10q10k10q10k.net

What changed in Angel Oak Mortgage REIT, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Angel Oak Mortgage REIT, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+375 added−369 removedSource: 10-K (2026-03-03) vs 10-K (2025-03-24)

Top changes in Angel Oak Mortgage REIT, Inc.'s 2025 10-K

375 paragraphs added · 369 removed · 302 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

18 edited+6 added−3 removed24 unchanged
Biggest changeOur Investment Strategy Our investment strategy is to make credit-sensitive investments primarily in newly-originated first lien non-QM loans that are primarily made to higher-quality non-QM loan borrowers and substantially sourced from Angel Oak Mortgage Lending, which primarily operates through a wholesale channel and has a national origination footprint. We also may invest in other target assets as described below.
Biggest changeThe Management Agreement is substantially and economically similar to the Prior Management Agreement. Our Investment Strategy Our investment strategy is to make credit-sensitive investments primarily in newly-originated non-QM loans and other mortgage assets that are primarily made to higher-quality borrowers and sourced from Angel Oak Mortgage Lending and other originators through our relationship with Angel Oak Capital.
Upon accumulating an 8 appropriate amount of assets, we expect to finance a substantial portion of our mortgage loans utilizing fixed rate term securitization funding that provides long-term financing for our mortgage loans and locks in our cost of funding, regardless of future interest rate movements.
Upon accumulating an appropriate amount of assets, we expect to finance a substantial portion of our mortgage loans utilizing fixed rate term securitization funding that provides long-term financing for our mortgage loans and locks in our cost of funding, regardless of future interest rate movements.
Information on our website, however, is not part of or incorporated by reference into this Annual Report on Form 10-K. In addition, all our filed reports can be obtained at the SEC’s website at www.sec.gov. 9
Information on our website, however, is not part of or incorporated by reference into this Annual Report on Form 10-K. In addition, all our filed reports can be obtained at the SEC’s website at www.sec.gov. 10
Item 1. Business The Company Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market.
Item 1. Business The Company Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first and second lien non-QM loans and other mortgage-related assets in the U.S. mortgage market.
All of our executive officers, and our dedicated or partially dedicated personnel, which include our Chief Executive Officer, Chief Financial Officer and Treasurer, accounting staff, in-house legal counsel, and other personnel providing services to us were employees of our Manager or one or more of our Manager’s affiliates as of December 31, 2024. Available Information Our website address is www.angeloakreit.com.
All of our executive officers, and our dedicated or partially dedicated personnel, which include our Chief Executive Officer, Chief Financial Officer and Treasurer, accounting staff, in-house legal counsel, and other personnel providing services to us were employees of our Manager or one or more of our Manager’s affiliates as of December 31, 2025. Available Information Our website address is www.angeloakreit.com.
Our Portfolio and Securitizations Since the commencement of our operations in September 2018 through December 31, 2024, we have focused on the acquisition of our target assets, including residential mortgage loans, a substantial portion of which were sourced by Angel Oak Mortgage Lending.
Our Portfolio and Securitizations Since the commencement of our operations in September 2018 through December 31, 2025, we have focused on the acquisition of our target assets, including residential mortgage loans, a substantial portion of which were sourced by Angel Oak Mortgage Lending.
As of December 31, 2024, our approximately $2.2 billion portfolio of target assets consisted predominantly of residential mortgage loans owned directly, residential mortgage loans held in securitization trusts, and RMBS.
As of December 31, 2025, our approximately $2.7 billion portfolio of target assets consisted predominantly of residential mortgage loans owned directly, residential mortgage loans held in securitization trusts, and RMBS.
Since the commencement of our operations in September 2018 through December 31, 2024, we have participated in seventeen rated securitization transactions. We believe that our portfolio validates our strategy of making credit-sensitive investments primarily in newly-originated first lien non-QM loans that are primarily made to higher-quality non-QM loan borrowers.
Since the commencement of our operations in September 2018 through December 31, 2025, we have participated in 21 rated securitization transactions. We believe that our portfolio validates our strategy of making credit-sensitive investments primarily in newly-originated non-QM loans and other mortgage assets that are primarily made to higher-quality borrowers.
Our Target Assets Our target assets include: 7 Target assets, investments backed by: Examples: Residential properties Non-QM loans Non-Agency mortgage loans Non-Agency RMBS Commercial real estate properties Senior mortgage loans Commercial bridge loans Small balance commercial mortgage loans Other investments Agency RMBS Second lien mortgage loans Mezzanine loans Construction loans HELOCs B-Notes QM loans Conforming residential mortgage loans Residential bridge loans Subprime residential mortgage loans Alt-A mortgage loans CRT securities CMBS MSRs and excess MSRs Certain non-real estate related assets, including ABS and consumer loans Our strategy is adaptable to changing market environments, subject to our ability to maintain our qualification as a REIT for U.S. federal income tax purposes and to maintain our exclusion from regulation as an investment company under the Investment Company Act.
These investment guidelines may be amended, restated, modified, supplemented, or waived by our Board of Directors (which must include a majority of our independent directors) from time to time without the approval of, or prior notice to, our stockholders. 8 Our Target Assets Our target assets include: Target assets, investments backed by: Examples: Residential properties Non-QM loans Non-Agency mortgage loans Non-Agency RMBS Commercial real estate properties Senior mortgage loans Commercial bridge loans Small balance commercial mortgage loans Other investments Agency RMBS Second lien mortgage loans Mezzanine loans Construction loans HELOCs B-Notes QM loans Conforming residential mortgage loans Residential bridge loans Subprime residential mortgage loans Alt-A mortgage loans CRT securities CMBS MSRs and excess MSRs Certain non-real estate related assets, including ABS and consumer loans Our strategy is adaptable to changing market environments, subject to our ability to maintain our qualification as a REIT for U.S. federal income tax purposes and to maintain our exclusion from regulation as an investment company under the Investment Company Act.
Any such hedging transactions could take a variety of forms, including the use of derivative instruments such as interest rate swap contracts, index swap contracts, interest rate cap or floor contracts, futures or forward contracts, and options. 6 Our Investment Guidelines Our Board of Directors has approved the following investment guidelines: • No investment shall be made that would cause us to fail to qualify as a REIT under the Code; • No investment shall be made that would cause us or any of our subsidiaries to be regulated as an investment company under the Investment Company Act; • Our investments will be predominantly in our target assets; • Prior to the deployment of capital into our target assets, our Manager may cause our capital to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements with primary U.S.
Our Investment Guidelines Our Board of Directors has approved the following investment guidelines: • No investment shall be made that would cause us to fail to qualify as a REIT under the Code; • No investment shall be made that would cause us or any of our subsidiaries to be regulated as an investment company under the Investment Company Act; • Our investments will be predominantly in our target assets; • Prior to the deployment of capital into our target assets, our Manager may cause our capital to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements with primary U.S.
Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles.We expect to derive our returns primarily from the difference between the interest we earn on loans we invest in and our cost of capital, as well as the returns from bonds, including risk retention securities, that are retained after securitizing the underlying loan collateral.
We expect to derive our returns primarily from the difference 7 between the interest we earn on loans we invest in and our cost of capital, as well as the returns from bonds, including risk retention securities, that are retained after securitizing the underlying loan collateral.
In addition, we believe we have significant competitive advantages due to Angel Oak’s analytical investment tools, extensive relationships in the financial community, financing and capital structuring skills, investment surveillance capabilities, and operational expertise.
In addition, we believe we have significant competitive advantages due to Angel Oak’s analytical investment tools, extensive relationships in the financial community, financing and capital structuring skills, investment surveillance capabilities, and operational expertise. On October 1, 2025, Angel Oak Companies, an affiliate of our Manager, and Brookfield Asset Management Ltd.
