What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-07 compared with 2024-11-06 · 263 added, 423 removed, 576 unchanged (54% of the section changed)

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In this quarterly report on Form 10-Q, or this "report," we refer to AG Mortgage Investment Trust, Inc.

as "we," "us," the "Company," or "our," unless we specifically state otherwise or the context indicates otherwise.

and its wholly-owned subsidiaries as "we," "us," the "Company," or "our," unless we specifically state otherwise or the context indicates otherwise.

We refer to our external manager, AG REIT Management, LLC, as our "Manager," and we refer to the direct parent company of our Manager, Angelo, Gordon & Co., L.P., as "TPG Angelo Gordon."

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Some, but not all, of the factors that might cause such a difference include, without limitation:

• the persistence of labor shortages, supply chain imbalances, the Israel-Hamas conflict, Russia’s invasion of Ukraine, inflation, and the potential for an economic recession;

• the persistence of labor shortages, supply chain imbalances, the Middle Eastern conflict, the Russia-Ukraine conflict, inflation, and the potential for an economic recession;

• changes in our business and investment strategy;

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• the degree to which our hedging strategies may or may not protect us from interest rate and credit risk volatility;

• our ability to realize all of the expected benefits of the acquisition of Western Asset Mortgage Capital Corporation ("WMC") or that such benefits may take longer to realize than expected (including because we incurred significant costs associated with such acquisition);

• changes in general economic conditions, in our industry and in the finance and real estate markets, including the impact on the value of our assets;

• conditions in the market for Residential Investments and Agency RMBS;

• conditions in the market for commercial investments, including the Company's ability to successfully realize the commercial investments acquired from WMC within the timeframe anticipated or at all;

• changes in trade policies and tariffs, together with any future downturns in the global economy or market disruptions resulting therefrom;

• conditions in the market for residential mortgage investments and Agency RMBS;

• conditions in the market for commercial investments, including the Company's ability to successfully realize the commercial investments acquired from Western Asset Mortgage Capital Corporation ("WMC") within the timeframe anticipated or at all;

• legislative and regulatory actions by the U.S.

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All forward-looking statements that we make, or that are attributable to us, are expressly qualified by this cautionary notice.

Third Quarter 2024 Executive Summary

First Quarter 2025 Executive Summary

Financial Highlights

• $10.65 Book Value per share;

◦ Book value per common share is calculated using stockholders’ equity less the liquidation preference of $228.0 million on our issued and outstanding preferred stock divided by all outstanding common shares as of quarter-end;

• $0.21 of Net Income/(Loss) Available to Common Stockholders per diluted common share and $0.20 of Earnings Available for Distribution ("EAD") per diluted common share;

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• 12.4x GAAP Leverage Ratio and 1.6x Economic Leverage Ratio;

• $0.19 dividend per common share declared.

• $0.20 dividend per common share declared in the first quarter 2025;

◦ Increased our quarterly dividend from $0.19 per common share in the fourth quarter 2024, which represented a 5.3% increase.

Investment Activity

• The table below summarizes the fair value of purchases and proceeds from sales of investments during the quarter ended September 30, 2024 (in thousands).

• The table below summarizes the fair value of purchases and proceeds from sales of investments during the quarter ended March 31, 2025 (in thousands).

Investment Purchases Sales

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Home Equity Loans 128,240 —

Non-Agency RMBS (1) 25,963 778

Non-Agency Loans — 11,336

Re- and Non-Performing Loans — 9,092

Agency RMBS — 1,894

Non-Agency RMBS (1) (2) 51,047 2,215

CMBS (1) — 1,531

Total $ 520,971 $ 23,100

(1) Includes sales of $2.2 million and $1.5 million of Non-Agency RMBS and CMBS, respectively, sold from the legacy portfolio acquired in the WMC acquisition.

(2) During the third quarter, we co-sponsored a rated securitization collateralized by $360.7 million of Agency-Eligible Loans.

As the co-sponsor, the Company retained an "eligible vertical interest" to comply with risk retention rules which consists of at least 5% of each class of securities issued in the securitization.

(1) During the first quarter 2025, we co-sponsored a rated securitization collateralized by $491.8 million of unpaid principal balance of Home Equity Loans.

As the co-sponsor, the Company retained an "eligible vertical interest" to comply with applicable risk retention rules.

Upon evaluating our retained interest in the securitization trust, we determined we were not the primary beneficiary and, as a result, did not consolidate the securitization trust and recorded an investment of $26.0 million of Non-Agency RMBS.

• Subsequent to quarter end:

◦ On October 25, 2024, sold Home Equity Loans with an unpaid principal balance of $48.9 million.

These loans were recorded within the "Residential mortgage loans, at fair value" line item on the consolidated balance sheets as of September 30, 2024.

• In April 2025, the Company sold Agency-Eligible Loans for gross proceeds of $37.3 million.

These loans were recorded within the "Residential mortgage loans, at fair value" line item on the consolidated balance sheets as of March 31, 2025.

Financing Activity

• Executed a rated securitization of Agency-Eligible Loans with a total unpaid principal balance of $423.3 million, converting recourse financing with mark-to-market margin calls to non-recourse financing without mark-to-market margin calls.

• The Company paid off the remaining $79.1 million principal amount outstanding of 6.75% convertible notes ("Legacy WMC Convertible Notes") at maturity in September 2024.

We are a residential mortgage REIT with a focus on investing in a diversified risk-adjusted portfolio of residential mortgage-related assets in the U.S.

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Through our ownership in Arc Home, we also have exposure to mortgage banking activities.

Arc Home is a multi-channel licensed mortgage originator and servicer primarily engaged in the business of originating and selling residential mortgage loans.

On December 6, 2023, we acquired Western Asset Mortgage Capital Corporation, an externally managed mortgage REIT that focused on investing in, financing and managing a portfolio of residential mortgage loans, real estate related securities, and commercial real estate loans.

Through this acquisition, we increased our investment portfolio by $1.2 billion, which primarily consisted of Securitized Non-Agency Loans.

For more information, refer to the "WMC Acquisition" section below.

Arc Home is a multi-channel licensed mortgage originator and servicer primarily engaged in the business of originating and selling residential mortgage loans while retaining the mortgage servicing rights associated with certain loans that it originates.

On December 6, 2023, the Company acquired Western Asset Mortgage Capital Corporation ("WMC"), an externally managed mortgage REIT that focused on investing in, financing and managing a portfolio of residential mortgage loans, real estate related securities, and commercial real estate loans.

Our investment portfolio (which excludes our ownership in Arc Home) primarily includes Residential Investments and Agency RMBS.

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In addition, we may also invest in other types of residential mortgage loans and other mortgage related assets.

As of September 30, 2024, our investment portfolio consisted of the following Residential Investments and Agency RMBS:

As of March 31, 2025, our investment portfolio consisted of the following Residential Investments and Agency RMBS:

Asset Class Description

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Non-Agency Loans consist of Qualified mortgage loans ("QM Loans") and Non-Qualified mortgage loans ("Non-QM Loans").

QM Loans are residential mortgage loans that comply with the Ability-To-Repay rules and related guidelines of the Consumer Finance Protection Bureau.

QM Loans are residential mortgage loans that comply with the Ability-To-Repay rules and related guidelines of the Consumer Financial Protection Bureau.

Agency-Eligible Loans (1)

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GSEs or agencies of the U.S.

Non-Agency RMBS are primarily secured by Non-Agency, Agency-Eligible, and Home Equity Loans.

Agency RMBS (2)

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(2) These investments are included in the "Real estate securities, at fair value" line item on the consolidated balance sheets.

In addition, our investment portfolio includes commercial loans, commercial-mortgage backed securities ("CMBS") and other securities (collectively, the "Legacy WMC Commercial Investments") that were acquired in the WMC acquisition.

The Legacy WMC commercial loans primarily include first lien commercial mortgage loan participations and are included in the "Commercial loans, at fair value" line item on the consolidated balance sheets.

In addition, our investment portfolio includes commercial loans and commercial-mortgage backed securities ("CMBS") (collectively, the "Legacy WMC Commercial Investments") that were acquired in the WMC acquisition.

The Legacy WMC commercial loans include first lien commercial mortgage loan participations and are included in the "Commercial loans, at fair value" line item on the consolidated balance sheets.

The Legacy WMC CMBS primarily include fixed-rate and floating-rate CMBS, secured by, or evidencing an ownership interest in, a single commercial mortgage loan or a pool of commercial mortgage loans, and are included in the "Real estate securities, at fair value" line item on the consolidated balance sheets.

We expect to either hold the Legacy WMC Commercial Investments until maturity or opportunistically exit these investments.

Our primary sources of income are net interest income from our investment portfolio, changes in the fair value of our investments, and income from our investment in Arc Home.

Our sources of income include net interest income from our investment portfolio, changes in the fair value of our investments, and income from our investment in Arc Home.

Net interest income consists of the interest income we earn on investments less the interest expense we incur on borrowed funds and any costs or benefits related to hedging.

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Accordingly, we generally will not be subject to U.S.

federal income taxes on our taxable income that we distribute to our stockholders as long as we maintain our intended qualification as a REIT, with the exception of business conducted in our domestic taxable REIT subsidiaries ("TRSs") which are subject to corporate income tax.

subject to corporate income tax.

We also operate our business in a manner that permits us to maintain our exemption from registration under the Investment Company Act.

WMC Acquisition

On December 6, 2023, (the "Closing Date") we completed our acquisition of WMC.

On the Closing Date, WMC merged with and into AGMIT Merger Sub, LLC, a Delaware limited liability company and our wholly owned subsidiary ("Merger Sub"), with Merger Sub continuing as the surviving company (the "Merger").

As contemplated by the Agreement and Plan of Merger, dated as of August 8, 2023 (the “Merger Agreement”), the certificate of merger was filed with the Secretary of State of the State of Delaware, and the Merger was effective at 8:15 a.m., Eastern Time, on the Closing Date (the "Effective Time").

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, each outstanding share of WMC common stock, par value $0.01 per share (“WMC Common Stock”), was converted into the right to receive the following (the “Per Share Merger Consideration”):

(i) from us, 1.498 shares of our common stock;

and (ii) from our Manager, a cash amount equal to $0.92 (the “Per Share Additional Manager Consideration”).

No fractional shares of our common stock were issued in the Merger, and the value of any fractional interests to which a former holder of WMC Common Stock was otherwise entitled was paid in cash.

In addition, on August 8, 2023, we and our Manager entered into an amendment (the “MITT Management Agreement Amendment”) to our existing management agreement, pursuant to which (i) the base management fee will be reduced by $0.6 million for the first four quarters following the Effective Time, beginning with the fiscal quarter in which the Effective Time occurs (i.e., resulting in an aggregate $2.4 million waiver of base management fees), and (ii) our Manager will waive its right to seek reimbursement from us for any expenses otherwise reimbursable by us under the management agreement in an amount equal to approximately $1.3 million, which is the excess of $7.0 million over the aggregate Per Share Additional Manager Consideration paid by our Manager to the holders of WMC Common Stock under the Merger Agreement.

Additionally, each outstanding share of WMC’s restricted common stock and each WMC restricted stock unit (each, a “WMC Equity Award”) vested in full immediately prior to the Effective Time and, as of the Effective Time, was considered outstanding for all purposes of the Merger Agreement, including the right to receive the Per Share Merger Consideration, except that WMC Equity Awards granted to certain members of the WMC board of directors at WMC’s 2023 annual stockholders’ meeting (collectively, the “2023 WMC Director Awards”) were treated as follows:

Christian Mitchell and Lisa G.

Quateman, who were appointed to our Board of Directors as of the Effective Time, the 2023 WMC Director Awards were equitably adjusted effective as of the Effective Time into awards relating to shares of our common stock that have the same value, vesting terms and other terms and conditions as applied to the corresponding WMC restricted stock units immediately prior to the Effective Time and (ii) for the other members of the WMC board of directors, the 2023 WMC Director Awards accelerated and vested pro-rata effective as of immediately prior to the Effective Time based on a fraction, the numerator of which was 166 (the number of days between the grant date and the Closing Date) and the denominator of which was 365, and the remaining unvested portion of such 2023 WMC Director Awards was cancelled without any consideration.

The issuance of shares of our common stock to the former stockholders of WMC was registered under the Securities Act, pursuant to a registration statement on Form S-4 (File No.

