Angel Oak Mortgage REIT, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management’s discussion and analysis of financial condition and results of operations is intended to help the reader understand the results of operations and financial condition of Angel Oak Mortgage REIT, Inc. The following should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto. References herein to our “Company,” “we,” “us,” or “our” refer to Angel Oak Mortgage REIT, Inc. and its subsidiaries including Angel Oak Mortgage Operating Partnership, LP (the “Operating Partnership”), through which we hold substantially all of our assets and conduct our operations. Unless otherwise indicated, the term “Angel Oak” refers collectively to Angel Oak Capital Advisors, LLC (“Angel Oak Capital”) and its affiliates, including Falcons I, LLC, our external manager (our “Manager”), Angel Oak Companies, LP (“Angel Oak Companies”), and the proprietary mortgage lending platform of affiliates Angel Oak Mortgage Solutions LLC (together with other non-operational affiliated originators, “Angel Oak Mortgage Lending”). Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “believe,” “intend,” “seek,” “plan” and similar expressions or their negative forms, or by references to strategy, plans, or intentions. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report on Form 10-K”). Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in other reports we file with the Securities and Exchange Commission (the “SEC”). We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Factors that could have a material adverse effect on future results and performance relative to those set forth in or implied by the related forward-looking statements, as well as on our business, financial condition, liquidity, results of operations and prospects, include, but are not limited to: • the effects of adverse conditions or developments in the financial markets and the economy upon our ability to acquire target assets such as non-qualified residential mortgage (“non-QM”) loans, including those sourced from Angel Oak’s proprietary mortgage lending platform, Angel Oak Mortgage Lending; • the level and volatility of prevailing interest rates and credit spreads; • changes in our industry, inflation, interest rates, business strategies, target assets, the debt or equity markets, the general economy (or in specific regions) or the residential real estate finance and real estate markets specifically; • general volatility of the markets in which we invest; • changes in the availability of attractive loans and other investment opportunities, including non-QM loans sourced from Angel Oak Mortgage Lending; • the ability of our Manager to locate suitable investments for us, manage our portfolio, and implement our strategy; • our ability to profitably execute securitization transactions; • our ability to obtain and maintain financing arrangements on favorable terms, or at all; • the adequacy of collateral securing our investments and a decline in the fair value of our investments; • the timing of cash flows, if any, from our investments; • the operating performance, liquidity, and financial condition of borrowers; • increased rates of default and/or decreased recovery rates on our investments; • changes in prepayment rates on our investments; • the departure of any of the members of senior management of the Company, our Manager, or Angel Oak; • the availability of qualified personnel; 24 • conflicts with Angel Oak, including our Manager and its personnel, including our officers, and entities managed by Angel Oak; • events, contemplated or otherwise, such as acts of God, including hurricanes, wildfires, earthquakes, and other natural disasters, including those resulting from global climate change, pandemics, acts of war or terrorism, the initiation or escalation of military conflicts, and others that may cause unanticipated and uninsured performance declines, disruptions in markets, volatility in prevailing interest rates, and/or losses to us or the owners and operators of the real estate securing our investments; • the occurrence of certain geo-political events (including global trade disputes related to tariffs) that affect the normal and peaceful course of international relations; • impact of and changes in governmental regulations, tax laws and rates, accounting principles and policies and similar matters; • the level of governmental involvement in the U.S. mortgage market; • future changes with respect to the Federal National Mortgage Association (“Fannie Mae”) or Federal Home Loan Mortgage Corporation (“Freddie Mac” and together with Fannie Mae, the “GSEs”) in the mortgage market and related events, including the lack of certainty as to the future roles of these entities and the U.S. Government in the mortgage market and changes to legislation and regulations affecting these entities; • effects of hedging instruments on our target assets and our returns, and the degree to which our hedging strategies may or may not protect us from interest rate volatility; • our ability to make distributions to our stockholders in the future at the level contemplated by our stockholders or the market generally, or at all; • our ability to continue to qualify as a real estate investment trust (a “REIT”) for U.S. federal income tax purposes; and • our ability to maintain our exclusion from regulation as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report and in the Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management’s views only as of the date such statements are made. The risks summarized under Item 1A. “Risk Factors” in the Annual Report on Form 10-K could cause actual results and performance to differ materially from those set forth in or implied by our forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Important Information Regarding Our Disclosure to Investors We may use our website (www.angeloakreit.com) to communicate with our investors and disclose company information. The information disclosed through our website may be considered material, so investors should monitor our website in addition to press releases, SEC filings and public conference calls and webcasts. The contents of our website referenced herein are not incorporated by reference into this report. General Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first and second lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. Our strategy is to make credit-sensitive investments primarily in newly-originated non-QM loans and other mortgage assets that are primarily made to higher-quality borrowers and sourced from the proprietary mortgage lending platform of our affiliate, Angel Oak Mortgage Lending and other originators through our relationship with Angel Oak Capital. We may also invest in other residential mortgage loans, RMBS, and other mortgage-related assets, which, collectively with non-QM loans, we refer to as our target assets. Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles. We are externally managed and advised by our Manager, Falcons I, LLC, a registered investment adviser under the Investment Advisers Act of 1940 and an affiliate of Angel Oak Capital, a leading alternative credit manager with market leadership in mortgage credit that includes asset management, lending and capital markets. Angel Oak Mortgage Lending, an affiliated Angel Oak mortgage origination platform, is a market leader in non‑QM loan production. Through our relationship with our Manager, we benefit from Angel Oak’s vertically integrated platform and in‑house expertise, providing us with the resources that we believe are necessary to generate attractive risk‑adjusted returns for our stockholders. Angel Oak Mortgage Lending provides us with proprietary access to non‑QM loans, as well as transparency over the underwriting process and the ability to acquire loans with our desired credit and return profile. We believe our ability to identify and acquire target assets through the secondary market is bolstered by Angel Oak’s experience in the mortgage industry and expertise in structured credit investments. In addition, we believe 25 we have significant competitive advantages due to Angel Oak’s analytical investment tools, extensive relationships in the financial community, financing and capital structuring skills, investment surveillance capabilities, and operational expertise. On October 1, 2025, Angel Oak Companies, an affiliate of our Manager, and Brookfield Asset Management Ltd. (“Brookfield”), closed on a strategic transaction resulting in the beneficial owners of Angel Oak Companies selling approximately 51% of the outstanding beneficial ownership of Angel Oak Companies, and indirectly our Manager, to Brookfield (the “Strategic Transaction”). Angel Oak Companies has advised the Company that the Strategic Transaction is not expected to result in any material change in the day-to-day management of the Company, and will not result in any material changes to the Company’s investment objectives and strategies. As part of the Strategic Transaction, Brookfield has the 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. On October 1, 2025, immediately following the closing of the Strategic Transaction between Angel Oak Companies and Brookfield, the Company, the Operating Partnership, and our Manager, entered into a new management agreement (the “Management Agreement”) to supersede and replace in its entirety the Amended and Restated Management Agreement, dated as of May 1, 2024, previously in effect (the “Prior Management Agreement”). The Management Agreement is substantially and economically similar to the Prior Management Agreement. The Management Agreement reflects two substantive changes from the Prior Management Agreement. The Prior Management Agreement required the Company to reimburse our Manager for a share of the wages, salaries and benefits incurred by our Manager with respect to the Company’s Chief Executive Officer and President, based upon the percentage of such person’s working time relating to the Company. Under the Management Agreement, this provision was modified to provide that, for so long as Sreeni Prabhu serves as the Company’s Chief Executive Officer and President, our Manager will not be entitled to be reimbursed for the costs of his wages, salaries and benefits unless Mr. Prabhu devotes 100% of his working time on matters related to the Company and its subsidiaries (which is not currently the case), and any such reimbursement is approved in advance by at least two-thirds of the independent directors. In addition, under the Management Agreement, with respect to the Company’s annual right to decline to renew the Management Agreement without cause upon the affirmative vote of at least two-thirds of the independent directors based upon a determination that the compensation payable to our Manager is not fair, it was clarified that any such determination will take into account amounts sought for expense reimbursement. We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2019. Commencing with our taxable year ended December 31, 2019, we believe that we have been organized and operated, and we intend to continue to operate in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Our qualification as a REIT, and maintenance of such qualification, depends on our ability to meet, on a continuing basis, various complex requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels, and the concentration of ownership of our stock. We also intend to operate our business in a manner that will allow us to maintain our exclusion from regulation as an investment company under the Investment Company Act. Our common stock commenced trading on the New York Stock Exchange on June 17, 2021. We expect to derive our returns primarily from the difference between the interest we earn on loans we invest in and our cost of capital, as well as the returns from bonds, including risk retention securities, that are retained after securitizing the underlying loan collateral. Trends and Recent Developments Overall macroeconomic environment and its effect on us During the first quarter of 2026, the U.S. Federal Reserve Bank (the “Fed”) maintained a generally neutral policy stance following the easing cycle of late 2025. Monetary policy in the quarter reflected continued confidence in moderating inflationary pressures and a gradually cooling, yet resilient, U.S. economy. While broader macroeconomic conditions were more constructive than in the prior year, uncertainty and volatility persisted throughout the quarter, driven by incoming inflation and employment data as well as shifting market expectations regarding the timing of any future policy actions. Additionally, the conflict in Iran added to the rate volatility late in the first quarter of 2026. As such, the Fed left the federal funds rate unchanged at 3.50% - 3.75% as of the end of the first quarter of 2026. Overall, the interest rate environment during the first quarter of 2026 remained supportive for prospective homebuyers relative to recent years. In parallel, securitization markets continued to demonstrate healthy activity, supported by constructive execution spreads and steady investor demand. Current expectations remain for a relatively stable interest rate environment through the balance of 2026, assuming continued progress on inflation and sustained, albeit moderating, economic growth. U.S. Treasury yields during the first quarter of 2026 reflected this stable but still data‑dependent environment. Short‑ and intermediate‑term Treasury yields experienced modest fluctuations over the course of the quarter, while longer‑term yields remained range‑bound, reflecting balanced market views on inflation, growth, and future monetary policy. Intra‑quarter yield movements were largely driven by updated macroeconomic data releases and evolving market commentary from the Fed. Residential mortgage rates moved broadly in line with Treasury yields during the first quarter of 2026, remaining below levels observed throughout much of 2024 and early 2025. Mortgage market activity showed continued signs of improvement, with borrower engagement supported by greater rate stability and improved affordability relative to the prior year. Residential mortgage rates, along with securitization spreads, remain key benchmarks for the valuation of our portfolio; though the generally lower rate environment was a positive contributor to asset pricing, macroeconomic volatility drove spreads wider, leading to an overall decrease in asset pricing during the quarter. Continued purchases of newly originated loans, together with ongoing securitizations of recently originated collateral, supported earnings 26 growth across our residential whole loan and loans held within securitization trusts portfolios. We expect continued acquisition of newly originated loans throughout 2026, which should further support portfolio performance and securitization execution in a constructive capital markets environment. Our investment performance Net Interest Margin (“NIM”). We generated $7.8 million greater interest income for the quarter ended March 31, 2026 compared to the comparable period for 2025, driven by increases in the amount of our target assets. Interest expense increased by $5.8 million for the quarter ended March 31, 2026 compared to the comparable period for 2025, due to new asset purchases and securitizations, collateralized by residential mortgage loans in securitization trusts as well as our 9.750% Senior Notes due 2030 (“2030 Notes”) issued in May 2025. Overall, the increase in our interest income outpaced the increase in interest expense and drove a 20%, or $2.0 million, increase in net interest income for the quarter ended March 31, 2026 compared to the comparable period for 2025. Net realized loss . Our net realized loss for the quarter ended March 31, 2026 was primarily due to realized losses associated with the unamortized premium of loans that paid off underlying our residential loans in securitization trust and RMBS portfolio as well as realized losses associated with hedging activity. Net unrealized loss . Our net unrealized loss for the quarter ended March 31, 2026 was primarily due to a decrease in the valuation of our loans in securitization trust, net of non-recourse securitization obligation and residential whole loans portfolios. Whole loans and securitization activity During the quarter ended March 31, 2026, we purchased $246.2 million of newly-originated, current market coupon non-QM residential mortgage loans, with a weighted average coupon of 7.34%, weighted average combined loan-to-value ratio (“CLTV”) of 67.1% and weighted average credit score of 759. In March 2026, we issued AOMT 2026-2, a $272.3 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans. We issued AOMT 2026-2 as the sole contributor in the securitization. We used the proceeds to repay outstanding debt of approximately $234.1 million, and the $23.9 million of cash released was used for new loan purchases and operational purposes. Whole loan financing facilities activity We continuously evaluate our lender base and may enter into new agreements and / or exit agreements as we deem prudent, in accordance with our core financial strategy of purchasing whole loans and financing them until securitized. See “Liquidity and Capital Resources” below, for a full description of our financing arrangements. Our total borrowing capacity was $1.3 billion as of March 31, 2026 Highlights of whole loan financing facilities activity over the first quarter of 2026 are as follows: • During the quarter ended March 31, 2026, we maintained the same whole loan financing facility lender base as of December 31, 2025. • On April 22, 2026, the Company and one of its subsidiaries, amended the Pricing Side Letter for its loan financing facility with Global Investment Bank 2. The amendment updates the seller underwriting guidelines to include home equity revolving lines of credit. The termination date of the loan financing facility was extended to April 21, 2028. In addition, the interest rate pricing spread was updated to a range from 1.50% to 2.60%; prior to this extension, the interest rate pricing spread was a range from 1.65% to 2.40% Key Financial Metrics As a real estate finance company, we believe the key financial measures and indicators for our business are Distributable Earnings, Distributable Earnings Return on Average Equity, Book Value per Share of Common Stock, and Economic Book Value per Share of Common Stock. Distributable Earnings Distributable Earnings is a non‑GAAP measure and is defined as net income (loss) allocable to common stockholders as calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), excluding (1) unrealized gains and losses on our aggregate portfolio, (2) impairment losses, (3) extinguishment of debt, (4) non-cash equity compensation expense, (5) the incentive fee earned by our Manager, (6) realized gains or losses on swap terminations and (7) certain other nonrecurring gains or