Angel Oak Mortgage REIT, Inc.

Previous wording

Angel Oak Companies has advised us that they have agreed to enter into a strategic transaction (the “Strategic Transaction”) with Brookfield Asset Management Ltd. (“Brookfield”). Angel Oak Companies has advised us that the Strategic Transaction would result in the current beneficial owners of Angel Oak Companies selling approximately 51% of the outstanding beneficial ownership of Angel Oak Companies, and indirectly our Manager, to Brookfield at closing. Angel Oak Companies has advised us that following the closing of the Strategic Transaction, the existing Angel Oak Companies management team will continue to independently manage the day-to-day business of Angel Oak Companies and our Manager, and will control the board of directors of Angel Oak Companies. Angel Oak Companies has advised us that the Strategic Transaction is not intended to result in any material changes to the investment objectives or strategies of the Company, nor to adjust the investment decision-making processes or portfolio management with respect to the Company. Angel Oak Companies has advised us that the personnel, officers and managers of our Manager are expected to remain the same. Angel Oak Companies has advised us that, as part of the Strategic Transaction, Brookfield will have a right to acquire additional beneficial ownership in Angel Oak Companies beginning in 2027, which over time could result in Brookfield taking control of the board of directors of Angel Oak Companies. Angel Oak Companies has advised us that the Strategic Transaction is expected to close in the second or third quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory clearances and required client consents. Under the Management Agreement, the Strategic Transaction would constitute an assignment of the Management Agreement pursuant to which the Management Agreement automatically terminates without payment of a termination fee unless the assignment is consented to in writing by the Company with the consent of a majority of the Company’s independent directors. For a discussion of certain risks related to our relationship with our Manager, see the information under Item 1A. “Risk Factors—Risks Related to Our Relationship with Our Manager and its Affiliates” in the Annual Report on Form 10-K.

Current wording

Angel Oak Companies has advised us that they have agreed to enter into a strategic transaction (the “Strategic Transaction”) with Brookfield Asset Management Ltd. (“Brookfield”). Angel Oak Companies has advised us that the Strategic Transaction would result in the current beneficial owners of Angel Oak Companies selling approximately 51% of the outstanding beneficial ownership of Angel Oak Companies, and indirectly our Manager, to Brookfield at closing. Angel Oak Companies has advised us that following the closing of the Strategic Transaction, the existing Angel Oak Companies management team will continue to independently manage the day-to-day business of Angel Oak Companies and our Manager, and will control the board of directors of Angel Oak Companies. Angel Oak Companies has advised us that the Strategic Transaction is not intended to result in any material changes to the investment objectives or strategies of the Company, nor to adjust the investment decision-making processes or portfolio management with respect to the Company. Angel Oak Companies has advised us that the personnel, officers and managers of our Manager are expected to remain the same. Angel Oak Companies has advised us that, as part of the Strategic Transaction, Brookfield will have a right to acquire additional beneficial ownership in Angel Oak Companies beginning in 2027, which over time could result in Brookfield taking control of the board of directors of Angel Oak Companies. Angel Oak Companies has advised us that the Strategic Transaction is expected to close in the third quarter of 2025, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory clearances and required client consents. Under the Management Agreement, the Strategic Transaction would constitute an assignment of the Management Agreement pursuant to which the Management Agreement automatically terminates without payment of a termination fee unless the assignment is consented to in writing by the Company with the consent of a majority of the Company’s independent directors. For a discussion of certain risks related to our relationship with our Manager, see the information under Item 1A. “Risk Factors—Risks Related to Our Relationship with Our Manager and its Affiliates” in the Annual Report on Form 10-K.

Previous wording

Treasury yields experienced decreases across two, five, and ten-year terms in the first quarter of 2025. The two-year Treasury yield decreased by approximately 36 basis points since the end of 2024 to 3.95%, the five-year Treasury yield decreased by approximately 43 basis points since the end of 2024 to 3.96%, and the ten-year Treasury yield decreased by approximately 37 basis points since the end of 2024 to 4.21%. Each of the two, five, and ten-year Treasury yields finished the first quarter near the minimum rate observed over the course of the quarter, with the maximums occurring toward the beginning of the first quarter.

