73 unchanged sentences
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.
−Removed: Angel Oak Companies has advised us that the Strategic Transaction is expected to close in the second or third quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory clearances and required client consents.
+Added: 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.
10 unchanged sentences
Overall macroeconomic environment and its effect on us
−Removed: The first quarter of 2025 continued with 2024’s trend of stability with decreases in expected rate and inflation paths, which created a constructive environment for our areas of business.
−Removed: Federal Reserve Bank (the “Fed”) held the federal funds rate unchanged at 4.25 - 4.50% in the first quarter of 2025.
−Removed: Securitization markets were resilient, contributing to a productive business backdrop.
−Removed: However, toward the end of the first quarter, a new driver of uncertainty emerged in the form of new tariffs and resulting international trade disruption, which drove volatility across equity and fixed income markets.
−Removed: The future outlook remains uncertain as market participants wait to see the new global and domestic economic outlook in light of real and potential tariff activity.
−Removed: Treasury yields experienced decreases across two, five, and ten-year terms in the first quarter of 2025.
−Removed: The two-year Treasury yield decreased by approximately 36 basis points since the end of 2024 to 3.95%, the five-year Treasury yield decreased by approximately 43 basis points since the end of 2024 to 3.96%, and the ten-year Treasury yield decreased by approximately 37 basis points since the end of 2024 to 4.21%.
−Removed: Each of the two, five, and ten-year Treasury yields finished the first quarter near the minimum rate observed over the course of the quarter, with the maximums occurring toward the beginning of the first quarter.
−Removed: 30 year fixed residential conforming mortgage rates decreased by 20 basis points over the course of the first quarter to 6.65% as of the end of the first quarter from 6.85% as of the end of 2024.
−Removed: These rates, alongside federal funds rate and Treasury yields, are key benchmarks for the valuation of our portfolio, and a decrease will generally drive a corresponding positive impact to our asset pricing, as we observed in the first quarter of 2025.
−Removed: As such,we observed a 77 basis point increase in the weighted average price of our residential whole loans portfolio and a 94 basis point increase in the weighted average price of our loans in securitization trusts portfolio versus the prior quarter.
−Removed: Continued purchases of high-quality non-QM loans are also expected to contribute to increases in the valuations of our portfolio, and we expect to continue to purchase newly originated loans, which should continue to support overall portfolio valuations and securitization execution going forward.
+Added: The second quarter of 2025 began with “Liberation Day”, on which significant tariff increases were announced on goods imported into the United States.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Despite the uncertainty, securitization markets remained stable and constructive throughout the quarter.
+Added: 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.
+Added: 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.
+Added: Current projections are for the Fed to begin cutting interest rates in 2025, though the timing and extent remains uncertain.
+Added: 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.
+Added: 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%.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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”).
+Added: 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.
+Added: We expect to continue to purchase newly originated loans and HELOCs, which should continue to support overall portfolio valuations and securitization execution going forward.
+Added: Notes offering
+Added: 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”).
+Added: 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.
+Added: The 2030 Notes will mature on June 1, 2030, unless earlier redeemed or repurchased by us, and are held at amortized cost.
+Added: After deducting the underwriting discount and other debt issuance costs, we received net proceeds of approximately $40.6 million.
+Added: 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”).
−Removed: We generated $7.7 million greater interest income for the quarter ended March 31, 2025 than in the comparable period for 2024, driven by increases in both the amount and yields of our target assets.
−Removed: Interest expense increased by $6.1 million for the quarter ended March 31, 2025 than in the comparable period for 2024, driven by increases in our total borrowings;
−Removed: however, this increase in interest expense was mitigated by lower average borrowing costs.
−Removed: Overall, the increase in our interest income outpaced the increase in interest expense and drove a $1.5 million, or 17.6%, increase in net interest income for the quarter ended March 31, 2025 than in the comparable period for 2024.
+Added: 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.
+Added: 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.
+Added: Interest income grew due to the continued acquisition and securitization of current market non-QM loans.
+Added: 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 .
−Removed: Our net realized loss for the quarter ended March 31, 2025 was primarily due to realized losses associated with the unamortized premium of loans that paid off in our residential loans in securitization trust portfolio as well as realized losses associated with hedging activity.
−Removed: Net unrealized gain .
−Removed: Our net unrealized gain for the quarter ended March 31, 2025 was primarily due to an increase in the valuation of our residential whole loans and loans in securitization trust portfolios.
+Added: 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.
+Added: Net unrealized loss .
+Added: 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
−Removed: During the quarter ended March 31, 2025, we purchased $259.0 million of newly-originated, current market coupon non-QM residential mortgage loans, with a weighted average coupon of 7.67%, weighted average loan-to-value ratio (“LTV”) of 70.0% and weighted average credit score of 751.
−Removed: Subsequent to quarter end, 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: We used the proceeds of the securitization to repay outstanding debt of approximately $73.1 million and retained bonds of $8.1 million.
+Added: The securitization released $9.2 million of cash, which was used for operational purposes.
+Added: 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.
−Removed: See “Liquidity and Capital Resources” below, for a full description of our financing arrangements.
