential whole loans contributed to the securitizations. The purpose of the MOAs is to retain and hold risk retention bonds issued by the securitization trust. Each MOA is a limited liability company and is accounted for as an equity method investment and held at amortized cost and tested for impairment at least annually utilizing undiscounted cash flows of the underlying bonds. See Note 9 — Fair Value Measurements.

Commercial Mortgage Loans

Commercial mortgage loans are measured at fair value. As of June 30, 2025 and December 31, 2024, the cost and unpaid principal balance of the assets was $5.6 million and $5.6 million, with a fair value of $5.2 million and $5.2 million, respectively. The weighted average interest rate was 6.23% with a weighted average maturity of 11 years, as of June 30, 2025. There were no commercial mortgage loans more than ninety (90) days past due or in foreclosure as of June 30, 2025 or December 31, 2024.

Commercial Mortgage Backed Securities

CMBS are held at fair value. As of June 30, 2025 and December 31, 2024, the cost of these assets were $5.8 million and $6.1 million, with a fair value of $5.3 million and $5.6 million, respectively. There was no repurchase debt held against these assets at June 30, 2025 or December 31, 2024.

14. Equity

During the three and six-months ended June 30, 2025, the Company issued and sold 215,622 shares of its common stock through an at-the-market equity offering program (the “ATM Program”) for proceeds of $2.2 million, net of commissions and fees. These shares of common stock were issued in SEC registered transactions off the Company’s shelf registration statement. Per the terms of our ATM Program, we may offer and sell shares of our common stock having an aggregate gross proceeds of up to $75.0 million from time to time.

15. Earnings per Share (“EPS”)

In the calculations of basic and diluted earnings per common share for the three and six months ended June 30, 2025 and 2024, the Company included participating securities, which are certain equity awards that have non-forfeitable dividend participation rights. Dividends and undistributed earnings allocated to participating securities under the basic and diluted earnings per share calculations require specific shares to be included that may differ in certain circumstances.

Angel Oak Mortgage REIT, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth the calculation of basic and diluted earnings per share for the three months ended June 30, 2025 and 2024:


	June 30, 2025		June 30, 2024
	(in thousands, except share and per share data)
Basic Earnings (Loss) per Common Share:
Net income (loss) to common stockholders	$	767	$	(273)
Dividends allocated to participating securities	(38)		(29)
Net income (loss) to common stockholders - basic	$	729	$	(302)
Basic weighted average common shares outstanding	23,524,735		24,810,021
Basic earnings (loss) per common share	$	0.03	$	(0.01)

Diluted Earnings (Loss) per Common Share:
Net income (loss) to common stockholders - basic	$	767	$	(273)
Dividends allocated to participating securities	(38)		(29)
Net income (loss) to common stockholders - diluted	$	729	$	(302)
Basic weighted average common shares outstanding	23,524,735		24,810,021
Net effect of dilutive equity awards	263,088		—
Diluted weighted average common shares outstanding	23,787,823		24,810,021
Diluted earnings (loss) per common share	$	0.03	$	(0.01)

The following table sets forth the calculation of basic and diluted earnings per share for the six months ended June 30, 2025 and 2024:


	June 30, 2025		June 30, 2024
	(in thousands, except share and per share data)
Basic Earnings (Loss) per Common Share:
Net income (loss) to common stockholders	$	21,298	$	12,601
Dividends allocated to participating securities	(72)		(54)
Net income (loss) to common stockholders - basic	$	21,226	$	12,547
Basic weighted average common shares outstanding	23,460,798		24,792,918
Basic earnings (loss) per common share	$	0.90	$	0.51

Diluted Earnings (Loss) per Common Share:
Net income (loss) to common stockholders - basic	$	21,298	$	12,601
Dividends allocated to participating securities	(72)		(54)
Net income (loss) to common stockholders - diluted	$	21,226	$	12,547
Basic weighted average common shares outstanding	23,460,798		24,792,918
Net effect of dilutive equity awards	258,852		180,583
Diluted weighted average common shares outstanding	23,719,650		24,973,501
Diluted earnings (loss) per common share	$	0.89	$	0.50

16. Subsequent Events

On August 5, 2025, the Company declared a dividend of $0.32 per share of common stock, to be paid on August 29, 2025 to common stockholders of record as of August 22, 2025.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations is intended to help the reader understand the results of operations and financial condition of Angel Oak Mortgage REIT, Inc. The following should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto. References herein to our “Company,” “we,” “us,” or “our” refer to Angel Oak Mortgage REIT, Inc. and its subsidiaries including Angel Oak Mortgage Operating Partnership, LP (the “Operating Partnership”), through which we hold substantially all of our assets and conduct our operations. Unless otherwise indicated, the term “Angel Oak” refers collectively to Angel Oak Capital Advisors, LLC (“Angel Oak Capital”) and its affiliates, including Falcons I, LLC, our external manager (our “Manager”), Angel Oak Companies, LP (“Angel Oak Companies”), and the proprietary mortgage lending platform of affiliates Angel Oak Mortgage Solutions LLC (together with other non-operational affiliated originators, “Angel Oak Mortgage Lending”).

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “believe,” “intend,” “seek,” “plan” and similar expressions or their negative forms, or by references to strategy, plans, or intentions. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report on Form 10-K”). Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in other reports we file with the Securities and Exchange Commission (the “SEC”). We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Factors that could have a material adverse effect on future results and performance relative to those set forth in or implied by the related forward-looking statements, as well as on our business, financial condition, liquidity, results of operations and prospects, include, but are not limited to:

•the effects of adverse conditions or developments in the financial markets and the economy upon our ability to acquire target assets such as non-qualified residential mortgage (“non-QM”) loans, particularly those sourced from Angel Oak’s proprietary mortgage lending platform, Angel Oak Mortgage Lending;

•the level and volatility of prevailing interest rates and credit spreads;

•changes in our industry, inflation, interest rates, business strategies, target assets, the debt or equity markets, the general economy (or in specific regions) or the residential real estate finance and real estate markets specifically;

•general volatility of the markets in which we invest;

•changes in the availability of attractive loans and other investment opportunities, including non-QM loans sourced from Angel Oak Mortgage Lending;

•the ability of our Manager to locate suitable investments for us, manage our portfolio, and implement our strategy;

•our ability to profitably execute securitization transactions;

•our ability to obtain and maintain financing arrangements on favorable terms, or at all;

•the adequacy of collateral securing our investments and a decline in the fair value of our investments;

•the timing of cash flows, if any, from our investments;

•the operating performance, liquidity, and financial condition of borrowers;

•increased rates of default and/or decreased recovery rates on our investments;

•changes in prepayment rates on our investments;

•the departure of any of the members of senior management of the Company, our Manager, or Angel Oak;

•the availability of qualified personnel;

•conflicts with Angel Oak, including our Manager and its personnel, including our officers, and entities managed by Angel Oak;

•events, contemplated or otherwise, such as acts of God, including hurricanes, wildfires, earthquakes, and other natural disasters, including those resulting from global climate change, pandemics, acts of war or terrorism, the initiation or escalation of military conflicts, and others that may cause unanticipated and uninsured performance declines, disruptions in markets, and/or losses to us or the owners and operators of the real estate securing our investments;

•the occurrence of certain geo-political events (including global trade disputes related to tariffs) that affect the normal and peaceful course of international relations;

•impact of and changes in governmental regulations, tax laws and rates, accounting principles and policies and similar matters;

•the level of governmental involvement in the U.S. mortgage market;

•future changes with respect to the Federal National Mortgage Association (“Fannie Mae”) or Federal Home Loan Mortgage Corporation (“Freddie Mac” and together with Fannie Mae, the “GSEs”) in the mortgage market and related events, including the lack of certainty as to the future roles of these entities and the U.S. Government in the mortgage market and changes to legislation and regulations affecting these entities;

•effects of hedging instruments on our target assets and our returns, and the degree to which our hedging strategies may or may not protect us from interest rate volatility;

•our ability to make distributions to our stockholders in the future at the level contemplated by our stockholders or the market generally, or at all;

•our ability to continue to qualify as a real estate investment trust (a “REIT”) for U.S. federal income tax purposes; and

•our ability to maintain our exclusion from regulation as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report and in the Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management’s views only as of the date such statements are made. The risks summarized under Item 1A. “Risk Factors” in the Annual Report on Form 10-K could cause actual results and performance to differ materially from those set forth in or implied by our forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us.