333-274319), as amended, filed by MITT with the Securities and Exchange Commission (the “SEC”) and declared effective on September 29, 2023 (the “Registration Statement”).

The joint proxy statement/prospectus included in the Registration Statement contains additional information about the Merger, the Merger Agreement and the transactions contemplated thereby.

Pursuant to the Merger Agreement, approximately 9.2 million shares of our common stock were issued in connection with the Merger to former WMC common stockholders, and former WMC common stockholders owned approximately 31% of the common equity of MITT as the combined company following the consummation of the Merger.

Our Manager and TPG Angelo Gordon

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TPG) is a leading global alternative asset management firm.

On November 1, 2023, TPG completed the previously announced acquisition of TPG Angelo Gordon (the "TPG Transaction"), pursuant to which TPG Angelo Gordon, including our Manager, became indirect subsidiaries of TPG.

On November 1, 2023, TPG acquired TPG Angelo Gordon (the "TPG Transaction"), pursuant to which TPG Angelo Gordon, including our Manager, became indirect subsidiaries of TPG.

Pursuant to the management agreement with our Manager, the closing of the TPG Transaction resulted in an assignment of the management agreement.

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Market Conditions

The financial markets have been, and will likely continue to remain, volatile given the overall market uncertainty related to inflation, the U.S.

presidential election, and the path of monetary policy and interest rates.

Throughout 2024, markets have displayed a high level of sensitivity to the Federal Reserve’s interest rate decisions.

On September 18, 2024, the Federal Reserve lowered the target range for the Federal Funds Rate by 50 basis points to 4.75% to 5.00%, the first decline in four years.

The Federal Reserve noted that the decrease was supported by greater confidence that inflation is moving sustainably toward 2% with the risks to achieving its employment and inflation goals being roughly in balance.

As of September 2024, the Consumer Price Index report indicated inflation was 2.4% year over year with the unemployment rate remaining at 4.1%.

During the third quarter, the 10-year U.S.

treasury yield decreased by approximately 62 basis points to 3.79% and the 30-year mortgage rate decreased by approximately 78 basis points to 6.1%.

The quarter ended with the spread between the 2-year and 10-year U.S.

treasury yields at approximately 14 basis points positive sloping, re-establishing a normal yield curve.

Despite the decline in benchmark and mortgage rates during the third quarter, this momentum reversed in the months of October and November.

Upon the Republican party winning the U.S.

presidential election, stock markets experienced notable increases, the U.S.

dollar strengthened, and benchmark rates increased continuing the themes of market uncertainty and volatility which could impact our industry.

The latest Federal Open Market Committee member median projection for the path of the Federal Funds Rate indicates 50 basis points of further rate cuts across the remaining two Federal Open Market Committee meetings this year followed by 100 basis points of rate cuts in 2025.

Overall, the Federal Reserve continues to monitor available economic data to determine if they will continue rate cuts and to what extent rates will decline.

RMBS spreads continued to tighten during the third quarter, and credit curves remained relatively flat.

Pricing dynamics have been supported by strong investor interest for mortgage credit assets given high quality underwriting, rising home values and low housing supply.

The financial markets had a strong start to 2025 with stock prices rising and risk assets performing well, but remain sensitive to uncertainty surrounding inflation, fiscal policy, and monetary policy.

In 2024, the Federal Reserve reduced the Federal Funds Rate by 100 basis points across three consecutive rate reductions that started in September 2024.

At the March 2025 Federal Open Market Committee (“FOMC”) meeting, the Federal Reserve maintained interest rates at 4.5%, following a January pause.

The economy showed resilience in the first quarter, with a strong labor market and moderating inflation, although it remained above the 2% target.

The March Consumer Price Index reported 2.4% year-over-year inflation, with a slight rise in the unemployment rate to 4.2%.

The Federal Reserve continues to maintain a cautious, yet increasingly dovish stance, employing a “wait-and-see” posture to obtain further confirmation from economic data before adjusting rates.

The updated Summary of Economic Projections (“SEP”) revised the 2025 growth forecasts downwards, increased inflation and unemployment forecasts, and maintained its projection of two rate cuts totaling 50 basis points in 2025.

During the first quarter, the 10-year U.S.

Treasury yield dropped by 37 basis points to 4.21%, and the 30-year mortgage rate decreased by 20 basis points to 6.65%.

The yield spread between the 2-year and 10-year U.S.

Treasuries ended the quarter at a positive 32 basis points, consistent with the previous quarter end.

Late in the first quarter and early April 2025, tariff announcements by the U.S.

presidential administration caused sharp declines in risk assets and U.S.

Treasury prices, pushing the 10-year U.S.

Treasury yield up by nearly 50 basis points.

A subsequent announcement to delay the tariffs for 90 days provided temporary relief, but economic uncertainty remains extremely elevated, with market participants navigating volatility and assessing the potential ongoing impact of recent events.

RMBS spreads were generally wider during the first quarter alongside broader risk markets and an influx of new issuance in March 2025.

Senior Non-QM tranches widened by 25 basis points, while mezzanine and subordinate Non-QM tranches widened by 10 to 25 basis points.

Senior prime jumbo spreads were 20 basis points wider while subordinate tranches tightened by 15 basis points as market participants sought out higher all-in yields available lower in the structure.

Trends in credit spreads on credit risk transfer ("CRT") assets can serve as a proxy for market participants evaluating credit-related assets given the observability of transactions.

CRT tranches tightened by 10 to 35 basis points.

Senior and mezzanine (BBB) Non-QM tranches tightened by 5 basis points, while the subordinate BB rated tranches tightened by 20 basis points.

Primary RMBS market activity increased during the third quarter, totaling approximately $36 billion, an increase of 7% quarter-over-quarter and 88% against year-ago activity.

The Non-QM sector ($11 billion) and Prime Jumbo sector ($8 billion) collectively comprised over half of the quarter’s new issuance.

Additionally, issuance of RMBS backed by second liens and Home Equity Loans held steady, totaling over $3 billion, or 9% of the quarter’s activity, as focus has shifted to this rapidly expanding sector.

Residential Transition Loan RMBS totaled over $1.9 billion or 5% of third quarter issuance as well.

Year-to-date, primary RMBS activity is just below $100 billion, surpassing all of 2023.

The rise in the S&P CoreLogic Case-Shiller U.S.

National Home Price Index persisted through July 2024.

The Index was higher by 5% both year-to-date and year-over-year, but regionally, home price performance has been somewhat varied.

Amid the rise in actual home prices, national home price expectations from third party research has generally reset higher with the average of the 2024 forecasts now approximating +3.5% and an average forecast for 2025 of +3%.

Prevailing mortgage rates fell sharply in the third quarter near 6% before rebounding to 6.4% in mid-October.

Rates rose back above 7% during the second quarter of 2024 but descended quickly in August and September, according to Freddie Mac Primary Mortgage Market Survey.

The effective mortgage rate outstanding was 3.92% as of June 2024, the latest data available, and remains well below prevailing rates.

However, the “lock-in effect,” or disincentive for existing homeowners to sell their homes because their current mortgage rate is well below current market rates, is starting to show signs of decay as the effective mortgage rate has risen approximately 60 basis points since March 2022.

Total existing home listings continued to rise to 1.35 million in August, the highest reading since the fourth quarter of 2020.

However, new listings are trending short of annual activity in 2015 through 2019, as well as the pandemic-affected years of 2020 through 2022.

From January 1, 2024 through August of 2024, approximately 3.1 million new listings came to market, almost 900 thousand fewer new listings than the same periods in 2015 through 2022.

CRT tranches were 5 to 35 basis points wider with tranches higher in the structure widening the most.

Compared to year-ago levels, residential credit spreads are mostly tighter, except for AAA Non-QM which is roughly 15 basis points wider.

Credit curves remain relatively flat as the demand for subordinate tranches of credit continue to be robust, particularly amid higher benchmark rates.

Primary RMBS market activity was notably higher during the first quarter, at $39 billion, an increase of 14% compared to the fourth quarter of 2024 and 32% from year-ago levels.

As has often been the case, the Non-QM sector saw the sharpest growth, followed by the Second Lien and Home Equity Lines of Credit sector.

The latter has received a lot of press for its growth potential with estimates of $17 trillion tappable home equity, including $2 trillion belonging to conventional mortgage borrowers.

Issuance of Prime Jumbo RMBS also increased while CRT issuance was little changed year-over-year.

At nearly $14 billion, the Non-QM sector remained the most active sector, followed by Prime Jumbo ($7.9 billion), Second Liens and Home Equity Lines of Credit ($5 billion) and CRT ($2.7 billion).

Primary agency-eligible investor RMBS issuance was approximately $2.1 billion in the first quarter.

This quarter was the most active first quarter since 2022 when almost $55 billion of RMBS was issued, $13 billion of which was Non-QM.

The S&P CoreLogic Case-Shiller U.S.

National Home Price Index was 3.9% higher year-over-year in February 2025, the latest data available, but has been little changed since establishing a new peak in July 2024.

Regional price variations continued to exist, and on an annual basis, regions in the Northeast and Midwest continued to lead gains.

New York City area home prices grew almost 8% from February 2024 to February 2025, with Chicago, Cleveland and Boston following with increases ranging from 6 to 7%.

On the other hand, regions in California appreciated by a softer 3 to 4%, Dallas increased by only 0.9% and Tampa home prices declined by 1.5% over the same period.

Home price growth and available for-sale inventory have had a relatively strong inverse relationship as regions with inventory growth since baseline 2019 have had weaker home price gains, and vice versa.

The average of the 2025 home price appreciation forecasts is approximately 1.5% to 2%, with a range of -2% to +3.4%.

Prevailing mortgage rates held steady in January and most of February, hovering around high-6% to 7%, before declining to end the quarter at 6.65%, according to the Freddie Mac Primary Mortgage Market Survey.

Amid market volatility following the April 2nd “Liberation Day” tariff announcements, mortgage rate locks fell to as low as 6.5% before reapproaching 7%, based on third party data.

The effective mortgage rate outstanding continued to steadily inch higher, reaching 4.03% during the fourth quarter of 2024, the latest data available.

This rate, which measures the rate on outstanding mortgage debt, is approximately 70 basis points higher than the low established at the end of the second quarter of 2022 but still remains well below prevailing rates, underscoring the stickiness of the “lock-in effect,” or disincentive for existing homeowners to sell their homes because their current mortgage rate is well below current market rates.

Total existing home inventory was around 1.33 million units in March 2025, the latest data available, and the most available inventory at this point of the year since March 2020.

The growth in inventory is positive for homebuyers, however when evaluating new listings, which are a timelier barometer of activity, inventory is slightly better year-over-year but remains 15% below average year-to-date listings in February from 2015 to 2022.

This reduced level of activity follows an annual shortage of over 1 million new listings in each of 2023 and 2024 compared to annual activity in 2015 to 2019 as well as pandemic-affected 2020 to 2022, underscoring the limited supply theme.

Presentation of investment, financing and hedging activities

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◦ "Non-Agency RMBS" refer to the retained tranches from unconsolidated securitizations of Non-Agency Loans and Re/Non-Performing Loans issued under the GCAT shelf, as well as Non-Agency RMBS issued by third-parties.

• "Real estate securities" refers to our Non-Agency RMBS and Agency RMBS, inclusive of TBAs, as well as Legacy WMC CMBS and Other Securities that were acquired in the WMC acquisition.

• "Real estate securities" refers to our Non-Agency RMBS and Agency RMBS, inclusive of TBAs, as well as Legacy WMC CMBS that were acquired in the WMC acquisition.

• Our "Legacy WMC Commercial Investments" refer to the commercial loans and CMBS that we acquired in the WMC acquisition.

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• Our "GAAP Residential Investments" refer to our Residential Investments excluding investments held within affiliated entities.

• Our "GAAP Investment portfolio" includes our GAAP Residential Investments, Agency RMBS, and Legacy WMC Commercial Investments and Other Securities.

• Our "GAAP Investment portfolio" includes our GAAP Residential Investments, Agency RMBS, and Legacy WMC Commercial Investments.

For a reconciliation of our Investment portfolio to our GAAP Investment portfolio, see the Investment Portfolio section below.

Book value per share

The below table details book value per common share.

Book value is calculated using stockholders’ equity less the liquidation preference of $228.0 million on our issued and outstanding preferred stock.

