Franklin BSP Realty Trust, Inc.

Previous wording

•the ability of us and our external advisor to retain qualified personnel;

Current wording

•changes in Company management and our board of directors and the ability of us and our external advisor to hire and retain qualified personnel;

Previous wording

As of March 31, 2026, we have 243 employees, all of which are employees of NewPoint.

Current wording

As of June 30, 2026, we have 252 employees, all of which are employees of NewPoint.

Previous wording

(3) Excluding the impact of accumulated depreciation and amortization of real property of $18.5 million and $17.5 million as of March 31, 2026 and December 31, 2025, respectively, as well as including the impact of the fair value of our MSRs over their carrying value of $19.2 million as of March 31, 2026, would result in a fully converted book value per share of $14.58 and $14.34, respectively.

Current wording

(3) Excluding the impact of accumulated depreciation and amortization of real property of $19.5 million and $17.5 million as of June 30, 2026 and December 31, 2025, respectively, as well as including the impact of the fair value of our MSRs over their carrying value of $26.2 million as of June 30, 2026, would result in a fully converted book value per share of $14.74 and $14.34, respectively.

Previous wording

During the three months ended March 31, 2026, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

During the six months ended June 30, 2026, there were no material changes to our critical accounting estimates as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

As of March 31, 2026 and December 31, 2025, our portfolio consisted of 177 and 169 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans, held for investment, net of allowance for credit losses, as of March 31, 2026 and December 31, 2025 had a total carrying value of $4,546.8 million and $4,383.1 million, respectively. As of March 31, 2026, our commercial mortgage loans, held for sale, measured at fair value, were comprised of five conduit loans and nine Agency loans, with a total fair value of $423.0 million. As of December 31, 2025, our commercial mortgage loans, held for sale, measured at fair value, were comprised of two conduit loans and 15 Agency loans, with a total fair value of $360.7 million. As of March 31, 2026 and December 31, 2025, we had $178.7 million and $151.7 million, respectively, of real estate securities, available for sale, measured at fair value. As of March 31, 2026 and December 31, 2025, our real estate owned, held for investment portfolio was composed of two properties with carrying values of $98.7 million and $99.3 million, respectively. As of March 31, 2026 and December 31, 2025, we had five and six positions classified as real estate owned, held for sale with combined carrying values of $192.7 million and $198.9 million, respectively. As of March 31, 2026 and December 31, 2025 our equity method investments consisted of five and four investments with carrying values of $98.6 million and $71.7 million, respectively.

Current wording

As of June 30, 2026 and December 31, 2025, our portfolio consisted of 172 and 169 commercial mortgage loans, held for investment, respectively. The commercial mortgage loans, held for investment, net of allowance for credit losses, as of June 30, 2026 and December 31, 2025 had a total carrying value of $4,275.1 million and $4,383.1 million, respectively. As of June 30, 2026, our commercial mortgage loans, held for sale, measured at fair value, were comprised of one conduit loan and 11 Agency loans, with a total fair value of $251.8 million. As of December 31, 2025, our commercial mortgage loans, held for sale, measured at fair value, were comprised of two conduit loans and 15 Agency loans, with a total fair value of $360.7 million. As of June 30, 2026 and December 31, 2025, we had $187.2 million and $151.7 million, respectively, of real estate securities, available for sale, measured at fair value. As of June 30, 2026 and December 31, 2025, our real estate owned, held for investment portfolio was composed of three and two properties with carrying values of $164.6 million and $99.3 million, respectively. As of June 30, 2026 and December 31, 2025, we had four and six positions classified as real estate owned, held for sale with combined carrying values of $115.7 million and $198.9 million, respectively. As of June 30, 2026 and December 31, 2025 our equity method investments consisted of five and four investments with carrying values of $89.2 million and $71.7 million, respectively.