We are externally managed and advised by our Manager pursuant to a management agreement (the “Management Agreement”). We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2019.
We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2019.
Our Financing Strategy and Use of Leverage We finance our assets with what we believe to be a prudent amount of leverage, which will vary from time to time based upon the particular characteristics of our portfolio, availability of financing and market conditions.
For additional information regarding our portfolio as of December 31, 2025, see Part II, Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Portfolio ”. 9 Our Financing Strategy and Use of Leverage We finance our assets with what we believe to be a prudent amount of leverage, which will vary from time to time based upon the particular characteristics of our portfolio, availability of financing and market conditions.
Our strategy is to make credit-sensitive investments primarily in newly-originated first lien non-QM loans that are primarily made to higher-quality non-QM loan borrowers and substantially sourced from Angel Oak’s proprietary mortgage lending platform, Angel Oak Mortgage Lending, which currently operates primarily through a wholesale channel and has a national origination footprint.
Our strategy is to make credit-sensitive investments primarily in newly-originated non-QM loans and other mortgage assets that are primarily made to higher-quality borrowers and sourced from the proprietary mortgage lending platform of our affiliate, Angel Oak Mortgage Lending, and other originators through our relationship with Angel Oak Capital.
Further, we may identify and acquire our target assets through the secondary market when market conditions and asset prices are conducive to making attractive purchases. We often finance these target assets through various financing lines on, primarily, a short-term basis and ultimately seek to secure long-term securitization funding for substantially all of our non-QM loans.
We also may invest in other target assets as described below. We often finance these target assets through various financing lines on, primarily, a short-term basis and ultimately seek to secure long-term securitization funding for substantially all of our target assets.
Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles. We are a Maryland corporation and commenced operations in September 2018. On June 21, 2021, we completed an initial public offering (“IPO”) of our common stock on the New York Stock Exchange (“NYSE”).
We may also invest in other residential mortgage loans, RMBS, and other mortgage‑related assets as defined in target assets below. Our objective is to generate attractive risk‑adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles. We are a Maryland corporation and commenced operations in September 2018.
For example, we may enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities.
For example, we may enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities. Any such hedging transactions could take a variety of forms, including the use of derivative instruments such as interest rate swap contracts, index swap contracts, interest rate cap or floor contracts, futures or forward contracts, and options.
Removed
We also may invest in other residential mortgage loans, RMBS, and other mortgage-related assets, which, collectively with non-QM loans, we refer to as our target assets. Further, we also may identify and acquire our target assets through the secondary market when market conditions and asset prices are conducive to making attractive purchases.
Added
On June 21, 2021, we completed an initial public offering (“IPO”) of our common stock on the New York Stock Exchange (“NYSE”). We are externally managed and advised by our Manager pursuant to the Management Agreement (as defined below).
Removed
These investment guidelines may be amended, restated, modified, supplemented, or waived by our Board of Directors (which must include a majority of our independent directors) from time to time without the approval of, or prior notice to, our stockholders.
Added
(“Brookfield”), closed on a strategic transaction resulting in the beneficial owners of Angel Oak Companies selling approximately 51% of the outstanding beneficial ownership of Angel Oak Companies, and indirectly our Manager, to Brookfield (the “Strategic Transaction”).
Removed
For additional information regarding our portfolio as of December 31, 2024, see Part II, Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Our Portfolio ”.
Added
Angel Oak Companies has advised the Company that the Strategic Transaction is not expected to result in any material change in the day-to-day management of the Company, and will not result in any material changes to the Company’s investment objectives and strategies.
Added
As part of the Strategic Transaction, Brookfield has the right to acquire additional beneficial ownership in Angel Oak Companies beginning in 2027, which over time could result in Brookfield taking control of the board of directors of Angel Oak Companies.
Added
On October 1, 2025, immediately following the closing of the Strategic Transaction between Angel Oak Companies and Brookfield, the Company, our operating partnership, and our Manager, entered into a new management agreement (the “Management Agreement”) to supersede and replace in its entirety the Amended and Restated Management Agreement, dated as if May 1, 2024, previously in effect (the “Prior Management Agreement”).
Added
Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

134 edited+16 added−31 removed636 unchanged
Biggest changeAs of December 31, 2024, we had approximately $230.1 million of debt outstanding at par, including (1) approximately $129.5 million outstanding under various uncommitted loan financing lines with a combination of multinational and global money center banks, which permitted borrowings in an aggregate amount of up to $1.1 billion as of December 31, 2024; (2) approximately $50.6 million outstanding under short-term repurchase facilities; and (3) $50.0 million in aggregate principal amount of our 9.500% Senior Notes due 2029 (our “senior unsecured notes”).
Biggest changeRisks Related to Our Financing and Hedging Our significant debt subjects us to increased risk of loss, and our charter and bylaws contain no limitation on the amount of debt we may incur. 35 As of December 31, 2025, we had approximately $365.3 million of debt outstanding at par, including (1) approximately $218.8 million outstanding under various uncommitted loan financing lines with a combination of multinational and global banks, which permitted borrowings in an aggregate amount of up to $1.3 billion as of December 31, 2025; (2) approximately $54.0 million outstanding under short-term repurchase facilities; (3) $50.0 million in aggregate principal amount of our 9.500% Senior Notes due 2029 (our “2029 senior notes”); and (4) $42.5 million in aggregate principal amount of our 9.750% Senior Notes due 2030 (our “2030 senior notes” and, together with our 2029 senior notes, our “Senior Unsecured Notes”) .
If our non-QM loans are underwritten to more flexible guidelines which have increased risk and may cause higher delinquency, default, or foreclosure rates given economic stress, the performance of our investments in non-QM loan portfolio could be correspondingly adversely affected, which could materially and adversely affect us.
If our non-QM loans are underwritten to more flexible guidelines which have increased risk and may cause higher delinquency, default, or foreclosure rates given economic stress, the performance of our investments in our non-QM loan portfolio could be correspondingly adversely affected, which could materially and adversely affect us.
Prepayment rates may adversely affect the value of our portfolio. Prepayment rates on our investments, where contractually permitted, are influenced by changes in current interest rates, significant improvement in the performance of underlying real estate assets and a variety of economic, geographic and other factors beyond our control.
Prepayment rates may adversely affect the value of our portfolio. Prepayment rates may adversely affect the value of our portfolio. Prepayment rates on our investments, where contractually permitted, are influenced by changes in current interest rates, significant improvement in the performance of underlying real estate assets and a variety of economic, geographic and other factors beyond our control.
In periods following home price declines, “strategic defaults” (decisions by borrowers to default on their mortgage loans despite having the ability to pay) also may become more prevalent.
In periods following home price declines, “strategic defaults” (decisions by borrowers to default on their mortgage loans despite having the ability to pay) also may become more prevalent.
Additionally, in the event of the bankruptcy of a residential mortgage loan borrower, the residential mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the residential mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.
Additionally, in the event of the bankruptcy of a residential mortgage loan borrower, the residential mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the residential mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.
For example, we may opportunistically enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities.
For example, we may opportunistically enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities.
Changes to the U.S. federal income tax laws, with or without retroactive application, could materially and adversely affect us. We cannot predict how changes in the tax laws might affect us or our stockholders. New legislation, regulations promulgated by the U.S. Treasury Department (the “U.S.
Changes to the U.S. federal income tax laws, with or without retroactive application, could materially and adversely affect us and our stockholders. We cannot predict how changes in the tax laws might affect us or our stockholders. New legislation, regulations promulgated by the U.S. Treasury Department (the “U.S.