The below table details book value per common share (in thousands, except per share data).

Per share amounts for book value are calculated using all outstanding common shares in accordance with GAAP as of quarter-end.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Stockholders’ Equity $ 543,870 $ 543,423

Liquidation preference of preferred stock (227,991) (227,991)

Book Value 315,879 315,432

Common shares outstanding 29,659 29,640

Book value per common share $ 10.65 $ 10.64

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Our primary source of net income or loss available to common stockholders is our net interest income, inclusive of our cost or benefit of hedging, which represents the difference between the interest earned on our investment portfolio and the costs of financing and economic hedges in place on our investment portfolio, as well as any income or losses from our equity investments in affiliates.

Three Months Ended September 30, 2024 compared to the Three Months Ended September 30, 2023

The table below presents certain information from our consolidated statements of operations for the three months ended September 30, 2024 and 2023 (in thousands).

Three Months Ended March 31, 2025 compared to the Three Months Ended March 31, 2024

The table below presents certain information from our consolidated statements of operations for the three months ended March 31, 2025 and 2024 (in thousands).

Three Months Ended

September 30, 2024 September 30, 2023 Increase/(Decrease)

March 31, 2025 March 31, 2024 Change

Statement of Operations Data:

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Interest income is calculated using the effective interest method for our GAAP investment portfolio.

Interest income increased from the three months ended September 30, 2023 to the three months ended September 30, 2024 primarily as a result of an increased investment portfolio resulting from the WMC acquisition in December 2023 along with purchases of residential mortgage loans during the period and an increase in the weighted average yield of our investment portfolio.

Interest income increased from the three months ended March 31, 2024 to the three months ended March 31, 2025 primarily as a result of purchases of residential mortgage loans and non-agency RMBS during the period and an increase in the weighted average yield of our investment portfolio.

The following table presents a summary of the weighted average amortized cost of and the weighted average yield on our GAAP investment portfolio ($ in millions).

Three Months Ended

September 30, 2024 September 30, 2023 Increase/(Decrease)

March 31, 2025 March 31, 2024 Change

Weighted average amortized cost of our GAAP investment portfolio

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Interest expense

Interest expense is inclusive of our financing cost related to our financing arrangements on our GAAP investment portfolio, securitized debt, Legacy WMC Convertible Notes, and Senior Unsecured Notes.

Interest expense increased from the three months ended September 30, 2023 to the three months ended September 30, 2024 due to an increase in the GAAP financing balance outstanding resulting from the assumption of financing through the WMC acquisition in December 2023 along with the issuance of securitized debt and Senior Unsecured Notes during the period.

Interest expense is inclusive of our financing cost related to our financing arrangements on our GAAP investment portfolio, securitized debt, Senior Unsecured Notes, and, for 2024, Legacy WMC Convertible Notes.

Interest expense increased from the three months ended March 31, 2024 to the three months ended March 31, 2025 due to an increase in the GAAP financing balance outstanding resulting from the issuance of securitized debt and Senior Unsecured Notes during the period, offset by the repayment of the Legacy WMC Convertible Notes upon maturity in September 2024.

Additionally, there was an increase in the weighted average financing rate.

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Three Months Ended

September 30, 2024 September 30, 2023 Increase/(Decrease)

March 31, 2025 March 31, 2024 Change

Weighted average GAAP financing balance

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Net interest component of interest rate swaps represents the net interest income received or expense paid on our interest rate swaps.

We recorded income on the net interest component of interest rate swaps during the three months ended September 30, 2024 and 2023 as a result of our swap portfolio being in a net receive position.

The following table presents a summary of our interest rate swap portfolio as of September 30, 2024 and 2023 ($ in millions).

September 30, 2024 September 30, 2023 Increase/(Decrease)

We recorded income on the net interest component of interest rate swaps during the three months ended March 31, 2025 and 2024 as a result of our swap portfolio being in a net receive position during the periods.

The decrease in income from the three months ended March 31, 2024 to the three months ended March 31, 2025 was the result of a decrease in the notional balance outstanding during the period and a decrease in the weighted average receive rate.

The following table presents a summary of our interest rate swap portfolio as of March 31, 2025 and 2024 ($ in millions).

March 31, 2025 March 31, 2024 Change

Interest rate swap notional value

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Net realized gain/(loss)

The following table presents a summary of Net realized gain/(loss) for the three months ended September 30, 2024 and 2023 (in thousands).

The realized loss during the three months ended September 30, 2024 was primarily driven by losses on unwinding pay-fix, receive-variable interest rate swaps which were held at unrealized losses, offset by gains on the sales of Agency RMBS.

The following table presents a summary of Net realized gain/(loss) for the three months ended March 31, 2025 and 2024 (in thousands).

During the three months ended March 31, 2025, there were gains on unwinding pay-fix, receive-variable interest rate swaps which were held at unrealized gains, offset by losses on the sales of residential mortgage loans.

Three Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Sales of residential mortgage loans and loans transferred to or sold from Other assets $ (1,010) $ 48

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Net unrealized gain/(loss)

The following table presents a summary of Net unrealized gain/(loss) for the three months ended September 30, 2024 and 2023 (in thousands).

During the three months ended September 30, 2024, there were unrealized gains on our residential mortgage loans and Non-Agency RMBS which were offset by unrealized losses on securitized debt and interest rate swaps.

The following table presents a summary of Net unrealized gain/(loss) for the three months ended March 31, 2025 and 2024 (in thousands).

During the three months ended March 31, 2025, there were unrealized gains on our residential mortgage loans and Non-Agency RMBS which were offset by unrealized losses on securitized debt, commercial loans, and interest rate swaps.

Three Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Residential mortgage loans $ 107,757 $ 23,079

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See the "Contractual obligations" section of this Item 2 for further detail on the calculation of our management fee and for the definition of Stockholders’ Equity.

In connection with the WMC acquisition, we and our Manager entered into the MITT Management Agreement Amendment pursuant to which the base management fee will be reduced by $0.6 million for the first four quarters following the transaction closing, beginning with the fiscal quarter in which the transaction closing occurs (i.e., resulting in an aggregate $2.4 million waiver of base management fees).

During the three months ended September 30, 2024, the base management fee was reduced by $0.6 million.

This was offset by an increase in stockholders' equity as calculated pursuant to the management agreement as a result of the WMC acquisition.

In connection with the WMC acquisition, we and our Manager entered into the MITT Management Agreement Amendment pursuant to which the base management fee was reduced by $0.6 million for the first four quarters following the transaction closing, beginning with the fiscal quarter in which the transaction closing occurred (i.e., resulting in an aggregate $2.4 million waiver of base management fees).

During the three months ended March 31, 2024, the base management fee was reduced by $0.6 million.

Non-investment related expenses

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Three Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Affiliate reimbursement (1) $ 1,839 $ 1,664

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D&O insurance 255 334

Directors' compensation 259 176

Directors' fees and equity based compensation 336 318

Tax expense (2) 117 25

Other 305 226

Total Non-investment related expenses $ 3,308 $ 3,114

(1) For the three months ended September 30, 2024, the Manager agreed to waive its right to receive expense reimbursements of $0.3 million pursuant to the MITT Management Agreement Amendment executed in connection with the Merger.

Of the $1.3 million expense reimbursement waiver agreed upon in connection with the Merger, $0.2 million remains outstanding as of September 30, 2024.

(1) For the three months ended March 31, 2024, the Manager agreed to waive its right to receive expense reimbursements of $0.3 million pursuant to the MITT Management Agreement Amendment executed in connection with the WMC acquisition.

(2) Estimated excise tax expense of $0.1 million was recognized during the three months ended March 31, 2025.

We did not recognize any excise tax during the three months ended March 31, 2024.

Investment related expenses

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We are required to reimburse our Manager or its affiliates for operating expenses incurred by our Manager or its affiliates on our behalf associated with our investment portfolio.

The WMC acquisition in December 2023 resulted in an increase in our residential mortgage loan portfolio of $1.1 billion of unpaid principal balance, which contributed to an increase in investment related expenses.

The following table presents a summary of our investment related expenses (in thousands).

Three Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Affiliate reimbursement $ 200 $ 114

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Transaction related expenses

Historically, transaction related expenses have included expenses primarily associated with purchasing and securitizing residential mortgage loans as well as certain other transaction and performance related fees associated with assets we invest in.

Transaction related expenses decreased from the three months ended September 30, 2023 to the three months ended September 30, 2024 primarily due to less expenses associated with securitizations and, for the three months ended September 30, 2023, we incurred $4.9 million of transaction expenses attributable to the WMC acquisition.

Transaction related expenses primarily include expenses associated with purchasing and securitizing residential mortgage loans.

Transaction related expenses were relatively consistent from the three months ended March 31, 2024 to the three months ended March 31, 2025 as we executed one securitization in each period.

Equity in earnings/(loss) from affiliates

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Three Months Ended

September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

MATT Non-QM Securities (1) $ (71) $ 2,205

Land Related Financing — 64

Re/Non-Performing Securities (120) 105

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$ 1,185 $ 2,037

(1) For the three months ended September 30, 2024, the earnings/(loss) generated from our investment in MATT Non-QM Securities consisted of interest income of $0.6 million and net unrealized losses of $(1.7) million.

For the three months ended September 30, 2023, the earnings/(loss) generated from our investment in MATT Non-QM Securities consisted of net interest income of $1.1 million, interest expense of $(0.2) million, and net unrealized gains of $1.7 million.

(1) For the three months ended March 31, 2025, the earnings/(loss) generated from our investment in MATT Non-QM Securities consisted of interest income of $0.6 million and net unrealized losses of $(0.7) million.

For the three months ended March 31, 2024, the earnings/(loss) generated from our investment in MATT Non-QM Securities consisted of interest income of $0.8 million, net unrealized gains of $1.5 million, and other expenses of $(0.1) million.

(2) Refer to the table below for additional detail on the earnings/(loss) generated from our investment in AG Arc.

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Three Months Ended

September 30, 2024 September 30, 2023

Interest income $ 924 $ 1,410

Interest expense 72 239

Total Net Interest Income 852 1,171

Net unrealized gain/(loss) (1,883) 1,946

After-tax earnings/(loss) at AG Arc (1) (186) (109)

Net unrealized gain/(loss) on investment in AG Arc (2) 760 (1,911)

Elimination of gains on loans sold to MITT (3) (359) (800)

Total AG Arc Earnings/(Loss) 215 (2,820)

Other operating expenses 33 109

Equity in earnings/(loss) from affiliates

$ (849) $ 188

(1) The earnings/(loss) at AG Arc during the three months ended September 30, 2024 were the result of $(0.1) million related to changes in the fair value of the MSR portfolio held by Arc Home and $(0.1) million of losses related to Arc Home's lending and servicing operations.

The earnings/(loss) at AG Arc during the three months ended September 30, 2023 were primarily the result of $(0.4) million of losses related to changes in the fair value of the MSR portfolio held by Arc Home, offset by $0.3 million of income related to Arc Home's lending and servicing operations.

(2) As of September 30, 2024, the fair value of our investment in Arc Home was calculated using a valuation multiple of 0.95x of book value, which was increased from 0.94x of book value as of June 30, 2024.

As of September 30, 2023, the fair value of our investment in Arc Home was calculated using a valuation multiple of 0.89x of book value, which was reduced from 0.94x of book value as of June 30, 2023.

(3) The earnings recognized by AG Arc do not include our portion of gains recorded by Arc Home in connection with the sale of residential mortgage loans to us.

Refer to Note 10 to the "Notes to Consolidated Financial Statements (unaudited)" for more information on this accounting policy.

Dividends on Preferred Stock

Holders of our Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock are entitled to receive cumulative cash dividends at their respective rates per annum on the $25.00 per share liquidation preference for each series.

Our Series A Preferred Stock and Series B Preferred Stock have fixed rates of 8.25% and 8.00%, respectively.

The initial dividend rate for our Series C Preferred Stock, from issuance through September 16, 2024, was 8.000%.

On and after September 17, 2024, dividends on the Series C Preferred Stock accumulate at an annual floating rate of three-month CME Term SOFR (plus a tenor spread adjustment of 0.26161%) plus a spread of 6.476%.

Nine Months Ended September 30, 2024 compared to the Nine Months Ended September 30, 2023

The table below presents certain information from our consolidated statements of operations for the nine months ended September 30, 2024 and 2023 (in thousands).