losses. We believe that the presentation of Distributable Earnings provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. We believe Distributable Earnings as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. As a REIT, we are generally required to distribute at least 90% of our annual REIT taxable income and to pay U.S. federal income tax at the regular corporate rate to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that stockholders invest in our common stock, generally we intend to attempt to pay dividends to our stockholders 27 in an amount equal to our REIT taxable income, if and to the extent authorized by our Board of Directors. Distributable Earnings is one of a number of factors considered by our Board of Directors in declaring dividends and, while not a direct measure of REIT taxable income, over time, the measure can be considered a useful indicator of our dividends. Distributable Earnings should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings may not be comparable to similar measures presented by other REITs. We also use Distributable Earnings to determine the incentive fee, if any, payable to our Manager pursuant to the Management Agreement. For information on the fees that are payable to our Manager under the Management Agreement, see “Note 9 – Related Party Transactions” in our unaudited condensed consolidated financial statements included in this report. Distributable Earnings were approximately a gain of $4.6 million and a gain of $4.1 million for the three months ended March 31, 2026 and 2025, respectively. The primary drivers of this quarter’s Distributable Earnings as compared to GAAP net income are the adjustments to remove unrealized losses associated with our residential loans and residential loans in securitization trusts and non-recourse securitization obligation portfolios. 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, 2026 and 2025: Three Months Ended March 31, 2026 March 31, 2025 (in thousands) Net income (loss) allocable to common stockholders $ (7,379) $ 20,531 Adjustments: Net unrealized (gains) losses on trading securities 2,152 1,032 Net unrealized (gains) losses on derivatives (3,703) 1,042 Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation 9,164 (15,657) Net unrealized (gains) losses on residential loans 3,979 (3,041) Non-cash equity compensation expense 423 237 Distributable Earnings $ 4,636 $ 4,144 Distributable Earnings Return on Average Equity Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total stockholders’ equity. We believe that the presentation of Distributable Earnings Return on Average Equity provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. Additionally, we believe Distributable Earnings Return on Average Equity provides investors with additional detail on the Distributable Earnings generated by our invested equity capital. We believe Distributable Earnings Return on Average Equity as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings Return on Average Equity should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings Return on Average Equity may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings Return on Average Equity may not be comparable to similar measures presented by other REITs. Set forth below is our computation of Distributable Earnings Return on Average Equity for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 March 31, 2025 ($ in thousands) Annualized Distributable Earnings $ 18,546 $ 16,576 Average total stockholders’ equity $ 262,212 $ 252,033 Distributable Earnings Return on Average Equity 7.1 % 6.6 % Book Value per Share of Common Stock The following table sets forth the calculation of our book value per share of common stock as of March 31, 2026 and December 31, 2025: 28 March 31, 2026 December 31, 2025 (in thousands except for share and per share data) Common stockholders’ equity $ 256,902 $ 267,523 Number of shares of common stock outstanding at period end 24,914,647 24,914,647 Book value per share of common stock $ 10.31 $ 10.74 Economic Book Value per Share of Common Stock “Economic book value” is a non-GAAP financial measure of our financial position. To calculate our economic book value, the portions of our non-recourse financing obligation held at amortized cost are adjusted to fair value. These adjustments are also reflected in the table below in our end of period total stockholders’ equity. Management considers economic book value to provide investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for our legally held retained bonds, irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for book value per share of common stock or stockholders’ equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies. The following table sets forth a reconciliation from GAAP total stockholders’ equity and book value per share of common stock to economic book value and economic book value per share of common stock as of March 31, 2026 and December 31, 2025: March 31, 2026 December 31, 2025 (in thousands except for share and per share data) GAAP total stockholders’ equity $ 256,902 $ 267,523 Adjustments: Fair value adjustment for securitized debt held at amortized cost 48,958 48,789 Stockholders’ equity including economic book value adjustments $ 305,860 $ 316,312 Number of shares of common stock outstanding at period end 24,914,647 24,914,647 Book value per share of common stock $ 10.31 $ 10.74 Economic book value per share of common stock $ 12.28 $ 12.70 29 Results of Operations Three Months Ended March 31, 2026 and 2025 The following table sets forth a summary of our results of operations for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 March 31, 2025 (in thousands) INTEREST INCOME, NET Interest income $ 40,694 $ 32,867 Interest expense 28,584 22,780 NET INTEREST INCOME $ 12,110 $ 10,087 REALIZED AND UNREALIZED GAINS (LOSSES), NET Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS $ (2,721) $ (3,182) Net unrealized gain (loss) on mortgage loans, portion of debt at fair value option, derivative contracts, and trading securities (11,592) 16,625 TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET $ (14,313) $ 13,443 EXPENSES Operating expenses $ 1,657 $ 1,201 Operating expenses incurred with affiliate 565 416 Stock compensation 423 237 Securitization costs 1,402 — Management fee incurred with affiliate 1,129 1,145 Total operating expenses $ 5,176 $ 2,999 INCOME (LOSS) BEFORE INCOME TAXES $ (7,379) $ 20,531 Income tax expense (benefit) — — NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS $ (7,379) $ 20,531 Other comprehensive income (loss) 4,398 (695) TOTAL COMPREHENSIVE INCOME (LOSS) $ (2,981) $ 19,836 30 Net Interest Income The following table sets forth the components of net interest income for the three months ended March 31, 2026 and 2025: Three Months Ended March 31, 2026 March 31, 2025 (in thousands) Interest income Interest income / expense Average balance Interest income / expense Average balance Residential mortgage loans $ 5,617 $ 334,781 $ 5,281 $ 304,007 Residential mortgage loans in securitization trusts 30,426 2,100,639 23,104 1,685,423 Commercial mortgage loans 102 5,186 108 5,210 RMBS and Majority-Owned Affiliate 3,975 130,632 3,651 145,289 CMBS 226 4,799 269 5,752 U.S. Treasury securities — — 38 4,167 Other interest income 348 36,839 416 38,630 Total interest income 40,694 32,867 Interest expense Notes payable 2,824 260,637 3,762 240,628 Non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts 22,541 1,933,249 16,843 1,574,110 Repurchase facilities 733 56,260 863 62,631 Senior Unsecured Notes 2,486 89,137 1,312 47,803 Total interest expense 28,584 22,780 Net interest income $ 12,110 $ 10,087 We generated $7.8 million greater interest income for the quarter ended March 31, 2026 compared to the comparable period for 2025, driven by increases in the amount of our target assets. Interest expense increased by $5.8 million for the quarter ended March 31, 2026 compared to the comparable period for 2025, due to new asset purchases and securitizations, collateralized by residential mortgage loans in securitization trusts as well as our 2030 Notes issued in May 2025. Overall, this increase in interest expense was mitigated by lower average borrowing costs. Overall, the increase in our interest income outpaced the increase in interest expense and drove a 20%, or $2.0 million, increase in net interest income for the quarter ended March 31, 2026 compared to the comparable period for 2025. Total Realized and Unrealized Gains (Losses) The components of total realized and unrealized gains (losses), net for the three months ended March 31, 2026 and 2025 are set forth as follows: Three Months Ended March 31, 2026 March 31, 2025 (in thousands) Realized and unrealized gain (loss) on securitization, net of unrealized gain (loss) on non-recourse securitization obligation $ (11,220) $ 14,546 Realized gain (loss) on RMBS (231) (319) Unrealized gain (loss) on Whole Pool Agency RMBS (1,754) (2,190) Realized gain (loss) on CMBS (33) (56) Realized gain (loss) on interest rate futures (50) (1,473) Realized and unrealized gain (loss) on TBAs 1,812 2,056 Realized and unrealized gain (loss) on residential mortgage loans (4,042) 2,936 Unrealized appreciation (depreciation) on interest rate futures 1,453 (1,934) Realized gain/(loss) on AOMT MOA (248) (105) Total realized and unrealized gains (losses), net $ (14,313) $ 13,443 31 For the three months ended March 31, 2026 and 2025, total realized and unrealized gains and (losses), net resulted in a net loss of ($14.3) million and a gain of $13.4 million, respectively. During the three months ended March 31, 2026, the ($11.2) million of realized and unrealized loss on securitization, net of unrealized gain (loss) on non-recourse securitization obligation and the ($4.0) million of realized and unrealized loss on our residential mortgage loan portfolio were the primary driver of the overall loss. These losses are substantially comprised of unrealized losses associated with valuation decreases in our securitization, net of unrealized gain (loss) on non-recourse securitization obligation and our residential mortgage loan portfolios, as well as realized losses associated with the loss of unamortized premiums in these portfolios. During the three months ended March 31, 2025, realized and unrealized gains on securitization, net of unrealized gain (loss) on non-recourse securitization obligation was the key drivers of the overall gain. Expenses Operating Expenses For the three months ended March 31, 2026 and 2025, our operating expenses were $1.7 million and $1.2 million, respectively. Our operating expenses increased compared to the comparative period due to increases in audit and loan diligence fees associated with a larger overall balance in our target portfolio. Operating Expenses Incurred with Affiliate For the three months ended March 31, 2026 and 2025, our operating expenses incurred with affiliate were $0.6 million and $0.4 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, increased in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to standard annual compensation increases. Stock Compensation For the three months ended March 31, 2026 and 2025, our stock compensation expense was $0.4 million and $0.2 million, respectively. Our stock compensation expense increased for the three months ended March 31, 2026 due to the issuance of new performance based stock awards in 2025. Securitization Costs For the three months ended March 31, 2026 and 2025, we incurred $1.4 million of securitization costs and no securitization costs, respectively. The securitization costs in the three months ended March 31, 2026 are associated with the AOMT 2026-2 securitization in March 2026, and there was no securitization activity in the three months ended March 31, 2025. Management Fee Incurred with Affiliate For the three months ended March 31, 2026 and 2025, our management fee incurred with affiliate was $1.1 million and $1.1 million, respectively. These expenses, which were flat for the three months ended March 31, 2026 versus the comparative period, are driven by our average Equity (as defined in the Management Agreement). 32 Our Portfolio As of March 31, 2026, our portfolio consisted of approximately $2.7 billion of residential mortgage loans, RMBS, and other target assets. Certain of these portfolio assets are located in states such as Florida and California where natural disasters such as hurricanes, wildfires and earthquakes may occasionally occur. We require all of our collateral to be adequately insured. The graphs in the subsequent detail of residential mortgage loans, residential mortgage loans held in securitization trusts, and residential mortgage loans underlying RMBS issuances show the percentage of residential mortgage loans held in each state where there is a concentration of loans. The following table sets forth additional information regarding our portfolio, including the manner in which our equity capital was allocated among investment types, as of March 31, 2026: Fair Value Collateralized Debt Allocated Capital % of Total Capital Portfolio: ($ in thousands) Residential mortgage loans $ 245,534 $ 192,230 $ 53,304 20.7 % Residential mortgage loans in securitization trust 2,249,614 2,079,653 169,961 66.2 % Total whole loan portfolio $ 2,495,148 $ 2,271,883 $ 223,265 86.9 % Investment securities RMBS $ 212,596 $ 57,000 $ 155,596 60.6 % Investments in Majority-Owned Affiliates (1) 25,667 — 25,667 10.0 % Total investment securities $ 238,263 $ 57,000 $ 181,263 70.6 % Total investment portfolio $ 2,733,411 $ 2,328,883 $ 404,528 157.5 % Target assets $ 2,733,411 $ 2,328,883 $ 404,528 157.5 % Cash $ 41,963 $ — $ 41,963 16.3 % Other assets and liabilities (2) (189,589) — (189,589) (73.8) % Total $ 2,585,785 $ 2,328,883 $ 256,902 100 % (1) Our Investment in Majority-Owned Affiliates is held at its amortized cost basis. (2) Other assets and liabilities presented is calculated as a net liability substantially comprised of $129.4 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. 33 As of December 31, 2025, our portfolio consisted of approximately $2.7 billion of residential mortgage loans, RMBS, and other target assets. The following table sets forth additional information regarding our portfolio including the manner in which our equity capital was allocated among investment types, as of December 31, 2025: Fair Value Collateralized Debt Allocated Capital % of Total Capital Portfolio: ($ in thousands) Residential mortgage loans $ 294,134 $ 218,757 $ 75,377 28.2 % Residential mortgage loans in securitization trust 2,076,776 1,915,321 161,455 60.4 % Total whole loan portfolio $ 2,370,910 $ 2,134,078 $ 236,832 88.5 % Investment securities RMBS $ 280,005 $ 54,041 $ 225,964 84.5 % Investment in Majority-Owned Affiliates (1) 25,474 — 25,474 9.5 % Total investment securities $ 305,479 $ 54,041 $ 251,438 94.0 % Total investment portfolio $ 2,676,389 $ 2,188,119 $ 488,270 182.5 % Target assets $ 2,676,389 $ 2,188,119 $ 488,270 182.5 % Cash $ 41,619 $ — $ 41,619 15.6 % Other assets and liabilities (2) (262,366) — (262,366) (98.1) % Total $ 2,455,642 $ 2,188,119 $ 267,523 100.0 % (1) "Investment in Majority-Owned Affiliate” is held at its amortized cost basis. (2) Other assets and liabilities presented is calculated as a net liability substantially comprised of $198.2 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued Whole Pool Agency RMBS, and excluding the portion of “other assets” which includes our investment in Majority-Owned Affiliates, which is considered a target asset. Residential Mortgage Loans The following table sets forth additional information on the residential mortgage loans in our portfolio as of March 31, 2026: Portfolio Range Portfolio Weighted Average ($ in thousands) Unpaid principal balance (“UPB”) $2 - $2,997 $330 Interest rate 3.87% - 13.49% 7.62% Maturity date 5/1/2026 - 2/14/2066 February, 2055 FICO score at loan origination 628 - 850 757 CLTV 1 at loan origination 7.4% - 90.0% 66.6% DTI at loan origination 1.7% - 50.0% 33.3% Percentage of first lien loans N/A 78.9% Percentage of loans 90+ days delinquent (based on UPB) N/A 1.1% 34 (1) "CLTV” means combined loan-to-value ratio, which is calculated as the total outstanding principal amount of, if applicable, the outstanding principal amount of a HELOC plus the outstanding principal amount of a loan plus any financing that is pari passu with or senior to such loan at the time of acquisition, divided by the applicable real estate value at acquisition of such loan. The real estate value reflects the results of third-party appraisals obtained by the selling mortgage companies prior to the loan closing. The following table sets forth additional information on the residential mortgage loans in our portfolio as of December 31, 2025: Portfolio Range Portfolio Weighted Average ($ in thousands) Unpaid principal balance (“UPB”) $10 - $3,497 $386 Interest rate 3.87% -13.41% 7.38% Maturity date 1/26/2040 - 10/19/2065 June, 2055 FICO score at loan origination 628-850 760 CLTV at loan origination 8.7%-85.0% 70.5% DTI at loan origination 1.7%-50.0% 32.4% Percentage of first lien loans N/A 89.1% Percentage of loans 90+ days delinquent (based on UPB) N/A 0.4% 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, 2026: 35 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, 2025: 36 The following charts illustrate additional characteristics of our residential mortgage loans in our portfolio that we owned directly as of March 31, 2026, based on the product profile, borrower profile, and geographic location (percentages are based on the aggregate unpaid principal balance of such loans): Characteristics of Our Residential Mortgage Loans as of March 31, 2026: Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of March 31, 2026. Numbers presented may add to more than 100% due to rounding. 37 The following charts illustrate additional characteristics of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2025, based on the product profile, borrower profile, and geographic location (percentages are based on the aggregate unpaid principal balance of such loans): Characteristics of Our Residential Mortgage Loans as of December 31, 2025: Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2025. Numbers presented may add to more than 100% due to rounding. 38 Residential Mortgage Loans Held in Securitization Trusts The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of March 31, 2026: ($ in thousands) UPB $2,277,410 Fair Value $2,249,614 Number of loans 5,392 Weighted average loan coupon 6.1% Average loan amount $424 Weighted average CLTV at loan origination and deal date 66.9% Weighted average credit score at loan origination and deal date 748 Current 3-month constant prepayment rate (“CPR”) (1) 12.8% Percentage of loans 90+ days delinquent (based on UPB) 1.9% (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year. The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of March 31, 2026 (percentages based on the aggregate unpaid principal balance of such loans): Note: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of March 31, 2026. Numbers presented may add to more than 100% due to rounding. 39 The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2025: ($ in thousands) UPB $2,090,583 Fair Value $2,076,776 Number of loans 4,947 Weighted average loan coupon 6.0% Average loan amount $424 Weighted average CLTV at loan origination and deal date 66.9% Weighted average credit score at loan origination and deal date 747 Current 3-month CPR 12.6% Percentage of loans 90+ days delinquent (based on UPB) 1.7% The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2025 (percentages based on the aggregate unpaid principal balance of such loans): Note: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2025. Numbers presented may add to more than 100% due to rounding. 40 RMBS We have participated in numerous securitization transactions alongside other Angel Oak entities. In return, we received our pro rata share of bonds from these securitizations, and cash. At times, we were allocated certain risk retention securities as part of these transactions. Risk retention securities represent at least 5% of a horizontal or vertical slice of the bonds issued as part of the transaction. Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in such securitization transactions is set forth below as of March 31, 2026, unless otherwise stated: March 31, 2026 AOMT 2019 Securitizations AOMT 2020 Securitizations AOMT 2023 Securitizations AOMT 2024 Securitizations AOMT 2025 Securitizations ($ in thousands) UPB of loans $102,761 $130,142 $959,625 $997,120 $559,605 Number of loans 375 421 1,914 2,368 3,301 Weighted average loan coupon 6.51% 5.81% 5.19% 5.72% 8.83% Average loan amount $274 $309 $501 $421 $170 Weighted average CLTV at loan origination and deal date 66% 74% 67% 67% 68% Weighted average credit score at loan origination and deal date 718 719 732 736 745 Current 3-month CPR (1) 9.4% 10.0% 8.2% 10.4% 24.4% 90+ day delinquency (as a % of UPB) 3.8% 3.3% 5.2% 2.9% 1.4% Weighted Average 90+ Delinquency (as a % of Original Balance) 0.8% 0.9% 3.9% 2.4% 1.2% Weighted Average CLTV of 90+ Delinquent Loans (FHFA HPI Estimate) (2) 48.3% 74.1% 64.0% 67.4% 52.1% Fair value of first loss piece (3, 4) $2,352 $27,313 $11,122 $17,789 $7,047 Investment thickness (5) 12.45% 23.84% 8.79% 10.55% 4.41% (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year. (2) AOMT 2020-3 does not have combined loan-to-value ratio (“CLTV”) or Federal Housing Finance Agency Home Price Index Estimates (“FHFA HPI Estimates”); accordingly, original CLTV is used. (3) Represents the fair value of the securities we hold in the first loss tranche in each securitization. (4) The fair value of the first loss pieces presented for the 2023 - 2025 securitizations is the total at risk for the Majority-Owned Affiliates. (5) Represents the average size of the subordinate securities we own as investments in each securitization relative to the average current size of the securitization. 41 Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in AOMT securitization transactions is set forth below as of December 31, 2025, unless otherwise stated: December 31, 2025 AOMT 2019 Securitizations AOMT 2020 Securitizations AOMT 2023 Securitizations AOMT 2024 Securitizations AOMT 2025 Securitizations ($ in thousands) UPB of loans $105,837 $134,276 $984,295 $1,028,989 $603,865 Number of loans 388 429 1,949 2,425 3,328 Weighted average loan coupon 6.47% 5.81% 5.18% 5.74% 9.08% Average loan amount $273 $313 $505 $424 $181 Weighted average CLTV at loan origination and deal date 66% 74% 67% 67% 68% Weighted average credit score at loan origination and deal date 718 719 732 736 746 Current 3-month CPR (1) 15.7% 6.2% 8.4% 10.2% 15.1% 90+ day delinquency (as a % of UPB) 4.8% 3.0% 3.9% 2.5% 0.7% Weighted Average 90+ Delinquency (as a % of Original Balance) 1.0% 0.9% 3.2% 2.3% 0.7% Weighted Average CLTV of 90+ Delinquent Loans (FHFA HPI Estimate) (2) 47.5% 74.1% 65.3% 64.9% 65.3% Fair value of first loss piece (3, 4) $2,214 $24,641 $10,938 $18,190 $7,172 Investment thickness (5) 12.09% 23.11% 8.57% 10.22% 4.08% (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year. (2) AOMT 2020-3 does not have CLTV or FHFA HPI Estimates; accordingly, original CLTV is used. (3) Represents the fair value of the securities we hold in the first loss tranche in each securitization. (4) The fair value of the first loss pieces presented for the 2023 - 2025 securitizations is the total at risk for the Majority-Owned Affiliates. (5) Represents the average size of the subordinate securities we own as investments in each securitization relative to the average current size of the securitization. 42 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, 2026: RMBS Repurchase Debt (1,3) Allocated Capital AOMT Third Party RMBS Total AOMT Third Party RMBS Total AOMT Third Party RMBS Total (in thousands) Mezzanine $ 14,265 $ — $ 14,265 $ 8,297 $ — $ 8,297 $ 5,968 $ — $ 5,968 Subordinate 62,229 — 62,229 12,625 — 12,625 49,604 — 49,604 Interest only / excess 9,221 — 9,221 — — — 9,221 — 9,221 Whole pool (2) — 126,881 126,881 — — — — 126,881 126,881 Retained RMBS in VIEs (3) — — — 36,078 — 36,078 (36,078) — (36,078) Subtotal $ 85,715 $ 126,881 $ 212,596 $ 57,000 $ — $ 57,000 $ 28,715 $ 126,881 $ 155,596 Investment in Majority Owned Affiliates 25,667 — 25,667 — — — 25,667 — 25,667 Total $ 111,382 $ 126,881 $ 238,263 $ 57,000 $ — $ 57,000 $ 54,382 $ 126,881 $ 181,263 (1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). (2) The whole pool RMBS presented as of March 31, 2026 were purchased from a broker to whom the Company owed approximately $129.4 million, payable upon the settlement date of the trade. See Note 6 — Due to Broker in our unaudited condensed consolidated financial statements included in this report. (3) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $220.9 million, are not reflected in the condensed consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its condensed consolidated balance sheets. 43 The following table provides certain information with respect to our RMBS portfolio both received in AOMT securitization transactions and acquired from other third parties as of December 31, 2025: RMBS Repurchase Debt (1,3) Allocated Capital AOMT Third Party RMBS Total AOMT Third Party RMBS Total AOMT Third Party RMBS Total (in thousands) Mezzanine $ 13,252 $ — $ 13,252 $ 6,993 $ — $ 6,993 $ 6,259 $ — $ 6,259 Subordinate 59,587 — 59,587 12,354 — 12,354 47,233 — 47,233 Interest only / excess 9,301 — 9,301 — — — 9,301 — 9,301 Whole pool (2) — 197,865 197,865 — — — — 197,865 197,865 Retained RMBS in VIEs (3) — — — 34,694 — 34,694 (34,694) — (34,694) Subtotal $ 82,140 $ 197,865 $ 280,005 $ 54,041 $ — $ 54,041 $ 28,099 $ 197,865 $ 225,964 Investment in Majority Owned Affiliates 25,474 — 25,474 — — — 25,474 — 25,474 Total $ 107,614 $ 197,865 $ 305,479 $ 54,041 $ — $ 54,041 $ 53,573 $ 197,865 $ 251,438 (1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). (2) The whole pool RMBS presented as of December 31, 2025 were purchased from a broker to whom the Company owed approximately $198.2 million, payable upon the settlement date of the trade. See Note 6 — Due to Broker in our unaudited condensed consolidated financial statements included in this report. (3) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $198.9 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. 44 The following table sets forth information with respect to our RMBS ending balances, at fair value, for the period ended March 31, 2026: Mezzanine Subordinate Interest Only Whole Pool Total (in thousands) Beginning fair value $ 13,252 $ 59,587 $ 9,301 $ 197,865 $ 280,005 Acquisitions: Third party securities — — — 129,359 129,359 Effect of principal payments / called deals — (198,191) (198,191) IO and excess servicing prepayments — — (399) — (399) Discount accretion and premium amortization 45 (139) (94) Changes in fair value, net 968 2,781 319 (2,152) 1,916 Ending fair value $ 14,265 $ 62,229 $ 9,221 $ 126,881 $ 212,596 The following table sets forth information with respect to our RMBS ending balances, at fair value, for the year ended December 31, 2025: Mezzanine Subordinate Interest Only Whole Pool Total (in thousands) Beginning fair value $ 12,735 $ 73,549 $ 12,508 $ 201,451 $ 300,243 Acquisitions: Retained bonds received in securitizations — 10,256 732 — 10,988 Third party securities — — — 908,857 908,857 Effect of principal payments / called deals 155 (25,251) (3,347) (915,610) (944,053) IO and excess servicing prepayments — — (1,640) — (1,640) Changes in fair value, net 362 1,033 1,048 3,167 5,610 Ending fair value $ 13,252 $ 59,587 $ 9,301 $ 197,865 $ 280,005 45 The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of March 31, 2026 (percentages are based on the aggregate unpaid principal balance of such loans): Geographic Diversification of Loans Underlying Our Portfolio of RMBS Issued in AOMT Securitization Transactions (as of March 31, 2026) Note: 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, 2026. Numbers presented may add to more than 100% due to rounding. The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2025 (percentages are based on the aggregate unpaid principal balance of such loans): Geographic Diversification of Loans Underlying Our Portfolio of RMBS Issued in AOMT Securitization Transactions (as of December 31, 2025) Note: 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 December 31, 2025. Numbers presented may add to more than 100% due to rounding. 46 Liquidity and Capital Resources Overview Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund our investments and operating costs, make distributions to our stockholders, and satisfy other general business needs. Our financing sources currently include payments of principal and interest we receive on our investment portfolio, unused borrowing capacity under our in‑place loan financing lines and repurchase facilities, securitizations of our whole loans, and our ATM Program (as defined below). In the past, we have also raised capital through public offerings of senior unsecured notes. Going forward, we may also utilize other types of borrowings, including bank credit facilities and warehouse lines of credit, among others. We may also seek to raise additional capital through public or private offerings of equity, equity-related, or debt securities, depending upon market conditions. The use of any particular source of capital and funds will depend on market conditions, availability of these sources, and the investment opportunities available to us. We have used and expect to continue to use loan financing lines to finance the acquisition and accumulation of mortgage loans or other mortgage‑related assets pending their eventual securitization. Upon accumulating an appropriate amount of assets, we have financed and expect to continue to finance a substantial portion of our mortgage loans utilizing fixed-rate term securitization funding that provides long‑term financing for our mortgage loans and locks in our cost of funding, regardless of future interest rate movements. Securitization transactions may either take the form of the issuance of securitized bonds or the sale of “real estate mortgage investment conduit” securities backed by mortgage loans or other assets, with the securitization proceeds being used in part to repay pre-existing loan financing lines and repurchase facilities. We have sponsored and participated in securitization transactions with other entities that are managed by Angel Oak, and may continue to do so in the future, along with sponsoring sole securitization transactions in which we are the sole participant and contributor. We believe these identified sources of financing will be adequate for purposes of meeting our short‑term (within one year) and our longer‑term liquidity needs. We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and any potential changes in market conditions. Description of Existing Financing Arrangements As of March 31, 2026, we were a party to four warehouse loan financing lines, which permitted borrowings in an aggregate amount of up to $1.3 billion. Borrowings under uncommitted loan financing lines may be used to purchase whole loans for eventual securitization or loans purchased for long‑term investment purposes. Our financing facilities are generally subject to limits on borrowings related to specific asset pools (“advance rates”) and other restrictive covenants, as is usual and customary. As of March 31, 2026, the advance rates (when required) of our four 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 four active lenders) included: (1) our minimum tangible net worth must not (i) decline 20% or more in the previous 30 days, 25% or more in the previous 90 days, or 35% or more in the previous year, or (ii) fall below $200.0 million of tangible net worth as of September 30, 2022 plus 50% of any capital contribution made or raised after September 30, 2022; (2) our minimum liquidity must not fall below the greatest of (x) the product of 5% and the aggregate repurchase price as it relates to Global Investment Bank 3 as of such date of determination, (y) $10.0 million and (z) any other amount of liquidity that we have covenanted to maintain in any other note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement, or similar credit facility or agreement for borrowed funds); and (3) the maximum ratio of our and our subsidiaries’ total indebtedness to tangible net worth must not be greater than 5:1. Our minimum liquidity requirement as of March 31, 2026 was $10.0 million. We were in compliance with all covenants as of March 31, 2026. A description of each loan financing line is set forth as follows: Multinational Bank 1 Loan Financing Facility. On April 13, 2022, we and two of our subsidiaries entered into a master repurchase agreement with a multinational bank (“Multinational Bank 1”). Our subsidiaries are each considered a “Seller” under this agreement. From time to time and pursuant to the agreement, either of our subsidiaries may sell to Multinational Bank 1, and later repurchase, up to $600.0 million aggregate borrowings on mortgage loans. Pursuant to the terms of the master repurchase agreement, the agreement may be renewed every three months for a maximum six-month term. As of March 31, 2026, the termination date of the master repurchase agreement was June 25, 2026, 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. 47 Pursuant to the agreement, Multinational Bank 1 retains the right to determine the market value of the mortgage loans in its sole commercially reasonable discretion. The loan financing line is marked‑to‑market. Additionally, Multinational Bank 1 is under no obligation to purchase the eligible mortgage loans we offer to sell to them. The interest rate on any outstanding balance under the master repurchase agreement that the applicable subsidiary is required to pay Multinational Bank 1 is generally in line with other similar agreements that the Company or one or more of its subsidiaries has entered into, where the interest rate is equal to the sum of (1) a pricing spread from 1.65% - 2.10% and (2) the average SOFR for each U.S. Government Securities Business Day (as defined in the master repurchase agreement) until two U.S. Government Securities Business Days prior to the date the applicable loan is repurchased by the applicable subsidiary. The obligations of the subsidiaries under the master repurchase agreement are guaranteed by the Company pursuant to a guaranty executed contemporaneously with the master repurchase agreement. In addition, and similar to other repurchase agreements that the Company has entered into, the Company is subject to various financial and other covenants, including those relating to (1) maintenance of a minimum tangible net worth; (2) a maximum ratio of indebtedness to tangible net worth; and (3) minimum liquidity. The agreement contains margin call provisions that provide Multinational Bank 1 with certain rights in the event of a decline in the market value of the purchased mortgage loans. Under these provisions, Multinational Bank 1 may require us or our subsidiaries to transfer cash sufficient to eliminate any margin deficit resulting from such a decline. In addition, the agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Multinational Bank 1’s right to liquidate the mortgage loans then subject to the agreement. We and our subsidiaries are also required to pay certain customary fees to Multinational Bank 1 and to reimburse Multinational Bank 1 for certain costs and expenses incurred in connection with its structuring, management, and ongoing administration of the master repurchase agreement. Global Investment Bank 2 Loan Financing Facility. On March 28, 2024, two of our subsidiaries entered into a master repurchase agreement with a global investment bank (“Global Investment Bank 2”), replacing the existing master repurchase agreement with Global Investment Bank 2 entered into on February 13, 2020. The Company is guarantor under the current facility, one of the subsidiaries is seller and Global Investment Bank 2 is buyer. Pursuant to the agreement, one of our subsidiaries may sell to Global Investment Bank 2, and later repurchase, up to $250.0 million aggregate borrowings on mortgage loans. The agreement is set to terminate on April 21, 2028, unless terminated earlier pursuant to the terms of the master repurchase agreement. The principal amount paid by Global Investment Bank 2 for each mortgage loan is based on a percentage of the market value, cost‑basis value, or unpaid principal balance of the mortgage loan (depending on the type of loan and certain other factors and subject to certain other adjustments). Pursuant to the agreement, Global Investment Bank 2 retains the right to determine the market value of the mortgage loan collateral in its sole good faith discretion. Additionally, Global Investment Bank 2 is under no obligation to purchase the eligible mortgage loans we offer to sell to them. Upon our or our subsidiary’s repurchase of the mortgage loan, our subsidiaries are required to repay Global Investment Bank 2 the principal amount related to such mortgage loan plus accrued and unpaid interest at a rate based on the sum of (A) the greater of (i) 0.00% and (ii) Term SOFR (which is defined as the forward-looking term rate based on the Secured Overnight Financing Rate for a corresponding tenor of one month) and (B) a pricing spread generally ranging from 1.50% to 2.60%. The agreement requires us to maintain various financial and other covenants, which include requirements surrounding: (1) adjusted tangible net worth; (2) liquidity; and (3) our indebtedness to our adjusted tangible net worth. The agreement contains margin call provisions that provide Global Investment Bank 2 with certain rights in the event of a decline in the market value or cost‑basis value of the purchased mortgage loans. Under these provisions, Global Investment Bank 2 may require us or our subsidiary to transfer cash sufficient to eliminate any margin deficit resulting from such a decline. In addition, the agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Global Investment Bank 2’s right to liquidate the mortgage loans then subject to the agreement. We and our subsidiary are also required to pay certain customary fees to Global Investment Bank 2 and to reimburse Global Investment Bank 2 for certain costs and expenses incurred in connection with its structuring, management and ongoing administration of the agreement. Global Investment Bank 3 Loan Financing Facility. 48 On October 24, 2018, two of our subsidiaries entered into a master repurchase agreement with a global investment bank (“Global Investment Bank 3”) for which we serve as guarantor of our subsidiaries’ obligations. Our subsidiaries, are each considered a “Seller” under this agreement. Pursuant to the initial agreement, our subsidiaries could sell to Global Investment Bank 3, and later repurchase, up to $200.0 million aggregate borrowings on mortgage loans. On September 26, 2025, the facility’s termination date was extended to September 26, 2026. The loan financing line is marked‑to‑market at fair value, where Global Investment Bank 3 retains the right to determine the market value of the mortgage loan collateral in its sole good faith discretion and in a commercially reasonable manner and is under no obligation to purchase the eligible mortgage loans we offer to sell to them. Further, the principal amount paid by Global Investment Bank 3 for each eligible mortgage loan is based on a percentage of the outstanding principal balance of the mortgage loan or the market value of the mortgage loan, whichever is less. Upon any subsidiary’s repurchase of the mortgage loan, such subsidiary is required to repay Global Investment Bank 3 the principal amount related to such mortgage loan plus accrued and unpaid interest at a rate based on the sum of (1) Compound SOFR and (2) a pricing spread generally ranging from 1.75% - 4.75%. The agreement contains margin call provisions that provide Global Investment Bank 3 with certain rights in the event of a decline in the market value of the purchased mortgage loans. Under those provisions, Global Investment Bank 3 could require us or our subsidiary to transfer cash sufficient to eliminate any margin deficit resulting from such a decline. The agreement requires us to maintain various financial and other customary covenants. The agreement also sets forth events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction. The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Global Investment Bank 3’s right to liquidate the mortgage loans then subject to the agreement. We and our subsidiary 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. Global Investment Bank 4 Loan Financing Facility On October 6, 2025, the Company and one of its subsidiaries entered into a $200.0 million repurchase facility with a Global Investment Bank 4 through the execution of a Master Repurchase Agreement and Securities Contract (the “Global Investment Bank 4 Master Repurchase Agreement”). The amount expected to be advanced by Global Investment Bank 4 is generally in line with other similar agreements that the Company has entered into. Additionally, the rates, terms, events of default, and remedies for such events of default contained within the Global Investment Bank 4 Master Repurchase Agreement are generally in line with other similar agreements that the Company has entered into. The interest rate is equal to the sum of (1) a spread of 1.60%, and (2) Term SOFR. The Company is subject to various financial and other covenants, including those relating to (1) declines in tangible net worth; (2) a maximum ratio of indebtedness to tangible net worth; and (3) minimum liquidity. The Global Investment Bank 4 Master Repurchase Agreement expires on October 6, 2027, unless terminated earlier pursuant to the terms of the Global Investment Bank 4 Master Repurchase Agreement. The following table sets forth the details of our financing lines as of each of March 31, 2026 and December 31, 2025: Interest Rate Pricing Spread Drawn Amount Note Payable Base Interest Rate March 31, 2026 December 31, 2025 ($ in thousands) Multinational Bank 1 (1) Average Daily SOFR 1.65% - 2.10% $ 79,013 $ 125,091 Global Investment Bank 2 (2) 1 Month Term SOFR 1.50% - 2.60% 23,155 — Global Investment Bank 3 (3) Compound SOFR 1.75% - 4.75% 64,407 60,263 Global Investment Bank 4 (4) Term SOFR 1.60% 25,655 33,403 Total $ 192,230 $ 218,757 (1) On December 26, 2025, this financing facility was extended through June 25, 2026 in accordance with the terms of the agreement, which contemplates rolling three-month renewals. The interest rate pricing spread remained unchanged from the prior extension at a range from 1.65% to 2.10%. (2) On April 22, 2026, the Company and one of its subsidiaries, amended the Pricing Side Letter for its loan financing facility with Global Investment Bank 2. The amendment updates the seller underwriting guidelines to include home equity revolving lines of credit. The termination date of the loan financing facility was extended to April 21, 2028. In addition, the interest rate pricing spread 49 was updated to a range from 1.50% to 2.60%; prior to this extension, the interest rate pricing spread was a range from 1.65% to 2.40% (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%. (4) On October 6, 2025, the Company and one of its subsidiaries entered into a $200.0 million repurchase facility with Global Investment Bank 4 through the execution of the Global Investment Bank 4 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 Global Investment Bank 4 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 Global Investment Bank 4 Master Repurchase Agreement expires on October 6, 2027, unless terminated earlier pursuant to the terms of the Global Investment Bank 4 Master Repurchase Agreement. The following table sets forth the total unused borrowing capacity of each financing line as of March 31, 2026: Note Payable Borrowing Capacity Balance Outstanding Available Financing (in thousands) Multinational Bank 1 $ 600,000 $ 79,013 $ 520,987 Global Investment Bank 2 250,000 23,155 226,845 Global Investment Bank 3 200,000 64,407 135,593 Global Investment Bank 4 200,000 25,655 174,345 Total $ 1,250,000 $ 192,230 $ 1,057,770 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. Short‑Term Repurchase Facilities. In addition to our existing loan financing lines, we employ short‑term repurchase facilities to borrow against U.S. Treasury securities, securities issued by AOMT, Angel Oak’s securitization platform, and other securities we may acquire in accordance with our investment guidelines. The following table sets forth certain characteristics of our short-term repurchase facilities as of March 31, 2026 and December 31, 2025: March 31, 2026 Repurchase Agreements Amount Outstanding Weighted Average Interest Rate Weighted Average Remaining Maturity (Days) ($ in thousands) AOMT RMBS (1) $ 57,000 5.14 % 16 December 31, 2025 Repurchase Agreements Amount Outstanding Weighted Average Interest Rate Weighted Average Remaining Maturity (Days) ($ in thousands) AOMT RMBS (1) $ 54,041 5.44 % 16 50 (1) A portion of repurchase debt outstanding as of both March 31, 2026 and December 31, 2025 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: Quarter End Quarter End Balance Average Balance in Quarter Highest Month-End Balance in Quarter (in thousands) Q2 2024 201,051 66,804 201,051 Q3 2024 102,876 57,842 102,876 Q4 2024 50,555 53,412 51,843 Q1 2025 148,467 62,631 148,467 Q2 2025 68,062 71,980 148,467 Q3 2025 54,041 64,557 68,062 Q4 2025 54,041 54,041 54,041 Q1 2026 57,000 56,260 57,000 We utilize short‑term repurchase facilities on our RMBS portfolio and to finance assets for REIT asset test purposes. Over time, the need to purchase securities for REIT asset test purposes will be reduced as we obtain and participate in additional securitizations and acquire assets directly for investment purposes. We will continue to use repurchase facilities on our RMBS portfolio to add additional leverage which increases the yield on those assets. Our use of repurchase facilities is generally highest at the end of any particular quarter, as shown in the table above, where the quarter-end balance and the highest month-end balance in each quarter are generally equivalent. Securitization Transactions In March 2026, 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. In the transaction, AOMT 2026-2 issued approximately 272.3 million in face value of bonds. We used the proceeds to repay outstanding debt of approximately $234.1 million and retained cash of $23.9 million, which was used for new loan purchases and operational purposes. 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. We have consolidated the AOMT 2026-2 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, 2026. In December 2025, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans secured by second lien HELOCs (an open or closed end home equity revolving line of credit, secured by a mortgage, deed of trust or other instrument creating a first or junior lien on a residential property, which lien secures the related line of credit) on one‑to‑four family residential properties. In the transaction, AOMT 2025-HB2 issued approximately $281.4 million in face value of bonds. Our proportionate share of 21.03% of the retained bonds and investments in MOAs was approximately $7.0 million, including a retained discount on issuance of approximately $0.2 million. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $43.4 million and released cash of $12.4 million, which was used for new loan purchases and operational purposes. We derecognized the mortgage loans sold in AOMT 2025-HB2 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of March 31, 2026. In October 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. In the transaction, AOMT 2025-10 issued approximately $274.3 million in face value of bonds. We used the proceeds to repay outstanding debt of approximately $237.4 million and retained cash of $22.1 million, which was used for new loan purchases and operational purposes. 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. We have consolidated the AOMT 2025-10 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, 2026. 51 In May 2025, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans 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. Our proportionate share of 24.94% of the retained bonds was approximately $8.1 million, including a retained premium on issuance of approximately $2.7 million. 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. We derecognized the mortgage loans sold in AOMT 2025-6 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of March 31, 2026. 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. 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. 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. We have consolidated the AOMT 2025-4 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, 2026. Notes Offering The Company’s Senior Unsecured Notes consist of $42.5 million principal amount of its 2030 Notes and $50.0 million principal amount of its 9.500% 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 $47.5 million. The below table provides a summary of the Senior Unsecured Notes as of March 31, 2026 ($ in thousands). Carrying Value Senior Unsecured Notes (1) Principal Amount March 31, 2026 December 31, 2025 Maturity Date (2) Redemption Date (3) Rate (4) June 2030 Senior Unsecured Notes $ 42,500 $ 40,888 $ 40,784 June 2030 June 2027 9.75 % July 2029 Senior Unsecured Notes 50,000 48,363 48,239 July 2029 July 2026 9.50 % $ 92,500 $ 89,251 $ 89,023 52 (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 9.750% per year, payable in cash quarterly in arrears on March 1, June 1, September 1, and December 1 of each year. The 2029 Notes bear interest at a rate equal to 9.500% 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 months ended March 31, 2026 and March 31, 2025. March 31, 2026 March 31, 2025 Coupon interest expense $ 2,230 $ 1,187 Amortization expense 221 125 Total interest expense $ 2,451 $ 1,312 At March 31, 2026 and December 31, 2025, the accrued interest payable on the Senior Unsecured Notes was $1.2 million and $2.2 million, respectively. At March 31, 2026 and December 31, 2025, the unamortized deferred debt issuance cost was $1.2 million and $1.2 million, respectively. The unamortized debt issuance costs will be amortized until maturity. Supplemental Guarantor Information The Senior Unsecured Notes were issued in SEC-registered transactions under an effective registration statement. 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. Pursuant to Rule 3-10 of Regulation S-X, subsidiary guarantors of a parent company’s obligations are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent company issues the security and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 of Regulation S-X is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the Operating Partnership because the assets, liabilities and results of operations of Angel Oak Mortgage REIT, Inc. and the Operating Partnership are not materially different than the corresponding amounts in Angel Oak Mortgage REIT, Inc.’s consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors. ATM Program 53 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 $75.0 million, of which $60.2 million remains available as of March 31, 2026, through an “at the market” equity offering program (the “ATM Program”). During the year ended December 31, 2025, the Company issued and sold 1,277,812 shares of its common stock through its ATM Program resulting in proceeds of $12.3 million, net of commissions and fees. These shares of common stock were issued in SEC registered transactions off the Company’s shelf registration statement. The Company did not issue any shares under the ATM Program during the quarter ended March 31, 2026. Leverage and Hedging Strategies We finance our assets with what we believe to be a prudent amount of leverage, which will vary from time to time based upon the particular characteristics of our portfolio, availability of financing, and market conditions. Subject to maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act, we expect to utilize various derivative instruments and other hedging instruments to mitigate interest rate risk, credit risk and other risks. For example, we may enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities. Any such hedging transactions could take a variety of forms, including the use of derivative instruments such as interest rate swap contracts, index swap contracts, interest rate cap or floor contracts, futures or forward contracts, and options. Cash Availability Cash and cash equivalents Our cash balance as of March 31, 2026 was sufficient to meet our liquidity covenants under our financing facilities and the Senior Unsecured Notes. We believe that we maintain sufficient cash to continue to meet margin calls on our financing facilities, should such margin calls occur. There was no margin collateral required as of March 31, 2026 or December 31, 2025. We may also participate in upcoming securitizations either solely or with other Angel Oak entities. We also have the ability to leverage currently unleveraged securities or whole loan assets, if we deem those actions advisable. Restricted Cash Restricted cash of approximately $1.7 million as of March 31, 2026 was comprised of: $0.5 million in interest rate futures margin collateral for the interest rate futures under our sole control; and margin collateral for securities sold under agreements to repurchase of $1.2 million. Restricted cash of approximately $3.7 million as of December 31, 2025 was comprised of: $2.5 million in interest rate futures margin collateral; and margin collateral for securities sold under agreements to repurchase of $1.2 million. Our counterparties did not require any margin collateral for TBAs as of December 31, 2025. Cash Flows Three Months Ended March 31, 2026 March 31, 2025 (in thousands) Cash flows provided by (used in) operating activities $ (143,715) $ (201,748) Cash flows provided by (used in) investing activities $ 403 $ (75,867) Cash flows provided by (used in)financing activities $ 141,672 $ 278,192 Net increase (decrease) in cash and restricted cash $ (1,640) $ 577 The cash used in operating activities of $143.7 million for the three months ended March 31, 2026 as compared to the cash used in operating activities of $201.7 million for the three months ended March 31, 2025 was primarily due to the volume of residential mortgage loans purchased during the first three months of 2026, as compared to the first three months of 2025. Cash provided by investing activities of $0.4 million for the three months ended March 31, 2026 as compared to cash used by investing activities of $75.9 million for the three months ended March 31, 2025 were primarily due to the timing of purchases and maturities of U.S. Treasury securities in the comparative period of 2025. 54 Financing cash flows provided $141.7 million for the three months ended March 31, 2026 as compared to $278.2 million provided by financing activities for the three months ended March 31, 2025 were primarily due to the activity within net borrowings under repurchase agreements and notes payable during the first three months of 2026. Cash Flows - Residential and Commercial Loan Classification Residential loan activity is recognized in the statement of cash flows as an operating activity, as our residential mortgage loans are generally held for a short period of time with the intent to securitize these loans. Commercial mortgage loan activity is recognized in the statement of cash flows as an investing activity, as our commercial mortgage loan portfolio is generally deemed to be held for investing purposes. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. A discussion of critical accounting policies and estimates is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” section in the Annual Report on Form 10-K. Our critical accounting policies and estimates have not materially changed since December 31, 2025. Management discusses the ongoing development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors. We expect quarter-to-quarter GAAP earnings volatility from our business activities. This volatility can occur for a variety of reasons, particularly changes in the fair values of consolidated assets and liabilities. In addition, the amount or timing of our reported earnings may be impacted by technical accounting issues and estimates. Recent Accounting Pronouncements Refer to the notes to our condensed consolidated financial statements included in this report for a discussion of recent accounting pronouncements and any expected impact on the Company. 55 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide this information.