Such joint venture investments may involve risks not otherwise present when we make investments without partners, including the following: • we may not have exclusive control over the investment or the joint venture, which may prevent us from taking actions that are in our best interest; • joint venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • any future joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner; • we may not be in a position to exercise sole decision-making authority regarding the investment or joint venture, which could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions; • a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals; • a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to qualifying and maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act; • a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the joint venture’s liabilities; • our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; 34 • disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our Manager and our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the joint venture to additional risk; or • we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our qualification and maintenance of our qualification as a REIT and maintenance of our exclusion from regulation as an investment company under the Investment Company Act, even though we do not control the joint venture.
Such joint venture investments may involve risks not otherwise present when we make investments without partners, including the following: • we may not have exclusive control over the investment or the joint venture, which may prevent us from taking actions that are in our best interest; • joint venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • any future joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner; • we may not be in a position to exercise sole decision-making authority regarding the investment or joint venture, which could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions; • a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals; • a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to qualifying and maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act; • a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the joint venture’s liabilities; • our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; • disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our Manager and our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the joint venture to additional risk; or • we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our qualification and maintenance of our qualification as a REIT and maintenance of our exclusion from regulation as an investment company under the Investment Company Act, even though we do not control the joint venture.
Hedging may fail to protect or could adversely affect us because, among other things: • interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates; • available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought; • the duration of the hedge may not match the duration of the related assets or liabilities being hedged; • most hedges are structured as OTC contracts with private counterparties, raising the possibility that the hedging counterparty may default on its obligations; • to the extent that the creditworthiness of a hedging counterparty deteriorates, it may be difficult or impossible to terminate or assign any hedging transactions with such counterparty to another counterparty; • to the extent hedging transactions do not satisfy certain provisions of the Code and are not made through a TRS, the amount of income that a REIT may earn from hedging transactions to offset interest rate losses is limited by U.S. federal tax provisions governing REITs; • the value of derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value (i.e., our operating results may suffer because losses, if any, on the derivatives that we enter into may not be offset by a change in the fair value of the related hedged transaction or item).
Hedging may fail to protect or could adversely affect us because, among other things: • interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates; • available interest rate hedges may not correspond directly with the interest rate risk for which protection is sought; • the duration of the hedge may not match the duration of the related assets or liabilities being hedged; • most hedges are structured as OTC contracts with private counterparties, raising the possibility that the hedging counterparty may default on its obligations; • to the extent that the creditworthiness of a hedging counterparty deteriorates, it may be difficult or impossible to terminate or assign any hedging transactions with such counterparty to another counterparty; • to the extent hedging transactions do not satisfy certain provisions of the Code and are not made through a TRS, the amount of income that a REIT may earn from hedging transactions to offset interest rate losses is limited by U.S. federal tax provisions governing REITs; 40 • the value of derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value (i.e., our operating results may suffer because losses, if any, on the derivatives that we enter into may not be offset by a change in the fair value of the related hedged transaction or item).
Additionally, the principal and interest payments on non‑Agency RMBS are not guaranteed by any entity, including any government entity or GSE, and therefore are subject to increased risks, including credit risk. • Mortgage loan modification programs and future legislative action may adversely affect the value of, and the returns on, our target assets, which could materially and adversely affect us. 10 • We are highly dependent on information systems, and system failures could significantly disrupt our business, which may, in turn, have a material adverse effect on us. • Our industry is highly regulated and we or Angel Oak, including our Manager, may be subject to adverse legislative or regulatory changes. • Maintenance of our exclusion from regulation as an investment company under the Investment Company Act imposes significant limitations on our operations. • Our significant debt subjects us to increased risk of loss, and our charter and bylaws contain no limitation on the amount of debt we may incur. • Our access to financing sources, which may not be available on favorable terms, or at all, may be limited, and this may materially and adversely affect us. • Market conditions and other factors may affect our ability to securitize assets, which could increase our financing costs and materially and adversely affect us. • We may be unable to profitably execute securitization transactions, which could materially and adversely affect us. • Interest rate fluctuations could increase our financing costs, which could materially and adversely affect us. • Our significant stockholders and their respective affiliates have significant influence over us and their actions might not be in your best interest as a stockholder. • Legislative or other actions affecting REITs could materially and adversely affect us. • Our failure to qualify as a REIT would subject us to U.S. federal income tax and potentially increased state and local taxes, which would reduce the amount of our income available for distribution to our stockholders. • Complying with REIT requirements and avoiding a prohibited transaction tax may force us to hold a significant portion of our assets and conduct a significant portion of our activities through a taxable REIT subsidiary (“TRS”), and a significant portion of our income may be earned through a TRS.
Additionally, the principal and interest payments on non‑Agency RMBS are not guaranteed by any entity, including any government entity or GSE, and therefore are subject to increased risks, including credit risk. • Mortgage loan modification programs and future legislative action may adversely affect the value of, and the returns on, our target assets, which could materially and adversely affect us. 11 • We are highly dependent on information systems, and system failures could significantly disrupt our business, which may, in turn, have a material adverse effect on us. • Our industry is highly regulated and we or Angel Oak, including our Manager, may be subject to adverse legislative or regulatory changes. • Maintenance of our exclusion from regulation as an investment company under the Investment Company Act imposes significant limitations on our operations. • Our significant debt subjects us to increased risk of loss, and our charter and bylaws contain no limitation on the amount of debt we may incur. • Our access to financing sources, which may not be available on favorable terms, or at all, may be limited, and this may materially and adversely affect us. • Market conditions and other factors may affect our ability to securitize assets, which could increase our financing costs and materially and adversely affect us. • We may be unable to profitably execute securitization transactions, which could materially and adversely affect us. • Interest rate fluctuations could increase our financing costs, which could materially and adversely affect us. • Our significant stockholders and their respective affiliates have significant influence over us and their actions might not be in your best interest as a stockholder. • Legislative or other actions affecting REITs could materially and adversely affect us and our stockholders. • Our failure to qualify as a REIT would subject us to U.S. federal income tax and potentially increased state and local taxes, which would reduce the amount of our income available for distribution to our stockholders. • Complying with REIT requirements and avoiding a prohibited transaction tax may force us to hold a significant portion of our assets and conduct a significant portion of our activities through a taxable REIT subsidiary (“TRS”), and a significant portion of our income may be earned through a TRS.
Additional risks associated with commercial real mortgage investments include, but are 22 not limited to, changes in the general economic climate or local conditions (such as an oversupply of space or a reduction in demand for space), competition based on rental rates, attractiveness and location of the properties, changes in the financial condition of tenants, increases in work-from-home policies, and changes in operating costs.
Additional risks associated with commercial real mortgage investments include, but are not limited to, changes in the general economic climate or local conditions (such as an oversupply of space or a reduction in demand for space), competition based on rental rates, attractiveness and location of the properties, changes in the financial condition of tenants, increases in work-from-home policies, and changes in operating costs.
For us to qualify as a REIT, we must meet detailed technical requirements, including income, asset and stock ownership tests, under several Code provisions that have not been extensively interpreted by judges or administrative officers. In addition, we do not control the determination of all factual matters and circumstances that affect our ability to qualify as a REIT.
For us to qualify as a REIT, we must meet detailed technical requirements, including income, asset, distribution and stock ownership tests, under several Code provisions that have not been extensively interpreted by judges or administrative officers. In addition, we do not control the determination of all factual matters and circumstances that affect our ability to qualify as a REIT.
Under the MGCL, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain circumstances specified under the statute, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any interested stockholder (as defined in the statute) or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder.