Nine Months Ended

September 30, 2024 September 30, 2023 Increase/(Decrease)

Statement of Operations Data:

March 31, 2025 March 31, 2024

Net Interest Income

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Other Income/(Loss)

Net interest component of interest rate swaps 6,447 5,025 1,422

Net realized gain/(loss) (9,928) 9,171 (19,099)

Net unrealized gain/(loss) (831) 1,370

Total Other Income/(Loss) 17,007 13,939 3,068

Management fee to affiliate 5,202 6,190 (988)

Non-investment related expenses 8,610 7,848 762

Investment related expenses 10,185 6,905 3,280

Transaction related expenses 2,164 9,700 (7,536)

Total Expenses 26,161 30,643 (4,482)

Income/(loss) before equity in earnings/(loss) from affiliates 39,356 17,789 21,567

Equity in earnings/(loss) from affiliates 2,099 642 1,457

Net Income/(Loss) 41,455 18,431 23,024

Dividends on preferred stock (13,888) (13,758) (130)

Net Income/(Loss) Available to Common Stockholders $ 27,567 $ 4,673 $ 22,894

Interest income

Interest income increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 primarily as a result of an increased investment portfolio resulting from the WMC acquisition in December 2023 along with purchases of residential mortgage loans during the period and an increase in the weighted average yield of our investment portfolio.

The following table presents a summary of the weighted average amortized cost of and the weighted average yield on our GAAP investment portfolio ($ in millions).

Nine Months Ended

September 30, 2024 September 30, 2023 Increase/(Decrease)

Weighted average amortized cost of our GAAP investment portfolio

$ 6,837 $ 4,825 $ 2,012

Weighted average yield on our GAAP investment portfolio 5.91 % 5.05 % 0.86 %

Interest expense

Interest expense increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 due to an increase in the GAAP financing balance outstanding resulting from the assumption of financing through the WMC acquisition in December 2023 along with the issuance of securitized debt and Senior Unsecured Notes during the period.

Additionally, there was an increase in the weighted average financing rate.

The following table presents a summary of the weighted average financing balance and the weighted average financing rate on our GAAP investment portfolio ($ in millions).

Nine Months Ended

September 30, 2024 September 30, 2023 Increase/(Decrease)

Weighted average GAAP financing balance

$ 6,470 $ 4,445 $ 2,025

Weighted average financing rate on our GAAP investment portfolio 5.24 % 4.45 % 0.79 %

Net interest component of interest rate swaps

We recorded income on the net interest component of interest rate swaps during the nine months ended September 30, 2024 and 2023 as a result of our swap portfolio being in a net receive position.

Interest income increased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 as a result of an increase in the net weighted average notional balance along with an increase in the net weighted average receive rate during the nine months ended September 30, 2024 compared with the nine months ended September 30, 2023.

The following table presents a summary of our interest rate swap portfolio as of September 30, 2024 and 2023 ($ in millions).

September 30, 2024 September 30, 2023 Increase/(Decrease)

Interest rate swap notional value

$ 305 $ 405 $ (100)

Weighted average receive-variable rate

4.96 % 5.31 % (0.35) %

Weighted average pay-fix rate 3.28 % 3.99 % (0.71) %

Net weighted average (pay)/receive rate

1.68 % 1.32 % 0.36 %

Net realized gain/(loss)

The following table presents a summary of Net realized gain/(loss) for the nine months ended September 30, 2024 and 2023 (in thousands).

The realized loss during the nine months ended September 30, 2024 was primarily driven by losses from unwinding pay-fix, receive-variable interest rate swaps which were held at unrealized losses, offset by gains on the sales of Agency RMBS and Non-Agency RMBS.

Nine Months Ended

September 30, 2024 September 30, 2023

Sales of residential mortgage loans and loans transferred to or sold from Other assets $ 323 $ (11,409)

Sales of real estate securities 13,024 (38)

Settlement of derivatives and other instruments (23,275) 20,618

Total Net realized gain/(loss) $ (9,928) $ 9,171

Net unrealized gain/(loss)

The following table presents a summary of Net unrealized gain/(loss) for the nine months ended September 30, 2024 and 2023 (in thousands).

During the nine months ended September 30, 2024, there were unrealized gains on residential mortgage loans and interest rate swaps offset by unrealized losses on our securitized debt.

Nine Months Ended

September 30, 2024 September 30, 2023

Residential mortgage loans $ 207,250 $ (13,217)

Commercial loans 322 —

Real estate securities (706) (2,282)

Securitized debt (188,779) 25,346

Derivatives 2,401 (10,104)

Total Net unrealized gain/(loss) $ 20,488 $ (257)

Management fee to affiliate

During the nine months ended September 30, 2024, the base management fee was reduced by $1.8 million in connection with the WMC acquisition.

This was offset by an increase in stockholders' equity as calculated pursuant to the management agreement as a result of the WMC acquisition.

Non-investment related expenses

The following table presents a summary of our non-investment related expenses (in thousands).

Nine Months Ended

September 30, 2024 September 30, 2023

Affiliate reimbursement (1) $ 4,936 $ 4,200

Professional Fees 1,113 1,505

D&O insurance 1,003 817

Directors' compensation 903 529

Other 655 797

Total Non-investment related expenses $ 8,610 $ 7,848

(1) For the nine months ended September 30, 2024, the Manager agreed to waive its right to receive expense reimbursements of $0.9 million pursuant to the MITT Management Agreement Amendment executed in connection with the Merger.

Of the $1.3 million expense reimbursement waiver agreed upon in connection with the Merger, $0.2 million remains outstanding as of September 30, 2024.

Investment related expenses

The following table presents a summary of our investment related expenses (in thousands).

Nine Months Ended

September 30, 2024 September 30, 2023

Affiliate reimbursement $ 395 $ 360

Servicing fees 5,601 3,044

Residential mortgage loan asset management fees 1,994 1,981

Trustee and bank fees 1,594 1,106

Other 601 414

Total Investment related expenses $ 10,185 $ 6,905

Transaction related expenses

Transaction related expenses decreased from the nine months ended September 30, 2023 to the nine months ended September 30, 2024 primarily due to less expenses associated with securitizations and, for the nine months ended September 30, 2023, we incurred $4.9 million of transaction expenses attributable to the WMC acquisition.

Equity in earnings/(loss) from affiliates

The below tables summarize the components of the "Equity in earnings/(loss) from affiliates" line item on our consolidated statements of operations (in thousands).

Nine Months Ended

September 30, 2024 September 30, 2023

MATT Non-QM Securities (1) $ 307 $ 4,580

Land Related Financing (2) — 805

Re/Non-Performing Securities 322 249

AG Arc (3) 1,470 (4,992)

Equity in earnings/(loss) from affiliates

$ 2,099 $ 642

(1) For the nine months ended September 30, 2024, the earnings/(loss) generated from our investment in MATT Non-QM Securities consisted of interest income of $2.2 million, net unrealized losses of $(1.8) million, and other expenses of $(0.1) million.

For the nine months ended September 30, 2023, the earnings/(loss) generated from our investment in MATT Non-QM Securities consisted of net interest income of $3.2 million, interest expenses of $(0.5) million, net unrealized gains of $2.1 million, and other expenses of $(0.2) million.

(2) Decrease in Land Related Financing as assets held within LOTS paid off in full during 2023.

(3) Refer to the table below for additional detail on the earnings/(loss) generated from our investment in AG Arc.

The below table further disaggregates our "Equity in earnings/(loss) from affiliates" line item on our consolidated statements of operations (in thousands).

Nine Months Ended

September 30, 2024 September 30, 2023

Interest income $ 3,055 $ 4,923

Interest expense 216 752

Total Net Interest Income 2,839 4,171

Net unrealized gain/(loss) (2,061) 1,861

AG Arc Earnings/(Loss)

After-tax earnings/(loss) at AG Arc (1) 61 (116)

Net unrealized gain/(loss) on investment in AG Arc (2) 2,459 (1,736)

Elimination of gains on loans sold to MITT (2) (88) (201)

Net unrealized gain/(loss) on investment in AG Arc (3) 1,403 44

Total AG Arc Earnings/(Loss) 1,376 (273)

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$ 1,185 $ 2,037

(1) The earnings/(loss) at AG Arc during the nine months ended September 30, 2024 were primarily the result of $(0.6) million of losses related to Arc Home's lending and servicing operations, offset by $0.6 million related to changes in the fair value of the MSR portfolio held by Arc Home.

The earnings/(loss) at AG Arc during the nine months ended September 30, 2023 were primarily the result of $(1.6) million related to changes in the fair value of the MSR portfolio held by Arc Home, along with $(0.5) million of losses related to Arc Home's lending and servicing operations.

(2) As of September 30, 2024, the fair value of our investment in Arc Home was calculated using a valuation multiple of 0.95x of book value, which was increased from 0.89x of book value as of December 31, 2023.

(1) The earnings/(loss) at AG Arc during the three months ended March 31, 2025 were the result of $0.2 million of income related to Arc Home's lending and servicing operations, offset by $(0.1) million of losses related to changes in the fair value of the MSR portfolio held by Arc Home.

The earnings/(loss) at AG Arc during the three months ended March 31, 2024 were primarily the result of $(0.2) million of losses related to Arc Home's lending and servicing operations, offset by $0.1 million related to changes in the fair value of the MSR portfolio held by Arc Home.

(2) The earnings recognized by AG Arc do not include our portion of gains recorded by Arc Home in connection with the sale of residential mortgage loans to us.

Refer to Note 10 to the "Notes to Consolidated Financial Statements (unaudited)" for more information on this accounting policy.

(3) As of March 31, 2025, the fair value of our investment in Arc Home was calculated using a valuation multiple of 1.00x of book value, which increased from 0.95x of book value as of December 31, 2024.

As of March 31, 2024, the fair value of our investment in Arc Home was calculated using a valuation multiple of 0.89x of book value, which was consistent with the valuation multiple as of December 31, 2023.

Dividends on Preferred Stock

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EAD includes the net interest income and other income earned on our investments on a yield adjusted basis, including TBA dollar roll income/(loss) or any other investment activity that may earn or pay net interest or its economic equivalent.

A reconciliation of "Net Income/(loss) available to common stockholders" to EAD for the three and nine months ended September 30, 2024 and 2023 is set forth below (in thousands, except per share data).

A reconciliation of "Net Income/(loss) available to common stockholders" to EAD for three months ended March 31, 2025 and 2024 is set forth below (in thousands, except per share data).

Three Months Ended

Nine Months Ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Net Income/(loss) available to common stockholders $ 6,173 $ 16,304

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Earnings available for distribution, per Diluted Share $ 0.20 $ 0.21

(1) For the three months ended September 30, 2024 and 2023, total transaction related expenses and deal related performance fees included $0.7 million and $7.6 million, respectively, recorded within the "Transaction related expenses" line item and $25 thousand and $9 thousand, respectively, recorded within the "Interest expense" line item, which relates to the amortization of deferred financing costs.

For the nine months ended September 30, 2024 and 2023, total transaction related expenses and deal related performance fees included $2.2 million and $9.7 million, respectively, recorded within the "Transaction related expenses" line item and $0.1 million and $0.2 million, respectively, recorded within the "Interest expense" line item, which relates to the amortization of deferred financing costs.

(2) For the three months ended September 30, 2024 and 2023, $32 thousand or $0.00 per share and $0.4 million or $0.02 per share, respectively;

and for the nine months ended September 30, 2024 and 2023, $1.6 million or $0.05 per share and $1.2 million or $0.06 per share, respectively, of realized and unrealized changes in the fair value of Arc Home's net mortgage servicing rights and corresponding derivatives, and other asset impairments were excluded from EAD, net of deferred tax expense or benefit.

Additionally, for the three months ended September 30, 2024 and 2023, $0.8 million or $0.03 per share and $(1.9) million or $(0.09) per share, respectively;

and for the nine months ended September 30, 2024 and 2023, $2.5 million or $0.08 per share and $(1.7) million or $(0.08) per share, respectively, of unrealized changes in the fair value of our investment in Arc Home were excluded from EAD.

(3) EAD recognized by AG Arc does not include our portion of gains recorded by Arc Home in connection with the sale of residential mortgage loans to us.