Current wording

Similar to the moderation in equity markets following the initial reaction to Liberation Day, Treasury yields experienced decreases across two and five-year terms, with a slight increase to the ten-year yield in the second quarter of 2025. The two-year Treasury yield decreased by approximately 17 basis points since the end of the first quarter of 2025 to 3.72%, the five-year Treasury yield decreased by approximately 15 basis points since the end of first quarter of 2025 to 3.81%, and the ten-year Treasury yield increased by approximately 2 basis points since the end of first quarter of 2025 to 4.23%. Each of the two, five, and ten-year Treasury yields finished the second quarter well below the highest rate observed over the course of the quarter, which occurred in mid-May across all three terms.

Previous wording

30 year fixed residential conforming mortgage rates decreased by 20 basis points over the course of the first quarter to 6.65% as of the end of the first quarter from 6.85% as of the end of 2024. These rates, alongside federal funds rate and Treasury yields, are key benchmarks for the valuation of our portfolio, and a decrease will generally drive a corresponding positive impact to our asset pricing, as we observed in the first quarter of 2025. As such,we observed a 77 basis point increase in the weighted average price of our residential whole loans portfolio and a 94 basis point increase in the weighted average price of our loans in securitization trusts portfolio versus the prior quarter. Continued purchases of high-quality non-QM loans are also expected to contribute to increases in the valuations of our portfolio, and we expect to continue to purchase newly originated loans, which should continue to support overall portfolio valuations and securitization execution going forward.

Current wording

30 year fixed residential conforming mortgage rates increased by 12 basis points over the course of the second quarter to 6.77% as of the end of the second quarter from 6.65% as of the end of the first quarter of 2025. These rates, alongside federal funds rate and Treasury yields, are key benchmarks for the valuation of our portfolio, and an increase is generally expected to drive a corresponding negative impact to our newly originated asset pricing, as we observed in the second quarter of 2025. As such, we observed an approximately 53 basis point decrease versus the first quarter of 2025 in the weighted average price of our residential whole loans portfolio excluding home equity lines of credit (“HELOCs”). This decrease was offset by a 136 basis point increase in the second quarter in the weighted average price of our loans in securitization trusts portfolio, which is substantially composed of loans originated in recent years at lower interest rates, versus the prior quarter. We expect to continue to purchase newly originated loans and HELOCs, which should continue to support overall portfolio valuations and securitization execution going forward.

Previous wording

Net realized loss. Our net realized loss for the quarter ended March 31, 2025 was primarily due to realized losses associated with the unamortized premium of loans that paid off in our residential loans in securitization trust portfolio as well as realized losses associated with hedging activity.

Current wording

Net realized loss. Our net realized loss for the quarter ended June 30, 2025 was primarily due to realized losses associated with the write-off of unamortized premium of loans that paid off in our residential loans in securitization trust portfolio and in loans underlying our RMBS portfolio.

Previous wording

During the quarter ended March 31, 2025, we purchased $259.0 million of newly-originated, current market coupon non-QM residential mortgage loans, with a weighted average coupon of 7.67%, weighted average loan-to-value ratio (“LTV”) of 70.0% and weighted average credit score of 751.

Current wording

During the quarter ended June 30, 2025, we purchased $146.6 million of newly-originated, current market coupon non-QM residential mortgage loans, second lien mortgage loans (residential mortgage loans that are subordinate to the primary or first lien mortgage loans on a residential property, or “Closed-End Seconds”), and HELOCs, with a weighted average coupon of 8.68%, weighted average combined loan-to-value ratio (“CLTV”) of 68.4% and weighted average credit score of 757.

Previous wording

Subsequent to quarter end, in April 2025, we issued AOMT 2025-4, a $284.3 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans. We issued AOMT 2025-4 as the sole participant in the securitization. We used the proceeds to repay outstanding debt of approximately $242.4 million, and the $24.7 million of cash released was used for new loan purchases and operational purposes.

Current wording

In April 2025, we issued AOMT 2025-4, a $284.3 million scheduled unpaid principal balance securitization backed by a pool of residential mortgage loans. We issued AOMT 2025-4 as the sole participant in the securitization. We used the proceeds to repay outstanding debt of approximately $242.4 million, and the $24.7 million of cash released was used for new loan purchases and operational purposes.