Under the MGCL, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain circumstances specified under the statute, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and any interested stockholder (as defined in the statute) or an affiliate of an interested 42 stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder.
Finally, laws may delay the initiation or completion of foreclosure proceedings on specified types of residential mortgage loans or otherwise limit the ability of mortgage servicers to take actions that may be essential to preserve the value of the loan. Any such limitations are likely to cause delayed or reduced collections from mortgagors and 29 generally increase servicing costs.
Finally, laws may delay the initiation or completion of foreclosure proceedings on specified types of residential mortgage loans or otherwise limit the ability of mortgage servicers to take actions that may be essential to preserve the value of the loan. Any such limitations are likely to cause delayed or reduced collections from mortgagors and generally increase servicing costs.
Further, rating agencies could alter their ratings processes or criteria after we 37 have accumulated loans for securitization in a manner that reduces the value of previously acquired loans or that requires us to incur additional costs to comply with those processes and criteria. Our securitization transactions may result in litigation, which could materially and adversely affect us.
Further, rating agencies could alter their ratings processes or criteria after we have accumulated loans for securitization in a manner that reduces the value of previously acquired loans or that requires us to incur additional costs to comply with those processes and criteria. Our securitization transactions may result in litigation, which could materially and adversely affect us.
If investment in non-QM loans falls out of favor or otherwise becomes unattractive because of perceived risks, unfavorable pricing or otherwise, our Manager will have a conflict of interest in determining whether our strategy should continue to focus on the acquisition of non-QM loans, particularly if the origination of such loans continues to be a focus of Angel Oak Mortgage Lending.
If investment in non-QM loans falls out of favor or otherwise becomes unattractive because of perceived risks, unfavorable pricing or otherwise, our Manager will have a conflict of interest in determining whether our strategy should continue to focus on the acquisition of non-QM loans, particularly if the origination of such loans continues to be a focus of Angel Oak 13 Mortgage Lending.
Risks Related to our REIT Qualification and Certain Other U.S. Federal Income Tax Items Legislative or other actions affecting REITs could materially and adversely affect us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service (“IRS”) and the U.S. Treasury Department.
Risks Related to our REIT Qualification and Certain Other U.S. Federal Income Tax Items Legislative or other actions affecting REITs could materially and adversely affect us and our stockholders. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service (“IRS”) and the U.S. Treasury Department.
For example, by relying on incorrect models and data, especially valuation or cash flow models, we may be induced to buy certain assets at prices that are too 26 high, to sell certain other assets at prices that are too low, to overestimate or underestimate the timing or amount of cash flows expected to be collected, or to miss favorable opportunities altogether.
For example, by relying on incorrect models and data, especially valuation or cash flow models, we may be induced to buy certain assets at prices that are too high, to sell certain other assets at prices that are too low, to overestimate or underestimate the timing or amount of cash flows expected to be collected, or to miss favorable opportunities altogether.
New legislation, U.S. Treasury regulations, administrative interpretations or court decisions might significantly 45 change the U.S. federal income tax laws with respect to our qualification as a REIT or the U.S. federal income tax consequences of such qualification. We believe that we have been organized and operate in conformity with the requirements for qualification as a REIT under the Code.
New legislation, U.S. Treasury regulations, administrative interpretations or court decisions might significantly change the U.S. federal income tax laws with respect to our qualification as a REIT or the U.S. federal income tax consequences of such qualification. We believe that we have been organized and operate in conformity with the requirements for qualification as a REIT under the Code.
Such estimates and assumptions include, without limitation, estimates of future cash flows associated with MSRs based upon assumptions involving interest rates as well as the prepayment rates, delinquencies, and foreclosure rates of the underlying serviced mortgage loans. The ultimate realization of the fair value of MSRs may be materially different than the values of such MSRs estimated by us.
Such estimates and assumptions include, without limitation, estimates of future cash flows associated with MSRs based upon assumptions involving interest rates as well as the prepayment rates, delinquencies, and foreclosure rates of the underlying serviced mortgage 25 loans. The ultimate realization of the fair value of MSRs may be materially different than the values of such MSRs estimated by us.
Federal Reserve officials regarding the U.S. economy, future economic growth, the U.S. Federal Reserve’s future open market activity and monetary policy had a significant impact on, among other things, benchmark interest rates, the value of residential mortgage loans and, more generally, the fixed-income markets. These statements and actions of the U.S.
Federal Reserve officials 31 regarding the U.S. economy, future economic growth, the U.S. Federal Reserve’s future open market activity and monetary policy had a significant impact on, among other things, benchmark interest rates, the value of residential mortgage loans and, more generally, the fixed-income markets. These statements and actions of the U.S.
Security breaches could also significantly damage our reputation with existing and prospective loan sellers, borrowers, and third parties with whom we do business. Any publicized security problems affecting our businesses and/or those of such third parties may negatively impact the market perception of our products and discourage market participants from doing business with us.
Security breaches could also significantly damage our reputation with existing and prospective loan sellers, borrowers, and third parties with whom we do business. Any publicized security problems affecting our businesses and/or those of such third parties may 32 negatively impact the market perception of our products and discourage market participants from doing business with us.
Changes in regulations relating to OTC derivatives activities may cause us to limit such activity or subject us and our Manager to additional disclosure, recordkeeping, and other regulatory requirements. The enforceability of swap agreements underlying hedging transactions may depend on compliance with applicable derivatives regulatory requirements and, depending on the identity of the counterparty, applicable international requirements.
Changes in regulations relating to OTC derivatives activities may cause us to limit such activity or subject us and our Manager to additional disclosure, recordkeeping, and other regulatory requirements. 41 The enforceability of swap agreements underlying hedging transactions may depend on compliance with applicable derivatives regulatory requirements and, depending on the identity of the counterparty, applicable international requirements.
However, we cannot guarantee that we will qualify as a REIT in any given year because: • the rules governing REITs are highly complex; • we do not control all factual circumstances and legal determinations by courts or regulatory bodies that affect REIT qualification; and • our circumstances may change in the future.
However, we cannot guarantee that we will qualify as a REIT in any given year because: • the rules governing REITs are highly complex; • we do not control all factual circumstances and legal determinations by courts or regulatory bodies that affect REIT qualification; and 46 • our circumstances may change in the future.
In order to qualify and maintain our qualification as a REIT for U.S. federal income tax purposes, we must on a continuing basis satisfy various tests on an annual and quarterly basis regarding the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of our stock.
In order to qualify and maintain our qualification as a REIT for U.S. federal income tax purposes, we must satisfy various tests on an annual and quarterly basis regarding the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of our stock.
The continued pursuit of our strategy under these 12 circumstances may result in losses. The significant majority of the loans that Angel Oak Mortgage Lending currently originates are non-QM loans. Similarly, failure to adjust our strategy may cause us to forego other attractive investment opportunities outside investments in non-QM loans.
The continued pursuit of our strategy under these circumstances may result in losses. The significant majority of the loans that Angel Oak Mortgage Lending currently originates are non-QM loans. Similarly, failure to adjust our strategy may cause us to forego other attractive investment opportunities outside investments in non-QM loans.
Fair values can change rapidly and significantly, and changes can result from changes in interest rates, perceived risk, supply, demand, and actual and projected cash flows, prepayments, and credit performance. A decrease in fair value may not necessarily be the result of or an expectation for deterioration in future cash flows.
Fair values can change rapidly and significantly, and changes can result from changes in interest rates, perceived risk, 20 supply, demand, and actual and projected cash flows, prepayments, and credit performance. A decrease in fair value may not necessarily be the result of or an expectation for deterioration in future cash flows.