For the three months ended September 30, 2024 and 2023, we eliminated $0.4 million or $0.01 per share and $0.8 million or $0.04 per share, respectively, of intra-entity profits recognized by Arc Home, and also decreased the cost basis of the underlying loans we purchased by the same amount.

For the nine months ended September 30, 2024 and 2023, we eliminated $1.0 million or $0.03 per share and $1.1 million or $0.06 per share, respectively, of intra-entity profits recognized by Arc Home, and also decreased the cost basis of the underlying loans we purchased by the same amount.

(1) For the three months ended March 31, 2025 and 2024, total transaction related expenses and deal related performance fees included $1.1 million and $1.0 million, respectively, recorded within the "Transaction related expenses" line item and $83 thousand and $24 thousand, respectively, recorded within the "Interest expense" line item, which relates to the amortization of deferred financing costs.

(2) For the three months ended March 31, 2025 and 2024, $(49.0) thousand or $0.00 per share and $0.9 million or $0.03 per share, respectively, of realized and unrealized changes in the fair value of Arc Home's mortgage servicing rights, transaction related expenses, and other asset impairments were excluded from EAD, net of deferred tax expense or benefit.

(3) For the three months ended March 31, 2025 and 2024, $1.4 million or $0.05 per share and $44 thousand or $0.00 per share, respectively, of unrealized changes in the fair value of our investment in Arc Home were excluded from EAD.

(4) EAD recognized by AG Arc does not include our portion of gains recorded by Arc Home in connection with the sale of residential

mortgage loans to us.

For the three months ended March 31, 2025 and 2024, we eliminated $88.0 thousand or $0.00 per share and $0.2 million or $0.01 per share, respectively, of intra-entity profits recognized by Arc Home, and also decreased the cost basis of the underlying loans we purchased by the same amount.

Refer to Note 10 to the "Notes to Consolidated Financial Statements (unaudited)" for more information on this accounting policy.

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Treasury and interest rate swap yield curves.

In December 2023, through our acquisition of WMC, we increased our investment portfolio by $1.2 billion, which primarily consisted of Securitized Non-Agency Loans.

For more information on the WMC acquisition, refer to "WMC Acquisition" above and the section entitled "WMC Acquisition" in Note 1 to the "Notes to Consolidated Financial Statements (unaudited)."

Net interest margin and leverage ratio

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The weighted average yield represents an effective interest rate on our cost basis, which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of quarter-end.

The calculation of weighted average yield is weighted on cost at quarter-end.

The calculation of weighted average yield is weighted on amortized cost at quarter-end.

The weighted average cost of funds is the sum of the weighted average funding costs on total financing arrangements outstanding at quarter-end, including all non-recourse financing arrangements, and our weighted average hedging cost or benefit, which is the weighted average of the net pay or receive rates on our interest rate swaps.

GAAP and non-GAAP cost of funds are weighted by the outstanding financing arrangements on our GAAP investment portfolio and our investment portfolio, respectively, and the cost of securitized debt at quarter-end.

GAAP and non-GAAP cost of funds are weighted by the outstanding financing arrangements on our GAAP investment portfolio and our investment portfolio, respectively, and the amortized cost of securitized debt and senior unsecured notes at quarter-end.

Our leverage ratio is determined by our portfolio mix as well as many additional factors, including the liquidity of our portfolio, the availability and price of our financing, the available capacity to finance our assets, and anticipated regulatory developments.

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Investment portfolio

The following tables present a summary of our Investment Portfolio, inclusive of net interest margin and leverage ratios, as of September 30, 2024 and a reconciliation of these metrics on our Investment Portfolio to their respective metrics on our GAAP Investment Portfolio ($ in thousands).

The following table presents a summary of our Investment Portfolio, inclusive of net interest margin and leverage ratios, as of March 31, 2025 and a reconciliation of these metrics on our Investment Portfolio to their respective metrics on our GAAP Investment Portfolio ($ in thousands).

Investment Securitized Debt Cost of Funds (c) Allocated Equity (d) Net Interest Margin

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Home Equity Loans 221,102 228,046 9.25 % — — 186,629 6.33 % 41,417 2.92 % 4.5x

Non-Agency Loans 13,770 13,405 4.52 % — — 7,674 5.04 % 5,731 (0.52) % 1.3x

Non-Agency Loans 574 572 3.54 % — — — — % 572 3.54 % N/A

Residential Whole Loans 791 1,685 115.68 % — — — — % 1,685 115.68 % N/A

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Total Legacy WMC Commercial Investments 126,998 119,795 13.28 % — — 62,495 7.19 % 57,300 6.09 % 1.1x

Other Securities 1,026 998 12.45 % — — — — % 998 12.45 % N/A

Total Investment Portfolio $ 7,370,165 $ 7,114,965 6.04 % $ 6,016,748 $ 5,836,691 $ 806,554 5.26 % $ 471,720 0.78 % 1.6x

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Total Investment Portfolio $ 7,370,165 $ 7,114,965 6.04 % $ 6,016,748 $ 5,836,691 $ 806,554 5.26 % $ 471,720 0.78 % 1.6x

Investments in Debt and Equity of Affiliates 16,745 20,061 20.59 % — — 3,540 7.66 % 16,521 12.93 % (j)

Investments in Debt and Equity of Affiliates 9,889 13,079 25.94 % — — — — % 13,079 25.94 % N/A

GAAP Investment Portfolio $ 7,360,276 $ 7,101,886 6.01 % $ 6,016,748 $ 5,836,691 $ 806,554 5.26 % $ 458,641 0.75 % 12.4x

(a) Excludes any net TBA positions.

(b) As of September 30, 2024, the weighted average yields are presented based on the amortized cost of the underlying loans and securities.

The weighted average yield of the Company's investment portfolio based on the fair value of the underlying loans and securities as of September 30, 2024 was 6.00%.

(b) The weighted average yields are calculated based on the amortized cost of the underlying loans and securities.

(c) The cost of funds related to the financing on our investment portfolio inclusive of the benefit of 0.04% from our interest rate hedges was 5.26%.

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(f) We expect to either hold the Legacy WMC Commercial Investments until maturity or opportunistically exit these investments.

(g) As of September 30, 2024, there are Legacy WMC CMBS with an unpaid principal balance of $23.5 million and a fair value of $6.3 million which are on non-accrual or cost recovery status.

(g) There are Legacy WMC CMBS with an unpaid principal balance of $23.5 million and a fair value of $6.5 million which are on non-accrual or cost recovery status.

(h) Cash and cash equivalents may include a portion of cash invested in money market funds.

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The impact of the net interest component of interest rate swaps on the cost of funds is included within the respective investment portfolio asset line items.

(j) Refer to the "Financing activities" section below for an aggregate breakout of leverage.

Securitized Non-Agency Loans

As noted above, our investment activities primarily include acquiring and securitizing newly-originated residential mortgage loans.

These securitization trusts ("Non-Agency VIEs") are collateralized by Non-Agency and Agency-Eligible Loans.

These securitization trusts ("Non-Agency VIEs"), as defined in Note 2 to the “Notes to Consolidated Financial Statements (unaudited)” of the consolidated financial statements, are collateralized by Non-Agency and Agency-Eligible Loans.

In each securitization transaction, we transfer a pool of loans to a wholly-owned subsidiary and the loans are deposited into a newly created securitization trust.

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However, as noted above, our equity at risk represents certain Certificates from each securitization which we retain.

The following table summarizes our Securitized residential mortgage loans and Securitized debt, as well as the economic interest on retained Certificates related to our Non-Agency VIEs as of September 30, 2024 (in thousands).

Unpaid Principal Balance Fair Value

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The notional value is used solely to determine interest distributions on the interest only classes of securities.

As of September 30, 2024, the Securitized debt in Non-Agency VIEs line item includes interest only classes with a notional value of $1.3 billion.

As of September 30, 2024, the notional value of Interest Only / Excess Servicing Bonds was $11.6 billion.

The Securitized debt in Non-Agency VIEs and Interest Only/Excess Servicing Bonds line items include interest only classes with a notional value of $1.8 billion and $12.1 billion, respectively.

(2) Represents the fair value of real estate owned within Non-Agency VIEs.

We record real estate owned at the lower of cost or fair value less estimated costs to sell.

As of September 30, 2024, we recorded real estate owned within our Non-Agency VIEs at $0.7 million.

We recorded real estate owned within our Non-Agency VIEs at $3.7 million.

(3) Maximum loss exposure from our involvement with VIEs pertains to the fair value of the Certificates retained from the VIEs.

We have no obligation to provide any other explicit or implicit support to the securitization trusts.

(4) As of September 30, 2024, our equity at risk included bonds with a fair value of $438.6 million held in order to comply with Risk Retention Rules.

(4) Our equity at risk included bonds with a fair value of $456.1 million held in order to comply with Risk Retention Rules.

We are generally required to hold the Required Credit Risk until the later of (i) the fifth anniversary of the securitization closing date and (ii) the date on which the aggregate unpaid principal balance of the mortgage loans has been reduced to 25% of the aggregate unpaid principal balance of the mortgage loans as of the securitization closing date, but no longer than the seventh anniversary of the closing date.

(5) As of September 30, 2024, a portion of our equity at risk included bonds exposed to the first loss of the securitization with a fair value of $112.6 million.

(6) Excludes net other asset/(liabilities) held within the VIEs of $7.8 million as of September 30, 2024.

(5) A portion of our equity at risk included bonds exposed to the first loss of the securitization with a fair value of $108.6 million.

(6) Excludes net other asset/(liabilities) held within the VIEs of $7.6 million.

(7) As the sponsor and depositor of each securitization, we may purchase all of the outstanding Certificates (an "Optional Redemption") following the earlier of (1) an applicable anniversary date (typically two or three years) of the respective securitization or (2) the date at which the unpaid principal balance of the applicable collateral has declined below a certain percentage (typically 10% to 30%) of the principal balance originally contributed to the securitization.

As of September 30, 2024, there were four securitizations with an unpaid principal balance of $0.6 billion that met the criteria for an Optional Redemption.

As of March 31, 2025, there were seven securitizations with an unpaid principal balance of $1.4 billion that met the criteria for an Optional Redemption.

Securitized residential mortgage loans and Residential mortgage loans

The following table presents information regarding collateral characteristics of our residential mortgage loans as of September 30, 2024 ($ in thousands).

The following table presents information regarding collateral characteristics of our residential mortgage loans as of March 31, 2025 ($ in thousands).

Unpaid Principal Balance Weighted Average (1)(2)

Loan Count (1) Original LTV Ratio (3) Current FICO (4) Coupon Life (Years) (5)

Fair Value Loan Count (1) Original LTV Ratio (3) Current FICO (4) Coupon Life (Years) (5)

Securitized residential mortgage loans

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Total Residential mortgage loans $ 255,501 $ 269,238 2,749 64.63 % 753 9.76 % 3.98

Total as of September 30, 2024

Total as of March 31, 2025

$ 7,054,653 $ 6,811,481 20,702 69.92 % 762 5.78 % 7.74

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See Note 3 to the "Notes to Consolidated Financial Statements (unaudited)" for information on the coupons, weighted average life, geographic concentration, collateral characteristics, LTV, and maturities of the loans we include in the "Commercial loans, at fair value" line item on our consolidated balance sheets.

Non-Agency RMBS and Legacy WMC CMBS & Other Securities

The following table presents the fair value, coupon, and weighted average life of our Non-Agency RMBS and Legacy WMC CMBS and Other Securities portfolios as of September 30, 2024 ($ in thousands).

Non-Agency RMBS and Legacy WMC CMBS

The following table presents the fair value, coupon, and weighted average life of our Non-Agency RMBS and Legacy WMC CMBS portfolios as of March 31, 2025 ($ in thousands).