Important Information Regarding Our Disclosure to Investors

We may use our website (www.angeloakreit.com) to communicate with our investors and disclose company information. The information disclosed through our website may be considered material, so investors should monitor our website in addition to press releases, SEC filings and public conference calls and webcasts. The contents of our website referenced herein are not incorporated by reference into this report.

General

Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. Our strategy is to make credit-sensitive investments primarily in newly-originated first lien non-QM loans that are primarily made to higher-quality non-QM loan borrowers and substantially sourced from Angel Oak’s proprietary mortgage lending platform, Angel Oak Mortgage Lending, which currently operates primarily through a wholesale channel and has a national origination footprint. We also may invest in other residential mortgage loans, RMBS, and other mortgage-related assets, which, collectively with non-QM loans, we refer to as our target assets. Further, we also may identify and acquire our target assets through the secondary market when market conditions and asset prices are conducive to making attractive purchases. Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles.

We are externally managed and advised by our Manager, Falcons I, LLC, a registered investment adviser under the Investment Advisers Act of 1940 and an affiliate of Angel Oak Capital, a leading alternative credit manager with market leadership in mortgage credit that includes asset management, lending and capital markets. Angel Oak Mortgage Lending, an affiliated Angel Oak mortgage origination platform, is a market leader in non‑QM loan production.

Through our relationship with our Manager, we benefit from Angel Oak’s vertically integrated platform and in‑house expertise, providing us with the resources that we believe are necessary to generate attractive risk‑adjusted returns for our stockholders. Angel Oak Mortgage Lending provides us with proprietary access to non‑QM loans, as well as transparency over the underwriting process and the ability to acquire loans with our desired credit and return profile. We believe our ability to identify and acquire target assets through the secondary market is bolstered by Angel Oak’s experience in the mortgage industry and expertise in structured credit investments. In addition, we believe

we have significant competitive advantages due to Angel Oak’s analytical investment tools, extensive relationships in the financial community, financing and capital structuring skills, investment surveillance capabilities, and operational expertise.

Angel Oak Companies has advised us that they have agreed to enter into a strategic transaction (the “Strategic Transaction”) with Brookfield Asset Management Ltd. (“Brookfield”). Angel Oak Companies has advised us that the Strategic Transaction would result in the current beneficial owners of Angel Oak Companies selling approximately 51% of the outstanding beneficial ownership of Angel Oak Companies, and indirectly our Manager, to Brookfield at closing. Angel Oak Companies has advised us that following the closing of the Strategic Transaction, the existing Angel Oak Companies management team will continue to independently manage the day-to-day business of Angel Oak Companies and our Manager, and will control the board of directors of Angel Oak Companies. Angel Oak Companies has advised us that the Strategic Transaction is not intended to result in any material changes to the investment objectives or strategies of the Company, nor to adjust the investment decision-making processes or portfolio management with respect to the Company. Angel Oak Companies has advised us that the personnel, officers and managers of our Manager are expected to remain the same. Angel Oak Companies has advised us that, as part of the Strategic Transaction, Brookfield will have a right to acquire additional beneficial ownership in Angel Oak Companies beginning in 2027, which over time could result in Brookfield taking control of the board of directors of Angel Oak Companies. Angel Oak Companies has advised us that the Strategic Transaction is expected to close in the third quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory clearances and required client consents. Under the Management Agreement, the Strategic Transaction would constitute an assignment of the Management Agreement pursuant to which the Management Agreement automatically terminates without payment of a termination fee unless the assignment is consented to in writing by the Company with the consent of a majority of the Company’s independent directors. For a discussion of certain risks related to our relationship with our Manager, see the information under Item 1A. “Risk Factors—Risks Related to Our Relationship with Our Manager and its Affiliates” in the Annual Report on Form 10-K.

We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2019. Commencing with our taxable year ended December 31, 2019, we believe that we have been organized and operated, and we intend to continue to operate in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Our qualification as a REIT, and maintenance of such qualification, depends on our ability to meet, on a continuing basis, various complex requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels, and the concentration of ownership of our stock. We also intend to operate our business in a manner that will allow us to maintain our exclusion from regulation as an investment company under the Investment Company Act. Our common stock commenced trading on the New York Stock Exchange on June 17, 2021.

We expect to derive our returns primarily from the difference between the interest we earn on loans we invest in and our cost of capital, as well as the returns from bonds, including risk retention securities, that are retained after securitizing the underlying loan collateral.

Trends and Recent Developments

Overall macroeconomic environment and its effect on us

The second quarter of 2025 began with “Liberation Day”, on which significant tariff increases were announced on goods imported into the United States. This announcement sparked sharp selloffs in both equity and fixed income markets, as the potential increases in the costs of many goods drove renewed concern around increases in inflation. Temporary pauses to the tariff increases were announced shortly after Liberation Day, and the extent to which the originally announced tariffs will be enacted remains uncertain. The selloff associated with the original Liberation Day announcement moderated throughout the remainder of the second quarter, and equity markets finished the quarter in positive territory as of June 30, 2025 compared to March 31, 2025. Despite the uncertainty, securitization markets remained stable and constructive throughout the quarter. Inflation slowed in April and May 2025 before increasing from 2.4% in May to 2.7% in June, likely reflecting the impact of announced tariffs. The Federal Reserve Bank (“Fed”) maintained its wait-and-see approach and held interest rates steady at 4.25 - 4.50% through the second quarter of 2025. Current projections are for the Fed to begin cutting interest rates in 2025, though the timing and extent remains uncertain.

Similar to the moderation in equity markets following the initial reaction to Liberation Day, Treasury yields experienced decreases across two and five-year terms, with a slight increase to the ten-year yield in the second quarter of 2025. The two-year Treasury yield decreased by approximately 17 basis points since the end of the first quarter of 2025 to 3.72%, the five-year Treasury yield decreased by approximately 15 basis points since the end of first quarter of 2025 to 3.81%, and the ten-year Treasury yield increased by approximately 2 basis points since the end of first quarter of 2025 to 4.23%. Each of the two, five, and ten-year Treasury yields finished the second quarter well below the highest rate observed over the course of the quarter, which occurred in mid-May across all three terms.

30 year fixed residential conforming mortgage rates increased by 12 basis points over the course of the second quarter to 6.77% as of the end of the second quarter from 6.65% as of the end of the first quarter of 2025. These rates, alongside federal funds rate and Treasury yields, are key benchmarks for the valuation of our portfolio, and an increase is generally expected to drive a corresponding negative impact to our newly originated asset pricing, as we observed in the second quarter of 2025. As such, we observed an approximately 53 basis point decrease versus the first quarter of 2025 in the weighted average price of our residential whole loans portfolio excluding home equity lines of credit (“HELOCs”). This decrease was offset by a 136 basis point increase in the second quarter in the weighted average price of our loans in securitization trusts portfolio, which is substantially composed of loans originated in recent years at lower interest rates, versus the prior quarter. We expect to continue to purchase newly originated loans and HELOCs, which should continue to support overall portfolio valuations and securitization execution going forward.

Notes offering

In May 2025, we closed an underwritten public offering and sale of, and issued, $42.5 million in aggregate principal amount of our 9.750% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes bear interest at a rate of 9.750% per annum, payable quarterly in arrears on March 1, June 1, September 1, and December 1 of each year, beginning on September 1, 2025. The 2030 Notes will mature on June 1, 2030, unless earlier redeemed or repurchased by us, and are held at amortized cost. After deducting the underwriting discount and other debt issuance costs, we received net proceeds of approximately $40.6 million. We used the majority of the net proceeds from the offering for general corporate purposes, which included the acquisition of non-QM loans and other target assets in a manner consistent with our strategy and investment guidelines.

Our investment performance

Net Interest Margin (“NIM”). We generated a 5% increase in net interest income in the second quarter of 2025 as compared to the second quarter of 2024, supported by the continued acquisition of accretive assets. Compared to the second quarter of 2024, interest income grew by $9.2 million and interest expense grew by $8.7 million, resulting in net interest income growth of $0.5 million in the second quarter of 2025. Interest income grew due to the continued acquisition and securitization of current market non-QM loans. The addition of our 2029 Notes and 2030 Notes issued in July 2024 and May 2025, respectively, were key components of the increase to interest expense, and, although there can be no assurances, we expect the deployment of new capital from our 2030 Notes issuance to drive further net interest income expansion in future quarters.