As a result, among other things, our Board of Directors may establish a class or series of shares of our common stock or 42 preferred stock that could delay or prevent a transaction or a change in control of us that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.
As a result, among other things, our Board of Directors may establish a class or series of shares of our common stock or preferred stock that could delay or prevent a transaction or a change in control of us that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.
Computer malware, viruses, and computer hacking and phishing attacks have become more prevalent in the financial services industry and may occur on our systems in the future. We rely heavily on our financial, accounting, and other data processing systems. 32 Financial services institutions have reported breaches of their systems, some of which have been significant.
Computer malware, viruses, and computer hacking and phishing attacks have become more prevalent in the financial services industry and may occur on our systems in the future. We rely heavily on our financial, accounting, and other data processing systems. Financial services institutions have reported breaches of their systems, some of which have been significant.
These laws and regulations and changes to securitization practices could alter the structure of securitizations in the future, could pose additional risks to our participation in future securitizations or effectively preclude us from executing securitization transactions, could delay our execution of these types of transactions, or could reduce the returns we would otherwise expect to earn from executing securitization transactions.
These laws and regulations and changes to securitization practices could alter the structure of securitizations in the future, could pose additional risks to our participation in future securitizations or effectively 37 preclude us from executing securitization transactions, could delay our execution of these types of transactions, or could reduce the returns we would otherwise expect to earn from executing securitization transactions.
If we act as the purchaser under a loan financing line, a risk exists that the seller will not pay to us the agreed upon sum on the delivery date at which point we would generally be entitled to sell the 38 relevant loans that we purchased.
If we act as the purchaser under a loan financing line, a risk exists that the seller will not pay to us the agreed upon sum on the delivery date at which point we would generally be entitled to sell the relevant loans that we purchased.
Subject to maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act, we have utilized, and in the future expect to continue to utilize various derivative instruments and other 39 hedging instruments to mitigate interest rate risk, credit risk and other risks.
Subject to maintaining our qualification as a REIT and maintaining our exclusion from regulation as an investment company under the Investment Company Act, we have utilized, and in the future expect to continue to utilize various derivative instruments and other hedging instruments to mitigate interest rate risk, credit risk and other risks.
This increase in borrowers’ monthly payments, together with any increase in prevailing market interest rates, may result in significantly increased monthly payments for borrowers subject to adjustable-rates. 21 Borrowers seeking to avoid these increased monthly payments by refinancing may no longer be able to find alternatives at comparably low interest rates.
This increase in borrowers’ monthly payments, together with any increase in prevailing market interest rates, may result in significantly increased monthly payments for borrowers subject to adjustable-rates. Borrowers seeking to avoid these increased monthly payments by refinancing may no longer be able to find alternatives at comparably low interest rates.
The value of ABS may be affected by other factors, such as the availability of information concerning the pool and its structure, the creditworthiness of the 25 servicing agent for the pool, the originator of the underlying assets or the entities providing credit enhancements and the ability of the servicer to service the underlying collateral.
The value of ABS may be affected by other factors, such as the availability of information concerning the pool and its structure, the creditworthiness of the servicing agent for the pool, the originator of the underlying assets or the entities providing credit enhancements and the ability of the servicer to service the underlying collateral.
If we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the intrinsic value of the assets and/or the value at which we previously recorded such assets. 27 Assets that are illiquid are more difficult to finance using leverage.
If we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the intrinsic value of the assets and/or the value at which we previously recorded such assets. Assets that are illiquid are more difficult to finance using leverage.
Our charter provides that our Board of Directors, subject to certain limits, upon receipt of such representations and agreements as our Board of Directors may require, may prospectively or retroactively exempt a person from either or both of the ownership limits and establish a different limit on ownership for such person.
Our charter provides that our Board of Directors, subject to certain limits, upon receipt of such representations and agreements as our Board of Directors may require, may prospectively or retroactively exempt a person from either or both of the ownership limits and 44 establish a different limit on ownership for such person.
Our portfolio includes CMBS, which are mortgage-backed securities secured by interests in a single commercial mortgage loan or a pool of mortgage loans secured by commercial properties. CMBS are issued in public and private transactions by a variety of public and 24 private issuers using a variety of structures, including senior and subordinated classes.
Our portfolio includes CMBS, which are mortgage-backed securities secured by interests in a single commercial mortgage loan or a pool of mortgage loans secured by commercial properties. CMBS are issued in public and private transactions by a variety of public and private issuers using a variety of structures, including senior and subordinated classes.
Changes in the fair values of our assets, liabilities, and derivatives can have a material adverse effect on us, including reduced earnings, increased earnings volatility, and volatility in our book value. 19 Fair values for our assets and liabilities, including derivatives, can be volatile and our revenue and income can be impacted by changes in fair values.
Changes in the fair values of our assets, liabilities, and derivatives can have a material adverse effect on us, including reduced earnings, increased earnings volatility, and volatility in our book value. Fair values for our assets and liabilities, including derivatives, can be volatile and our revenue and income can be impacted by changes in fair values.
In the event of a default or a bankruptcy of the borrower, the second lien mortgage loan will not receive payment until the first lien mortgage loan is fully paid, resulting in a higher likelihood that we will be subject to losses on such second lien mortgage loan.
In the event of a 23 default or a bankruptcy of the borrower, the second lien mortgage loan will not receive payment until the first lien mortgage loan is fully paid, resulting in a higher likelihood that we will be subject to losses on such second lien mortgage loan.
Our taxable income may substantially exceed our net income as determined by GAAP or differences in timing between the recognition of taxable income and the actual receipt of cash may occur, in which case we may have taxable income in excess of cash flow from our operating activities.
Our taxable income may substantially exceed our net income as determined by GAAP or differences in timing between the recognition of taxable income and the actual receipt of cash may occur, in which case we may have taxable 47 income in excess of cash flow from our operating activities.
To the extent we might be compelled to liquidate qualifying real estate assets to repay debts, our compliance with the REIT requirements regarding our assets and our sources of income could be negatively affected, which could jeopardize our qualification as a REIT.
To the extent we might be compelled to liquidate qualifying real estate assets to repay debts, our compliance with the REIT requirements regarding our assets and our sources of income could be negatively affected, which could jeopardize our qualification as a 39 REIT.
Regardless of the form of risk retention selected, we or a majority-owned affiliate will be required to hold the Risk Retention Securities until the end of the time period required under the U.S. Risk Retention Rules (i.e., the respective risk retention holding period).
Regardless of the form of risk retention selected, we or a majority-owned affiliate will be required to hold the Risk Retention Securities until the end of the time period required under the U.S. Risk Retention Rules (i.e., the respective risk retention 28 holding period).
Accordingly, downturns relating generally to non-QM loans may result in defaults on a number of our non-QM loans within a short time period, and adverse conditions in the areas where the properties securing or otherwise underlying our investments are concentrated (including unemployment rates, changing demographics and 17 other factors) and local real estate conditions (such as oversupply or reduced demand) may have an adverse effect on the value of our investments, any of which may materially and adversely affect us.
Accordingly, downturns relating generally to non-QM loans may result in defaults on a number of our non-QM loans within a short time period, and adverse conditions in the areas where the properties securing or otherwise underlying our investments are concentrated (including unemployment rates, changing demographics and other factors) and local 18 real estate conditions (such as oversupply or reduced demand) may have an adverse effect on the value of our investments, any of which may materially and adversely affect us.
A residential mortgage loan is typically secured by a single-family residential property and is subject to risks of delinquency and foreclosure and risk of loss. The ability of a borrower to repay a loan secured by a residential property is dependent upon the income or assets of the borrower.