Weighted Average

Instrument Current Face Fair Value Coupon (1) Life (Years) (2)

GCAT Non-Agency RMBS

GCAT Non-Agency Securities $ 43,794 $ 37,424 4.82 % 6.93

GCAT Non-Agency RMBS Interest Only (3) N/A 3,469 0.81 % 3.10

MATT Non-QM Securities (3) 4,497 13,050 0.45 % 3.11

Re/Non-Performing Securities (3) 5,516 7,011 1.01 % 0.15

Total GCAT Non-Agency RMBS 53,807 60,954 1.32 % 3.31

Non-Agency Securities 84,641 81,797 6.16 % 11.18

Non-Agency RMBS Interest Only (3) N/A 948 0.50 % 6.28

Non-Agency RMBS by collateral type:

Non-QM Loans (3) $ 54,013 $ 58,876 1.66 % 3.24

Agency-Eligible Loans (3) 49,889 49,545 3.47 % 6.71

Home Equity Loans (3) 40,083 52,025 5.89 % 5.42

Prime Jumbo Loans (3) 6,437 4,506 0.99 % 7.73

Re- and Non-Performing Loans (3) N/A 717 — % 2.66

Total Non-Agency RMBS $ 150,422 $ 165,669 2.48 % 4.55

CMBS 100,896 52,685 5.37 % 2.14

Other Securities N/A 998 N/A 7.80

Total Non-Agency RMBS, CMBS, and Other Securities $ 239,344 $ 197,382 2.76 % 4.43

Legacy WMC CMBS

Single-Asset/Single-Borrower - Fixed Rate $ 51,400 $ 22,677 6.02 % 1.96

Single-Asset/Single-Borrower - Floating Rate 34,421 19,827 10.94 % 0.68

Conduit - Fixed Rate 15,044 11,787 4.19 % 2.55

Legacy WMC CMBS (4) $ 100,865 $ 54,291 7.43 % 1.61

Total Non-Agency RMBS and Legacy WMC CMBS $ 251,287 $ 219,960 3.48 % 4.20

Investments in Debt and Equity of Affiliates $ 4,497 $ 13,079 0.73 % 2.69

Total GAAP Non-Agency RMBS and CMBS $ 229,331 $ 177,321 3.81 % 5.65

Total GAAP Non-Agency RMBS and Legacy WMC CMBS $ 246,790 $ 206,881 4.48 % 4.87

(1) Equity residual investments with a zero coupon rate are excluded from this calculation.

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The notional value is used solely to determine interest distributions on the interest only classes of securities.

As of September 30, 2024, the notional value of interest only classes included in t he GCAT Non-Agency RMBS Interest Only, MATT Non-QM Securities, Re/Non-Performing Securities, and Non-Agency RMBS Interest Only line items was $87.3 million, $274.8 million, $21.5 million, and $81.4 million, respectively.

The following table presents the fair value of our Non-Agency RMBS and Legacy WMC CMBS and Other Securities by credit rating as of September 30, 2024 (in thousands).

Credit Rating (1) Non-Agency RMBS CMBS Other Securities

The notional value of interest only classes included in the Non-QM Loans, Agency-Eligible Loans, Home Equity Loans, Prime Jumbo Loans, and Re- and Non-Performing Loans line items was $336.1 million, $48.7 million, $181.4 million, $27.4 million, and $0.8 million, respectively.

(4) There are Legacy WMC CMBS with an unpaid principal balance of $23.5 million and a fair value of $6.5 million which are on non-accrual or cost recovery status.

The following table presents the fair value of our Non-Agency RMBS and Legacy WMC CMBS by credit rating as of March 31, 2025 (in thousands).

Credit Rating (1) Non-Agency RMBS Legacy WMC CMBS

AAA $ 50,533 $ —

AA 18,426 — —

BBB 19,653 4,889 —

BB 17,993 5,308

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Not Rated 47,662 14,783

Non-Agency RMBS $ 143,699 $ 52,685 $ 998

Total Non-Agency RMBS and Legacy WMC CMBS $ 165,669 $ 54,291

Investments in Debt and Equity of Affiliates $ 13,079 $ —

GAAP Basis $ 123,638 $ 52,685 $ 998

Total GAAP Non-Agency RMBS and Legacy WMC CMBS $ 152,590 $ 54,291

(1) Represents the minimum rating for rated assets of S&P, Moody's, Morningstar, and Fitch credit ratings, stated in terms of the S&P equivalent.

The following table presents the collateral type of our Non-Agency RMBS and Legacy WMC CMBS portfolio as of September 30, 2024 (in thousands).

Instrument Current Face Fair Value

Non-Agency RMBS

Non-QM Loans (1) $ 54,014 $ 58,946

Re- and Non-Performing Loans (1) 5,516 7,011

Prime (1) 78,918 77,742

Total Non-Agency RMBS $ 138,448 $ 143,699

Legacy WMC CMBS

Single-Asset/Single-Borrower - Fixed Rate $ 51,400 $ 23,032

Single-Asset/Single-Borrower - Floating Rate 34,450 19,061

Conduit - Fixed Rate 15,046 10,592

Total Legacy WMC CMBS $ 100,896 $ 52,685

(1) The current face on our Non-Agency RMBS excludes interest only classes which have no principal balances and bear interest based on a notional value.

The notional value is used solely to determine interest distributions on the interest only classes of securities.

As of September 30, 2024, the notional value of interest only classes included in the Non-QM Loans, Re-and Non-Performing Loans, and Prime line items was $362.1 million, $21.5 million, and $81.4 million, respectively.

The following table presents the geographic concentration of the underlying collateral for our Non-Agency RMBS and Legacy WMC CMBS portfolios as of September 30, 2024 ($ in thousands).

The following table presents the geographic concentration of the underlying collateral for our Non-Agency RMBS and Legacy WMC CMBS portfolios as of March 31, 2025 ($ in thousands).

Non-Agency RMBS Legacy WMC CMBS

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California 31.6 % $ 52,301 California 35.7 % $ 19,389

New York 10.4 % 15,003 Bahamas 27.6 % 14,559

Florida 9.4 % 13,459 Minnesota 11.1 % 5,854

Florida 9.0 % 14,955 Bahamas 27.1 % 14,725

New York 8.8 % 14,613 Minnesota 11.1 % 6,003

Texas 4.6 % 7,575 Texas 5.8 % 3,157

North Carolina 3.4 % 4,836 New York 3.0 % 1,600

New Jersey 3.5 % 5,811 New York 3.3 % 1,801

Other 42.5 % 70,414 Other 17.0 % 9,216

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Although our investment activities primarily include acquiring and securitizing newly-originated residential mortgage loans, from time to time we invest excess liquidity into Agency RMBS.

The following table presents certain characteristics of our Agency RMBS portfolio as of September 30, 2024 ($ in thousands).

The following table presents the fair value, constant prepayment rate (“CPR”), coupon, and weighted average life experienced on our Agency RMBS portfolio as of March 31, 2025 ($ in thousands).

Weighted Average

Fair Value CPR (1) Coupon Life (2)

Fair Value CPR (1) Coupon Life (Years) (2)

Agency RMBS Interest Only $ 18,020 6.7 % 4.25 % 6.14

(1) Represents the weighted average monthly Constant Prepayment Rates ("CPR") published during the period for our in-place portfolio.

(1) Represents the weighted average monthly CPRs published during the period for our in-place portfolio.

(2) Weighted average life is based on projected life.

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Financing activities

In December 2023, through our acquisition of WMC, we assumed liabilities of $1.1 billion, which primarily consisted of securitized debt, financing arrangements, and convertible senior unsecured notes.

For more information on the acquisition of WMC, refer to "WMC Acquisition" above and the section entitled "WMC Acquisition" in Note 1 to the "Notes to Consolidated Financial Statements (unaudited)."

Financing Arrangements

We use leverage to finance the purchase of our investment portfolio.

Our leverage has primarily been in the form of repurchase agreements and similar financing arrangements (which we refer to collectively as financing arrangements), and securitized debt.

Our leverage has primarily been in the form of repurchase agreements and similar financing arrangements (which we refer to collectively as financing arrangements).

Repurchase agreements involve the sale and a simultaneous agreement to repurchase the transferred assets or similar assets at a future date.

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Repurchase agreements are generally mark-to-market with respect to margin calls and recourse to us.

We had outstanding financing arrangements with six and seven counterparties as of September 30, 2024 and December 31, 2023, respectively.

We had outstanding financing arrangements with six counterparties as of March 31, 2025.

Our financing arrangements generally include customary representations, warranties, and covenants, but may also contain more restrictive supplemental terms and conditions.

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To the extent that we fail to comply with the covenants contained in these financing arrangements or are otherwise found to be in default under the terms of such agreements, the counterparty has the right to accelerate amounts due under the associated agreement.

As of September 30, 2024, we are in compliance with all of our financial covenants.

We also use securitized debt to finance our loan portfolio.

Securitized debt is generally non-mark-to-market with respect to margin calls and non-recourse to us.

Legacy WMC Convertible Notes

Through our acquisition of WMC, we assumed the Legacy WMC Convertible Notes.

In September 2024, we paid off the remaining principal amount outstanding of the Legacy WMC Convertible Notes at maturity.

See Note 6 to the "Notes to Consolidated Financial Statements (unaudited)" for additional information on the Legacy WMC Convertible Notes.

As of March 31, 2025, we are in compliance with all of our financial covenants.

Securitized Debt

We also utilize securitized debt to finance our loan portfolio.

As explained in the “Investment Activities” section above, our investment strategy focuses on acquiring and securitizing newly originated residential mortgage loans.

In each securitization transaction, we transfer a pool of loans to a wholly owned subsidiary, which then deposits the loans into a newly formed securitization trust.

This trust issues Certificates, and we typically sell the senior classes of these Certificates to unrelated third parties.

We record “Securitized debt" on our consolidated balance sheet in accordance with U.S.

when we determine that we are the primary beneficiary of the securitization transaction.

The proceeds from securitization transactions are used to repay the financing arrangements initially employed to acquire newly originated residential mortgage loans, replacing recourse financing with mark-to-market margin calls with securitized debt.

Securitized debt is generally long-term in nature, non-recourse to us and is not subject to mark-to-market margin calls.

Additionally, securitized debt is generally the holders of the securitized debt have no recourse to the general credit of the Company and we have no obligation to provide any other explicit or implicit support to the securitization trusts.

Senior Unsecured Notes

On January 26, 2024, we issued $34.5 million principal amount of 9.500% senior notes due 2029.

On May 15, 2024, we issued $65.0 million principal amount of 9.500% senior notes due 2029.

During 2024, we issued senior unsecured notes which consist of $34.5 million principal amount 9.500% Senior Notes due February 2029 and $65.0 million principal amount 9.500% Senior Notes due May 2029.

See Note 6 to the "Notes to Consolidated Financial Statements (unaudited)" for additional information on the Senior Unsecured Notes.

Recourse and non-recourse financing

The below table provides detail on the breakout between recourse and non-recourse financing as of September 30, 2024 (in thousands).

September 30, 2024

Recourse financing - Financing arrangements, including those in Investments in Debt and Equity of Affiliates $ 739,704

The below table provides detail on the breakout between recourse and non-recourse financing as of March 31, 2025 (in thousands).

Carrying Value

Recourse financing - Financing arrangements $ 759,854

Recourse financing - Senior unsecured notes 95,898

Total Recourse financing $ 855,752

Non-recourse financing - Securitized debt, at fair value 5,836,691

Non-recourse financing - Financing arrangements 46,700

Total Financing 6,386,139

Recourse financing - Financing arrangements included in Investments in Debt and Equity of Affiliates 3,540

Total Financing in Investments in Debt and Equity of Affiliates 3,540

Total Non-recourse financing $ 5,883,391

Total Financing $ 6,739,143

GAAP Basis $ 6,382,599

We use leverage to increase potential returns to our stockholders and to fund the acquisition of our investment portfolio.

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Our GAAP financial results and the reconciliations from these results should be carefully evaluated.

We define GAAP leverage as the sum of (1) GAAP Securitized debt, at fair value, (2) GAAP Financing arrangements, net of any restricted cash posted on such financing arrangements, (3) Senior Unsecured Notes, and (4) the amount payable on purchases that have not yet settled less the financing remaining on sales that have not yet settled.

We define Economic Leverage, a non-GAAP metric, as the sum of:

(i) our GAAP leverage, exclusive of any fully non-recourse financing arrangements, (ii) financing arrangements held through affiliated entities, net of any restricted cash posted on such financing arrangements, exclusive of any financing utilized through AG Arc, inclusive of any adjustment related to unsettled trades as described in (4) in the previous sentence, and exclusive of any non-recourse financing arrangements and (iii) our net TBA position (at cost), if any.

The calculations in the tables below divide GAAP leverage and Economic Leverage by our GAAP stockholders’ equity to derive our leverage ratios.

The following tables present a reconciliation of our Economic Leverage ratio to GAAP Leverage ($ in thousands).