Previous wording

We continuously evaluate our lender base and may enter into new agreements and / or exit agreements as we deem prudent, in accordance with our core financial strategy of purchasing whole loans and financing them until securitized. See “Liquidity and Capital Resources” below, for a full description of our financing arrangements. Our total borrowing capacity was $1.1 billion as of March 31, 2025 Highlights of whole loan financing facilities activity over the first quarter of 2025 are as follows:

Current wording

We continuously evaluate our lender base and may enter into new agreements and / or exit agreements as we deem prudent, in accordance with our core financial strategy of purchasing whole loans and financing them until securitized. See “Liquidity and Capital

Previous wording

•During the quarter ended March 31, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods, simultaneously decreasing the interest rate pricing spread from 1.75% to 1.65%.

Current wording

•During the quarter ended June 30, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods.

Previous wording

We also use Distributable Earnings to determine the incentive fee, if any, payable to our Manager pursuant to the management agreement that we and the Operating Partnership entered into with our Manager upon the completion of our IPO initial public offering of common stock (“IPO”) on June 21, 2021 and amended and restated on May 1, 2024 (as amended and restated, the “Management Agreement”). For information on the fees that are payable to our Manager under the Management Agreement, see “Note 10 –Related Party Transactions” in our unaudited condensed consolidated financial statements included in this report.

Current wording

We also use Distributable Earnings to determine the incentive fee, if any, payable to our Manager pursuant to the management agreement that we and the Operating Partnership entered into with our Manager upon the completion of our initial public offering of common stock (“IPO”) on June 21, 2021 and amended and restated on May 1, 2024 (as amended and restated, the “Management Agreement”). For information on the fees that are payable to our Manager under the Management Agreement, see “Note 10 –Related Party Transactions” in our unaudited condensed consolidated financial statements included in this report.

Previous wording

Distributable Earnings were approximately a gain of $4.1 million and a gain of $2.8 million for the three months ended March 31, 2025 and 2024, respectively. The primary drivers of this quarter’s Distributable Earnings as compared to GAAP net income are the adjustments to remove unrealized gains associated with our residential loans and residential loans in securitization trusts and non-recourse securitization obligation portfolios.

Current wording

Distributable Earnings were a gain of $2.6 million and a loss of $2.3 million for the three months ended June 30, 2025 and 2024, respectively. The primary drivers of the difference of Distributable Earnings as compared to GAAP net income in the quarters ended June 30, 2025 and June 30, 2024 are adjustments to remove unrealized losses on residential loans and adjustments to remove unrealized gains on residential loans in securitization trusts and non-recourse securitization obligation, respectively. For the six months ended June 30, 2025 and June 30, 2024, the primary drivers of the difference between Distributable Earnings and GAAP net income were adjustments to remove unrealized gains on residential loans in securitization trusts and non-recourse securitization obligation and adjustments to remove unrealized gains on residential loans, respectively.

Previous wording

The table below sets forth a reconciliation of net income (loss) allocable to common stockholders, calculated in accordance with GAAP, to Distributable Earnings for the three months ended March 31, 2025 and 2024:

Current wording

The table below sets forth a reconciliation of net income (loss) allocable to common stockholders, calculated in accordance with GAAP, to Distributable Earnings for the three and six months ended June 30, 2025 and 2024:

Previous wording

Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total stockholders’ equity. We believe that the presentation of Distributable Earnings Return on Average Equity provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. Additionally, we believe Distributable Earnings Return on Average Equity provides investors with additional detail on the Distributable Earnings generated by our invested equity capital. We believe Distributable Earnings Return on Average Equity as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings Return on Average Equity should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings Return on Average Equity may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings Return on Average Equity may not be comparable to similar measures presented by other REITs. Set forth below is our computation of Distributable Earnings Return on Average Equity for the three months ended March 31, 2025 and 2024:

Current wording

Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total stockholders’ equity. We believe that the presentation of Distributable Earnings Return on Average Equity provides investors with a useful measure to facilitate comparisons of financial performance among our REIT peers, but has important limitations. Additionally, we believe Distributable Earnings Return on Average Equity provides investors with additional detail on the Distributable Earnings generated by our invested equity capital. We believe Distributable Earnings Return on Average Equity as described above helps evaluate our financial performance without the impact of certain transactions but is of limited usefulness as an analytical tool. Therefore, Distributable Earnings Return on Average Equity should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. Our methodology for calculating Distributable Earnings Return on Average Equity may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Distributable Earnings Return on Average Equity may not be comparable to similar measures presented by other REITs. Set forth below is our computation of Distributable Earnings Return on Average Equity for the three and six months ended June 30, 2025 and 2024:

Previous wording

We generated $7.7 million greater interest income for the quarter ended March 31, 2025 than in the comparable period for 2024, driven by increases in both the amount and yields of our target assets. Interest expense increased by $6.2 million for the quarter ended March 31, 2025 compared to the comparable period for 2024, driven by increases in our total borrowings; however, this increase in interest expense was mitigated by lower average borrowing costs. Overall, the increase in our interest income outpaced the increase in interest expense and drove a 17.6%, or $1.5 million, increase in net interest income for the quarter ended March 31, 2025 than in the comparable period for 2024.

Current wording

We generated $9.2 million greater interest income for the quarter ended June 30, 2025 than in the comparable period for 2024, driven by increases in both the amount and yields of our target assets. Interest expense increased by $8.7 million for the quarter ended June 30, 2025 compared to the comparable period for 2024, driven by increases in our total borrowings and our 2029 Notes and 2030 Notes issuances, both of which occurred after the quarter ended June 30, 2024. Overall, the increase in our interest income outpaced the increase in interest expense and drove a 5.0%, or $0.5 million, increase in net interest income for the quarter ended June 30, 2025 than in the comparable period for 2024.

Previous wording

For the three months ended March 31, 2025 and 2024, total realized and unrealized gains and (losses), net resulted in net gains of $13.4 million and $9.3 million, respectively. During the three months ended March 31, 2025, gains on securitization, net of unrealized gain (loss) on non-recourse securitization obligation were the primary driver of the overall gain to our portfolio. During the three months ended March 31, 2024, gains on securitization, net of unrealized gain (loss) on non-recourse securitization obligation, and interest rate futures were the key drivers of the overall gain.

Current wording

For the three months ended June 30, 2025 and 2024, total realized and unrealized gains and (losses), net resulted in net losses of $4.1 million and $4.1 million, respectively. During the three months ended June 30, 2025, realized and unrealized losses on securitization, net of unrealized gain (loss) on non-recourse securitization obligation, realized losses on interest rate futures, and realized and unrealized losses on residential mortgage loans were the primary drivers of the overall loss to our portfolio. During the three months ended June 30, 2024, losses on securitization, net of unrealized gain (loss) on non-recourse securitization obligation were the key drivers of the overall loss.

Previous wording

For the three months ended March 31, 2025 and 2024, our operating expenses incurred with affiliate were $0.4 million and $0.5 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, decreased in the first three months of 2025 compared to the first three months of 2024 due to resource alignment initiatives.

Current wording

For the three months ended June 30, 2025 and 2024, our operating expenses incurred with affiliate were $0.5 million and $0.5 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, were flat in the three months ended June 30, 2025 compared to the same period of 2024.

Previous wording

For the three months ended March 31, 2025 and 2024, our stock compensation expense was $0.2 million and $0.6 million, respectively. Our stock compensation expense decreased for the three months ended March 31, 2025 due to the vesting of stock awards issued at our IPO.

Current wording

For the three months ended June 30, 2025 and 2024, our stock compensation expense was $0.3 million and $0.6 million, respectively. Our stock compensation expense decreased for the three months ended June 30, 2025 due primarily to the vesting of stock awards granted at our IPO.

Previous wording

For the three months ended March 31, 2025 and 2024, we incurred no securitization costs and $0.2 million of securitization costs, respectively. There was no securitization activity in the three months ended March 31, 2025, and the expense in the first three months of 2024 was a proportional allocation of expenses in conjunction with our share of the loans contributed to the AOMT 2024-3 securitization.

Current wording

For the three months ended June 30, 2025 and 2024, we incurred $1.9 million and $1.4 million of securitization costs, respectively. The expense in the three months ended June 30, 2025 is due to expenses associated with the AOMT 2025-4 and AOMT 2025-6 securitizations, and the expense in the first three months of 2024 was due to expenses associated with the AOMT 2024-4 and AOMT 2024-6 securitizations.