A residential mortgage loan is typically secured by a single-family residential property and is subject to 22 risks of delinquency and foreclosure and risk of loss. The ability of a borrower to repay a loan secured by a residential property is dependent upon the income or assets of the borrower.
Treasury regulations”), administrative interpretations, or court decisions could significantly and negatively affect our ability to qualify as a REIT or the U.S. federal income tax consequences of such qualification.
Treasury regulations”), administrative interpretations, or court decisions could significantly and negatively affect our ability to qualify as a REIT, the U.S. federal income tax consequences of such qualification or the U.S. federal income tax consequences of our stockholders.
Fierman, the Chairman of our Board of Directors, also serves as a Managing Partner and Co-Chief Executive Officer of Angel Oak Companies, and Sreeniwas Prabhu, our Chief Executive Officer and President, also serves as Managing Partner, Co-Chief Executive Officer, and Group Chief Investment Officer at Angel Oak Capital.
Michael Fierman, the Chairman of our Board of Directors, also serves as a Managing Partner and Co-Chief Executive Officer of Angel Oak Companies, and Sreeniwas Prabhu, our Chief Executive Officer and President, also serves as Managing Partner, Co-Chief Executive Officer, and Group Chief Investment Officer at Angel Oak Capital.
For example, in recent years, hurricanes have caused widespread flooding in Florida and Texas and wildfires and mudslides in California have destroyed or damaged thousands of homes, including during the wildfires experienced in southern California in January 2025.
For example, in recent years, hurricanes have caused widespread flooding in Florida and Texas and wildfires and mudslides in California, including the wildfires experienced in southern California in January 2025, have destroyed or damaged thousands of homes.
Termination of the Management Agreement with our Manager may require us to pay our Manager a substantial termination fee, which will increase the effective cost to us of terminating the Management Agreement, thereby adversely affecting our ability to terminate our Manager without cause. 14 Our Manager will not assume any responsibility other than to provide the services specified in the Management Agreement in good faith and will not be responsible for any action of our Board of Directors in following or declining to follow its advice or recommendations.
Termination of the Management Agreement with our Manager may require us to pay our Manager a substantial termination fee, which will increase the effective cost to us of terminating the Management Agreement, thereby adversely affecting our ability to terminate our Manager without cause. 15 Our Manager will not assume any responsibility other than to provide the services specified in the Management Agreement in good faith and will not be responsible for any action of our Board of Directors in following or declining to follow its advice or recommendations.
Our Manager has great latitude within our broad investment guidelines to determine the types of assets it may decide are proper for purchase by us, which could result in investment returns that are substantially below expectations or that result in losses, which would materially and adversely affect us. 15 In addition, there can be no assurance that our Manager will follow its investment process in relation to the identification and underwriting of prospective investments.
Our Manager has great latitude within our broad investment guidelines to determine the types of assets it may decide are proper for purchase by us, which could result in investment returns that are substantially below expectations or that result in losses, which would materially and adversely affect us. 16 In addition, there can be no assurance that our Manager will follow its investment process in relation to the identification and underwriting of prospective investments.
See “— Risks Related to Our Investment Activities — Prepayment rates may adversely affect the value of our portfolio” for information relating to the impact of prepayments on our investments. The U.S.
See “— Risks Related to Our 30 Investment Activities — Prepayment rates may adversely affect the value of our portfolio” for information relating to the impact of prepayments on our investments. The U.S.
In the event of a sudden, precipitous drop in the value of our financed assets, we might not be able to liquidate assets quickly enough to repay our borrowings, further magnifying losses.
In the event of a sudden, precipitous drop in the value of our financed assets, we might not be able to liquidate assets quickly enough to repay our borrowings, 36 further magnifying losses.
Our Manager’s and Angel Oak’s management of other managed entities could create a conflict of interest to the extent our Manager or Angel Oak is aware of material non-public information concerning potential investment decisions. In addition, this conflict may limit the freedom of our Manager to make potentially profitable investments, which could have an adverse effect on 13 our operations.
Our Manager’s and Angel Oak’s management of other managed entities could create a conflict of interest to the extent our Manager or Angel Oak is aware of material non-public information concerning potential investment decisions. In addition, this conflict may limit the freedom of our Manager to make potentially profitable investments, which could have an adverse effect on 14 our operations.
We cannot be certain if the scaled SEC reporting options available to Smaller Reporting Companies will make our securities less attractive to investors, which could make the market price and trading volume of our securities to be more volatile and decline significantly. 50 Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
We cannot be certain if the scaled SEC reporting options available to Smaller Reporting Companies will make our securities less attractive to investors, which could make the market price and trading volume of our securities to be more volatile and decline significantly. 51 Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
Sales of substantial amounts of shares of our common stock, or the perception that such sales could occur, may adversely affect prevailing market prices for shares of our common stock. 49 Future offerings of debt securities, which would rank senior to shares of our common stock upon our bankruptcy or liquidation, and future offerings of equity securities which would dilute the common stock holdings of our existing stockholders and may be senior to shares of our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of shares of our common stock.
Sales of substantial amounts of shares of our common stock, or the perception that such sales could occur, may adversely affect prevailing market prices for shares of our common stock. 50 Future offerings of debt securities, which would rank senior to shares of our common stock upon our bankruptcy or liquidation, and future offerings of equity securities which would dilute the common stock holdings of our existing stockholders and may be senior to shares of our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of shares of our common stock.
Distressed assets may entail characteristics that make disposition or liquidation more challenging, including, among other things, severe document deficiencies or underlying real estate located in states with extended foreclosure timelines. Additionally, many of these loans may have LTVs in excess of 100%, meaning the amount owed on the loan exceeds the value of the underlying real estate.
Distressed assets may entail characteristics that make disposition or liquidation more challenging, including, among other things, severe document deficiencies or underlying real estate located in states with extended foreclosure timelines. Additionally, many of these loans may have CLTVs in excess of 100%, meaning the amount owed on the loan exceeds the value of the underlying real estate.
In the event such defenses were successful, or resulted in delay, we could incur losses, which could materially and adversely affect us. 23 • Construction Loans.
In the event such defenses were successful, or resulted in delay, we could incur losses, which could materially and adversely affect us. • Construction Loans.
Our business is materially affected by conditions in the residential mortgage market, the residential real estate market, the financial markets, and the economy, including increasing inflation, energy costs, unemployment, geopolitical issues, pandemics, endemics, concerns over the creditworthiness of governments worldwide and the stability of the global banking system.
Our business is materially affected by conditions in the residential mortgage market, the residential real estate market, the financial markets, and the economy, including increasing inflation, energy costs, unemployment, geopolitical issues, tariff policies, pandemics, endemics, concerns over the creditworthiness of governments worldwide and the stability of the global banking system.
The non-QM loans and other residential mortgage loans in which we invest are subject to a risk of default, among other risks. Our strategy is to make credit-sensitive investments primarily in newly-originated first lien non-QM loans, which include investment property loans. We also may invest in other target assets.
The non-QM loans and other residential mortgage loans in which we invest are subject to a risk of default, among other risks. Our strategy is to make credit-sensitive investments primarily in newly-originated non-QM loans, which include investment property loans, and other mortgage assets. We also may invest in other target assets.
As of December 31, 2024, Angel Oak Mortgage Lending was licensed to originate loans in 46 states and in the District of Columbia, and is currently subject to significant regulation by both U.S. federal and state regulators, including the CFPB and various state offices of financial regulation.
As of December 31, 2025, Angel Oak Mortgage Lending was licensed to originate loans in 46 states and in the District of Columbia, and is currently subject to significant regulation by both U.S. federal and state regulators, including the CFPB and various state offices of financial regulation.