Previous wording

As of both March 31, 2026 and December 31, 2025, we had seven loans (one secured by an office property and six secured by multifamily properties) designated as non-performing status with a total amortized cost of $308.9 million and $214.0 million, respectively. As of March 31, 2026 and December 31, 2025, three loans designated as non-performing and put on cost recovery status were determined to have a combined $16.3 million and $4.1 million specific allowance for credit losses, respectively.

Current wording

As of June 30, 2026, we had nine loans (one secured by an office property and eight secured by multifamily properties), designated as non-performing status with a total amortized cost of $344.2 million. As of December 31, 2025, we had seven loans (six secured by a multifamily properties and one secured by an office property), designated as non-performing status with a total amortized cost of $214.0 million. As of June 30, 2026, four loans designated as non-performing and put on cost recovery status were determined to have a combined $17.8 million specific allowance for credit losses. As of December 31, 2025, three loans designated as non-performing and put on cost recovery status were determined to have a combined $4.1 million specific allowance for credit losses.

Previous wording

As of March 31, 2026 and December 31, 2025 our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 7.0% and 7.1%, respectively, and a weighted average remaining contractual maturity life of 1.1 years and 1.1 years, respectively.

Current wording

As of June 30, 2026 and December 31, 2025 our commercial mortgage loans, held for investment, excluding commercial mortgage loans on non-performing status, had a weighted average coupon of 7.1% and 7.1%, respectively, and a weighted average remaining contractual maturity life of 1.1 years and 1.1 years, respectively.

Previous wording

As of March 31, 2026 and December 31, 2025, the Company had a total servicing portfolio consisting of 1,933 and 1,596 loans with an unpaid principal balance of $58.1 billion and $47.8 billion, respectively. As of March 31, 2026 and December 31, 2025, the Company owned Mortgage Servicing Rights (“MSRs”) of $211.9 million and $212.2 million, respectively. As of March 31, 2026 and December 31, 2025, the MSRs consisted of 1,045 and 1,042 loans with an unpaid principal balance of $22.0 billion and $21.6 billion, respectively.

Current wording

As of June 30, 2026 and December 31, 2025, the Company had a total servicing portfolio consisting of 1,948 and 1,596 loans with an unpaid principal balance of $59.8 billion and $47.8 billion, respectively. As of June 30, 2026 and December 31, 2025, the Company owned Mortgage Servicing Rights (“MSRs”) of $205.5 million and $212.2 million, respectively. As of June 30, 2026 and December 31, 2025, the MSRs consisted of 1,051 and 1,042 loans with an unpaid principal balance of $22.3 billion and $21.6 billion, respectively.

Previous wording

Comparison of the Three Months Ended March 31, 2026 to the Three Months Ended December 31, 2025

Current wording

Comparison of the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025

Previous wording

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities, agency and conduit programs.

Current wording

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities, agency and conduit segments.

Previous wording

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the three months ended March 31, 2026 and December 31, 2025 (dollars in thousands):

Current wording

The following table presents the average balance of interest-earning assets less related interest-bearing liabilities, associated interest income and expense and corresponding yield earned and incurred for the six months ended June 30, 2026 and 2025 (dollars in thousands):

Previous wording

(1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities. Amounts are calculated based on daily averages for the three months ended March 31, 2026 and December 31, 2025, respectively.

Current wording

(1) Based on amortized cost for real estate debt and real estate securities and principal amount for interest-bearing liabilities. Amounts are calculated based on daily averages for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Interest expense for the three months ended March 31, 2026 and 2025 was $65.2 million and $70.6 million, respectively, a decrease of $5.4 million. The decrease was primarily due to an approximate 66 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease in spreads.

Current wording

Interest expense for the six months ended June 30, 2026 and 2025 was $132.5 million and $140.8 million, respectively, a decrease of $8.3 million. The decrease was primarily due to an approximate 68 basis point decrease in daily average SOFR and SOFR equivalent rates coupled with a decrease in spreads.

Previous wording

Gain on sales, including fee-based services, net for the three months ended March 31, 2026 and December 31, 2025 was $21.3 million and $22.9 million, respectively, which was comprised of sales, including fee-based services, from our Agency Business and conduit segments.