Previous wording

For the three months ended March 31, 2025 and 2024, our management fee incurred with affiliate was $1.1 million and $1.3 million, respectively. The decrease is due to the decrease in our average Equity (as defined in the Management Agreement) for the three months ended March 31, 2025 as compared to the same period in 2024. The calculation of Equity for the purposes of the Management Agreement includes the addition of Distributable Earnings, which is the primary departure from the calculation of equity in accordance with GAAP, which has caused Equity (as defined in the Management Agreement) to decrease.

Current wording

For the three months ended June 30, 2025 and 2024, our management fee incurred with affiliate was $1.1 million and $1.3 million, respectively. The decrease is due to the decrease in our average Equity (as defined in the Management Agreement) for the three months ended June 30, 2025 as compared to the same period in 2024. The calculation of Equity for the purposes of the Management Agreement includes the addition or subtraction of Distributable Earnings, which is the primary departure from the calculation of equity in accordance with GAAP, which has caused Equity (as defined in the Management Agreement) to decrease.

Previous wording

For the three months ended March 31, 2025 and 2024, our operating expenses were $1.2 million and $2.0 million, respectively. Our operating expenses decreased compared to the comparative period due to continued cost savings actions such as resource alignment initiatives, vendor contract negotiations, and a decrease in servicing fees associated with servicing our whole loans portfolios.

Current wording

For thesix months ended June 30, 2025 and 2024, our operating expenses were $2.5 million and $3.7 million, respectively. Our operating expenses decreased during the six months ended June 30, 2025 as compared to the comparative period due to continued cost savings actions such as in-sourcing of key accounting functions, vendor contract negotiations, and a decrease in servicing fees associated with servicing our whole loan portfolio.

Previous wording

(2) “Target assets” excludes U.S. Treasury securities and includes investments in Majority-Owned Affiliates.

Current wording

(2) “Target assets” as defined by us excludes U.S. Treasury securities and includes investments in Majority-Owned Affiliates.

Previous wording

(3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $302.6 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued whole pool agency residential mortgage-backed securities (“Whole Pool Agency RMBS”), and excluding the portion of “other assets” which includes our investment in a Majority-Owned Affiliate, which is considered a target asset.

Current wording

(3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $254.2 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued whole pool agency residential mortgage-backed securities (“Whole Pool Agency RMBS”), and excluding the portion of “other assets” which includes our investment in a Majority-Owned Affiliate, which is considered a target asset.

Previous wording

(3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $202 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued Whole Pool Agency RMBS, and excluding the portion of “other assets” which includes our investment in a Majority-Owned Affiliates, which is considered a target asset. Additionally, other assets includes $5.2 million of commercial loans and $5.6 million of CMBS.

Current wording

(3) Other assets and liabilities presented is calculated as a net liability substantially comprised of $202.0 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued Whole Pool Agency RMBS, and excluding the portion of “other assets” which includes our investment in Majority-Owned Affiliates, which is considered a target asset. Additionally, other assets includes $5.2 million of commercial loans and $5.6 million of CMBS.

Previous wording

The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024 (percentages based on the aggregate unpaid principal balance of such loans):

Current wording

The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of June 30, 2025 (percentages are based on the aggregate unpaid principal balance of such loans):

Previous wording

(2)The whole pool RMBS presented as of March 31, 2025 were purchased from a broker to whom the Company owed approximately $302.6 million, payable upon the settlement date of the trade. See Note 6 —Due to Brokerin our unaudited condensed consolidated financial statements included in this report.

Current wording

(2)The whole pool RMBS presented as of June 30, 2025 were purchased from a broker to whom the Company owed approximately $254.2 million, payable upon the settlement date of the trade. See Note 6 —Due to Brokerin our unaudited condensed consolidated financial statements included in this report.

Previous wording

(3)A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $160.8 million, are not reflected in the condensed consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its condensed consolidated balance sheets.

Current wording

(3)A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $178.3 million, are not reflected in the condensed consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its condensed consolidated balance sheets.