Since our commencement of operations in September 2018 through December 31, 2024, a substantial portion of the target assets in our portfolio have been acquired from Angel Oak Mortgage Lending, and we expect that, in the future, a substantial portion of our portfolio will continue to consist of target assets acquired from Angel Oak Mortgage Lending.
Since our commencement of operations in September 2018 through December 31, 2025, a substantial portion of the target assets in our portfolio have been acquired from Angel Oak Mortgage Lending, and we expect that, in the future, a substantial portion of our portfolio will continue to consist of target assets acquired from Angel Oak Mortgage Lending.
We depend upon the availability of adequate capital and financing sources to fund our operations. Our lenders include or are expected to include global money center and large regional banks, with exposures both to global financial markets and to more localized conditions.
We depend upon the availability of adequate capital and financing sources to fund our operations. Our lenders include or are expected to include global and large regional banks, with exposures both to global financial markets and to more localized conditions.
Some of the risks of relying on analytical models and third-party data include the following: • collateral cash flows and/or liability structures may be incorrectly modeled in all or only certain scenarios, or may be modeled based on simplifying assumptions that lead to errors; • information about assets or the underlying collateral may be incorrect, incomplete, or misleading; • asset, collateral, RMBS or CMBS historical performance (such as historical prepayments, defaults, cash flows, etc.) may be incorrectly reported, or subject to interpretation; and • asset, collateral, RMBS or CMBS information may be outdated, in which case the models may contain incorrect assumptions as to what has occurred since the date information was last updated.
Some of the risks of relying on analytical models and third-party data include the following: • collateral cash flows and/or liability structures may be incorrectly modeled in all or only certain scenarios, or may be modeled based on simplifying assumptions that lead to errors; • information about assets or the underlying collateral may be incorrect, incomplete, or misleading; • asset, collateral, RMBS or CMBS historical performance (such as historical prepayments, defaults, cash flows, etc.) may be incorrectly reported, or subject to interpretation; and • asset, collateral, RMBS or CMBS information may be outdated, in which case the models may contain incorrect assumptions as to what has occurred since the date information was last updated. 27 Some models, such as prepayment models or default models, may be predictive in nature.
Ordinary dividends payable by REITs do not generally qualify for the reduced tax rates applicable to certain corporate dividends. The Code provides for a 20% maximum federal income tax rate for dividends paid by regular United States corporations to eligible domestic shareholders that are individuals, trusts or estates. Dividends paid by REITs are generally not eligible for these reduced rates.
Ordinary dividends payable by REITs do not generally qualify for the reduced tax rates applicable to certain corporate dividends. The Code provides for a 20% maximum U.S. federal income tax rate for dividends paid by regular United States corporations to eligible domestic shareholders that are individuals, trusts or estates.
Such acquisitions and investments will subject us to risks which include, among others: • declines in the value of residential or commercial real estate; • risks related to benchmark rates such as the Secured Overnight Financing Rate (“SOFR”) as reference rates for loans, borrowings and securities; • risks related to general and local economic conditions, including unemployment rates; • lack of available mortgage funding for borrowers to refinance or sell their homes or other properties; • overbuilding and/or housing availability; • increases in property taxes; • changes in U.S. federal and state lending laws; • changes in zoning laws; • costs resulting from the clean-up of, and liability to third parties for damages resulting from, environmental problems, such as indoor mold; • casualty or condemnation losses; • acts of God, terrorism, social unrest, and civil disturbances; • uninsured damages from floods, earthquakes, wildfires, or other natural disasters, including those resulting from global climate change; • limitations on and variations in rents; • fluctuations in interest rates; • undetected or unknown fraudulent activity by borrowers, originators, sellers of mortgage loans and/or other third party service providers; • undetected deficiencies and/or inaccuracies in underlying mortgage loan documentation and calculations; and • failure of the borrower to adequately maintain the property.
Such acquisitions and investments will subject us to risks which include, among others: • declines in the value of residential or commercial real estate; • risks related to general and local economic conditions, including unemployment rates; • lack of available mortgage funding for borrowers to refinance or sell their homes or other properties; • overbuilding and/or housing availability; • increases in property taxes; • changes in U.S. federal and state lending laws; • changes in zoning laws; • costs resulting from the clean-up of, and liability to third parties for damages resulting from, environmental problems, such as indoor mold; • casualty or condemnation losses; • acts of God, terrorism, social unrest, and civil disturbances; • uninsured damages from floods, earthquakes, wildfires, or other natural disasters, including those resulting from global climate change; • limitations on and variations in rents; • fluctuations in interest rates; • undetected or unknown fraudulent activity by borrowers, originators, sellers of mortgage loans and/or other third party service providers; • undetected deficiencies and/or inaccuracies in underlying mortgage loan documentation and calculations; and • failure of the borrower to adequately maintain the property.
To qualify for this deduction, the shareholder receiving such dividend must hold the dividend-paying REIT shares for at least 46 days (taking into account certain special holding period rules) of the 91-day period beginning 45 days before the shares become ex-dividend, and cannot be under an obligation to make related payments with respect to a position in substantially similar or related property.
To qualify for this deduction, the stockholder receiving a Qualified REIT Dividend must hold the dividend-paying REIT shares for at least 46 days (taking into account certain special holding period rules) of the 91-day period beginning 45 days before the shares become ex-dividend and cannot be under an obligation to make related payments with respect to a position in substantially similar or related property.
In addition, as of December 31, 2024, more than 5% of the unpaid principal balance of the loans underlying our portfolio of RMBS from the AOMT securitizations in which we participated and/or were the primary beneficiary were secured by properties located in each of California, Florida, Texas, and Georgia.
In addition, as of December 31, 2025, more than 5% of the unpaid principal balance of the loans underlying our portfolio of RMBS from the AOMT securitizations in which we participated and/or were the primary beneficiary were secured by properties located in each of California, Florida, and Texas.
If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value and liquidity of our investments could significantly decline, which would adversely affect the value of our portfolio and could result in losses. 20 Prepayment rates may adversely affect the value of our portfolio.
If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our investments in the future, the value and liquidity of our investments could significantly decline, which would adversely affect the value of our portfolio and could result in losses.
Key personnel provided to us by our Manager may 11 become unavailable to us as a result of their departure from our Manager or for any other reason.
Key personnel provided to us by our Manager may 12 become unavailable to us as a result of their departure from our Manager or for any other reason.
Our investment guidelines do not require us to observe specific diversification criteria. Currently, we are focused on acquiring and investing in first lien non-QM loans in the U.S. mortgage market. As of December 31, 2024, substantially all of the loans underlying our portfolio of RMBS and residential loans held in securitization trusts consisted of non-QM loans.
Our investment guidelines do not require us to observe specific diversification criteria. Currently, we are focused on acquiring and investing in non-QM loans in the U.S. mortgage market. As of December 31, 2025, substantially all of the loans underlying our portfolio of RMBS and residential loans held in securitization trusts consisted of non-QM loans.
As with other REITs, but unlike corporations generally, our ability to finance our growth must largely be funded by external sources of capital because we generally have to distribute to our stockholders 90% of our REIT taxable income in order to qualify as a REIT and 100% of REIT taxable income in order to avoid U.S. federal corporate income tax and a 4% nondeductible excise tax.
We are dependent on external sources of capital to finance our growth. 48 As with other REITs, but unlike corporations generally, our ability to finance our growth must largely be funded by external sources of capital because we generally have to distribute to our stockholders 90% of our REIT taxable income annually in order to qualify as a REIT and 100% of REIT taxable income in order to avoid U.S. federal corporate income tax and a 4% nondeductible excise tax.