Current wording

Gain on sales, including fee-based services, net for the six months ended June 30, 2026 and 2025 was $37.1 million and $5.3 million, respectively, which was comprised of sales, including fee-based services, from our Agency Business and conduit segments. As discussed below, the increase was primarily attributable to the contributions of the Agency Business in the 2026 period, as the Company did not have the Agency Business segment during the 2025 period.

Previous wording

Gain on sales, including fee-based services, net from our Agency Business segment for the three months ended March 31, 2026 was $16.5 million. This was due to Agency loans originated of $572.2 million and sales of $684.9 million. The Company did not have the Agency Business segment during the three months ended March 31, 2025.

Current wording

Gain on sales, including fee-based services, net from our Agency Business segment for the six months ended June 30, 2026 was $26.2 million. This was due to Agency loans originated of $1.0 billion and sales of $1.1 billion. The Company did not have the Agency Business segment during the six months ended June 30, 2025.

Previous wording

Gain on sales, including fee-based services, net from our conduit segment for the three months ended March 31, 2026 and 2025 was $4.8 million and $5.0 million, respectively. During the three months ended March 31, 2026, the Company sold $105.0 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $109.3 million. This is compared to the sale of $106.5 million in principal amount of commercial real estate loans sold into the CMBS securitization market resulting in proceeds of $111.5 million for the three months ended March 31, 2025.

Current wording

Gain on sales, including fee-based services, net from our conduit segment for the six months ended June 30, 2026 and 2025 was $10.9 million and $5.3 million, respectively. During the six months ended June 30, 2026, the Company sold $354.5 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $362.3 million. This is compared to the sale of $114.4 million in principal amount of commercial real estate loans sold into the CMBS securitization market resulting in proceeds of $119.7 million for the six months ended June 30, 2025.

Previous wording

Income from mortgage servicing rights for the three months ended March 31, 2026 was $6.7 million which related to the fair value of originated MSR loans rate locked under programs with Fannie Mae, Freddie Mac and HUD. The Company did not have income from mortgage servicing rights for the three months ended March 31, 2025.

Current wording

Income from mortgage servicing rights for the six months ended June 30, 2026 was $10.7 million which related to the fair value of originated MSR loans rate locked under programs with Fannie Mae, Freddie Mac and HUD. The Company did not have income from mortgage servicing rights for the six months ended June 30, 2025.

Previous wording

Servicing revenue for the three months ended March 31, 2026 was $10.6 million which related to $12.7 million of servicing fee income, $6.9 million in placement fees on borrower escrows and reserves and $2.6 million in MSR impairment recovery. This is offset by $11.6 million in reductions to the MSR for amortization and payoffs. The Company did not have servicing revenue for the three months ended March 31, 2025.

Current wording

Servicing revenue for the six months ended June 30, 2026 was $20.2 million which related to $25.7 million of servicing fee income, $14.8 million in placement fees on borrower escrows and reserves and $2.6 million in MSR impairment recovery. This is offset by $22.9 million in reductions to the MSR for amortization and payoffs. The Company did not have servicing revenue for the six months ended June 30, 2025.

Previous wording

Gain on derivatives for the three months ended March 31, 2026 was $1.9 million, compared to a loss of $0.1 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, the gain was composed of a $1.3 million unrealized gain related to mark to market on credit default swaps, treasury note futures, and options, coupled with a $0.6 million realized gain primarily due to the termination and settlement of credit default swaps and options. This is compared to a $0.1 million loss for the three months ended March 31, 2025 composed primarily of a $1.0 million unrealized loss on mark to market on credit default swaps, treasury note futures, and options, partially offset by a realized gain of $0.9 million due to the termination and settlement of treasury note futures.