Previous wording

The following table sets forth information with respect to our RMBS ending balances, at fair value, for the period ended March 31, 2025:

Current wording

The following table sets forth information with respect to our RMBS ending balances, at fair value, as of June 30, 2025:

Previous wording

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund our investments and operating costs, make distributions to our stockholders, and satisfy other general business needs. Our financing sources currently include payments of principal and interest we receive on our investment portfolio, unused borrowing capacity under our in‑place loan financing lines and repurchase facilities, securitizations of our whole loans, and our ATM Program (as defined below). Additionally, on July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 9.500% Senior Notes due 2029. We have deployed the majority of the net proceeds from the offering of our senior unsecured notes for general corporate purposes, which included the acquisition of non-QM loans and other target assets substantially sourced from our affiliated proprietary mortgage lending platform and other target assets through the secondary market in a manner consistent with our strategy and investment guidelines. Additionally, we used the net proceeds from the offering of our senior unsecured notes to repurchase 1,707,922 shares of our common stock owned by Xylem Finance LLC, an affiliate of Davidson Kempner Capital Management LP, for an aggregate repurchase price of approximately $20.0 million. Our financing sources historically have included the foregoing, as well as capital contributions from our investors prior to our IPO, and the proceeds from our IPO and concurrent private placement (which capital has all been deployed). Going forward, we may also utilize other types of borrowings, including bank credit facilities and warehouse lines of credit, among others. We may also seek to raise additional capital through public or private offerings of equity, equity-related, or debt securities, depending upon market conditions. The use of any particular source of capital and funds will depend on market conditions, availability of these sources, and the investment opportunities available to us.

Current wording

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund our investments and operating costs, make distributions to our stockholders, and satisfy other general business needs. Our financing sources currently include payments of principal and interest we receive on our investment portfolio, unused borrowing capacity under our in‑place loan financing lines and repurchase facilities, securitizations of our whole loans, and our ATM Program (as defined below). Additionally, on July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 2029 Notes. We have deployed the majority of the net proceeds from the offering of our 2029 Notes for general corporate purposes, which included the acquisition of non-QM loans and other target assets substantially sourced from our affiliated proprietary mortgage lending platform and other target assets through the secondary market in a manner consistent with our strategy and investment guidelines. Additionally, we used the net proceeds from the offering of our 2029 Notes to repurchase 1,707,922 shares of our common stock owned by Xylem Finance LLC, an affiliate of Davidson Kempner Capital Management LP, for an aggregate repurchase price of approximately $20.0 million. Furthermore, in May 2025, we closed an underwritten public offering and sale of, and issued, $42.5 million in aggregate principal amount of our 2030 Notes. We used the majority of the net proceeds from the offering of our 2030 Notes for general corporate purposes, which included the acquisition of non-QM loans and other target assets in a manner consistent with our strategy and investment guidelines. Our financing sources historically have included the foregoing, as well as capital contributions from our investors prior to our IPO, and the proceeds from our IPO and concurrent private placement (which capital has all been deployed). Going forward, we may also utilize other types of borrowings, including bank credit facilities and warehouse lines of credit, among others. We may also seek to raise additional capital through public or private offerings of equity, equity-related, or debt securities, depending upon market conditions. The use of any particular source of capital and funds will depend on market conditions, availability of these sources, and the investment opportunities available to us.

Previous wording

As of March 31, 2025, we were a party to three warehouse loan financing lines, which permitted borrowings in an aggregate amount of up to $1.1 billion. During the quarter ended March 31, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods simultaneously decreasing the interest rate pricing margin. Borrowings under warehouse loan financing lines (in general, each a “loan financing facility”) may be used to purchase whole loans for securitization or loans purchased for long‑term investment purposes.

Current wording

As of June 30, 2025, we were a party to three warehouse loan financing lines, which permitted borrowings in an aggregate amount of up to $1.1 billion. During the quarter ended June 30, 2025, we renewed our loan financing facility with Multinational Bank 1 in accordance with the mechanism for six-month renewal periods. Borrowings under warehouse loan financing lines (in general, each a “loan financing facility”) may be used to purchase whole loans for securitization or loans purchased for long‑term investment purposes.

Previous wording

(1)On March 25, 2025, this financing facility was extended through September 25, 2025 in accordance with the terms of the agreement, which contemplates six-month renewals, with an interest rate pricing spread of 1.65%. Prior to this extension the interest rate pricing spread was up to 1.75%.

Current wording

(1)On June 24, 2025, this financing facility was extended through December 25, 2025 in accordance with the terms of the agreement, which contemplates six-month renewals. The interest rate pricing spread remained unchanged from the prior extension at a range from 1.65% to 2.10%.

Previous wording

(2) On March 28, 2024, the Company and two of its subsidiaries terminated the existing facility with Global Investment Bank 2 and the Company and two different subsidiaries entered into a new facility with Global Investment Bank 2 wherein the Company is guarantor, one of the subsidiaries is seller and Global Investment Bank 2 is buyer. This updated facility is extended through March 27, 2026. In connection with the execution of the new facility the interest rate pricing spread was reduced to a range between 2.10% and 3.35%. On October 25, 2024, the facility was amended to, among other changes, reduce the pricing spread to a range between 1.75% and 3.35%.

Current wording

(2) On March 28, 2024, the Company and two of its subsidiaries terminated the existing facility with Global Investment Bank 2 and the Company and two different subsidiaries entered into a new facility with Global Investment Bank 2 wherein the Company is guarantor, one of the subsidiaries is seller and Global Investment Bank 2 is buyer. This updated facility is extended through March 27, 2026. On October 25, 2024, the facility was amended to, among other changes, reduced the interest rate pricing spread to a range from 1.75% and 3.35%; prior to this amendment, the interest rate pricing spread was a range from 2.10% and 3.45%.

Previous wording

(3) On November 1, 2024, the facility’s termination date was extended to November 1, 2025. In addition, the base interest rate spread was reduced to a range from 1.90%. to 4.75% and the index spread adjustment of 0.20% was eliminated.

Current wording

(3) On November 1, 2024, the facility’s termination date was extended to November 1, 2025. In addition, the base interest rate spread was reduced to a range from 1.90% to 4.75% and the index spread adjustment of 20 basis points was eliminated; prior to this extension, the base interest rate pricing spread was a range from 2.00% to 4.50%.

Previous wording

Subsequent to the end of the quarter, in April 2025, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, secured exclusively by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2025-4 issued approximately $284.3 million in face value of bonds. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $242.4 million and retained cash of $24.7 million, which was used for new loan purchases and operational purposes.

Current wording

In April 2025, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, secured exclusively by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2025-4 issued approximately $284.3 million in face value of bonds. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $242.4 million and retained cash of $24.7 million, which was used for new loan purchases and operational purposes.

Previous wording

On July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 9.500% Senior Notes due 2029. The Notes bear interest at a rate of 9.500% per annum, payable quarterly in arrears on January 30, April 30, July 30 and October 30 of each year. The Notes will mature on July 30, 2029, unless earlier redeemed or repurchased by us.The Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Operating Partnership, including the due and punctual payment of principal of, premium, if any, and interest on the Notes, whether at the stated maturity, upon acceleration, call for redemption or otherwise. We may redeem the Notes in whole or in part at any time or from time to time at our option on or after July 30, 2026 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon the occurrence of certain events relating to a change of control of us, we must make an offer to repurchase all outstanding Notes at a price in cash equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.

Current wording

On July 25, 2024, we closed an underwritten public offering and sale of, and issued, $50 million in aggregate principal amount of our 2029 Notes. The 2029 Notes bear interest at a rate of 9.500% per annum, payable quarterly in arrears on January 30, April 30, July 30 and October 30 of each year. The 2029 Notes will mature on July 30, 2029, unless earlier redeemed or repurchased by us. The 2029 Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Operating Partnership, including the due and punctual payment of principal of, premium, if any, and interest on the 2029 Notes, whether at the stated maturity, upon acceleration, call for redemption or otherwise. We may redeem the 2029 Notes in whole or in part at any time or from time to time at our option on or after July 30, 2026 at a redemption price equal to 100% of the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon the occurrence of certain events relating to a change of control of us, we must make an offer to repurchase all outstanding 2029 Notes at a price in cash equal to 101% of the principal amount of the 2029 Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.