−Removed: Our total borrowing capacity was $1.1 billion as of March 31, 2025 Highlights of whole loan financing facilities activity over the first quarter of 2025 are as follows:
−Removed: • During the quarter ended March 31, 2025, we maintained the same whole loan financing facility lender base as of December 31, 2024.
−Removed: • During the quarter ended March 31, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods, simultaneously decreasing the interest rate pricing spread from 1.75% to 1.65%.
+Added: See “Liquidity and Capital
+Added: Resources” below for a full description of our financing arrangements.
+Added: Our total borrowing capacity was $1.1 billion as of June 30, 2025;
+Added: Highlights of whole loan financing facilities activity over the second quarter of 2025 are as follows:
+Added: • During the quarter ended June 30, 2025, we maintained the same whole loan financing facility lender base as of December 31, 2024.
+Added: • 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
10 unchanged sentences
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.
−Removed: 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 IPO 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”).
+Added: 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.
−Removed: Distributable Earnings were approximately a gain of $4.1 million and a gain of $2.8 million for the three months ended March 31, 2025 and 2024, respectively.
−Removed: The primary drivers of this quarter’s Distributable Earnings as compared to GAAP net income are the adjustments to remove unrealized gains associated with our residential loans and residential loans in securitization trusts and non-recourse securitization obligation portfolios.
−Removed: 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 months ended March 31, 2025 and 2024:
−Removed: Three Months Ended
−Removed: March 31, 2025 March 31, 2024
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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:
+Added: Three Months Ended Six Months Ended
+Added: June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024
(in thousands)
5 unchanged sentences
Net unrealized (gains) losses on commercial loans — (27) — (49)
−Removed: Non-cash equity compensation expense 237 630
+Added: Stock compensation expense 296 630 533 1,260
Distributable Earnings $ 2,639 $ (2,301) $ 6,782 $ 519
6 unchanged sentences
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.
−Removed: Set forth below is our computation of Distributable Earnings Return on Average Equity for the three months ended March 31, 2025 and 2024:
−Removed: Three Months Ended
−Removed: March 31, 2025 March 31, 2024
+Added: 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:
+Added: Three Months Ended Six Months Ended
+Added: June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024
($ in thousands)
3 unchanged sentences
Book Value per Share of Common Stock
−Removed: The following table sets forth the calculation of our book value per share of common stock as of March 31, 2025 and December 31, 2024:
−Removed: March 31, 2025 December 31, 2024
+Added: 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:
+Added: June 30, 2025 December 31, 2024
(in thousands except for share and per share data)
6 unchanged sentences
These adjustments are also reflected in the table below in our end of period total stockholders’ equity.
−Removed: 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.
+Added: 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,
+Added: 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.
−Removed: 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 March 31, 2025 and December 31, 2024:
−Removed: March 31, 2025 December 31, 2024
+Added: 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:
+Added: June 30, 2025 December 31, 2024
(in thousands except for share and per share data)
6 unchanged sentences
Results of Operations
−Removed: Three Months Ended March 31, 2025 and 2024
−Removed: The following table sets forth a summary of our results of operations for the three months ended March 31, 2025 and 2024:
+Added: Three Months Ended June 30, 2025 and 2024
+Added: 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
−Removed: March 31, 2025 March 31, 2024
+Added: June 30, 2025 June 30, 2024
(in thousands)
5 unchanged sentences
Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS $ (2,499) $ (6,770)
−Removed: Net unrealized gain (loss) on trading securities, mortgage loans, debt at fair value option, and derivative contracts 16,625 10,684
+Added: Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts
+Added: (1,576) 2,658
TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET $ (4,075) $ (4,112)
6 unchanged sentences
INCOME (LOSS) BEFORE INCOME TAXES $ 767 $ (131)
−Removed: Income tax expense — 287
+Added: Income tax expense (benefit) — 142
NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS $ 767 $ (273)
2 unchanged sentences
Net Interest Income
−Removed: The following table sets forth the components of net interest income for the three months ended March 31, 2025 and 2024:
+Added: The following table sets forth the components of net interest income for the three months ended June 30, 2025 and 2024:
Three Months Ended
−Removed: March 31, 2025 March 31, 2024
+Added: June 30, 2025 June 30, 2024
(in thousands)
15 unchanged sentences
Net interest income $ 9,940 $ 9,463
−Removed: We generated $7.7 million greater interest income for the quarter ended March 31, 2025 than in the comparable period for 2024, driven by increases in both the amount and yields of our target assets.
−Removed: Interest expense increased by $6.2 million for the quarter ended March 31, 2025 compared to the comparable period for 2024, driven by increases in our total borrowings;
−Removed: however, this increase in interest expense was mitigated by lower average borrowing costs.
−Removed: Overall, the increase in our interest income outpaced the increase in interest expense and drove a 17.6%, or $1.5 million, increase in net interest income for the quarter ended March 31, 2025 than in the comparable period for 2024.
+Added: 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.
+Added: 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.