Current wording

Gain on derivatives for the six months ended June 30, 2026 was $2.3 million, compared to a loss of $0.3 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, the gain was composed of a $0.1 million unrealized gain related to mark to market on credit default swaps and treasury note futures, coupled with a $2.2 million realized gain primarily due to the termination and settlement of credit default swaps, options and treasury note futures. For the six months ended June 30, 2025, the loss was primarily composed of a $1.2 million unrealized loss on mark to market on credit default swaps, treasury note futures, and options, partially offset by a realized gain of $0.9 million due to the termination and settlement of treasury note futures.

Previous wording

Provision for credit losses during the three months ended March 31, 2026 was $11.4 million, compared with a benefit of $1.9 million during the three months ended March 31, 2025.

Current wording

Provision for credit losses during the six months ended June 30, 2026 was $18.6 million, compared with a benefit of $3.4 million during the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026 and December 31, 2025, general benefit for credit losses was $1.3 million and $7.8 million, respectively. General benefit for the three months ended March 31, 2026 was attributable to more favorable economic assumptions utilized for the CECL model compared to preceding periods. General benefit for the three months ended December 31, 2025 was attributable to performance improvement of our portfolio since the end of the prior quarter.

Current wording

For the six months ended June 30, 2026, general provision for credit losses was $2.3 million compared to a benefit of $4.2 million during the six months ended June 30, 2025. General provision for the six months ended June 30, 2026 was attributable to a worsening economic scenario projection utilized for the CECL model compared to preceding periods. General benefit for the six months ended June 30, 2025 was primarily due to a decrease in the size of the overall portfolio.

Previous wording

For the three months ended March 31, 2026, specific provision for credit losses was $14.8 million compared to a specific benefit for credit losses of $0.3 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, the increase in specific reserve was primarily related to a $13.2 million provision for a non-performing loan secured by two multifamily properties located in North Carolina, coupled with an aggregate increase to existing provisions of $1.6 million for non-performing loans secured by multifamily properties located in Pennsylvania, Arizona and North Carolina. For the three months ended March 31, 2025, the decrease in specific reserve was primarily related to a partial paydown on our non-performing loan secured by an office property in Georgia.

Current wording

For the six months ended June 30, 2026, specific provision for credit losses was $16.4 million compared to a specific provision for credit losses of $0.8 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, the increase in specific reserve was primarily related to a $13.2 million provision for a non-performing loan secured by two multifamily properties located in North Carolina, coupled with an increase to provisions for non-performing loans secured by multifamily properties located in Pennsylvania, Arizona, Texas and North Carolina. For the six months ended June 30, 2025, the increase in specific reserve was primarily related to a non-performing loan secured by a multifamily property in Texas, partially offset by a partial paydown on a non-performing loan secured by an office property in Georgia.

Previous wording

For the three months ended March 31, 2026, benefit for loss sharing was $2.1 million which related to a $1.2 million decrease to the general CECL reserve due to an improved overall economic outlook, coupled with a $0.9 million decrease in the specific loan reserve due to the removal of a large at-risk loan from the reserve. The Company did not have an allowance for loss sharing for the three months ended March 31, 2025.

Current wording

For the six months ended June 30, 2026, benefit for loss sharing was $0.1 million which related to a $1.0 million increase to the general CECL reserve due to a worsening economic scenario outlook, offset with a $1.1 million decrease in the specific loan reserve due to the removal of a large at-risk loan from the reserve. The Company did not have an allowance for loss sharing for the six months ended June 30, 2025.

Previous wording

Loss on other real estate investments for the three months ended March 31, 2026 was $4.5 million primarily due to a fair value write-down of one of our multifamily properties which was subsequently sold in the second quarter, coupled with a loss realized on the sale of the final property from the Walgreens Portfolio. This is compared to a loss of $2.2 million for the three months ended March 31, 2025 primarily due to the onboarding of real estate owned, held for sale, multifamily and office properties coupled with losses on the sale of three, held for sale, multifamily properties and one, held for sale, retail property from our Walgreens Portfolio.

Current wording

Gain on other real estate investments for the six months ended June 30, 2026 was $3.2 million primarily due to a gain on foreclosure of a property located in Huntersville, NC, partially offset with losses on sales of one multifamily property and one retail property, as well as a write down on an office property located in Denver, CO. This is compared to a gain of $0.5 million for the six months ended June 30, 2025 primarily due to the sales and settled litigation regarding the Walgreens Portfolio (as defined in Note 8 – Real Estate Owned), partially offset by losses related to the onboarding of real estate owned, held for sale, multifamily and office properties, as well as fair value write downs on two of our multifamily properties.

Previous wording

Income from equity method investments for the three months ended March 31, 2026 of $12.4 million primarily related to the Company's allocated percentage of unrealized gains on a mixed use property located in New Jersey and an industrial property located in California. We did not have any income from our equity method investment during the three months ended March 31, 2025.

Current wording

Income from equity method investments for the six months ended June 30, 2026 of $13.8 million primarily related to the Company's allocated percentage of unrealized gains on a mixed use property located in New Jersey and an industrial property located in California. This is compared to income from equity method investments for the six months ended June 30, 2025 of $0.2 million related to the Company's allocated percentage of quarterly income for a mixed use property located in New Jersey.

Previous wording

Provision for income tax for the three months ended March 31, 2026 was $0.9 million compared to a provision of $0.7 million for the three months ended March 31, 2025. The increase was primarily due to taxable income related to our Agency Business segment, which was acquired on July 1, 2025.

Current wording

Benefit for income tax for the six months ended June 30, 2026 was $2.0 million compared to a provision of $0.5 million for the six months ended June 30, 2025. The increase was primarily due to taxable income related to our Agency Business and conduit segments.

Previous wording

Net income attributable to non-controlling interest in our consolidated joint ventures for the three months ended March 31, 2026 was $0.3 million compared to a net loss of $0.4 million for the three months ended March 31, 2025.

Current wording

Net income attributable to non-controlling interest in our consolidated joint ventures for the six months ended June 30, 2026 and 2025 was $1.0 million and $0.8 million, respectively.

Previous wording

Expenses from operations for the three months ended March 31, 2026 and December 31, 2025 consisted of the following (dollars in thousands):

Current wording

Expenses from operations for the six months ended June 30, 2026 and 2025 consisted of the following (dollars in thousands):

Previous wording

The increase in operating expense for the three months ended March 31, 2026 compared to 2025 was primarily related to (i) an increase in professional fees related to correspondent fees paid from our Agency Business segment and (ii) our incurrence of compensation and benefits cost of $22.8 million compared to no such expenses during the three months ended March 31, 2025, resulting from our acquisition of NewPoint.

Current wording

The increase in operating expense for the six months ended June 30, 2026 compared to 2025 was primarily related to increases resulting from our acquisition of NewPoint, including (i) an increase in professional fees related to correspondent fees paid from our Agency Business segment and (ii) our incurrence of compensation and benefits cost of $43.8 million compared to no such expenses during the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026, we incurred asset management and subordinated performance fees and administrative services expenses of $6.1 million and $2.3 million, respectively, which are payable to our Advisor under our Advisory Agreement. For the three months ended March 31, 2026 compared to March 31, 2025, asset management and subordinated performance fees decreased due to decreases in applicable average equity between periods, while administrative services expenses decreased due to the time spent on the NewPoint acquisition in the prior period compared to none in the current period. Refer to Note 11 - Related Party Transactions and Arrangements for a summary of the Company's Advisory Agreement with the Advisor and a description of how our fees are calculated.

Current wording

For the six months ended June 30, 2026, we incurred asset management and subordinated performance fees and administrative services expenses of $12.0 million and $4.4 million, respectively, which are payable to our Advisor under our Advisory Agreement. For the six months ended June 30, 2026 compared to June 30, 2025, asset management and subordinated performance fees stayed relatively consistent due to minimal changes in applicable average equity between periods, while administrative services expenses decreased due to the time spent on the NewPoint acquisition in the prior period compared to none in the current period. Refer to Note 18 - Related Party Transactions and Arrangements for a summary of the Company's Advisory Agreement with the Advisor and a description of how our fees are calculated.