September 30, 2024 Leverage Stockholders’ Equity Leverage Ratio

We define GAAP leverage as the sum of (1) Securitized debt, at fair value, (2) Financing arrangements, net of any restricted cash posted on such financing arrangements, (3) Senior Unsecured Notes, and (4) the amount payable on purchases that have not yet settled less the financing remaining on sales that have not yet settled.

We define Economic Leverage, a non-GAAP metric, as the sum of our GAAP leverage, exclusive of any fully non-recourse financing arrangements, and our net TBA position (at cost), if any.

Our leverage does not include any financing utilized through AG Arc.

The calculations in the table below divide GAAP Leverage and Economic Leverage by our GAAP stockholders’ equity to derive our leverage ratios.

The following table presents a reconciliation of our Economic Leverage ratio to GAAP Leverage ($ in thousands).

March 31, 2025 Leverage Stockholders’ Equity Leverage Ratio

Securitized debt, at fair value $ 5,836,691

GAAP Financing arrangements 789,499

Financing arrangements 806,554

Senior Unsecured Notes 95,898

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GAAP Leverage $ 6,734,070 $ 543,870 12.4x

Financing arrangements through affiliated entities 3,540

Non-recourse financing arrangements (1) (5,883,391)

Economic Leverage $ 850,679 $ 543,870 1.6x

(1) Non-recourse financing arrangements include securitized debt and other non-recourse financing arrangements.

(1) Non-recourse financing arrangements include securitized debt, at fair value and $46.7 million of other non-recourse financing arrangements.

Hedging activities

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federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our financing arrangements and other debt payable.

If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make required cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

in the form of a taxable stock distribution or distribution of debt securities.

As described above, our distribution requirements are based on taxable income rather than GAAP net income.

Differences between taxable income and GAAP net income include (i) unrealized gains and losses associated with investment and derivative portfolios which are marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) temporary differences related to amortization of premiums and discounts paid on investments, (iii) the timing and amount of deductions related to stock-based compensation, (iv) temporary differences related to the recognition of realized gains and losses on sold investments and certain terminated derivatives, (v) taxes, and (vi) differences between GAAP income or losses in our TRSs and taxable income resulting from dividend distributions to the REIT from our TRSs.

During the nine months ended September 30, 2024, the Company declared common stock dividends of $0.56.

Undistributed taxable income is based on current estimates and is not finalized until we file our annual tax return for that tax year, typically in October of the following year.

As of December 31, 2024, we had estimated undistributed taxable income of approximately $0.38 per common share.

During the three months ended March 31, 2025, the Company declared common stock dividends of $0.20 per share.

During the same period, the Company declared and paid preferred stock dividends on its Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock of $0.51563, $0.50, and $0.693062, respectively.

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Our liquidity determines our ability to meet our cash obligations, including distributions to our stockholders, payment of our expenses, financing our investments and satisfying other general business needs.

Our principal sources of cash consist of borrowings under financing arrangements, principal and interest payments we receive on our investment portfolio, cash generated from our operating results, and proceeds from capital market transactions.

We typically use cash to repay principal and interest on our financing arrangements, to purchase loans, real estate securities, and other real

estate related assets, to make dividend payments on our capital stock, to repurchase our capital stock, and to fund our operations.

Our principal sources of cash consist of borrowings under securitized debt and financing arrangements, principal and interest payments we receive on our investment portfolio, cash generated from our operating results, proceeds from the sale of investments, and proceeds from capital market transactions.

We typically use cash to repay principal and interest on our securitized debt, financing arrangements and senior unsecured notes, to purchase loans, real estate securities, and other real estate related assets, to make dividend payments on our capital stock, to repurchase our capital stock, and to fund our operations.

We may also generate liquidity when restricted cash that was pledged as collateral for clearing and executing trades, derivatives, and financing arrangements becomes unrestricted when the related collateral requirements are exceeded or at the maturity of the derivative or financing arrangement.

Refer to "—Margin requirements" below discussing instances where we may use liquidity to meet margin requirements.

At September 30, 2024, we had $119.7 million of liquidity, which consisted of $102.5 million of cash and cash equivalents and $17.2 million of unencumbered Agency RMBS available to support our liquidity needs.

At March 31, 2025, we had $132.5 million of liquidity, which consisted of $115.5 million of cash and cash equivalents and $17.0 million of unencumbered Agency RMBS available to support our liquidity needs.

Refer to the "Contractual obligations" section of this Item 2 for additional obligations that could impact our liquidity.

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This typically occurs when prevailing market rates change adversely, with the severity of the change also dependent on the terms of the derivatives involved.

We may also receive margin calls on our derivatives based on the implied volatility of interest rates.

We may also receive margin calls on our

derivatives based on the implied volatility of interest rates.

Our posting of collateral with our counterparties can be done in cash or assets, and is generally bilateral, which means that if the fair value of our interest rate hedges increases, our counterparty will be required to post collateral with us.

Refer to the "Liquidity risk – derivatives" section of Item 3 below for a further discussion on margin.

The below details changes to our cash, cash equivalents, and restricted cash for the nine months ended September 30, 2024 and 2023 ($ in thousands).

Nine Months Ended

September 30, 2024 September 30, 2023 Change

The below details changes to our cash, cash equivalents, and restricted cash for the three months ended March 31, 2025 and 2024 (in thousands).

Three Months Ended

March 31, 2025 March 31, 2024 Change

Cash and cash equivalents and restricted cash, Beginning of Period $ 138,568 $ 125,573 $ 12,995

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Cash and cash equivalents and restricted cash, End of Period $ 129,217 $ 116,634 $ 12,583

(1) Cash provided by operating activities is primarily attributable to net interest income less operating expenses for the nine months ended September 30, 2024.

(2) Cash used in investing activities for the nine months ended September 30, 2024 was primarily attributable to purchases of investments, offset by principal repayments on investments and sales of investments.

(3) Cash provided by financing activities for the nine months ended September 30, 2024 was primarily attributable to proceeds from the issuance of securitized debt and our Senior Unsecured Notes and net borrowings under financing agreements, offset by principal repayments on securitized debt, repurchases of the Legacy WMC Convertible Senior Unsecured Notes and the subsequent payoff of the Legacy WMC Convertible Senior Unsecured Notes at maturity, and dividend payments.

(1) Cash provided by operating activities is primarily attributable to net interest income less operating expenses for the three months ended March 31, 2025.

(2) Cash used in investing activities for the three months ended March 31, 2025 was primarily attributable to purchases of residential mortgage loans and real estate securities, offset by principal repayments on residential mortgage loans and proceeds from the sale of certain investments.

(3) Cash provided by financing activities for the three months ended March 31, 2025 was primarily attributable to proceeds from the issuance of securitized debt and net borrowings under financing arrangements, offset by principal repayments on securitized debt and dividend payments.

Stock repurchase programs

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As of the date of this filing, approximately $1.5 million of common stock remained authorized for future share repurchases under the 2022 Repurchase Program.

See Note 11 in the "Notes to Consolidated Financial Statements (unaudited)" for additional details on the shares repurchased under the 2022 Repurchase Program during the three and nine months ended September 30, 2024 and 2023.

There were no shares repurchased during the three months ended March 31, 2025 and 2024.

On May 4, 2023, our Board of Directors authorized a stock repurchase program (the "2023 Repurchase Program") to repurchase up to $15.0 million of our outstanding common stock on substantially the same terms as the 2022 Repurchase Program.

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No share repurchases under the Preferred Repurchase Program have been made since its authorization.

Shares of stock repurchased by us under any repurchase program, if any, will be cancelled and, until reissued by us, will be deemed to be authorized but unissued shares of its stock as required by Maryland law.

Shares of stock repurchased by us under any repurchase program, if any, will be cancelled and, until reissued by us, will be deemed to be authorized but unissued shares of our stock as required by Maryland law.

The cost of the acquisition by us of shares of our own stock in excess of the aggregate par value of the shares first reduces additional paid-in capital, to the extent available, with any residual cost applied against retained earnings.

Equity distribution agreements

On May 5, 2017, we entered into an equity distribution agreement with each of Credit Suisse Securities (USA) LLC and JMP Securities LLC (collectively, the "Sales Agents"), which we refer to as the "Equity Distribution Agreements," pursuant to which

we may sell up to $100.0 million aggregate offering price of shares of our common stock from time to time through the Sales Agents, under the Securities Act of 1933.

We did not issue any shares of common stock under the Equity Distribution Agreements during the three and nine months ended September 30, 2024.

Since inception of the program, we have issued approximately 2.2 million shares of common stock under the Equity Distribution Agreements for gross proceeds of $48.3 million.

Effective November 6, 2024, the Company terminated the Equity Distribution Agreements and entered into new equity distribution agreements (the "2024 Equity Distribution Agreements") with each of BTIG, LLC, JonesTrading Institutional Services LLC, Keefe, Bruyette & Woods, Inc.

On November 6, 2024, we entered into separate equity distribution agreements (the "2024 Equity Distribution Agreements") with each of BTIG, LLC, JonesTrading Institutional Services LLC, Keefe, Bruyette & Woods, Inc.

and Piper Sandler & Co.

(collectively, the "2024 Sales Agents").

Pursuant to the 2024 Equity Distribution Agreements, the Company may sell up to $75.0 million aggregate offering price of shares of its common stock from time to time through an "at the market" equity offering program under which the 2024 Sales Agents will act as sales agent and/or principal.

(collectively, the "2024 Sales Agents"), pursuant to which we may sell up to $75.0 million aggregate offering price of shares of our common stock from time to time through an "at-the-market" equity offering program under which the 2024 Sales Agents will act as sales agent.

Prior to entering into the 2024 Equity Distribution Agreements, we terminated the equity distribution agreements related to our prior at-the-market program (the "Equity Distribution Agreements").

At the time of such termination, $51.7 million remained unsold under the prior program.

We did not issue any shares of common stock under any of our equity distribution agreements then in effect during the three months ended March 31, 2025 and 2024.

Forward-looking statements regarding liquidity

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There were no changes to the management agreement in connection with the TPG Transaction and the assignment of the management agreement became effective upon the closing of the TPG Transaction.

In connection with the Merger with WMC, which was completed on December 6, 2023, and contemporaneously with the execution of the Merger Agreement, on August 8, 2023, we and our Manager entered into the MITT Management Agreement Amendment, pursuant to which (i) our Manager’s base management fee will be reduced by $0.6 million for the first four quarters following the Effective Time, beginning with the fiscal quarter in which the Effective Time occurs (i.e., resulting in an aggregate $2.4 million waiver of base management fees), and (ii) our Manager will waive its right to seek reimbursement from us for any expenses otherwise reimbursable by us under the management agreement in an amount equal to approximately $1.3 million, which is the excess of $7.0 million over the aggregate Per Share Additional Merger Consideration paid by our Manager to the holders of WMC Common Stock under the Merger Agreement.

The MITT Management Agreement Amendment became effective automatically upon the closing of the Merger.

In connection with the closing of the with the WMC acquisition, the MITT Management Agreement Amendment became effective, pursuant to which (i) our Manager’s base management fee was reduced by $0.6 million for the first four quarters following the Effective Time, beginning with the fiscal quarter in which the Effective Time occurred (i.e., resulting in an aggregate $2.4 million waiver of base management fees), and (ii) our Manager waived its right to seek reimbursement from us for any expenses otherwise reimbursable by us under the management agreement in an amount equal to approximately $1.3 million, which was the excess of $7.0 million over the aggregate per share additional merger Consideration paid by our Manager to the holders of WMC Common Stock under the merger agreement.

Management fee

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Stockholders’ Equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown on our financial statements.

The below table details the management fees incurred during the three and nine months ended September 30, 2024 and 2023 (in thousands).

Three Months Ended Nine Months Ended

The below table details the management fees incurred during the three months ended March 31, 2025 and 2024 (in thousands).

Three Months Ended

Consolidated statements of operations line item:

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

March 31, 2025 March 31, 2024

Management fee to affiliate (1) $ 2,327 $ 1,741

(1) For the three and nine months ended September 30, 2024, the Manager agreed to waive its right to receive management fees of $0.6 million and $1.8 million, respectively, pursuant to the MITT Management Agreement Amendment executed in connection with the Merger.