Net realized loss. Our net realized loss for the quarter ended June 30, 2025 was primarily due to realized losses associated with the write-off of unamortized premium of loans that paid off in our residential loans in securitization trust portfolio and in loans underlying our RMBS portfolio.

Net unrealized loss. Our net unrealized loss for the quarter ended June 30, 2025 was primarily due to the reversal of prior unrealized gains on residential loans that were contributed to securitizations during the quarter.

Whole loans and securitization activity

During the quarter ended June 30, 2025, we purchased $146.6 million of newly-originated, current market coupon non-QM residential mortgage loans, second lien mortgage loans (residential mortgage loans that are subordinate to the primary or first lien mortgage loans on a residential property, or “Closed-End Seconds”), and HELOCs, with a weighted average coupon of 8.68%, weighted average combined loan-to-value ratio (“CLTV”) of 68.4% and weighted average credit score of 757.

In April 2025, we issued AOMT 2025-4, a $284.3 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans. We issued AOMT 2025-4 as the sole participant in the securitization. We used the proceeds to repay outstanding debt of approximately $242.4 million, and the $24.7 million of cash released was used for new loan purchases and operational purposes.

In May 2025, we participated in AOMT 2025-6, an approximately $349.7 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans, to which we contributed loans with a scheduled principal balance of $87.2 million. We used the proceeds of the securitization to repay outstanding debt of approximately $73.1 million and retained bonds of $8.1 million. The securitization released $9.2 million of cash, which was used for operational purposes. We participated in this securitization alongside other Angel Oak entities.

Whole loan financing facilities activity

We continuously evaluate our lender base and may enter into new agreements and / or exit agreements as we deem prudent, in accordance with our core financial strategy of purchasing whole loans and financing them until securitized. See “Liquidity and Capital

Resources” below for a full description of our financing arrangements. Our total borrowing capacity was $1.1 billion as of June 30, 2025; Highlights of whole loan financing facilities activity over the second quarter of 2025 are as follows:

•During the quarter ended June 30, 2025, we maintained the same whole loan financing facility lender base as of December 31, 2024.

•During the quarter ended June 30, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods.

Key Financial Metrics

As a real estate finance company, we believe the key financial measures and indicators for our business are Distributable Earnings, Distributable Earnings Return on Average Equity, Book Value per Share of Common Stock, and Economic Book Value per Share of Common Stock.

Distributable Earnings

Distributable Earnings is a non‑GAAP measure and is defined as net income (loss) allocable to common stockholders as calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), excluding (1) unrealized gains and losses on our aggregate portfolio, (2) impairment losses, (3) extinguishment of debt, (4) non-cash equity compensation expense, (5) the incentive fee earned by our Manager, (6) realized gains or losses on swap terminations and (7) certain other nonrecurring gains or losses. We believe that the presentation of Distributable Earnings provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. We believe Distributable Earnings as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. As a REIT, we are generally required to distribute at least 90% of our annual REIT taxable income and to pay U.S. federal income tax at the regular corporate rate to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that stockholders invest in our common stock, generally we intend to attempt to pay dividends to our stockholders in an amount equal to our REIT taxable income, if and to the extent authorized by our Board of Directors. Distributable Earnings is one of a number of factors considered by our Board of Directors in declaring dividends and, while not a direct measure of REIT taxable income, over time, the measure can be considered a useful indicator of our dividends. Distributable Earnings should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings may not be comparable to similar measures presented by other REITs.

We also use Distributable Earnings to determine the incentive fee, if any, payable to our Manager pursuant to the management agreement that we and the Operating Partnership entered into with our Manager upon the completion of our initial public offering of common stock (“IPO”) on June 21, 2021 and amended and restated on May 1, 2024 (as amended and restated, the “Management Agreement”). For information on the fees that are payable to our Manager under the Management Agreement, see “Note 10 – Related Party Transactions” in our unaudited condensed consolidated financial statements included in this report.

Distributable Earnings were a gain of $2.6 million and a loss of $2.3 million for the three months ended June 30, 2025 and 2024, respectively. The primary drivers of the difference of Distributable Earnings as compared to GAAP net income in the quarters ended June 30, 2025 and June 30, 2024 are adjustments to remove unrealized losses on residential loans and adjustments to remove unrealized gains on residential loans in securitization trusts and non-recourse securitization obligation, respectively. For the six months ended June 30, 2025 and June 30, 2024, the primary drivers of the difference between Distributable Earnings and GAAP net income were adjustments to remove unrealized gains on residential loans in securitization trusts and non-recourse securitization obligation and adjustments to remove unrealized gains on residential loans, respectively.

The table below sets forth a reconciliation of net income (loss) allocable to common stockholders, calculated in accordance with GAAP, to Distributable Earnings for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended				Six Months Ended
	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
	(in thousands)
Net income (loss) allocable to common stockholders	$	767	$	(273)	$	21,298	$	12,601
Adjustments:
Net unrealized (gains) losses on trading securities	(4,898)		1,813		(3,866)		1,814
Net unrealized (gains) losses on derivatives	4,829		(2,592)		5,871		(3,037)
Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation	(546)		2,579		(16,204)		(2,568)
Net unrealized (gains) losses on residential loans	2,191		(4,431)		(850)		(9,502)
Net unrealized (gains) losses on commercial loans	—		(27)		—		(49)
Stock compensation expense	296		630		533		1,260
Distributable Earnings	$	2,639	$	(2,301)	$	6,782	$	519

Distributable Earnings Return on Average Equity

Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total stockholders’ equity. We believe that the presentation of Distributable Earnings Return on Average Equity provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. Additionally, we believe Distributable Earnings Return on Average Equity provides investors with additional detail on the Distributable Earnings generated by our invested equity capital. We believe Distributable Earnings Return on Average Equity as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings Return on Average Equity should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings Return on Average Equity may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings Return on Average Equity may not be comparable to similar measures presented by other REITs. Set forth below is our computation of Distributable Earnings Return on Average Equity for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended				Six Months Ended
	June 30, 2025		June 30, 2024		June 30, 2025		June 30, 2024
	($ in thousands)
Annualized Distributable Earnings	$	10,556	$	(9,204)	$	13,564	$	1,038
Average total stockholders’ equity	$	248,934	$	259,565	$	245,612	$	258,412
Distributable Earnings Return on Average Equity	4.2%		(3.5)%		5.5%		0.4%

Book Value per Share of Common Stock

The following table sets forth the calculation of our book value per share of common stock as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
	(in thousands except for share and per share data)
Total stockholders’ equity	$	246,389	$	238,967


Number of shares of common stock outstanding at period end	23,765,202		23,500,175
Book value per share of common stock	$	10.37	$	10.17

Economic Book Value per Share of Common Stock

“Economic book value” is a non-GAAP financial measure of our financial position. To calculate our economic book value, the portions of our non-recourse financing obligation held at amortized cost are adjusted to fair value. These adjustments are also reflected in the table below in our end of period total stockholders’ equity. Management considers economic book value to provide investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for our legally held retained bonds,

irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for book value per share of common stock or stockholders’ equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies.

The following table sets forth a reconciliation from GAAP total stockholders’ equity and book value per share of common stock to economic book value and economic book value per share of common stock as of June 30, 2025 and December 31, 2024:


	June 30, 2025		December 31, 2024
	(in thousands except for share and per share data)
GAAP total stockholders’ equity	$	246,389	$	238,967
Adjustments:
Fair value adjustment for securitized debt held at amortized cost	61,846		68,784
Stockholders’ equity including economic book value adjustments	$	308,235	$	307,751

Number of shares of common stock outstanding at period end	23,765,202		23,500,175
Book value per share of common stock	$	10.37	$	10.17
Economic book value per share of common stock	$	12.97	$	13.10

Results of Operations

Three Months Ended June 30, 2025 and 2024

The following table sets forth a summary of our results of operations for the three months ended June 30, 2025 and 2024:


	Three Months Ended
	June 30, 2025		June 30, 2024
	(in thousands)
INTEREST INCOME, NET
Interest income	$	35,094	$	25,902
Interest expense	25,154		16,439
NET INTEREST INCOME	$	9,940	$	9,463

REALIZED AND UNREALIZED GAINS (LOSSES), NET
Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS	$	(2,499)	$	(6,770)
Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts	(1,576)		2,658
TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET	$	(4,075)	$	(4,112)

EXPENSES
Operating expenses	$	1,334	$	1,692
Operating expenses incurred with affiliate	453		456

Stock compensation	296		630
Securitization costs	1,866		1,410
Management fee incurred with affiliate	1,149		1,294
Total operating expenses	$	5,098	$	5,482

INCOME (LOSS) BEFORE INCOME TAXES	$	767	$	(131)
Income tax expense (benefit)	—		142


NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS	$	767	$	(273)
Other comprehensive income (loss)	(491)		125
TOTAL COMPREHENSIVE INCOME (LOSS)	$	276	$	(148)

Net Interest Income

The following table sets forth the components of net interest income for the three months ended June 30, 2025 and 2024:


	Three Months Ended
	June 30, 2025				June 30, 2024
	(in thousands)
Interest income	Interest income / expense		Average balance		Interest income / expense		Average balance
Residential mortgage loans	$	3,268	$	235,691	$	2,834	$	195,819
Residential mortgage loans in securitization trusts	27,095		1,859,895		18,725		1,390,998
Commercial mortgage loans	114		5,204		104		5,220
RMBS and Majority-Owned Affiliate	3,679		148,866		3,260		145,858
CMBS	256		5,482		262		6,539
U.S. Treasury securities	23		2,500		260		20,000
Other interest income	659		53,586		457		38,469
Total interest income	$	35,094			$	25,902
Interest expense
Notes payable	2,274		176,214		1,638		125,951
Non-recourse securitization obligation, collateralized by residential mortgage loans	19,854		1,730,521		13,695		1,323,055
Repurchase facilities	1,154		69,522		1,106		66,804
Senior Unsecured Notes	1,872		68,223		—		—
Total interest expense	$	25,154			$	16,439
Net interest income	$	9,940			$	9,463

We generated $9.2 million greater interest income for the quarter ended June 30, 2025 than in the comparable period for 2024, driven by increases in both the amount and yields of our target assets. Interest expense increased by $8.7 million for the quarter ended June 30, 2025 compared to the comparable period for 2024, driven by increases in our total borrowings and our 2029 Notes and 2030 Notes issuances, both of which occurred after the quarter ended June 30, 2024. Overall, the increase in our interest income outpaced the increase in interest expense and drove a 5.0%, or $0.5 million, increase in net interest income for the quarter ended June 30, 2025 than in the comparable period for 2024.

Total Realized and Unrealized Gains (Losses)

The components of total realized and unrealized gains (losses), net for the three months ended June 30, 2025 and 2024 are set forth as follows:


	Three Months Ended
	June 30, 2025		June 30, 2024
	(in thousands)
Realized and unrealized gain (loss) on securitization, net of unrealized gain (loss) on non-recourse securitization obligation	$	(1,127)	$	(4,009)
Realized gain (loss) on RMBS	(303)		(1,522)
Unrealized gain (loss) on Whole Pool Agency RMBS	7,830		(3,917)
Realized gain (loss) on CMBS	(208)		(74)
Realized gain (loss) on interest rate futures	(1,064)		290
Realized and unrealized gain (loss) on TBAs	(7,646)		3,565
Realized and unrealized gain (loss) on residential mortgage loans	(1,182)		684
Realized and unrealized gain (loss) on commercial mortgage loans	—		27
Realized and unrealized gain (loss) on U.S. Treasury securities	18		—
Unrealized appreciation (depreciation) on interest rate futures	(199)		844
Realized gain/(loss) on AOMT Majority Owned Affiliates (“MOA”)	(194)
Total realized and unrealized gains (losses), net	$	(4,075)	$	(4,112)

For the three months ended June 30, 2025 and 2024, total realized and unrealized gains and (losses), net resulted in net losses of $4.1 million and $4.1 million, respectively. During the three months ended June 30, 2025, realized and unrealized losses on securitization, net of unrealized gain (loss) on non-recourse securitization obligation, realized losses on interest rate futures, and realized and unrealized losses on residential mortgage loans were the primary drivers of the overall loss to our portfolio. During the three months ended June 30, 2024, losses on securitization, net of unrealized gain (loss) on non-recourse securitization obligation were the key drivers of the overall loss.

Expenses

Operating Expenses

For the three months ended June 30, 2025 and 2024, our operating expenses were $1.3 million and $1.7 million, respectively. Our operating expenses decreased compared to the comparative period due to a decrease in fees associated with the acquisition of whole loans in our whole loans portfolio.

Operating Expenses Incurred with Affiliate

For the three months ended June 30, 2025 and 2024, our operating expenses incurred with affiliate were $0.5 million and $0.5 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, were flat in the three months ended June 30, 2025 compared to the same period of 2024.

Stock Compensation

For the three months ended June 30, 2025 and 2024, our stock compensation expense was $0.3 million and $0.6 million, respectively. Our stock compensation expense decreased for the three months ended June 30, 2025 due primarily to the vesting of stock awards granted at our IPO.

Securitization Costs

For the three months ended June 30, 2025 and 2024, we incurred $1.9 million and $1.4 million of securitization costs, respectively. The expense in the three months ended June 30, 2025 is due to expenses associated with the AOMT 2025-4 and AOMT 2025-6 securitizations, and the expense in the first three months of 2024 was due to expenses associated with the AOMT 2024-4 and AOMT 2024-6 securitizations.

Management Fee Incurred with Affiliate

For the three months ended June 30, 2025 and 2024, our management fee incurred with affiliate was $1.1 million and $1.3 million, respectively. The decrease is due to the decrease in our average Equity (as defined in the Management Agreement) for the three months ended June 30, 2025 as compared to the same period in 2024. The calculation of Equity for the purposes of the Management Agreement includes the addition or subtraction of Distributable Earnings, which is the primary departure from the calculation of equity in accordance with GAAP, which has caused Equity (as defined in the Management Agreement) to decrease.

Six Months Ended June 30, 2025 and 2024

The following table sets forth a summary of our results of operations for the six months ended June 30, 2025 and 2024:


	Six Months Ended
	June 30, 2025		June 30, 2024
	(in thousands)
INTEREST INCOME, NET
Interest income	$	67,961	$	51,114
Interest expense	47,934		33,072
NET INTEREST INCOME	$	20,027	$	18,042

REALIZED AND UNREALIZED GAINS (LOSSES), NET
Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS	$	(5,681)	$	(8,192)
Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts	15,049		13,342
TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET	$	9,368	$	5,150

EXPENSES
Operating expenses	$	2,536	$	3,742
Operating expenses incurred with affiliate	869		971

Stock compensation	533		1,260
Securitization costs	1,866		1,583
Management fee incurred with affiliate	2,293		2,606
Total operating expenses	$	8,097	$	10,162

INCOME (LOSS) BEFORE INCOME TAXES	$	21,298	$	13,030
Income tax expense (benefit)	—		429


NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS	$	21,298	$	12,601
Other comprehensive income (loss)	(1,186)		1,828
TOTAL COMPREHENSIVE INCOME (LOSS)	$	20,112	$	14,429

Net Interest Income

The following table sets forth the components of net interest income for the six months ended June 30, 2025 and 2024:


	Six Months Ended
	June 30, 2025				June 30, 2024
	(in thousands)
Interest income	Interest income / expense		Average balance			Interest income / expense		Average balance
Residential mortgage loans	$	8,550	$	245,619		$	9,266	$	278,316
Residential mortgage loans in securitization trusts	50,199		1,787,012			33,271		1,315,336
Commercial mortgage loans	222		5,207			176		5,219
RMBS and Majority Owned Affiliate	7,330		147,356			6,363		161,912
CMBS	524		5,597			681		6,556
U.S. Treasury securities	61		3,333			483		18,587
Other interest income	1,075		47,167			874		38,952
Total interest income	$	67,961				$	51,114
Interest expense
Notes payable	$	6,034	186,700			$	7,097	199,000
Non-recourse securitization obligation, collateralized by residential mortgage loans	36,697		1,666,064			23,894		1,253,614
Repurchase facilities	2,018		62,591			2,081		68,205
Senior Unsecured Notes	3,185		59,462			—		—
Total interest expense	$	47,934				$	33,072
Net interest income	$	20,027				$	18,042

Net interest income for the six months ended June 30, 2025 and 2024 was $20.0 million and $18.0 million, respectively. Net interest income increased in the six months ended June 30, 2025 as compared to the same period in 2024, primarily due to higher interest income generated by increase balances in our residential mortgage loans in securitization trusts portfolio. Similarly, the increase in interest expense was also driven by the increased balance of our non-recourse securitization obligation, collateralized by residential mortgage loans portfolio during the six months ended June 30, 2025. The net interest income associated with our residential mortgage loans in securitization trusts portfolio and non-recourse securitization obligation, collateralized by residential mortgage loans portfolio was $13.5 million in the six months ended June 30, 2025 as compared to $9.4 million in the comparable period of 2024.

Total Realized and Unrealized Gains (Losses)

The components of total realized and unrealized gains (losses), net for the six months ended June 30, 2025 and 2024 are set forth as follows:


	Six Months Ended
	June 30, 2025		June 30, 2024
	(in thousands)
Realized and unrealized gain (loss) on securitization, net of unrealized gain (loss) on non-recourse securitization obligation	$	13,419	$	379
Realized gain (loss) on RMBS	(622)		(1,698)
Unrealized gain (loss) on Whole Pool Agency RMBS	5,640		(4,425)
Realized gain (loss) on CMBS	(264)		(119)
Realized gain (loss) on interest rate futures	(2,536)		3,839
Realized and unrealized gain (loss) on TBAs	(5,590)		4,112
Realized and unrealized gain (loss) on residential mortgage loans	1,754		2,051
Realized and unrealized gain (loss) on commercial mortgage loans	—		49
Realized and unrealized gain (loss) on U.S. Treasury securities	—		(86)
Unrealized appreciation (depreciation) on interest rate futures	(2,134)		1,048
Realized gain/(loss) on AOMT MOA	(299)		—
Total realized and unrealized gains (losses), net	$	9,368	$	5,150

For the six months ended June 30, 2025 and 2024, total realized and unrealized gains (losses), net resulted in a net gains of $9.4 million and $5.2 million, respectively. During the six months ended June 30, 2025, gains on securitization, net of non-recourse securitization obligation, partially offset by losses on TBAs, were the primary drivers of the net gain. In the six months ended June 30, 2024, the net realized and unrealized gain was primarily due to gains on TBAs, interest rate futures, and residential mortgage loans offset by losses on whole pool agency RMBS.

Expenses

Operating Expenses

For the six months ended June 30, 2025 and 2024, our operating expenses were $2.5 million and $3.7 million, respectively. Our operating expenses decreased during the six months ended June 30, 2025 as compared to the comparative period due to continued cost savings actions such as in-sourcing of key accounting functions, vendor contract negotiations, and a decrease in servicing fees associated with servicing our whole loan portfolio.

Operating Expenses Incurred with Affiliate

For the six months ended June 30, 2025 and 2024, our operating expenses incurred with affiliate were $0.9 million and $1.0 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, decreased versus the comparative period due to achieved resource efficiencies.

Stock Compensation

For the six months ended June 30, 2025 and 2024 our stock compensation expense was $0.5 million and $1.3 million, respectively. Stock compensation expense decreased for the six months ended June 30, 2025 due primarily to the vesting of stock awards granted at our IPO.

Securitization Costs

Securitization costs of $1.9 million were incurred for the six months ended June 30, 2025 in connection with the AOMT 2025-4 and AOMT 2025-6 securitizations. There were $1.6 million of securitization costs incurred for the comparable period in 2024, representing costs incurred in connection with the AOMT 2024-3, AOMT 2024-4, and AOMT 2024-6.

Management Fee Incurred with Affiliate

For the six months ended June 30, 2025 and 2024, our management fee incurred with affiliate was $2.3 million and $2.6 million, respectively. The decrease is due to the decrease in our average Equity as defined in the Management Agreement for the six months ended June 30, 2025 as compared to the same period in 2024. The calculation of Equity for the purposes of the Management Agreement includes the addition or subtraction of Distributable Earnings, which is the primary departure from the calculation of equity in accordance with GAAP.

Our Portfolio

As of June 30, 2025, our portfolio consisted of approximately $2.5 billion of residential mortgage loans, RMBS, and other target assets. Certain of these portfolio assets are located in states such as Florida and California where natural disasters such as hurricanes, wildfires and earthquakes may occasionally occur. We require all of our collateral to be adequately insured. The graphs in the subsequent detail of residential mortgage loans, residential mortgage loans held in securitization trusts, and residential mortgage loans underlying RMBS issuances show the percentage of residential mortgage loans held in each state where there is a concentration of loans.

The following table sets forth additional information regarding our portfolio, including the manner in which our equity capital was allocated among investment types, as of June 30, 2025:


	Fair Value		Collateralized Debt		Allocated Capital		% of Total Capital
Portfolio:	($ in thousands)
Residential mortgage loans	$	200,665	$	118,619	$	82,046	33.3	%
Residential mortgage loans in securitization trust	1,902,721		1,767,929		134,792		54.7	%
Total whole loan portfolio	$	2,103,386	$	1,886,548	$	216,838	88.0	%

Investment securities
RMBS	$	361,884	$	68,062	$	293,822	119.3	%

Total investment securities	$	361,884	$	68,062	$	293,822	119.3	%

Investments in Majority-Owned Affiliates (1)	$	20,992	$	—	$	20,992	8.5	%

Total investment portfolio	$	2,486,262	$	1,954,610	$	531,652	215.8	%
Target assets (2)	$	2,486,262	$	1,954,610	$	531,652	215.8	%

Cash	$	40,500	$	—	$	40,500	16.4	%
Other assets and liabilities (3)	(325,764)		—		(325,764)		(132.2)	%
Total	$	2,200,998	$	1,954,610	$	246,388	100.0	%

(1) "Investments in Majority-Owned Affiliates” is held at amortized cost.

(2) “Target assets” as defined by us excludes U.S. Treasury securities and includes investments in Majority-Owned Affiliates.

(3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $254.2 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued whole pool agency residential mortgage-backed securities (“Whole Pool Agency RMBS”), and excluding the portion of “other assets” which includes our investment in a Majority-Owned Affiliate, which is considered a target asset.

As of December 31, 2024, our portfolio consisted of approximately $2.2 billion of residential mortgage loans, RMBS, and other target assets. The following table sets forth additional information regarding our portfolio including the manner in which our equity capital was allocated among investment types, as of December 31, 2024:


	Fair Value		Collateralized Debt		Allocated Capital		% of Total Capital
Portfolio:	($ in thousands)
Residential mortgage loans	$	183,064	$	129,459	$	53,605	21.0	%
Residential mortgage loans in securitization trust	1,696,995		1,593,612		103,383		40.5	%
Total whole loan portfolio	$	1,880,059	$	1,723,071	$	156,988	61.5	%

Investment securities
RMBS	$	300,243	$	50,555	$	249,688	97.8	%
Investment in Majority-Owned Affiliates (1)	20,680		—		20,680		8.1	%

Total investment securities	$	320,923	$	50,555	$	270,368	105.9	%

Total investment portfolio	$	2,200,982	$	1,773,626	$	427,356	167.4	%
Target assets (2)	$	2,200,982	$	1,773,626	$	427,356	167.4	%

Cash	$	40,762	$	—	$	40,762	15.9	%
Other assets and liabilities (3)	(212,801)		—		(212,801)		(83.3)	%
Total	$	2,028,943	$	1,773,626	$	255,317	100.0	%

(1) "Investment in Majority-Owned Affiliate” is held at its amortized cost basis.

(2) “Target assets” as defined by us excludes U.S. Treasury securities, and includes our investment in a Majority-Owned Affiliates.

(3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $202.0 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued Whole Pool Agency RMBS, and excluding the portion of “other assets” which includes our investment in Majority-Owned Affiliates, which is considered a target asset. Additionally, other assets includes $5.2 million of commercial loans and $5.6 million of CMBS.

Residential Mortgage Loans

The following table sets forth additional information on the residential mortgage loans in our portfolio as of June 30, 2025:


	Portfolio Range	Portfolio Weighted Average
	($ in thousands)
Unpaid principal balance (“UPB”)	$5 - $2,998	$286
Interest rate	3.87% - 15.54%	8.37%
Maturity date	8/8/2039 - 3/31/2065	August 2054
FICO score at loan origination	628 - 850	755
CLTV at loan origination	3.5% - 90.0%	68.6%
DTI at loan origination	2.2% - 50.0%	21.1%
Percentage of first lien loans	N/A	72.9%
Percentage of loans 90+ days delinquent (based on UPB)	N/A	1.1%

The following table sets forth additional information on the residential mortgage loans in our portfolio as of December 31, 2024:


	Portfolio Range	Portfolio Weighted Average
	($ in thousands)
Unpaid principal balance (“UPB”)	$75 - $2,995	$537
Interest rate	3.87%-11.88%	7.4%
Maturity date	8/8/2039 - 9/26/2064	November 2054
FICO score at loan origination	628-822	752
CLTV at loan origination	31.9%-90.0%	71.7%
DTI at loan origination	1.94%-50.0%	31.2%
Percentage of first lien loans	N/A	96.7%
Percentage of loans 90+ days delinquent (based on UPB)	N/A	—%

The following charts illustrate the distribution of the credit scores and interest rates by the number of loans in our residential mortgage loan portfolio as of June 30, 2025:

The following charts illustrate the distribution of the credit scores and interest rates by the number of loans in our residential mortgage loan portfolio as of December 31, 2024:

The following charts illustrate additional characteristics of our residential mortgage loans in our portfolio that we owned directly as of June 30, 2025, based on the product profile, borrower profile, and geographic location (percentages are based on the aggregate unpaid principal balance of such loans):

Characteristics of Our Residential Mortgage Loans as of June 30, 2025:

Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of June 30, 2025. Numbers presented may add to more than 100% due to rounding.

The following charts illustrate additional characteristics of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2024, based on the product profile, borrower profile, and geographic location (percentages are based on the aggregate unpaid principal balance of such loans):

Characteristics of Our Residential Mortgage Loans as of December 31, 2024:

Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2024. Numbers presented may add to more than 100% due to rounding.

Residential Mortgage Loans Held in Securitization Trusts

The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of June 30, 2025:


			($ in thousands)
UPB			$1,949,994
Fair Value			$1,902,721
Number of loans			4,564
Weighted average loan coupon			5.80%
Average loan amount			$427
Weighted average LTV at loan origination and deal date			67.1%
Weighted average credit score at loan origination and deal date			744
Current 3-month constant prepayment rate (“CPR”) (1)			9.9%
Percentage of loans 90+ days delinquent (based on UPB)			1.4%

(1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.

The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of June 30, 2025 (percentages are based on the aggregate unpaid principal balance of such loans):

Note: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of June 30, 2025. Numbers presented may add to more than 100% due to rounding.

The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024:


			($ in thousands)
UPB			$1,781,311
Fair Value			$1,696,995
Number of loans			4,183
Weighted average loan coupon			5.6%
Average loan amount			$427
Weighted average LTV at loan origination and deal date			67.0%
Weighted average credit score at loan origination and deal date			743
Current 3-month CPR			7.4%
Percentage of loans 90+ days delinquent (based on UPB)			2.0%

The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024 (percentages based on the aggregate unpaid principal balance of such loans):

Note: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024. Numbers presented may add to more than 100% due to rounding.

RMBS

We have participated in numerous securitization transactions pursuant to which we contributed to a securitization trust under the purview of AOMT I, LLC, non‑QM loans that we had accumulated and held on our balance sheet. These loans were purchased from affiliated and unaffiliated entities. In return, we received bonds from these securitization trusts, and cash. At times, we were allocated certain risk retention securities as part of these transactions. Risk retention securities represent at least 5% of a horizontal or vertical slice of the bonds issued as part of the transaction.

Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in such securitization transactions is set forth below as of June 30, 2025, unless otherwise stated:


	2019 Securitizations		2020 Securitizations		2023 Securitizations		2024 Securitizations		2025 Securitizations
	($ in thousands)
UPB of loans	$266,418		$141,846		$1,033,497		$1,092,647		$348,086
Number of loans	983		445		2,026		2,537		727
Weighted average loan coupon	7.14	%	5.81	%	5.21	%	5.75	%	7.65	%
Average loan amount	$271		$319		$510		$431		$479
Weighted average LTV at loan origination and deal date	68.2	%	74.1	%	67.7	%	68.0	%	71.8	%
Weighted average credit score at loan origination and deal date	708		720		732		736		751
Current 3-month CPR (1)	10.5	%	8.9	%	12.7	%	11.9	%	12.0	%
90+ day delinquency (as a % of UPB)	9.2	%	2.3	%	3.6	%	2.0	%	—	%
Weighted Average 90+ Delinquency (as a % of Original Balance)	1.3	%	0.7	%	3.3	%	2.0	%	—	%
Weighted Average LTV of 90+ Delinquent Loans (FHFA HPI Estimate) (2)	46.6	%	74.1	%	65.1	%	68.3	%	—	%
Fair value of first loss piece (3)	$19,582		$23,447		$11,151		$18,026		$5,608
Investment thickness (4)	23.83	%	21.87	%	8.17	%	9.63	%	5.00	%

(1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.

(2) AOMT 2020-3 does not have LTV or Federal Housing Finance Agency Home Price Index Estimates (“FHFA HPI Estimates”); accordingly, original LTV is used.

(3) Represents the fair value of the securities we hold in the first loss tranche in each securitization including the total at risk for the Majority-Owned Affiliates.

(4) Represents the average size of the subordinate securities we own as investments in each securitization relative to the average current size of the securitization.

Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in AOMT securitization transactions is set forth below as of December 31, 2024, unless otherwise stated:


	2019 Securitizations		2020 Securitizations		2023 Securitizations		2024 Securitizations
	($ in thousands)
UPB of loans	$286,875		$148,016		$1,093,694		$1,153,975
Number of loans	1053		466		2122		2629
Weighted average loan coupon	7.19	%	5.83	%	5.23	%	5.79	%
Average loan amount	$272		$318		$515		$439
Weighted average LTV at loan origination and deal date	69	%	74	%	68	%	69	%
Weighted average credit score at loan origination and deal date	708		719		732		737
Current 3-month CPR (1)	10.1	%	13.2	%	7.4	%	9.1	%
90+ day delinquency (as a % of UPB)	8.3	%	4.0	%	2.6	%	1.6	%
Weighted Average 90+ Delinquency (as a % of Original Balance)	1.3	%	1.3	%	2.5	%	2.1	%
Weighted Average LTV of 90+ Delinquent Loans (FHFA HPI Estimate) (2)	47.2	%	—	%	67.0	%	70.2	%
Fair value of first loss piece (3, 4)	$19,226		$23,405		$10,995		$18,650
Investment thickness (5)	21.92	%	20.96	%	7.77	%	9.59	%

(1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.

(2) AOMT 2020-3 does not have LTV or Federal Housing Finance Agency Home Price Index Estimates (“FHFA HPI Estimates”); accordingly, original LTV is used.

(3) Represents the fair value of the securities we hold in the first loss tranche in each securitization.

(4) The fair value of the first loss pieces presented is the total at risk for the Majority-Owned Affiliates.

(5) Represents the average size of the subordinate securities we own as investments in each securitization relative to the average current size of the securitization.

The following table provides certain information with respect to our RMBS portfolio both received in AOMT securitization transactions and acquired from other third parties as of June 30, 2025:


	RMBS						Repurchase Debt (1,3)						Allocated Capital
	AOMT		Third Party RMBS		Total		AOMT		Third Party RMBS		Total		AOMT		Third Party RMBS		Total
	(in thousands)
Mezzanine	$	12,831	$	—	$	12,831	$	11,172	$	—	$	11,172	$	1,659	$	—	$	1,659
Subordinate	80,509		—		80,509		25,874		—		25,874		54,635		—		54,635
Interest only / excess	10,992		—		10,992		—		—		—		10,992		—		10,992
Whole pool (2)	—		257,552		257,552		—		—		—		—		257,552		257,552
Retained RMBS in VIEs (3)	—		—		—		31,016		—		31,016		(31,016)		—		(31,016)
Subtotal	$	104,332	$	257,552	$	361,884	$	68,062	$	—	$	68,062	$	36,270	$	257,552	$	293,822
Investment in Majority Owned Affiliates	$	20,992	$	—	$	20,992	$	—	$	—	$	—	$	20,992	$	—	$	20,992
Total	$	125,324	$	257,552	$	382,876	$	68,062	$	—	$	68,062	$	57,262	$	257,552	$	314,814

(1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs).

(2) The whole pool RMBS presented as of June 30, 2025 were purchased from a broker to whom the Company owed approximately $254.2 million, payable upon the settlement date of the trade. See Note 6 — Due to Broker in our unaudited condensed consolidated financial statements included in this report.

(3) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $178.3 million, are not reflected in the condensed consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its condensed consolidated balance sheets.

The following table provides certain information with respect to our RMBS portfolio both received in AOMT securitization transactions and acquired from other third parties as of December 31, 2024:


	RMBS						Repurchase Debt (1,3)						Allocated Capital
	AOMT		Third Party RMBS		Total		AOMT		Third Party RMBS		Total		AOMT		Third Party RMBS		Total
	(in thousands)
Mezzanine	$	12,735	$	—	$	12,735	$	5,440	$	—	$	5,440	$	7,295	$	—	$	7,295
Subordinate	73,548		—		73,548		19,829		—		19,829		53,719		—		$	53,719
Interest only / excess	12,508		—		12,508		—		—		—		12,508		—		$	12,508
Whole pool (2)	—		201,452		201,452		—		—		—		—		201,452		$	201,452
Retained RMBS in VIEs (3)	—		—		—		25,286		—		25,286		(25,286)		—		$	(25,286)
Subtotal	$	98,791	$	201,452	$	300,243	$	50,555	$	—	$	50,555	$	48,236	$	201,452	$	249,688
Investment in Majority Owned Affiliates	$	20,680	$	—	$	20,680	$	—	$	—	$	—	$	20,680	$	—	$	20,680
Total	$	119,471	$	201,452	$	320,923	$	50,555	$	—	$	50,555	$	68,916	$	201,452	$	270,368

(1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs).

(2) The whole pool RMBS presented as of December 31, 2024 were purchased from a broker to whom the Company owed approximately $202 million, payable upon the settlement date of the trade. See Note 6 — Due to Broker in our unaudited condensed consolidated financial statements included in this report.

(3) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $163.9 million, are not reflected in the consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its condensed consolidated balance sheets.

The following table sets forth information with respect to our RMBS ending balances, at fair value, as of June 30, 2025:


	Mezzanine		Subordinate		Interest Only		Whole Pool		Total
	(in thousands)
Beginning fair value as of March 31, 2025	$	12,879	$	73,103	$	11,228	$	301,062	$	398,272
Acquisitions:
Retained bonds received in securitizations	—		7,493		586		—		$	8,079

Third party securities	—		—		—		254,228		$	254,228
Effect of principal payments / called deals	—		(196)		—		(305,569)		$	(305,765)
IO and excess servicing prepayments	—		—		(264)		—		$	(264)
Changes in fair value, net	(48)		109		(558)		7,831		$	7,334
Ending fair value as of June 30, 2025	$	12,831	$	80,509	$	10,992	$	257,552	$	361,884

The following table sets forth information with respect to our RMBS ending balances, at fair value, for the year ended December 31, 2024:


	Mezzanine		Subordinate		Interest Only		Whole Pool		Total
	(in thousands)
Beginning fair value as of December 31, 2023	$	10,972	$	55,665	$	13,059	$	392,362	$	472,058
Acquisitions:
Retained bonds received in securitizations	2,420		14,757		1,838		—		19,015
Third party securities	—		—		—		938,430		938,430
Effect of principal payments / called deals	(1,080)		—		—		(1,125,653)		(1,126,733)
IO and excess servicing prepayments	—		—		(1,974)		—		(1,974)
Changes in fair value, net	423		3,127		(415)		(3,688)		(553)
Ending fair value as of December 31, 2024	$	12,735	$	73,549	$	12,508	$	201,451	$	300,243

The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of June 30, 2025 (percentages are based on the aggregate unpaid principal balance of such loans):

Geographic Diversification of Loans Underlying Our Portfolio

of RMBS Issued in AOMT Securitization Transactions

(as of June 30, 2025)

Note: No state in “Other” represents more than a 3% concentration of the loans underlying our portfolio of RMBS issued in AOMT

securitization transactions as of June 30, 2025. Numbers presented may add to more than 100% due to rounding.

The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2024 (percentages are based on the aggregate unpaid principal balance of such loans):

Geographic Diversification of Loans Underlying Our Portfolio

of RMBS Issued in AOMT Securitization Transactions

(as of December 31, 2024)

Note: No state in “Other” represents more than a 3% concentration of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2024. Numbers presented may add to more than 100% due to rounding.

Liquidity and Capital Resources

Overview

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund our investments and operating costs, make distributions to our stockholders, and satisfy other general business needs. Our financing sources currently include payments of principal and interest we receive on our investment portfolio, unused borrowing capacity under our in‑place loan financing lines and repurchase facilities, securitizations of our whole loans, and our ATM Program (as defined below). Additionally, on July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 2029 Notes. We have deployed the majority of the net proceeds from the offering of our 2029 Notes for general corporate purposes, which included the acquisition of non-QM loans and other target assets substantially sourced from our affiliated proprietary mortgage lending platform and other target assets through the secondary market in a manner consistent with our strategy and investment guidelines. Additionally, we used the net proceeds from the offering of our 2029 Notes to repurchase 1,707,922 shares of our common stock owned by Xylem Finance LLC, an affiliate of Davidson Kempner Capital Management LP, for an aggregate repurchase price of approximately $20.0 million. Furthermore, in May 2025, we closed an underwritten public offering and sale of, and issued, $42.5 million in aggregate principal amount of our 2030 Notes. We used the majority of the net proceeds from the offering of our 2030 Notes for general corporate purposes, which included the acquisition of non-QM loans and other target assets in a manner consistent with our strategy and investment guidelines. Our financing sources historically have included the foregoing, as well as capital contributions from our investors prior to our IPO, and the proceeds from our IPO and concurrent private placement (which capital has all been deployed). Going forward, we may also utilize other types of borrowings, including bank credit facilities and warehouse lines of credit, among others. We may also seek to raise additional capital through public or private offerings of equity, equity-related, or debt securities, depending upon market conditions. The use of any particular source of capital and funds will depend on market conditions, availability of these sources, and the investment opportunities available to us.

We have used and expect to continue to use loan financing lines to finance the acquisition and accumulation of mortgage loans or other mortgage‑related assets pending their eventual securitization. Upon accumulating an appropriate amount of assets, we have financed and expect to continue to finance a substantial portion of our mortgage loans utilizing fixed-rate term securitization funding that provides long‑term financing for our mortgage loans and locks in our cost of funding, regardless of future interest rate movements.

Securitization transactions may either take the form of the issuance of securitized bonds or the sale of “real estate mortgage investment conduit” securities backed by mortgage loans or other assets, with the securitization proceeds being used in part to repay pre-existing loan financing lines and repurchase facilities. We have sponsored and participated in securitization transactions with other entities that are managed by Angel Oak, and may continue to do so in the future, along with sponsoring sole securitization transactions in which we are the sole participant and contributor.

We believe these identified sources of financing will be adequate for purposes of meeting our short‑term (within one year) and our longer‑term liquidity needs. We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and any potential changes in market conditions.

Description of Existing Financing Arrangements

As of June 30, 2025, we were a party to three warehouse loan financing lines, which permitted borrowings in an aggregate amount of up to $1.1 billion. During the quarter ended June 30, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods. Borrowings under warehouse loan financing lines (in general, each a “loan financing facility”) may be used to purchase whole loans for securitization or loans purchased for long‑term investment purposes.

Our financing facilities are generally subject to limits on borrowings related to specific asset pools (“advance rates”) and other restrictive covenants, as is usual and customary. As of June 30, 2025, the advance rates (when required) of our three active lenders ranged from 60% to 92%, depending on the asset type and loan delinquency status. Our most restrictive covenants (when covenants are required by any of our three active lenders) included (1) our minimum tangible net worth must not (i) decline 20% or more in the previous 30 days, 25% or more in the previous 90 days, or 35% or more in the previous year, or (ii) fall below $200.0 million of tangible net worth as of September 30, 2022 plus 50% of any capital contribution made or raised after September 30, 2022; (2) our minimum liquidity must not fall below the greatest of (i) the product of 5% and the aggregate repurchase price for a specific loan financing facility as of such date of determination, (ii) $10.0 million and (iii) any other amount of liquidity that we have covenanted to maintain in any other note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement, or similar credit facility or agreement for borrowed funds); and (3) the maximum ratio of our and our subsidiaries’ total indebtedness to tangible net worth must not be greater than 5:1. Our minimum liquidity requirement as of June 30, 2025 was $10.0 million.

A description of each loan financing facility in place during the quarter ended June 30, 2025 is set forth as follows:

Multinational Bank 1 Loan Financing Facility.

On April 13, 2022, we and two of our subsidiaries entered into a master repurchase agreement with a multinational bank (“Multinational Bank 1”). Our subsidiaries are each considered a “Seller” under this agreement. From time to time and pursuant to the agreement, either of our subsidiaries may sell to Multinational Bank 1, and later repurchase, up to $600.0 million aggregate borrowings on mortgage loans.

Pursuant to the terms of the master repurchase agreement, the agreement may be renewed every three months for a maximum six-month term. As of June 30, 2025, the termination date of the master repurchase agreement was December 25, 2025, unless terminated earlier pursuant to the terms of the master repurchase agreement.

The amount expected to be paid by Multinational Bank 1 for each eligible mortgage loan is based on an advance rate as a percentage of either the outstanding principal balance of the mortgage loan or the market value of the mortgage loan, whichever is less. Pursuant to the agreement, Multinational Bank 1 retains the right to determine the market value of the mortgage loans in its sole commercially reasonable discretion. The loan financing line is marked‑to‑market. Additionally, Multinational Bank 1 is under no obligation to purchase the eligible mortgage loans we offer to sell to them. The interest rate on any outstanding balance under the master repurchase agreement that the applicable subsidiary is required to pay Multinational Bank 1 is generally in line with other similar agreements that the Company or one or more of its subsidiaries has entered into, where the interest rate is equal to the sum of (1) a pricing spread from 1.65% - 2.10% and (2) the average SOFR for each U.S. Government Securities Business Day (as defined in the master repurchase agreement) until two U.S. Government Securities Business Days prior to the date the applicable loan is repurchased by the applicable subsidiary.

The obligations of the subsidiaries under the master repurchase agreement are guaranteed by the Company pursuant to a guaranty executed contemporaneously with the master repurchase agreement. In addition, and similar to other repurchase agreements that the Company has entered into, the Company is subject to various financial and other covenants, including those relating to (1) maintenance of a minimum tangible net worth; (2) a maximum ratio of indebtedness to tangible net worth; and (3) minimum liquidity.

The agreement contains margin call provisions that provide Multinational Bank 1 with certain rights in the event of a decline in the market value of the purchased mortgage loans. Under these provisions, Multinational Bank 1 may require us or our subsidiaries to transfer cash sufficient to eliminate any margin deficit resulting from such a decline.

In addition, the agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Multinational Bank 1’s right to liquidate the mortgage loans then subject to the agreement.

We and our subsidiaries are also required to pay certain customary fees to Multinational Bank 1 and to reimburse Multinational Bank 1 for certain costs and expenses incurred in connection with its structuring, management, and ongoing administration of the master repurchase agreement.

Global Investment Bank 2 Loan Financing Facility.

On March 28, 2024, two of our subsidiaries entered into a master repurchase agreement with a global investment bank (“Global Investment Bank 2”), replacing the existing master repurchase agreement with Global Investment Bank 2 entered into on February 13, 2020. The Company is guarantor under the current facility, one of the subsidiaries is seller and Global Investment Bank 2 is buyer. Pursuant to the agreement, one of our subsidiaries may sell to Global Investment Bank 2, and later repurchase, up to $250.0 million aggregate borrowings on mortgage loans. The agreement is set to terminate on March 27, 2026, unless terminated earlier pursuant to the terms of the agreement.

The principal amount paid by Global Investment Bank 2 for each mortgage loan is based on a percentage of the market value, cost‑basis value, or unpaid principal balance of the mortgage loan (depending on the type of loan and certain other factors and subject to certain other adjustments). Pursuant to the agreement, Global Investment Bank 2 retains the right to determine the market value of the mortgage loan collateral in its sole good faith discretion. Additionally, Global Investment Bank 2 is under no obligation to purchase the eligible mortgage loans we offer to sell to them. Upon our or our subsidiary’s repurchase of the mortgage loan, our subsidiaries are required to repay Global Investment Bank 2 the principal amount related to such mortgage loan plus accrued and unpaid interest at a rate based on the sum of (1) the greater of (A) the greater of (i) 0.00% and (ii) Term SOFR (which is defined as the forward-looking term rate based on the Secured Overnight Financing Rate for a corresponding tenor of one month) and (B) a pricing spread generally ranging from 1.75% to 3.35%.

The agreement requires us to maintain various financial and other covenants, which include requirements surrounding: (1) adjusted tangible net worth; (2) liquidity; and (3) our indebtedness to our adjusted tangible net worth.

The agreement contains margin call provisions that provide Global Investment Bank 2 with certain rights in the event of a decline in the market value or cost‑basis value of the purchased mortgage loans. Under these provisions, Global Investment Bank 2 may require us or our subsidiary to transfer cash sufficient to eliminate any margin deficit resulting from such a decline.

In addition, the agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Global Investment Bank 2’s right to liquidate the mortgage loans then subject to the agreement.

We and our subsidiary are also required to pay certain customary fees to Global Investment Bank 2 and to reimburse Global Investment Bank 2 for certain costs and expenses incurred in connection with its structuring, management and ongoing administration of the agreement.

Global Investment Bank 3 Loan Financing Facility.

On October 24, 2018, two of our subsidiaries entered into a master repurchase agreement with a global investment bank (“Global Investment Bank 3”) for which we serve as guarantor of our subsidiaries’ obligations. Our subsidiaries, are each considered a “Seller” under this agreement. Pursuant to the initial agreement, our subsidiaries could sell to Global Investment Bank 3, and later repurchase, up to $200.0 million aggregate borrowings on mortgage loans.

On November 7, 2023, the facility was amended to set the base interest rate spread to 1.80% plus a 0.20% index spread adjustment for the first six (6) months of seasoning on this financing facility with an additional 0.25% increase following the first six (6) months. On November 1, 2024, the facility’s termination date was extended to November 1, 2025. In addition, the base interest rate spread was reduced to a range from 1.90% to 4.75% and the index spread adjustment of 20 basis points was eliminated.

The loan financing line is marked‑to‑market at fair value, where Global Investment Bank 3 retains the right to determine the market value of the mortgage loan collateral in its sole good faith discretion and in a commercially reasonable manner and is under no obligation to purchase the eligible mortgage loans we offer to sell to them. Further, the principal amount paid by Global Investment Bank 3 for each eligible mortgage loan is based on a percentage of the outstanding principal balance of the mortgage loan or the market value of the mortgage loan, whichever is less.

The agreement contains margin call provisions that provide Global Investment Bank 3 with certain rights in the event of a decline in the market value of the purchased mortgage loans. Under those provisions, Global Investment Bank 3 could require us or our subsidiaries to transfer cash sufficient to eliminate any margin deficit resulting from such a decline.

The agreement requires us to maintain various financial and other customary covenants. The agreement also sets forth events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Global Investment Bank 3’s right to liquidate the mortgage loans then subject to the agreement.

We and our subsidiaries are also required to pay certain customary fees to Global Investment Bank 3 and to reimburse Global Investment Bank 3 for certain costs and expenses incurred in connection with its structuring, management, and ongoing administration of the agreement.

Angel Oak Mortgage REIT, Inc. 10-Q