Previous wording

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities, agency and conduit programs.

Current wording

Net interest income is generated on our interest-earning assets less related interest-bearing liabilities and is recorded as part of our real estate debt, real estate securities, agency and conduit segments.

Previous wording

Gain on sales, including fee-based services, net for the three months ended March 31, 2026 and 2025 was $21.3 million and $5.0 million, respectively, which was comprised of sales, including fee-based services, from our Agency Business and conduit segments.

Current wording

Gain on sales, including fee-based services, net for the three months ended June 30, 2026 and March 31, 2026 was $15.8 million and $21.3 million, respectively, which was comprised of sales, including fee-based services, from our Agency Business and conduit segments.

Previous wording

Gain on sales, including fee-based services, net from our Agency Business segment for the three months ended March 31, 2026 and December 31, 2025 was $16.5 million and $11.3 million, respectively. The increase was primarily due to higher premiums earned on loans rate locked during the three months ended March 31, 2026 as compared with three months ended December 31, 2025.

Current wording

Gain on sales, including fee-based services, net from our Agency Business segment for the three months ended June 30, 2026 and March 31, 2026 was $9.8 million and $16.5 million, respectively. The decrease was primarily due to lower premiums earned on loans rate locked during the three months ended June 30, 2026 as compared with three months ended March 31, 2026.

Previous wording

Gain on sales, including fee-based services, net from our conduit segment for the three months ended March 31, 2026 and December 31, 2025 was $4.8 million and $11.6 million, respectively. During the three months ended March 31, 2026, the Company sold $105.0 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $109.3 million. This is compared to the sale of $290.6 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $299.8 million for the three months ended December 31, 2025.

Current wording

Gain on sales, including fee-based services, net from our conduit segment for the three months ended June 30, 2026 and March 31, 2026 was $6.0 million and $4.8 million, respectively. During the three months ended June 30, 2026, the Company sold $249.5 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $252.6 million. This is compared to the sale of $105.0 million in principal amount of commercial real estate loans into the CMBS securitization market resulting in proceeds of $109.3 million for the three months ended March 31, 2026.

Previous wording

Income for mortgage servicing rights for the three months ended March 31, 2026 and December 31, 2025 was $6.7 million and $8.8 million, respectively. The decrease related to $421.8 million in lower origination volume of the underlying loans for the three months ended March 31, 2026 compared to the three months ended December 31, 2025.

Current wording

Income for mortgage servicing rights for the three months ended June 30, 2026 and March 31, 2026 was $3.9 million and $6.7 million, respectively. The decrease is related to lower volume of loans sold during the three months ended June 30, 2026 compared to the three months ended March 31, 2026.

Previous wording

Servicing revenue for the three months ended March 31, 2026 and December 31, 2025 was $10.6 million and $8.9 million, respectively. The increase was primarily due to MSR impairment recoveries recognized during the three months ended March 31, 2026 due to potential market interest rate increase, which resulted in lower prepayment rates and higher portfolio valuation.

Current wording

Servicing revenue for the three months ended June 30, 2026 and March 31, 2026 was $9.7 million and $10.6 million, respectively. The decrease was primarily due to MSR impairment recoveries recognized during the first quarter due to potential market interest rate increase, which resulted in lower prepayment rates and higher portfolio valuation, compared to no impairment recoveries recognized in the second quarter.

Previous wording

Gain on derivatives for the three months ended March 31, 2026 was $1.9 million composed of a $1.3 million unrealized gain related to mark to market on credit default swaps, treasury note futures, and options, coupled with a $0.6 million realized gain primarily due to the termination and settlement of credit default swaps and options. This is compared to a gain on derivatives for the three months ended December 31, 2025 of $0.3 million composed of a $0.4 million realized gain related to the termination and settlement of credit default swaps and treasury note futures, partially offset by an unrealized loss of $0.1 million.

Current wording

Gain on derivatives for the three months ended June 30, 2026 was $0.5 million composed of a $1.2 million unrealized loss related to mark to market on credit default swaps, treasury note futures, and options, offset by a $1.7 million realized gain primarily due to the termination and settlement of credit default swaps and options. This is compared to a gain on derivatives for the three months ended March 31, 2026 of $1.9 million composed of a $0.6 million realized gain related to the termination and settlement of credit default swaps and options, coupled with an unrealized gain of $1.3 million related to mark to market on credit default swaps, treasury note futures, and options.

Previous wording

For the three months ended March 31, 2026, general benefit for credit losses was $1.3 million compared to a benefit of $1.6 million during the three months ended March 31, 2025. General benefit for the three months ended March 31, 2026 is attributable to more favorable economic assumptions utilized for the CECL model compared to preceding periods. General provision for the three months ended March 31, 2025 was primarily due to the portfolio turnover of older vintage loans with newly originated loans.

Current wording

For the three months ended June 30, 2026, general provision for credit losses was $3.7 million, compared with a general benefit for credit losses of $1.3 million for the three months ended March 31, 2026. General provision for the three months ended June 30, 2026 was attributable to a worsening economic scenario projection utilized for the CECL model compared to preceding periods. General benefit for the three months ended March 31, 2026 was attributable to more favorable economic assumptions utilized for the CECL model compared to preceding periods.

Previous wording

For the three months ended March 31, 2026 and December 31, 2025, specific provision for credit losses was $14.8 million and $3.0 million, respectively. For the three months ended March 31, 2026, the increase in specific reserve was primarily related to a $13.2 million provision for a non-performing loan secured by two multifamily properties located in North Carolina, coupled with an aggregate increase to existing provisions of $1.6 million for non-performing loans secured by multifamily properties located in Pennsylvania, Arizona and North Carolina. For the three months ended December 31, 2025, the specific provision was primarily related to three non-performing loans secured by multifamily properties in Pennsylvania, Arizona and North Carolina, coupled with a non-performing loan secured by a multifamily property in Texas which we foreclosed on during the fourth quarter.

Current wording

For the three months ended June 30, 2026 and March 31, 2026, specific provision for credit losses was $1.5 million and $14.8 million, respectively. For the three months ended June 30, 2026, the increase in specific reserve was primarily related to increases in the specific reserves for non-performing loans secured by multifamily properties located in Arizona and Texas. For the three months ended March 31, 2026, the specific provision was primarily related to a $13.2 million provision for a non-performing loan secured by two multifamily properties located in North Carolina, coupled with an increase to provisions for non-performing loans secured by multifamily properties located in Pennsylvania, Arizona and North Carolina.

Previous wording

For the three months ended March 31, 2026 and December 31, 2025, benefit for loss sharing was $2.1 million and $3.1 million, respectively. For the three months ended March 31, 2026, the benefit primarily related to a $1.2 million decrease to the general CECL reserve due to an increased overall economic outlook, coupled with a $0.9 million decrease in the specific loan reserve due to the removal of a large at-risk loan from the reserve. For the three months ended December 31, 2025 the benefit was the result of a decrease of $4.1 million in the specific allowance for loss sharing due to improvement in the performance of at risk loans, partially offset by a $1.0 million general provision due to growth in the Fannie Mae loss sharing portfolio.

Current wording

For the three months ended June 30, 2026, provision for loss sharing was $2.1 million, compared with a benefit for loss sharing of $2.1 million for the three months ended March 31, 2026. For the three months ended June 30, 2026, the provision primarily related to a worsening economic scenario outlook since the end of the prior quarter. For the three months ended March 31, 2026 the benefit primarily related to a $1.2 million decrease to the general CECL reserve due to an increased overall economic outlook, coupled with a $0.9 million decrease in the specific loan reserve due to the removal of a large at-risk loan from the reserve.