+Added: 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)
−Removed: The components of total realized and unrealized gains (losses), net for the three months ended March 31, 2025 and 2024 are set forth as follows:
+Added: 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
−Removed: March 31, 2025 March 31, 2024
+Added: June 30, 2025 June 30, 2024
(in thousands)
1 unchanged sentence
Realized gain (loss) on RMBS (303) (1,522)
−Removed: Realized and unrealized gain (loss) on Whole Pool Agency RMBS (2,190) (289)
−Removed: Realized and unrealized gain (loss) on CMBS (56) (45)
+Added: Unrealized gain (loss) on Whole Pool Agency RMBS 7,830 (3,917)
+Added: Realized gain (loss) on CMBS (208) (74)
Realized gain (loss) on interest rate futures (1,064) 290
2 unchanged sentences
Realized and unrealized gain (loss) on commercial mortgage loans — 27
−Removed: Realized and unrealized loss on U.S.
+Added: Realized and unrealized gain (loss) on U.S.
Treasury securities
Unrealized appreciation (depreciation) on interest rate futures (199) 844
+Added: Realized gain/(loss) on AOMT Majority Owned Affiliates (“MOA”) (194)
+Added: Total realized and unrealized gains (losses), net $ (4,075) $ (4,112)
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Operating Expenses
+Added: For the three months ended June 30, 2025 and 2024, our operating expenses were $1.3 million and $1.7 million, respectively.
+Added: 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.
+Added: Operating Expenses Incurred with Affiliate
+Added: 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.
+Added: 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.
+Added: Stock Compensation
+Added: For the three months ended June 30, 2025 and 2024, our stock compensation expense was $0.3 million and $0.6 million, respectively.
+Added: 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.
+Added: Securitization Costs
+Added: For the three months ended June 30, 2025 and 2024, we incurred $1.9 million and $1.4 million of securitization costs, respectively.
+Added: 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.
+Added: Management Fee Incurred with Affiliate
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Six Months Ended June 30, 2025 and 2024
+Added: The following table sets forth a summary of our results of operations for the six months ended June 30, 2025 and 2024:
+Added: Six Months Ended
+Added: June 30, 2025 June 30, 2024
+Added: (in thousands)
+Added: INTEREST INCOME, NET
+Added: Interest income $ 67,961 $ 51,114
+Added: Interest expense 47,934 33,072
+Added: NET INTEREST INCOME $ 20,027 $ 18,042
+Added: REALIZED AND UNREALIZED GAINS (LOSSES), NET
+Added: Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS $ (5,681) $ (8,192)
+Added: Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts 15,049 13,342
+Added: TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET $ 9,368 $ 5,150
+Added: Operating expenses $ 2,536 $ 3,742
+Added: Operating expenses incurred with affiliate 869 971
+Added: Stock compensation 533 1,260
+Added: Securitization costs 1,866 1,583
+Added: Management fee incurred with affiliate 2,293 2,606
+Added: Total operating expenses $ 8,097 $ 10,162
+Added: INCOME (LOSS) BEFORE INCOME TAXES $ 21,298 $ 13,030
+Added: Income tax expense (benefit) — 429
+Added: NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS $ 21,298 $ 12,601
+Added: Other comprehensive income (loss) (1,186) 1,828
+Added: TOTAL COMPREHENSIVE INCOME (LOSS) $ 20,112 $ 14,429
+Added: Net Interest Income
+Added: The following table sets forth the components of net interest income for the six months ended June 30, 2025 and 2024:
+Added: Six Months Ended
+Added: June 30, 2025 June 30, 2024
+Added: (in thousands)
+Added: Interest income Interest income / expense Average balance Interest income / expense Average balance
+Added: Residential mortgage loans $ 8,550 $ 245,619 $ 9,266 $ 278,316
+Added: Residential mortgage loans in securitization trusts 50,199 1,787,012 33,271 1,315,336
+Added: Commercial mortgage loans 222 5,207 176 5,219
+Added: RMBS and Majority Owned Affiliate
+Added: 7,330 147,356 6,363 161,912
+Added: CMBS 524 5,597 681 6,556
+Added: Treasury securities 61 3,333 483 18,587
+Added: Other interest income 1,075 47,167 874 38,952
+Added: Total interest income $ 67,961 $ 51,114
+Added: Interest expense
+Added: Notes payable $ 6,034 186,700 $ 7,097 199,000
+Added: Non-recourse securitization obligation, collateralized by residential mortgage loans 36,697 1,666,064 23,894 1,253,614
+Added: Repurchase facilities 2,018 62,591 2,081 68,205
+Added: Senior Unsecured Notes 3,185 59,462 — —
+Added: Total interest expense $ 47,934 $ 33,072
+Added: Net interest income $ 20,027 $ 18,042
+Added: Net interest income for the six months ended June 30, 2025 and 2024 was $20.0 million and $18.0 million, respectively.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Total Realized and Unrealized Gains (Losses)
+Added: 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:
+Added: Six Months Ended
+Added: June 30, 2025 June 30, 2024
+Added: (in thousands)
+Added: Realized and unrealized gain (loss) on securitization, net of unrealized gain (loss) on non-recourse securitization obligation
+Added: $ 13,419 $ 379
+Added: Realized gain (loss) on RMBS
+Added: (622) (1,698)
+Added: Unrealized gain (loss) on Whole Pool Agency RMBS 5,640 (4,425)
+Added: Realized gain (loss) on CMBS (264) (119)
+Added: Realized gain (loss) on interest rate futures (2,536) 3,839
+Added: Realized and unrealized gain (loss) on TBAs (5,590) 4,112
+Added: Realized and unrealized gain (loss) on residential mortgage loans
+Added: Realized and unrealized gain (loss) on commercial mortgage loans
+Added: Realized and unrealized gain (loss) on U.S.
+Added: Treasury securities
+Added: Unrealized appreciation (depreciation) on interest rate futures
+Added: (2,134) 1,048
Realized gain/(loss) on AOMT MOA (299) —
Total realized and unrealized gains (losses), net $ 9,368 $ 5,150
−Removed: For the three months ended March 31, 2025 and 2024, total realized and unrealized gains and (losses), net resulted in net gains of $13.4 million and $9.3 million, respectively.
−Removed: During the three months ended March 31, 2025, gains on securitization, net of unrealized gain (loss) on non-recourse securitization obligation were the primary driver of the overall gain to our portfolio.
−Removed: During the three months ended March 31, 2024, gains on securitization, net of unrealized gain (loss) on non-recourse securitization obligation, and interest rate futures were the key drivers of the overall gain.
+Added: 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.
+Added: 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.
+Added: 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.
Operating Expenses
−Removed: For the three months ended March 31, 2025 and 2024, our operating expenses were $1.2 million and $2.0 million, respectively.
−Removed: Our operating expenses decreased compared to the comparative period due to continued cost savings actions such as resource alignment initiatives, vendor contract negotiations, and a decrease in servicing fees associated with servicing our whole loans portfolios.
+Added: For the six months ended June 30, 2025 and 2024, our operating expenses were $2.5 million and $3.7 million, respectively.
+Added: 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
−Removed: For the three months ended March 31, 2025 and 2024, our operating expenses incurred with affiliate were $0.4 million and $0.5 million, respectively.
−Removed: These expenses, which are substantially comprised of payroll reimbursements to our Manager, decreased in the first three months of 2025 compared to the first three months of 2024 due to resource alignment initiatives.
+Added: 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.
+Added: These expenses, which are substantially comprised of payroll reimbursements to our Manager, decreased versus the comparative period due to achieved resource efficiencies.
Stock Compensation
−Removed: For the three months ended March 31, 2025 and 2024, our stock compensation expense was $0.2 million and $0.6 million, respectively.
−Removed: Our stock compensation expense decreased for the three months ended March 31, 2025 due to the vesting of stock awards issued at our IPO.
+Added: For the six months ended June 30, 2025 and 2024 our stock compensation expense was $0.5 million and $1.3 million, respectively.
+Added: 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
−Removed: For the three months ended March 31, 2025 and 2024, we incurred no securitization costs and $0.2 million of securitization costs, respectively.
−Removed: There was no securitization activity in the three months ended March 31, 2025, and the expense in the first three months of 2024 was a proportional allocation of expenses in conjunction with our share of the loans contributed to the AOMT 2024-3 securitization.
+Added: 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.
+Added: 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
−Removed: For the three months ended March 31, 2025 and 2024, our management fee incurred with affiliate was $1.1 million and $1.3 million, respectively.
−Removed: The decrease is due to the decrease in our average Equity (as defined in the Management Agreement) for the three months ended March 31, 2025 as compared to the same period in 2024.
−Removed: The calculation of Equity for the purposes of the Management Agreement includes the addition 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.
+Added: 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.
+Added: 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.
+Added: 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
−Removed: As of March 31, 2025, our portfolio consisted of approximately $2.5 billion of residential mortgage loans, RMBS, and other target assets.
+Added: 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.
1 unchanged sentence
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.
−Removed: 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 March 31, 2025:
+Added: 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
5 unchanged sentences
RMBS $ 361,884 $ 68,062 $ 293,822 119.3 %
−Removed: Treasury securities 74,959 74,564 395 0.2 %
Total investment securities $ 361,884 $ 68,062 $ 293,822 119.3 %
9 unchanged sentences
(1) "Investments in Majority-Owned Affiliates” is held at amortized cost.
−Removed: (2) “Target assets” excludes U.S.
+Added: (2) “Target assets” as defined by us excludes U.S.
Treasury securities and includes investments in Majority-Owned Affiliates.
22 unchanged sentences
Treasury securities, and includes our investment in a Majority-Owned Affiliates.
−Removed: (3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $202 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 a Majority-Owned Affiliates, which is considered a target asset.
+Added: (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
−Removed: The following table sets forth additional information on the residential mortgage loans in our portfolio as of March 31, 2025:
+Added: 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
2 unchanged sentences
Interest rate 3.87% - 15.54%
−Removed: Maturity date 1/26/2040 - 2/9/2065 January 2055
+Added: Maturity date 8/8/2039 - 3/31/2065
FICO score at loan origination 628 - 850
−Removed: LTV at loan origination 27.8% - 90.0% 71.2%
+Added: CLTV at loan origination
DTI at loan origination 2.2% - 50.0%
6 unchanged sentences
Interest rate 3.87%-11.88% 7.4%
−Removed: Maturity date 8/8/2039 - 2/9/2064 November 2054
+Added: Maturity date 8/8/2039 - 9/26/2064
+Added: November 2054
FICO score at loan origination 628-822 752
−Removed: LTV at loan origination 31.9%-90.0% 71.7%
+Added: CLTV at loan origination
+Added: 31.9%-90.0% 71.7%
DTI at loan origination 1.94%-50.0% 31.2%
1 unchanged sentence
Percentage of loans 90+ days delinquent (based on UPB) N/A —%
−Removed: 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 March 31, 2025:
+Added: 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:
−Removed: The following charts illustrate additional characteristics of our residential mortgage loans in our portfolio that we owned directly as of March 31, 2025, based on the product profile, borrower profile, and geographic location (percentages are based on the aggregate unpaid principal balance of such loans):
−Removed: Characteristics of Our Residential Mortgage Loans as of March 31, 2025:
−Removed: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of March 31, 2025.
+Added: 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):
+Added: Characteristics of Our Residential Mortgage Loans as of June 30, 2025:
+Added: 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.
4 unchanged sentences
Residential Mortgage Loans Held in Securitization Trusts
−Removed: The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of March 31, 2025:
+Added: 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
−Removed: Fair Value $1,672,189
Number of loans 4,564
6 unchanged sentences
(1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.
−Removed: The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of March 31, 2025 (percentages based on the aggregate unpaid principal balance of such loans):
−Removed: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of March 31, 2025.
+Added: The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of June 30, 2025 (percentages are based on the aggregate unpaid principal balance of such loans):
+Added: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of June 30, 2025.
Numbers presented may add to more than 100% due to rounding.
18 unchanged sentences
Risk retention securities represent at least 5% of a horizontal or vertical slice of the bonds issued as part of the transaction.
−Removed: Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in such securitization transactions is set forth below as of March 31, 2025, unless otherwise stated:
−Removed: AOMT 2019 Securitizations AOMT 2020 Securitizations AOMT 2023 Securitizations AOMT 2024 Securitizations
+Added: Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in such securitization transactions is set forth below as of June 30, 2025, unless otherwise stated:
+Added: 2019 Securitizations
+Added: 2020 Securitizations
+Added: 2023 Securitizations
+Added: 2024 Securitizations
+Added: 2025 Securitizations
($ in thousands)
21 unchanged sentences
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:
−Removed: As of December 31, 2024 AOMT 2019 Securitizations AOMT 2020 Securitizations AOMT 2023 Securitizations AOMT 2024 Securitizations
+Added: 2019 Securitizations
+Added: 2020 Securitizations
+Added: 2023 Securitizations
+Added: 2024 Securitizations
($ in thousands)
21 unchanged sentences
(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.
−Removed: 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 March 31, 2025:
+Added: 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)
13 unchanged sentences
(1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs).
−Removed: (2) The whole pool RMBS presented as of March 31, 2025 were purchased from a broker to whom the Company owed approximately $302.6 million, payable upon the settlement date of the trade.
+Added: (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.
21 unchanged sentences
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.
−Removed: The following table sets forth information with respect to our RMBS ending balances, at fair value, for the period ended March 31, 2025:
−Removed: Senior Mezzanine Subordinate Interest Only Whole Pool Total
+Added: The following table sets forth information with respect to our RMBS ending balances, at fair value, as of June 30, 2025:
+Added: Mezzanine Subordinate Interest Only Whole Pool Total
(in thousands)
−Removed: Beginning fair value $ — $ 12,735 $ 73,549 $ 12,508 $ 201,451 $ 300,243
+Added: Beginning fair value as of March 31, 2025
+Added: $ 12,879 $ 73,103 $ 11,228 $ 301,062 $ 398,272
Acquisitions:
4 unchanged sentences
Changes in fair value, net (48) 109 (558) 7,831 $ 7,334
−Removed: Ending fair value $ — $ 12,879 $ 73,103 $ 11,228 $ 301,062 $ 398,272
+Added: Ending fair value as of June 30, 2025
+Added: $ 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:
−Removed: Senior Mezzanine Subordinate Interest Only Whole Pool Total
+Added: Mezzanine Subordinate Interest Only Whole Pool Total
(in thousands)
−Removed: Beginning fair value $ — $ 10,972 $ 55,665 $ 13,059 $ 392,362 $ 472,058
+Added: Beginning fair value as of December 31, 2023
+Added: $ 10,972 $ 55,665 $ 13,059 $ 392,362 $ 472,058
Acquisitions:
4 unchanged sentences
Changes in fair value, net 423 3,127 (415) (3,688) (553)
−Removed: Ending fair value $ — $ 12,735 $ 73,549 $ 12,508 $ 201,451 $ 300,243
−Removed: The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of March 31, 2025 (percentages are based on the aggregate unpaid principal balance of such loans):
+Added: Ending fair value as of December 31, 2024
+Added: $ 12,735 $ 73,549 $ 12,508 $ 201,451 $ 300,243
+Added: 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
−Removed: (as of March 31, 2025)
−Removed: No state in “Other” represents more than a 4% concentration of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of March 31, 2025.
+Added: (as of June 30, 2025)
+Added: No state in “Other” represents more than a 3% concentration of the loans underlying our portfolio of RMBS issued in AOMT
+Added: securitization transactions as of June 30, 2025.
Numbers presented may add to more than 100% due to rounding.
5 unchanged sentences
Numbers presented may add to more than 100% due to rounding.
−Removed: In November 2020, we participated in a securitization transaction of a pool of small balance commercial mortgage loans consisting of mortgage loans secured by commercial properties pursuant to which we contributed to AOMT 2020-SBC1 commercial mortgage loans with a carrying value of approximately $31.2 million that we had accumulated and held on our balance sheet, and we received bonds from AOMT 2020-SBC1 with a fair value of approximately $8.9 million.
−Removed: Certain information regarding the commercial mortgage loans underlying our portfolio of CMBS issued in the AOMT 2020-SBC1 securitization transaction is shown below as of March 31, 2025 and December 31, 2024:
−Removed: March 31, 2025 December 31, 2024
−Removed: ($ in thousands)
−Removed: UPB of loans $99,447 $101,686
−Removed: Number of loans 125 129
−Removed: Weighted average loan coupon 8.4 % 8.1 %
−Removed: Average loan amount $796 $788
−Removed: Weighted average LTV at loan origination and deal date 56.2 % 56.2 %
−Removed: The following table provides certain information with respect to the CMBS we received in connection with the AOMT 2020-SBC1 securitization transactions as of March 31, 2025 and December 31, 2024:
−Removed: March 31, 2025 December 31, 2024
−Removed: CMBS Repurchase Debt Allocated Capital CMBS Repurchase Debt Allocated Capital
−Removed: (in thousands)
−Removed: Senior $ — $ — $ — $ — $ — $ —
−Removed: Mezzanine — — — — — —
−Removed: Subordinate 2,666 — 2,666 2,540 — 2,540
−Removed: Interest only / excess 3,091 — 3,091 3,053 — 3,053
−Removed: Total $ 5,757 $ — $ 5,757 $ 5,593 $ — $ 5,593
Liquidity and Capital Resources
1 unchanged sentence
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).
−Removed: Additionally, on July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 9.500% Senior Notes due 2029.
−Removed: We have deployed the majority of the net proceeds from the offering of our senior unsecured 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.
−Removed: Additionally, we used the net proceeds from the offering of our senior unsecured 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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).
4 unchanged sentences
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.
−Removed: 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-
−Removed: existing loan financing lines and repurchase facilities.
+Added: 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.
3 unchanged sentences
Description of Existing Financing Arrangements
−Removed: As of March 31, 2025, we were a party to three warehouse loan financing lines, which permitted borrowings in an aggregate amount of up to $1.1 billion.
−Removed: During the quarter ended March 31, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods simultaneously decreasing the interest rate pricing margin.
+Added: 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.
+Added: 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.
−Removed: As of March 31, 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.
+Added: 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;
1 unchanged sentence
and (3) the maximum ratio of our and our subsidiaries’ total indebtedness to tangible net worth must not be greater than 5:1.
−Removed: Our minimum liquidity requirement as of March 31, 2025 was $10.0 million.
−Removed: A description of each loan financing facility in place during the quarter ended March 31, 2025 is set forth as follows:
+Added: Our minimum liquidity requirement as of June 30, 2025 was $10.0 million.
+Added: 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.
3 unchanged sentences
Pursuant to the terms of the master repurchase agreement, the agreement may be renewed every three months for a maximum six-month term.
−Removed: As of March 31, 2025, the termination date of the master repurchase agreement was September 25, 2025, unless terminated earlier pursuant to the terms of the master repurchase agreement.
+Added: 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.
12 unchanged sentences
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.
−Removed: The remedies for such events of default are also customary for this type of transaction
−Removed: 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.
+Added: 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.
32 unchanged sentences
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.
−Removed: The following table sets forth the details of our financing lines as of each of March 31, 2025 and December 31, 2024:
+Added: The following table sets forth the details of our financing lines as of each of June 30, 2025 and December 31, 2024:
Spread Drawn Amount
−Removed: Note Payable Base Interest Rate March 31, 2025 December 31, 2024
+Added: Note Payable Base Interest Rate June 30, 2025 December 31, 2024
(in thousands)
8 unchanged sentences
Total $ 118,619 $ 129,459
−Removed: (1) On March 25, 2025, this financing facility was extended through September 25, 2025 in accordance with the terms of the agreement, which contemplates six-month renewals, with an interest rate pricing spread of 1.65%.
−Removed: Prior to this extension the interest rate pricing spread was up to 1.75%.
+Added: (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.
+Added: 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.
−Removed: In connection with the execution of the new facility the interest rate pricing spread was reduced to a range between 2.10% and 3.35%.
−Removed: On October 25, 2024, the facility was amended to, among other changes, reduce the pricing spread to a range between 1.75% and 3.35%.
+Added: 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%;
+Added: 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.
−Removed: In addition, the base interest rate spread was reduced to a range from 1.90%.
−Removed: to 4.75% and the index spread adjustment of 0.20% was eliminated.
−Removed: The following table sets forth the total unused borrowing capacity of each financing line as of March 31, 2025:
+Added: 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;
+Added: prior to this extension, the base interest rate pricing spread was a range from 2.00% to 4.50%.
+Added: 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
8 unchanged sentences
Treasury securities, securities issued by AOMT, Angel Oak’s securitization platform, and other securities we may acquire in accordance with our investment guidelines.
−Removed: The following table sets forth certain characteristics of our short-term repurchase facilities as of March 31, 2025 and December 31, 2024:
−Removed: March 31, 2025
+Added: The following table sets forth certain characteristics of our short-term repurchase facilities as of June 30, 2025 and December 31, 2024:
+Added: June 30, 2025
Repurchase Agreements Amount Outstanding Weighted Average Interest Rate Weighted Average Remaining Maturity (Days)
(in thousands)
−Removed: Treasury securities $ 74,564 4.60 % 3
AOMT RMBS (1)
$ 68,062 5.85 % 11
−Removed: Total $ 148,467 5.15 % 10
December 31, 2024
3 unchanged sentences
$ 50,555 5.76 % 19
−Removed: Total $ 50,555 5.76 % 19
−Removed: (1) A portion of repurchase debt outstanding as of both March 31, 2025 and December 31, 2024 includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs).
−Removed: The repurchase debt against the U.S.
−Removed: Treasury securities was repaid in full upon the maturity of the U.S.
−Removed: Treasury securities.
+Added: (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).
The following table presents the amount of collateralized borrowings outstanding under repurchase facilities as of the end of each quarter, the average amount of collateralized borrowings outstanding under repurchase facilities during the quarter and the highest balance of any month end during the quarter:
8 unchanged sentences
Q4 2024 50,555 53,412 51,843
−Removed: Q1 2025 148,467 62,631 148,467
+Added: 148,467 62,631 148,467
+Added: $ 68,062 $ 71,980 $ 148,467
We utilize short‑term repurchase facilities on our RMBS portfolio and to finance assets for REIT asset test purposes.
3 unchanged sentences
Securitization Transactions
−Removed: Subsequent to the end of the quarter, in April 2025, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, secured exclusively by first liens on one‑to‑four family residential properties.
+Added: In May 2025, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans, approximately 17% of which were mortgage loans originated by our affiliated mortgage origination companies, secured primarily by first liens on one‑to‑four family residential properties.
In the transaction, AOMT 2025-6 issued approximately $349.7 million in face value of bonds.
+Added: Our proportionate share of 24.94% of the retained bonds and investments in MOAs was approximately $8.1 million, including a retained premium on issuance of approximately $2.7 million.
+Added: We used the proceeds of the securitization transaction to repay outstanding debt of approximately $73.1 million and retained cash of $9.2 million, which was used for operational purposes.
+Added: In April 2025, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, secured exclusively by first liens on one‑to‑four family residential properties.
+Added: In the transaction, AOMT 2025-4 issued approximately $284.3 million in face value of bonds.
We used the proceeds of the securitization transaction to repay outstanding debt of approximately $242.4 million and retained cash of $24.7 million, which was used for new loan purchases and operational purposes.
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We used the proceeds of the securitization transaction to repay outstanding debt of approximately $141.5 million and retained cash of $15.6 million, which was used for operational purposes.
−Removed: We derecognized the mortgage loans sold in AOMT 2024-13 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of March 31, 2025.
+Added: We derecognized the mortgage loans sold in AOMT 2024-13 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of June 30, 2025.
In October 2024, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, approximately 42% of which were mortgage loans originated by our affiliated mortgage origination companies, secured exclusively by first liens on one‑to‑four family residential properties.
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We are the sole member of the Depositor and also own and hold the call rights on the XS tranche of bonds, which is the “controlling class” of the bonds.
−Removed: We have consolidated the AOMT 2024-10 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of March 31, 2025.
+Added: We have consolidated the AOMT 2024-10 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of June 30, 2025.
In June 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans, approximately 62% of which were mortgage loans originated by our affiliated mortgage origination companies, secured primarily by first liens on one‑to‑four family residential properties.
2 unchanged sentences
We used the proceeds of the securitization transaction to repay outstanding debt of approximately $15.8 million and retained cash of $1.8 million, which was used for operational purposes.
−Removed: We derecognized the mortgage loans sold in AOMT 2024-6 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of March 31, 2025.
+Added: We derecognized the mortgage loans sold in AOMT 2024-6 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of June 30, 2025.
In April 2024, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, approximately 79% of which were mortgage loans originated by our affiliated mortgage origination companies, secured exclusively by first liens on one‑to‑four family residential properties.
2 unchanged sentences
We are the sole member of the Depositor and also own and hold the call rights on the XS tranche of bonds, which is the “controlling class” of the bonds.
−Removed: We have consolidated the AOMT 2024-4 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of March 31, 2025.
+Added: We have consolidated the AOMT 2024-4 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of June 30, 2025.
In March 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans, approximately 60% of which were mortgage loans originated by our affiliated mortgage origination companies, secured primarily by first liens on one‑to‑four family residential properties.
2 unchanged sentences
We used the proceeds of the securitization transaction to repay outstanding debt of approximately $35.9 million and retained cash of $4.6 million, which was used for operational purposes.
−Removed: We derecognized the mortgage loans sold in AOMT 2024-3 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of March 31, 2025.
−Removed: Notes Offering
−Removed: On July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 9.500% Senior Notes due 2029.
+Added: We derecognized the mortgage loans sold in AOMT 2024-3 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of June 30, 2025.
+Added: Notes Offerings
+Added: 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.
+Added: 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.
+Added: The 2030 Notes will mature on June 1, 2030, unless earlier redeemed or repurchased by us.
+Added: 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 the stated maturity, upon acceleration, call for redemption or otherwise.
+Added: We may redeem the 2030 Notes in whole or in part at any time or from time to time at our option 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.
+Added: Upon the occurrence of certain events relating to a change of control of us, we 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.
+Added: 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.
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.
−Removed: The Notes will mature on July 30, 2029, unless earlier redeemed or repurchased by us.The 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 Notes, whether at the stated maturity, upon acceleration, call for redemption or otherwise.
+Added: The 2029 Notes will mature on July 30, 2029, unless earlier redeemed or repurchased by us.
+Added: 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 the stated maturity, upon acceleration, call for redemption or otherwise.
We may redeem the 2029 Notes in whole or in part at any time or from time to time at our 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.
1 unchanged sentence
On August 8, 2024, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) to sell shares of the Company’s common stock from time to time having an aggregate gross sales price of up to $75 million, through an “at the market” equity offering program (the “ATM Program”).
−Removed: The Company issued and sold 188,456 shares of common stock through the ATM Program during the year ended December 31, 2024 for gross proceeds of $2.3 million, receiving net proceeds of $2.3 million.
−Removed: The Company paid $45 thousand in commissions to the agents under the ATM Program in connection with such sales during the year ended December 31, 2024.
−Removed: of March 31, 2025, the Company had approximately $73 million of shares of common stock available for issuance under the ATM Program and Sales Agreement.
−Removed: The Company did not issue any shares under the ATM program during the quarter ended March 31,2025.
+Added: The Company issued and sold 215,622 shares of common stock through the ATM Program during the three and six months ended June 30, 2025 for gross proceeds of $2.2 million, receiving net proceeds of $2.2 million.
+Added: The Company paid $44 thousand in commissions to the agents under the ATM Program in connection with such sales during the three and six months ended June 30, 2025.
+Added: As of June 30, 2025, the Company had approximately $71 million of gross proceeds available for issuance under the ATM Program and Sales Agreement.
Leverage and Hedging Strategies
5 unchanged sentences
Cash and cash equivalents
−Removed: Our cash balance as of March 31, 2025 was sufficient to meet our liquidity covenants under our financing facilities and the Notes.
+Added: Our cash balance as of June 30, 2025 was sufficient to meet our liquidity covenants under our financing facilities and the 2029 Notes and 2030 Notes.
We believe that we maintain sufficient cash to continue to meet margin calls on our financing facilities, should such margin calls occur.
−Removed: There was no margin collateral required as of March 31,2025 or December 31,2024.
+Added: There was no margin collateral required as of June 30, 2025 or December 31,2024.
We may also participate in upcoming securitizations either solely or with other Angel Oak entities.
1 unchanged sentence
Restricted Cash
−Removed: Restricted cash of approximately $4.8 million as of March 31, 2025 was comprised of:
+Added: Restricted cash of approximately $3.9 million as of June 30, 2025 was comprised of:
$2.7 million in interest rate futures margin collateral for the interest rate futures under our sole control;
4 unchanged sentences
Our counterparties did not require any margin collateral for TBAs as of December 31, 2024.
−Removed: Three Months Ended
−Removed: March 31, 2025 March 31, 2024
+Added: Six Months Ended
+Added: June 30, 2025 June 30, 2024
(in thousands)
1 unchanged sentence
Cash flows provided by (used in) investing activities (5,769) (11,061)
−Removed: Cash flows provided by (used in)financing activities $ 278,192 $ (37,679)
−Removed: Net increase (decrease) in cash and restricted cash $ 577 $ (2,276)
−Removed: The cash used in operating activities of $201.7 million for the three months ended March 31, 2025 as compared to the cash provided of $40.2 million for the three months ended March 31, 2024 was primarily due to the volume of residential mortgage loans purchased during the first three months of 2025, as compared to the first three months of 2024.
−Removed: The use of investing cash flows of $75.9 million for the three months ended March 31, 2025 as compared to cash used by investing activities of $4.8 million for the three months ended March 31, 2024 were primarily due to the timing of purchases and maturities of U.S.
+Added: Cash flows provided by financing activities 188,346 (3,347)
+Added: Net increase in cash and restricted cash $ 1,474 $ 1,606
+Added: The cash used in operating activities of $181.1 million for the six months ended June 30, 2025 as compared to the cash provided of $16.0 million for the six months ended June 30, 2024 was primarily due to the volume of residential mortgage loans purchased from non affiliates during the first six months of 2024, as compared to the first six months of 2025.
+Added: The use of investing cash flows of $5.8 million for the six months ended June 30, 2025 as compared to cash used in investing activities of $11.1 million for the six months ended June 30, 2024 were primarily due to the timing of purchases and maturities of U.S.
Treasury securities in the comparative period of 2024.
−Removed: Financing cash flows provided $278.2 million for the three months ended March 31, 2025 as compared to $37.7 million used in financing activities for the three months ended March 31, 2024 were primarily due to the activity within net borrowings under repurchase agreements and notes payable during the first three months of 2025.
+Added: Financing cash flows provided $188.3 million for the six months ended June 30, 2025 as compared to $3.3 million used in the six months ended June 30, 2024 were primarily due to the activity within net borrowings under repurchase agreements and notes payable for the comparative periods.
Cash Flows - Residential and Commercial Loan Classification
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.