Previous wording

On August 8, 2024, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) to sell shares of the Company’s common stock from time to time having an aggregate gross sales price of up to $75 million, through an “at the market” equity offering program (the “ATM Program”). The Company issued and sold 188,456 shares of common stock through the ATM Program during the year ended December 31, 2024 for gross proceeds of $2.3 million, receiving net proceeds of $2.3 million. The Company paid $45 thousand in commissions to the agents under the ATM Program in connection with such sales during the year ended December 31, 2024. As of March 31, 2025, the Company had approximately $73 million of shares of common stock available for issuance under the ATM Program and Sales Agreement. The Company did not issue any shares under the ATM program during the quarter ended March 31,2025.

Current wording

On August 8, 2024, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) to sell shares of the Company’s common stock from time to time having an aggregate gross sales price of up to $75 million, through an “at the market” equity offering program (the “ATM Program”). The Company issued and sold 215,622 shares of common stock through the ATM Program during the three and six months ended June 30, 2025 for gross proceeds of $2.2 million, receiving net proceeds of $2.2 million. The Company paid $44 thousand in commissions to the agents under the ATM Program in connection with such sales during the three and six months ended June 30, 2025. As of June 30, 2025, the Company had approximately $71 million of gross proceeds available for issuance under the ATM Program and Sales Agreement.

Previous wording

Our cash balance as of March 31, 2025 was sufficient to meet our liquidity covenants under our financing facilities and the Notes. We believe that we maintain sufficient cash to continue to meet margin calls on our financing facilities, should such margin calls occur. There was no margin collateral required as of March 31,2025 or December 31,2024. We may also participate in upcoming securitizations either solely or with other Angel Oak entities. We also have the ability to leverage currently unleveraged securities or whole loan assets, if we deem those actions advisable.

Current wording

Our cash balance as of June 30, 2025 was sufficient to meet our liquidity covenants under our financing facilities and the 2029 Notes and 2030 Notes. We believe that we maintain sufficient cash to continue to meet margin calls on our financing facilities, should such margin calls occur. There was no margin collateral required as of June 30, 2025 or December 31,2024. We may also participate in upcoming securitizations either solely or with other Angel Oak entities. We also have the ability to leverage currently unleveraged securities or whole loan assets, if we deem those actions advisable.

Previous wording

Restricted cash of approximately $4.8 million as of March 31, 2025 was comprised of: $3.6 million in interest rate futures margin collateral for the interest rate futures under our sole control; and margin collateral for securities sold under agreements to repurchase of $1.2 million.

Current wording

Restricted cash of approximately $3.9 million as of June 30, 2025 was comprised of: $2.7 million in interest rate futures margin collateral for the interest rate futures under our sole control; and margin collateral for securities sold under agreements to repurchase of $1.2 million.

Previous wording

The cash used in operating activities of $201.7 million for the three months ended March 31, 2025 as compared to the cash provided of $40.2 million for the three months ended March 31, 2024 was primarily due to the volume of residential mortgage loans purchased during the first three months of 2025, as compared to the first three months of 2024.

Current wording

The cash used in operating activities of $181.1 million for thesix months ended June 30, 2025 as compared to the cash provided of $16.0 million for the six months ended June 30, 2024 was primarily due to the volume of residential mortgage loans purchased from non affiliates during the first six months of 2024, as compared to the first six months of 2025.

Previous wording

The use of investing cash flows of $75.9 million for the three months ended March 31, 2025 as compared to cash used by investing activities of $4.8 million for the three months ended March 31, 2024 were primarily due to the timing of purchases and maturities of U.S. Treasury securities in the comparative period of 2024.

Current wording

The use of investing cash flows of $5.8 million for thesix months ended June 30, 2025 as compared to cash used in investing activities of $11.1 million for the six months ended June 30, 2024 were primarily due to the timing of purchases and maturities of U.S. Treasury securities in the comparative period of 2024.

Previous wording

Financing cash flows provided $278.2 million for the three months ended March 31, 2025 as compared to $37.7 million used in financing activities for the three months ended March 31, 2024 were primarily due to the activity within net borrowings under repurchase agreements and notes payable during the first three months of 2025.

Current wording

Financing cash flows provided $188.3 million for thesix months ended June 30, 2025 as compared to $3.3 million used in the six months ended June 30, 2024 were primarily due to the activity within net borrowings under repurchase agreements and notes payable for the comparative periods.