As of September 30, 2024, all of the $2.4 million management fee waiver agreed upon in connection with the Merger has been utilized.

As of September 30, 2024 and December 31, 2023, we have recorded management fees payable of $1.7 million and $1.5 million, respectively.

(1) For the three months ended March 31, 2024, the Manager agreed to waive its right to receive management fees of $0.6 million pursuant to the MITT Management Agreement Amendment executed in connection with the WMC acquisition.

As of March 31, 2025 and December 31, 2024, we have recorded management fees payable of $2.3 million and $2.3 million, respectively.

The management fee payable is included within the "Due to affiliates" line item within the "Other liabilities" line item on the consolidated balance sheets.

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The annual incentive fee will be payable in cash, or, at the option of our Board of Directors, shares of common stock or a combination of cash and shares.

During the three and nine months ended September 30, 2024 and 2023, we did not incur any incentive fee expense.

During the three months ended March 31, 2025 and 2024, we did not incur any incentive fee expense.

Termination fee

Upon the occurrence of (i) our termination of the management agreement without cause or (ii) the Manager’s termination of the management agreement upon a breach by the Company of any material term of the management agreement, the Manager will be entitled to a termination fee equal to three times the average annual management fee during the 24-month period prior to such termination, calculated as of the end of the most recently completed fiscal quarter.

As of September 30, 2024 and December 31, 2023, no event of termination of the management agreement had occurred.

As of March 31, 2025 and December 31, 2024, no event of termination of the management agreement had occurred.

Expense reimbursement

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however, reimbursements are subject to an annual budget process which combines guidelines from the management agreement with oversight by our Board of Directors and discussions with our Manager.

The below table details the expense reimbursement incurred during the three and nine months ended September 30, 2024 and 2023 (in thousands).

Three Months Ended Nine Months Ended

The below table details the expense reimbursement incurred during the three months ended March 31, 2025 and 2024 (in thousands).

Three Months Ended

Consolidated statements of operations line item:

September 30, 2024

September 30, 2023 September 30, 2024 September 30, 2023

March 31, 2025

March 31, 2024

Non-investment related expenses (1)

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Investment related expenses

194 148 395 360

Transaction related expenses 260 68

Expense reimbursements to Manager or its affiliates $ 2,299 $ 1,846

(1) For the three and nine months ended September 30, 2024, the Manager agreed to waive its right to receive expense reimbursements of $0.3 million and $0.9 million, respectively, pursuant to the MITT Management Agreement Amendment executed in connection with the Merger.

Of the $1.3 million expense reimbursement waiver agreed upon in connection with the Merger, $0.2 million remains outstanding as of September 30, 2024.

As of September 30, 2024 and December 31, 2023, we recorded a reimbursement payable to our Manager or its affiliates of $2.9 million and $1.5 million, respectively The reimbursement payable to the Manager or its affiliates is included within the "Due to affiliates" line item within the "Other liabilities" line item on the consolidated balance sheets.

(1) For the three months ended March 31, 2024 , the Manager agreed to waive its right to receive expense reimbursements of $0.3 million, pursuant to the MITT Management Agreement Amendment executed in connection with the WMC acquisition.

As of March 31, 2025 and December 31, 2024, we recorded a reimbursement payable to our Manager or its affiliates of $2.3 million and $1.7 million, respectively The reimbursement payable to the Manager or its affiliates is included within the "Due to affiliates" line item within the "Other liabilities" line item on the consolidated balance sheets.

Share-based compensation

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The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during any fiscal year, shall not exceed $300,000 in total value (calculating the value of any such awards based on the grant date fair value).

As of September 30, 2024, 406,539 shares of common stock remained available to be awarded under the 2020 Equity Incentive Plan.

Since inception of the 2020 Equity Incentive Plan and through September 30, 2024, we have granted an aggregate of 232,467 shares of restricted common stock to our independent directors under our 2020 Equity Incentive Plan, all of which have vested.

As of March 31, 2025, 239,183 shares of common stock remained available to be awarded under the 2020 Equity Incentive Plan.

Since inception of the 2020 Equity Incentive Plan and through March 31, 2025, we have granted an aggregate of 268,313 shares of restricted common stock to our independent directors under our 2020 Equity Incentive Plan, all of which have vested.

On December 6, 2023, in connection with the WMC acquisition, we granted an aggregate 25,962 restricted stock units to the two independent directors added to our Board of Directors who previously served on WMC's board of directors.

Through September 30, 2024, the two independent directors have also been granted an aggregate of 1,698 dividend equivalent units.

Through March 31, 2025, the two independent directors have also been granted an aggregate of 3,208 dividend equivalent units.

These restricted stock units and associated dividend equivalent units vested in full on June 23, 2024, and will be settled in shares of our common stock upon each independent director's separation from service with our Board of Directors.

Further, on December 18, 2024, we granted an aggregate of 130,000 restricted shares of common stock to certain employees of the Manager, including certain of our executive officers, under the 2020 Equity Incentive Plan.

These awards vest ratably in three annual installments beginning in January 2026, subject to continued employment with the Manager.

On May 5, 2025, our stockholders approved our Equity Incentive Plan (the “2025 Equity Incentive Plan”) at our 2025 annual meeting of stockholders (the “2025 Annual Meeting”).

The 2025 Equity Incentive Plan replaces the Company’s 2020 Equity Incentive Plan.

Refer to Note 14 to the “Notes to Consolidated Financial Statements (unaudited)” for additional details.

The AG Mortgage Investment Trust, Inc.

2021 Manager Equity Incentive Plan (the "2021 Manager Plan"), which became effective on April 7, 2021 following the approval of our stockholders at our 2021 annual meeting of stockholders, provides for a maximum of 573,425 shares of common stock that may be subject to awards thereunder to our Manager.

As of September 30, 2024, there were no shares or awards issued under the 2021 Manager Plan.

As of March 31, 2025, there were no shares or awards issued under the 2021 Manager Plan.

Following the execution of the Third Amendment to our management agreement in November 2021 related to the incentive fee, our compensation committee no longer expects to continue its historical practice of making periodic equity grants to the Manager pursuant to the 2021 Manager Plan.

Unfunded commitments

See Note 12 of the "Notes to Consolidated Financial Statements (unaudited)" for detail on our commitments as of September 30, 2024.

See Note 12 of the "Notes to Consolidated Financial Statements (unaudited)" for detail on our commitments as of March 31, 2025.

Off-balance sheet arrangements

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We record TBA purchases and sales on the trade date and present the purchase or receipt net of the corresponding payable or receivable until the settlement date of the transaction.

Refer to Note 7 to the "Notes to Consolidated Financial Statements (unaudited)" for additional detail on TBAs as of September 30, 2024, if applicable.

For additional information on our commitments as of September 30, 2024 , refer to Note 12 of the "Notes to Consolidated Financial Statements (unaudited)." We do not expect these commitments, taken as a whole, to be significant to, or to have a material impact on, our overall liquidity or capital resources or our operations.

Refer to Note 7 to the "Notes to Consolidated Financial Statements (unaudited)" for additional detail on TBAs as of March 31, 2025, if applicable.

For additional information on our commitments as of March 31, 2025 , refer to Note 12 of the "Notes to Consolidated Financial Statements (unaudited)." We do not expect these commitments, taken as a whole, to be significant to, or to have a material impact on, our overall liquidity or capital resources or our operations.

Critical accounting policies and estimates

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We believe that the estimates, judgments and assumptions utilized in the preparation of our consolidated financial statements are prudent and reasonable.

Although our estimates contemplate conditions as of September 30, 2024 and how we expect them to change in the future, it is reasonably possible that actual conditions could be different than anticipated in arriving at those estimates, which could materially affect reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the periods presented.

Although our estimates contemplate conditions as of March 31, 2025 and how we expect them to change in the future, it is reasonably possible that actual conditions could be different than anticipated in arriving at those estimates, which could materially affect reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the periods presented.

Our most critical accounting policies include (i) Valuation of financial instruments, (ii) Accounting for loans, (iii) Accounting for real estate securities, (iv) Interest income recognition, (v) Financing arrangements, (vi) Investment consolidation, and (vii) Accounting for business combinations.

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Investment Company Act Exemption

We conduct our operations so that we are not considered an investment company under Section 3(a)(1)(C) of the Investment Company Act.

We conduct our business so as to maintain our exempt status under, and not to become regulated as an investment company for purposes of, the Investment Company Act.

Under Section 3(a)(1)(A) of the Investment Company Act, a company is an investment company if it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities.

Under Section 3(a)(1)(C) of the Investment Company Act, a company is deemed to be an investment company if it is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire "investment securities" having a value exceeding 40% of the value of its total assets (exclusive of U.S.

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"Investment securities" do not include, among other things, U.S.

government securities and securities issued by majority-owned subsidiaries that (i) are not investment

companies and (ii) are not relying on the exceptions from the definition of investment company provided by Section 3(c)(1) or 3(c)(7) of the Investment Company Act.

Conducting our operations so as not to be considered an investment company under the Investment Company Act and the rules and regulations promulgated under the Investment Company Act and SEC staff interpretive guidance limits our ability to make certain investments.

For example, these restrictions limit our and our subsidiaries’ ability to invest directly in Agency RMBS mortgage-related securities that represent less than the entire ownership in a pool of mortgage loans or debt and equity tranches of Non-Agency RMBS (in each case to the extent such interest are not retained interest in securitizations consisting of mortgage loans that were owned by us and such securitizations were not sponsored by us in order to obtain financing to acquire additional mortgage loans), certain real estate companies and assets not related to real estate.

government securities, and securities issued by majority-owned subsidiaries that (i) are not investment companies and (ii) are not relying on the exceptions from the definition of investment company provided by Section 3(c)(1) or 3(c)(7) of the Investment Company Act (the so called "private investment company" exemptions).

We conduct our operations such that we will not be considered an investment company under Section 3(a)(1) of the Investment Company Act by complying with the 40% Test and not engaging primarily (or holding ourselves out as being engaged primarily) in the business of investing, reinvesting, or trading in securities.

Rather, through wholly-owned or majority-owned subsidiaries, we are primarily engaged in the non-investment company businesses of these subsidiaries, namely the real estate finance business of purchasing or otherwise acquiring mortgage loans and other interests in real estate.

We currently have several subsidiaries that rely on the exclusion provided by Section 3(c)(7) of the Investment Company Act, each a "3(c)(7) subsidiary." In addition, we currently have several subsidiaries that rely on the exclusion provided by Section 3(c)(5)(C) of the Investment Company Act, each a "3(c)(5)(C) subsidiary."

While investments in 3(c)(7) subsidiaries are considered investment securities for the purposes of the 40% Test, investments in 3(c)(5)(C) subsidiaries are not considered investment securities for the purposes of the 40% Test, nor are investments in subsidiaries that rely on the exclusion provided by Section 3(a)(1)(C).

Therefore, our investments in 3(c)(7) subsidiaries and other investment securities cannot exceed 40% of the value of our total assets (excluding U.S.

government securities and cash) on an unconsolidated basis.

Section 3(c)(5)(C) of the Investment Company Act exempts from the definition of "investment company" entities primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.

The SEC staff generally requires an entity relying on Section 3(c)(5)(C) to invest at least 55% of its portfolio in "qualifying assets" and at least another 25% in additional qualifying assets or in "real estate-related assets" (with no more than 20% comprised of miscellaneous assets).

Both the 40% Test and the requirements of the Section 3(c)(5)(C) exclusion limit the types of businesses in which we may engage and the types of assets we may hold, as well as the timing of sales and purchases of assets.

For example, these restrictions limit our and our 3(c)(5)(C) subsidiaries’ ability to invest directly in Agency RMBS that represent less than the entire ownership in a pool of mortgage loans or debt and equity tranches of Non-Agency RMBS (in each case to the extent such interest are not retained interest in securitizations consisting of mortgage loans that were owned by us and such securitizations were not sponsored by us in order to obtain financing to acquire additional mortgage loans), certain real estate companies and assets not related to real estate.

The determination that we qualify for this exemption from being regulated as an investment company depends on various factual matters and circumstances.

We closely monitor our holdings to ensure continuing and ongoing compliance with these tests.

If we failed to comply with the 40% Test or another exemption under the Investment Company Act and became regulated as an investment company, our ability to, among other things, use leverage would be substantially reduced and, as a result, we would be unable to conduct our business as described in this report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis