Angel Oak Mortgage REIT, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS Angel Oak Mortgage REIT, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except for share data) As of: September 30, 2025 December 31, 2024 ASSETS Residential mortgage loans - at fair value $ 425,775 $ 183,064 Residential mortgage loans in securitization trusts - at fair value 1,862,330 1,696,995 RMBS - at fair value 235,024 300,243 Cash and cash equivalents 51,598 40,762 Restricted cash 1,833 2,131 Principal and interest receivable 14,781 8,141 TBA securities and interest rate futures contracts - at fair value 1,944 1,515 Other assets 44,825 36,918 Total assets $ 2,638,110 $ 2,269,769 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Notes payable $ 342,608 $ 129,459 Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts (see Note 2) 1,726,657 1,593,612 Securities sold under agreements to repurchase 54,041 50,555 Senior unsecured notes 88,795 47,740 TBA securities and interest rate futures contracts - at fair value 1,309 — Due to broker 153,819 201,994 Accrued expenses 1,952 2,291 Accrued expenses payable to affiliate 588 766 Interest payable 2,173 934 Income taxes payable 163 2,785 Management fee payable to affiliate 1,840 666 Total liabilities $ 2,373,945 $ 2,030,802 STOCKHOLDERS' EQUITY Common stock, $ 0.01 par value. As of September 30, 2025: 350,000,000 shares authorized, 24,914,035 shares issued and outstanding. As of December 31, 2024: 350,000,000 shares authorized, 23,500,175 shares issued and outstanding. $ 249 $ 234 Additional paid-in capital 474,154 461,057 Accumulated other comprehensive income (loss) ( 996 ) ( 3,475 ) Retained earnings (deficit) ( 209,242 ) ( 218,849 ) Total stockholders' equity $ 264,165 $ 238,967 Total liabilities and stockholders' equity $ 2,638,110 $ 2,269,769 The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement. 2 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 Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 INTEREST INCOME, NET Interest income $ 36,659 $ 27,444 $ 104,620 $ 78,558 Interest expense 26,479 18,424 74,414 51,495 NET INTEREST INCOME $ 10,180 $ 9,020 $ 30,206 $ 27,063 REALIZED AND UNREALIZED GAINS (LOSSES), NET Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS $ ( 6,557 ) $ ( 6,335 ) $ ( 12,238 ) $ ( 14,527 ) Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts 11,280 35,172 26,329 48,514 TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET $ 4,723 $ 28,837 $ 14,091 $ 33,987 EXPENSES Operating expenses $ 1,117 $ 1,541 $ 3,653 $ 5,282 Operating expenses incurred with affiliate 510 472 1,379 1,444 Stock compensation 398 604 930 1,864 Securitization costs — — 1,866 1,583 Management fee incurred with affiliate 1,161 1,204 3,454 3,810 Total operating expenses $ 3,186 $ 3,821 $ 11,282 $ 13,983 INCOME (LOSS) BEFORE INCOME TAXES $ 11,717 $ 34,036 $ 33,015 $ 47,067 Income tax expense (benefit) 307 2,832 307 3,261 NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS $ 11,410 $ 31,204 $ 32,708 $ 43,806 Other comprehensive income (loss) 3,665 2,706 2,479 4,534 TOTAL COMPREHENSIVE INCOME (LOSS) $ 15,075 $ 33,910 $ 35,187 $ 48,340 Basic earnings (loss) per common share $ 0.49 $ 1.31 $ 1.40 $ 1.79 Diluted earnings (loss) per common share $ 0.46 $ 1.29 $ 1.36 $ 1.76 Weighted average number of common shares outstanding: Basic 23,043,587 23,757,039 23,320,200 24,445,105 Diluted 24,560,881 24,079,247 24,014,840 24,778,465 The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement. 3 Angel Oak Mortgage REIT, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (in thousands) Three Months Ended September 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 June 30, 2025 $ 238 $ 463,580 $ ( 4,661 ) $ ( 212,768 ) $ 246,389 Issuance of common stock, net of issuance costs 11 10,176 — — 10,187 Dividends paid on common stock — — — ( 7,839 ) ( 7,839 ) Dividends accrued on unvested performance shares — — — ( 45 ) ( 45 ) Stock compensation — 398 — — 398 Unrealized gain (loss) on RMBS and CMBS — — 3,665 — 3,665 Net income (loss) — — — 11,410 11,410 Stockholders' equity as of September 30, 2025 $ 249 $ 474,154 $ ( 996 ) $ ( 209,242 ) $ 264,165 Three Months Ended September 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 June 30, 2024 $ 249 $ 478,328 $ ( 3,147 ) $ ( 219,624 ) $ 255,806 Issuance of common stock, net of issuance costs 2 2,250 — — 2,252 Repurchase of shares of common stock ( 17 ) ( 19,933 ) — — ( 19,950 ) Dividends paid on common stock — — — ( 7,524 ) ( 7,524 ) Stock compensation — 604 — — 604 Unrealized gain (loss) on RMBS and CMBS — — 2,706 — 2,706 Net income (loss) — — — 31,204 31,204 Stockholders’ equity as of September 30, 2024 $ 234 $ 461,249 $ ( 441 ) $ ( 195,944 ) $ 265,098 The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement. 4 Angel Oak Mortgage REIT, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (in thousands) Nine Months Ended September 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 issuance costs 15 12,167 — — 12,182 Dividends paid on common stock — — — ( 22,964 ) ( 22,964 ) Dividends accrued on unvested performance shares — — — ( 137 ) ( 137 ) Stock compensation — 930 — — 930 Unrealized gain (loss) on RMBS and CMBS — — 2,479 — 2,479 Net income (loss) — — — 32,708 32,708 Stockholders’ equity as of September 30, 2025 $ 249 $ 474,154 $ ( 996 ) $ ( 209,242 ) $ 264,165 Nine Months Ended September 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 Issuance of common stock, net of issuance costs 2 2,250 — — 2,252 Repurchase of shares of common stock ( 17 ) ( 19,933 ) — — ( 19,950 ) Dividends paid on common stock — — — ( 23,514 ) ( 23,514 ) Stock compensation — 1,864 — — 1,864 Unrealized gain (loss) on RMBS and CMBS — — 4,534 — 4,534 Net income (loss) — — — 43,806 43,806 Stockholders’ equity as of September 30, 2024 $ 234 $ 461,249 $ ( 441 ) $ ( 195,944 ) $ 265,098 The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement. 5 Angel Oak Mortgage REIT, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2025 September 30, 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 32,708 $ 43,806 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 12,238 14,527 Net unrealized (gain) loss on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts ( 26,329 ) ( 48,514 ) Amortization of debt issuance costs 559 246 Net amortization of premiums and discounts on mortgage loans 2,754 1,989 Accretion of non-recourse securitized obligation discount 3,278 3,455 Accretion of discount on U.S. Treasury securities ( 61 ) ( 548 ) Stock compensation 930 1,864 Purchases of residential mortgage loans from affiliates ( 119,776 ) ( 182,200 ) Purchases of residential mortgage loans from non-affiliates ( 523,547 ) ( 243,634 ) Sale of residential mortgage loans 1,279 3,118 Sale of residential mortgage loans into affiliate's securitization trust 83,669 66,107 Principal payments on residential mortgage loans 29,390 15,475 Principal payments on residential mortgage loans in securitization trusts 172,156 122,311 Net change in: Margin (paid) received from interest rate futures contracts and TBAs ( 7,559 ) 4,618 Principal and interest receivable on residential mortgage loans ( 6,640 ) 868 Other assets ( 8,640 ) ( 1,461 ) Management fee payable to affiliate 1,174 ( 1,367 ) Accrued expenses ( 430 ) 1,015 Accrued expenses payable to affiliate ( 223 ) ( 91 ) Income tax payable ( 2,622 ) 1,544 Interest payable 1,238 492 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ( 354,454 ) ( 196,380 ) The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement. 6 Angel Oak Mortgage REIT, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2025 September 30, 2024 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of investments in RMBS, available for sale ( 8,352 ) ( 5,733 ) Purchases of investments in whole pool agency RMBS, trading ( 758,316 ) ( 935,573 ) Sale of investments in RMBS, available for sale 27,726 — Sale of investments in whole pool agency RMBS, trading 759,306 927,047 Purchase of investments in U.S. Treasury securities ( 74,939 ) ( 349,595 ) Investments in majority-owned affiliates — ( 2,253 ) Principal payments on RMBS and CMBS securities 448 2,122 Maturities of U.S. Treasury securities 75,000 450,000 Principal payments on commercial mortgage loans 12 25 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 20,885 86,040 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuances of common stock, net of expenses 12,182 2,252 Dividends paid to common stockholders ( 22,964 ) ( 23,514 ) Principal payments on non-recourse securitization obligation ( 172,156 ) ( 122,070 ) Cash paid for debt issuance costs ( 666 ) ( 1,013 ) Proceeds from securitizations 269,915 274,793 Net proceeds from (payments on) securities sold under agreements to repurchase 3,486 ( 90,780 ) Net proceeds from (payments on) notes payable 213,149 42,432 Net proceeds from issuance of senior notes 41,161 48,425 Repurchase of common stock — ( 19,950 ) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 344,107 110,575 CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 10,538 235 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period 42,893 44,496 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period $ 53,431 $ 44,731 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $ 60,104 $ 46,386 The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of this statement. 7 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 non-QM loans that are primarily made to higher quality borrowers and 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”) and other originators. 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 8 — 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. 8 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 income, 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. 9 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 September 30, 2025 and December 31, 2024: As of: September 30, 2025 December 31, 2024 ($ in thousands) Aggregate unpaid principal balance of residential whole loans sold $ 1,893,465 $ 1,781,311 Fair value adjustment for residential mortgage loans in securitization trusts ( 31,135 ) ( 84,316 ) Residential mortgage loans in securitization trusts, at fair value $ 1,862,330 $ 1,696,995 Outstanding amount of Non-recourse securitization obligation, at amortized cost $ 1,730,940 $ 1,630,083 Fair value adjustment for the portion of Non-recourse securitization obligation, at fair value option ( 4,283 ) ( 36,471 ) Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts $ 1,726,657 $ 1,593,612 Weighted average coupon rate for residential mortgage loans in securitization trusts 5.70 % 5.56 % Weighted average fixed rate for Non-recourse securitization obligation issued 4.13 % 3.86 % For the period ended: September 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 September 30, 2025, the Company did not issue and retain bonds on our consolidated balance sheets for any securitization transaction for which the Company was the primary beneficiary. For the nine months ended September 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 sold bonds 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 September 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 September 30, 2025 and December 31, 2024, the aggregate carrying value of bonds issued by consolidated VIEs was $ 1.7 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. 10 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 September 30, 2025 and December 31, 2024, and details on the accounting treatment and fair value methodology of the securities can be found in Note 8 — 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 12 - Other Assets , for investments that are majority-owned by affiliates (“MOAs”), as of September 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 September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 ($ in thousands) Cost $ 420,851 $ 183,149 Unpaid principal balance $ 407,614 $ 178,373 Net premium on mortgage loans purchased 13,237 4,776 Change in fair value 4,924 ( 85 ) Fair value $ 425,775 $ 183,064 Weighted average interest rate 7.98 % 7.39 % Weighted average remaining contractual maturity (years) 29.5 30.0 11 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 September 30, 2025 and December 31, 2024: As of: September 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 $ 497 $ — Unpaid principal balance of loans 90 or more days past due $ 473 $ — Number of mortgage loans in foreclosure 1 — Recorded investment in mortgage loans in foreclosure $ 640 $ — Unpaid principal balance of loans in foreclosure $ 623 $ — 4. Investment Securities As of September 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”). In September 2025, the Company in conjunction with the Company’s affiliates exercised its call rights on the AOMT 2019-2 and AOMT 2019-4 securitizations and subsequently re-securitized the underlying loans in AOMT 2025-R1. This transaction resulted in $ 19.4 million of cash which was used for new loan purchases and other accretive uses, and $ 7.3 million of non-performing loans that are classified as held for sale and recorded in other assets. See Note 8 — Fair Value Measurements and Note 12 — Other Assets . The following table sets forth a summary of RMBS at cost as of September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 (in thousands) AOMT RMBS $ 80,249 $ 101,801 Whole Pool Agency RMBS $ 153,819 $ 201,994 12 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 September 30, 2025: September 30, 2025 Real Estate Securities at Fair Value Securities Sold Under Agreements to Repurchase Allocated Capital (in thousands) AOMT RMBS (1) Mezzanine $ 13,246 $ ( 2,394 ) $ 10,852 Subordinate 56,382 ( 12,354 ) 44,028 Interest Only/Excess 10,258 — 10,258 Retained RMBS in VIEs (2) — ( 39,293 ) ( 39,293 ) Total AOMT RMBS $ 79,886 $ ( 54,041 ) $ 25,845 Whole Pool Agency RMBS (3) Fannie Mae $ 126,970 $ — $ 126,970 Freddie Mac 28,168 — 28,168 Total Whole Pool Agency RMBS $ 155,138 $ — $ 155,138 Total RMBS $ 235,024 $ ( 54,041 ) $ 180,983 (1) AOMT RMBS held as of September 30, 2025 included both retained tranches of AOMT securitizations in which the Company participated and additional AOMT securities purchased in secondary market transactions. AOMT RMBS are available for sale securities. (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 September 30, 2025 were purchased from a broker to whom the Company owes approximately $ 154 million, payable upon the settlement date of the trade. Whole Pool Agency RMBS are trading securities. See Note 6 - Due to Broker . 13 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 September 30, 2025 or December 31, 2024. 14 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) The following table sets forth the details of the Company’s financing as of September 30, 2025 and December 31, 2024 ($ in thousands): September 30, 2025 December 31, 2024 Current Face Carrying Value Stated Maturity Base/Fixed Interest Rate Interest Rate Pricing Spread Carrying Value Notes payable Multinational Bank 1 (1) $ 252,100 $ 252,100 March 2026 Average Daily SOFR 1.65 % - 2.10 % $ 100,711 Global Investment Bank 2 (2) 143 143 March 2026 1 Month Term SOFR 1.75 % - 3.35 % 15,111 Global Investment Bank 3 (3) 90,365 90,365 September 2026 Compound SOFR 1.75 % - 4.75 % 13,637 Total Notes Payable Financing $ 342,608 $ 342,608 $ 129,459 Non-recourse securitization obligation, at fair value $ 1,730,940 $ 1,726,657 N/A 4.13 % $ 1,593,612 Securities sold under agreements to repurchase $ 54,041 $ 54,041 October 2025 5.92 % $ 50,555 Senior Unsecured Notes June 2030 Senior Unsecured Notes $ 42,500 $ 40,681 June 2030 9.75 % $ — July 2029 Senior Unsecured Notes 50,000 48,114 July 2029 9.50 % 47,740 Total Senior Unsecured Notes $ 92,500 $ 88,795 $ 47,740 Total Financing $ 2,220,089 $ 2,212,101 $ 1,821,366 (1) On September 25, 2025, this financing facility was extended through March 25, 2026 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 10, 2025, the facility was amended to, reduce the interest rate pricing spread to a range of 1.65 % to 2.40 %; prior to this amendment, the interest rate pricing spread was a range of 1.75 % to 3.35 %. (3) On September 26, 2025, the facility’s termination date was extended to September 26, 2026. In addition, the interest rate pricing spread was reduced to a range from 1.75 %to 4.75 %; prior to this extension, the interest rate pricing spread was a range from 1.90 % to 4.75 %. The following table sets forth the total unused borrowing capacity of each financing line as of September 30, 2025: 15 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) Note Payable Borrowing Capacity Balance Outstanding Available Financing (in thousands) Multinational Bank 1 $ 600,000 $ 252,100 $ 347,900 Global Investment Bank 2 250,000 143 249,857 Global Investment Bank 3 200,000 90,365 109,635 Total $ 1,050,000 $ 342,608 $ 707,392 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 The Company’s Senior Unsecured Notes consist of $ 42.5 million principal amount of its 9.75 % Senior Notes due June 2030 (the “2030 Notes”) and $ 50.0 million principal amount of its 9.50 % Senior Notes due July 2029 (the “2029 Notes”and, together with the 2030 Notes, the “Senior Unsecured Notes”). The 2030 Notes were issued in May, 2025 in a public offering for net proceeds of approximately$ 40.6 million and the 2029 Notes were issued in July, 2024 in a public offering for net proceeds of approximately $ 47.5 million. The below table provides a summary of the Senior Unsecured Notes as of September 30, 2025 ($ in thousands). Senior Unsecured Notes (1) Principal Amount Carrying Value Maturity Date (2) Redemption Date (3) Rate (4) June 2030 Senior Unsecured Notes $ 42,500 $ 40,681 June 2030 June 2027 9.75 % July 2029 Senior Unsecured Notes $ 50,000 $ 48,114 July 2029 July 2026 9.50 % (1) The Senior Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Operating Partnership, including the due and punctual payment of principal, premium, if any, and interest on the Senior Unsecured Notes, whether at stated maturity, upon acceleration, call for redemption or otherwise. (2) The Company has the option to redeem the Senior Unsecured Notes earlier than the maturity date. (3) The Company may redeem the Senior Unsecured Notes in whole or in part at any time on or after the optional redemption date, at a redemption price equal to 100 % of the outstanding principal amount of the Senior Unsecured 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 Senior Unsecured Notes at a price in cash equal to 101 % of the principal amount of the Senior Unsecured Notes, plus accrued and unpaid interest to, but excluding, the repurchase date. (4) The 2030 Notes bear interest at a rate equal to 9.75 % per year, payable in cash quarterly in arrears on March 1, June 1, September 1, and December 1 of each year, beginning on September 1, 2025. The 2029 Notes bear interest at a rate equal to 9.50 % per year, payable in cash quarterly in arrears on January 30, April 30, July 30 and October 30 of each year. The below table details the total interest expense incurred on the Senior Unsecured Notes during the three and nine months ended September 30, 2025 and September 30, 2024 ($ in thousands). Three Months Ended Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Coupon interest expense $ 2,223 $ 884 $ 5,070 $ 884 Amortization expense 221 109 559 109 Total interest expense $ 2,445 $ 993 $ 5,629 $ 993 At September 30, 2025 and September 30, 2024, the accrued interest payable on the Senior Unsecured Notes was $ 1.2 million and $ 0.9 million, respectively. At September 30, 2025 and September 30, 2024, the unamortized deferred debt issuance cost was $ 1.3 million and $ 0.9 million, respectively. The unamortized debt issuance costs will be amortized until maturity. 16 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 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 September 30, 2025 and December 31, 2024, respectively. The following table summarizes certain characteristics of the Company’s repurchase agreements as of September 30, 2025 and December 31, 2024: September 30, 2025 Repurchase Agreements Amount Outstanding Weighted Average Interest Rate Weighted Average Remaining Maturity (Days) ($ in thousands) AOMT RMBS (1) 54,041 5.92 % 16 December 31, 2024 Repurchase Agreements Amount Outstanding Weighted Average Interest Rate Weighted Average Remaining Maturity (Days) AOMT RMBS (1) 50,555 5.76 % 19 (1) A portion of repurchase debt outstanding as of both September 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. 6. Due to Broker The “Due to broker” account on the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, respectively, in the amounts of $ 153.8 million and $ 202.0 million relates to the purchase of Whole Pool Agency RMBS at quarter-end in the third 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 October 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. 7. 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 September 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 as of September 30, 2025 and December 31, 2024 included $ 0.6 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. 17 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 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. The following table sets forth the derivative instruments presented on the condensed consolidated balance sheets and notional amounts as of September 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) September 30, 2025 Interest rate futures 3,119 $ 1,944 $ — $ — $ 311,900 September 30, 2025 TBAs N/A $ — $ 1,309 $ — $ 152,300 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 nine months ended September 30, 2025 and September 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 September 30, 2025 Interest rate futures $ ( 3,100 ) $ 3,091 Three Months Ended September 30, 2025 TBAs $ ( 70 ) $ 1,899 Three Months Ended September 30, 2024 Interest rate futures $ ( 4,461 ) $ 1,184 Three Months Ended September 30, 2024 TBAs $ 3,115 $ ( 1,235 ) Derivatives Not Designated as Hedging Instruments Net Realized Gains (Losses) on Derivative Instruments Net Change in Unrealized Appreciation (Depreciation) on Derivative Instruments (in thousands) Nine Months Ended September 30, 2025 Interest rate futures $ ( 5,636 ) $ 957 Nine Months Ended September 30, 2025 TBAs $ ( 1,924 ) $ ( 1,837 ) Nine Months Ended September 30, 2024 Interest rate futures $ ( 622 ) $ 2,232 Nine Months Ended September 30, 2024 TBAs $ 5,238 $ 753 18 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 8. 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 September 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 MOAs), notes payable, securities sold under agreements to repurchase, amounts due to broker and accrued expenses (including 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 12 — 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 ” 19 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 September 30, 2025: Level 1 Level 2 Level 3 Total (in thousands) Assets, at fair value Residential mortgage loans $ — $ 424,703 $ 1,072 $ 425,775 Residential mortgage loans in securitization trusts — 1,835,074 27,256 1,862,330 Investments in securities AOMT RMBS (1) — 79,886 — 79,886 Whole Pool Agency RMBS — 155,138 — 155,138 U.S. Treasury Securities — — — — Other Assets, at fair value (2) — 10,065 7,300 17,365 Unrealized appreciation on futures contracts — — — — Unrealized appreciation on TBAs — — — — Total assets, at fair value $ — $ 2,504,866 $ 35,628 $ 2,540,494 Liabilities, at fair value Non-recourse securitization obligation, collateralized by residential mortgage loans (3) $ — $ 1,369,346 $ — $ 1,369,346 Unrealized depreciation on futures contracts ( 1,944 ) — — ( 1,944 ) Unrealized depreciation on TBAs 1,309 — — 1,309 Total liabilities, at fair value $ ( 635 ) $ 1,369,346 $ — $ 1,368,711 (1) AOMT RMBS held as of September 30, 2025 included both retained tranches of AOMT securitizations in which the Company participated and additional AOMT securities purchased in secondary market transactions. (2) Includes Commercial Loans, AOMT commercial mortgage backed securities (“CMBS”) assets, and loans held for sale. All AOMT CMBS held as of September 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. 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. 20 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) As of September 30, 2025, the total amortized cost basis and fair value of our non-recourse securitization obligations was $ 1.73 billion and $ 1.67 billion, respectively, a difference of approximately $ 57.1 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 $ 52.8 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 September 30, 2025 was approximately $ 21.2 million and $ 17.2 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. 21 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. 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. Transfers between Level 2 and Level 3 were immaterial for the year ended December 31, 2024. 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. 22 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 9. 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 September 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) : September 30, 2025 $ 119,776 285 61 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 12 — 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”). On October 1, 2025, the Company, the Operating Partnership, and the Manager, entered into a new management agreement (the “New Management Agreement”) to supersede and replace in its entirety 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). The New Management Agreement did not modify any provisions relating to the management fee or its calculation provided for 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) 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, no incentive fee has been earned. The New Management Agreement did not modify any provisions relating to the incentive fee or its calculation provided for in the Management Agreement. Operating Expense Reimbursements The Company is also required to pay the Manager reimbursements for certain general and administrative expenses pursuant to the Management Agreement. The New Management Agreement continues to require the Company to pay the Manager reimbursements for certain general and administrative expenses. Accrued expenses payable to affiliate and operating expenses incurred with affiliate are substantially comprised of payroll reimbursements. 23 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 10. 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 September 30, 2025, the Company was not aware of any legal claims that could materially impact its financial condition. As of September 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 September 30, 2025 the Company had total purchase commitments of $ 186.8 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. 11. 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 nine months ended September 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 nine months ended September 30, 2025 and 2024: Three Months Ended September 30, 2025 Three Months Ended September 30, 2024 (in thousands) AOCI balance, beginning of period $ ( 4,661 ) $ ( 3,147 ) Net unrealized gain/(loss) on AFS securities 3,665 2,706 AOCI balance, end of period $ ( 996 ) $ ( 441 ) Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024 (in thousands) AOCI balance, beginning of period $ ( 3,475 ) $ ( 4,975 ) Net unrealized gain/(loss) on AFS securities 2,479 4,534 AOCI balance, end of period $ ( 996 ) $ ( 441 ) 24 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 12. Other Assets The following table sets forth the detail of other assets included in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 (in thousands) Investments in Majority-Owned Affiliates $ 21,164 $ 20,680 Commercial Mortgage Loans, at fair value 5,196 5,214 CMBS, at fair value 4,869 5,593 Deferred tax asset 3,457 3,457 Prepaid expenses 2,217 1,095 Loans held for sale 7,300 — Protective advances and other assets 622 879 Total other assets $ 44,825 $ 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 8 — Fair Value Measurements . Commercial Mortgage Loans Commercial mortgage loans are measured at fair value. As of September 30, 2025 and December 31, 2024, the cost and unpaid principal balance of the assets was $ 5.5 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 10 years, as of September 30, 2025. There were no commercial mortgage loans more than ninety (90) days past due or in foreclosure as of September 30, 2025 or December 31, 2024. Commercial Mortgage Backed Securities CMBS are held at fair value. As of September 30, 2025 and December 31, 2024, the cost of these assets were $ 5.5 million and $ 6.1 million, with a fair value of $ 4.9 million and $ 5.6 million, respectively. There was no repurchase debt held against these assets at September 30, 2025 or December 31, 2024. Loans Held for Sale As of September 30, 2025, loans held for sale were $ 7.3 million and were the result of the Company in conjunction with the Company’s affiliates exercised call rights on the AOMT 2019-2 and AOMT 2019-4 securitizations and subsequent re-securitization of the underlying loans in AOMT 2025-R1 during September 2025. Loans held for sale consist of non-performing loans that are classified as held for sale and recorded in other assets. See Note 4 - Investment Securities and Note 8 — Fair Value Measurements . 13. Equity During the three and nine-months ended September 30, 2025, the Company issued and sold 1,061,578 and 1,277,200 shares, respectively, of its common stock through its at-the-market equity offering program (the “ATM Program”) resulting in proceeds of $ 10.1 million and $ 12.3 million, respectively, 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, of which $ 60.2 million is available. 14. Earnings per Share (“EPS”) In the calculations of basic and diluted earnings per common share for the three and nine months ended September 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. 25 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 September 30, 2025 and 2024: September 30, 2025 September 30, 2024 (in thousands, except share and per share data) Basic Earnings (Loss) per Common Share: Net income (loss) to common stockholders $ 11,410 $ 31,204 Dividends allocated to participating securities ( 50 ) ( 38 ) Net income (loss) to common stockholders - basic $ 11,360 $ 31,166 Basic weighted average common shares outstanding 23,043,587 23,757,039 Basic earnings (loss) per common share $ 0.49 $ 1.31 Diluted Earnings (Loss) per Common Share: Net income (loss) to common stockholders - basic $ 11,410 $ 31,204 Dividends allocated to participating securities ( 50 ) ( 38 ) Net income (loss) to common stockholders - diluted $ 11,360 $ 31,166 Basic weighted average common shares outstanding 23,043,587 23,757,039 Net effect of dilutive equity awards 1,517,294 322,208 Diluted weighted average common shares outstanding 24,560,881 24,079,247 Diluted earnings (loss) per common share $ 0.46 $ 1.29 The following table sets forth the calculation of basic and diluted earnings per share for the nine months ended September 30, 2025 and 2024: September 30, 2025 September 30, 2024 (in thousands, except share and per share data) Basic Earnings (Loss) per Common Share: Net income (loss) to common stockholders $ 32,708 $ 43,806 Dividends allocated to participating securities ( 89 ) ( 115 ) Net income (loss) to common stockholders - basic $ 32,619 $ 43,691 Basic weighted average common shares outstanding 23,320,200 24,445,105 Basic earnings (loss) per common share $ 1.40 $ 1.79 Diluted Earnings (Loss) per Common Share: Net income (loss) to common stockholders - basic $ 32,708 $ 43,806 Dividends allocated to participating securities ( 89 ) ( 115 ) Net income (loss) to common stockholders - diluted $ 32,619 $ 43,691 Basic weighted average common shares outstanding 23,320,200 24,445,105 Net effect of dilutive equity awards 694,640 333,360 Diluted weighted average common shares outstanding 24,014,840 24,778,465 Diluted earnings (loss) per common share $ 1.36 $ 1.76 26 Angel Oak Mortgage REIT, Inc. Notes to the Condensed Consolidated Financial Statements (Unaudited) 15. Subsequent Events On October 1, 2025, the Company, the Operating Partnership, and the “Manager, entered into the New Management Agreement to supersede and replace in its entirety the Management Agreement. The New Management Agreement was entered into immediately following the closing on October 1, 2025 of the strategic transaction between Angel Oak Companies, LP, an affiliate of the Manager (“Angel Oak Companies”), and Brookfield Asset Management Ltd. (“Brookfield”). The New Management Agreement is substantially and economically similar to the Management Agreement. On October 6, 2025, the Company and one of its subsidiaries entered into a $ 200.0 million repurchase facility with a global investment bank (“Global Investment Bank 4”) through the execution of a Master Repurchase Agreement and Securities Contract (the “Master Repurchase Agreement”). The amount expected to be advanced by Global Investment Bank 4 is generally in line with other similar agreements that the Company has entered into. Additionally, the rates, terms, events of default, and remedies for such events of default contained within the Master Repurchase Agreement are generally in line with other similar agreements that the Company has entered into. The interest rate is equal to the sum of (1) a spread of 1.60 %, and (2) Term SOFR. The Company is subject to various financial and other covenants, including those relating to (1) declines in tangible net worth; (2) a maximum ratio of indebtedness to tangible net worth; and (3) minimum liquidity. The Master Repurchase Agreement expires on October 6, 2027, unless terminated earlier pursuant to the terms of the Master Repurchase Agreement. On October 10, 2025, the Company amended the Pricing Side Letter of its loan financing facility with Global Investment Bank 2. The interest rate pricing spread was updated from a range of 1.75 % to 3.35 % to a range of 1.65 % to 2.40 %, based on collateral type, loan status, dwell time and other factors. On October 14, 2025, the Company issued AOMT 2025-10, an approximately $ 274.3 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans. The Company issued AOMT 2025-10 as the sole contributor in the securitization. The Company used the proceeds to repay outstanding debt of approximately $ 237.4 million, and the $ 22.1 million of cash released is planned to be used for new loan purchases and operational purposes. On November 6, 2025, the Company declared a dividend of $ 0.32 per share of common stock, to be paid on November 26, 2025 to common stockholders of record as of November 18, 2025. 27