It is possible that we may wish to distribute a dividend from a TRS to ourselves in order to reduce the value of TRS securities below 20% of our assets, but be unable to do so without violating the requirement that 75% of our gross income in the taxable year be derived from real estate assets and certain other sources.
It is possible that we may wish to distribute a dividend from a TRS to ourselves in order to reduce the value of TRS securities below 25% (20% for periods prior to 2026) of our assets, but be unable to do so without violating the requirement that 75% of our gross income in the taxable year be derived from real estate assets and certain other sources.
The “unsolicited takeover” provisions of the MGCL permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses if we have a class of equity securities registered under the Exchange Act and at least three independent directors.
The “unsolicited takeover” provisions of the MGCL permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement takeover defenses if we have a class of equity securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and at least three independent directors.
Due to limitations on the concentration of ownership of REIT stock imposed by the Code, and subject to certain exceptions, our charter provides that no person may beneficially or constructively own (1) shares of common stock in excess of 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock or (2) shares of stock in excess of 9.8% in value of the outstanding shares of our stock.
To assist us to comply with the limitations on the concentration of ownership of REIT stock imposed by the Code, and subject to certain exceptions, our charter provides that no person may beneficially or constructively own (1) shares of common stock in excess of 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock or (2) shares of stock in excess of 9.8% in value of the outstanding shares of our stock.
“Risk Factors.” We may change our strategy, investment guidelines, hedging strategy, asset allocation, operational, and management policies without notice or stockholder consent, which could materially and adversely affect us.
We may change our strategy, investment guidelines, hedging strategy, asset allocation, operational, and management policies without notice or stockholder consent, which could materially and adversely affect us.
Although our strategy is to make credit-sensitive investments primarily in newly-originated first lien non-QM loans that are substantially sourced from Angel Oak Mortgage Lending, Angel Oak Mortgage Lending has no obligation to sell non-QM loans and other target assets to us and, as a result, we may need to acquire non-QM loans and other target assets from unaffiliated third parties, including through the secondary market when market conditions and asset prices are conducive to making attractive purchases.
Although our strategy is to make credit-sensitive investments primarily in newly-originated non-QM loans and other mortgage assets that are sourced from Angel Oak Mortgage Lending and other originators through our relationship with Angel Oak Capital, Angel Oak Mortgage Lending has no obligation to sell non-QM loans and other target assets to us and, as a result, we may need to acquire non-QM loans and other target assets from unaffiliated third parties, including through the secondary market when market conditions and asset prices are conducive to making attractive purchases.
Treasury securities or other similar assets in the absence of that 20% value test. Additionally, the need to satisfy such 20% value test may require dividends to be distributed by one or more TRSs to us at times when it may not be beneficial to do so.
Treasury securities or other similar assets in the absence of that 25% (20% for periods prior to 2026) value test. Additionally, the need to satisfy such 25% (20% for periods prior to 2026) value test may require dividends to be distributed by one or more TRSs to us at times when it may not be beneficial to do so.
Taxable stockholders receiving such distributions will be required to include the full amount of the distribution as ordinary income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
U.S. stockholders receiving such distributions will be required to include the full amount of the distribution in their taxable income to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
Our operating results are dependent upon our Manager’s ability to source non-QM loans and other target assets for acquisition by us from Angel Oak Mortgage Lending and other unaffiliated originators.
Our operating results are dependent upon our Manager’s ability to source a large volume of non-QM loans and other target assets for acquisition by us from Angel Oak Mortgage Lending and other unaffiliated originators.
We are subject to counterparty risk and may be unable to seek indemnity or require our counterparties to repurchase mortgage loans if they breach representations and warranties, which could have a material adverse effect on us. When selling mortgage loans, sellers typically make customary representations and warranties about such loans.
These and other developments could materially and adversely affect us. We are subject to counterparty risk and may be unable to seek indemnity or require our counterparties to repurchase mortgage loans if they breach representations and warranties, which could have a material adverse effect on us. When selling mortgage loans, sellers typically make customary representations and warranties about such loans.
Certain provisions of the Maryland General Corporation Law (the “MGCL”) may have the effect of deterring a third party from making a proposal to acquire us or of inhibiting a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock.
Certain provisions of the MGCL may have the effect of deterring a third party from making a proposal to acquire us or of inhibiting a change in control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock.

… 101 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed19 unchanged
Biggest changeIn addition to its engagement of the IT Service Provider, we and/or Angel Oak Capital may engage other third parties, including auditors and 51 consultants, to perform assessments or audits of our and/or its cybersecurity policies and procedures and/or to assist with the evaluation of a cybersecurity threat or incident, among other matters.
Biggest changeIn addition to its engagement of the IT Service Provider, we and/or Angel Oak Capital may engage other third parties, including auditors and 52 consultants, to perform assessments or audits of our and/or its cybersecurity policies and procedures and/or to assist with the evaluation of a cybersecurity threat or incident, among other matters.
For a discussion of the risks we face from cybersecurity threats, including those that could materially affect us, see “Part I, Item 1A.
For a discussion of the risks we face from cybersecurity threats, including those that could materially affect us, see Part I, Item 1A.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties As of December 31, 2024, we did not own any property. Our principal offices are located in space leased by an affiliate of our Manager at 3344 Peachtree Road Northeast, Suite 1725, Atlanta, Georgia 30326. Item 3. Legal Proceedings None.
Biggest changeItem 2. Properties As of December 31, 2025, we did not own any property. Our principal offices are located in space leased by an affiliate of our Manager at 980 Hammond Drive, Suite 200, Atlanta, Georgia 30328. Item 3. Legal Proceedings None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed7 unchanged
Biggest changeITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities On June 17, 2021, our common stock began trading on the NYSE under the symbol “AOMR.” As of March 1, 2025, there were 17 holders of record of our common stock.
Biggest changeITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities On June 17, 2021, our common stock began trading on the NYSE under the symbol “AOMR.” As of March 3, 2026, there were 16 holders of record of our common stock.
For more information regarding risk factors that could materially adversely affect our actual results of operations, see Part I, Item IA, “Risk Factors.” Issuer Purchases of Equity Securities During the quarter ended December 31, 2024, we did not repurchase any shares of our common stock.
For more information regarding risk factors that could materially adversely affect our actual results of operations, see Part I, Item 1A, “Risk Factors.” Issuer Purchases of Equity Securities During the quarter ended December 31, 2025, we did not repurchase any shares of our common stock.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the quarter ended December 31, 2024. Item 6. Reserved Not applicable.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the year ended December 31, 2025. Item 6. Reserved Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

144 edited+51 added−33 removed89 unchanged
Biggest changeThe following table sets forth a reconciliation from GAAP total stockholders’ equity and book value per share of common stock to economic book value and economic book value per share of common stock as of each quarter-end date of 2024 and as of December 31, 2023: 57 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 (in thousands except for share and per share data) GAAP total common stockholders’ equity for book value per share of common stock $ 238,967 $ 265,098 $ 255,806 $ 263,324 $ 256,106 Adjustments: Fair value adjustment for securitized debt held at amortized cost 68,784 64,522 73,053 80,599 81,942 Stockholders’ equity including economic book value adjustments $ 307,751 $ 329,620 $ 328,859 $ 343,923 $ 338,048 Number of shares of common stock outstanding at period end 23,500,175 23,511,272 24,998,549 24,965,274 24,965,274 Book value per share of common stock $ 10.17 $ 11.28 $ 10.23 $ 10.55 $ 10.26 Economic book value per share of common stock $ 13.10 $ 14.02 $ 13.16 $ 13.78 $ 13.54 58 Results of Operations Year Ended December 31, 2024, Compared to the Year Ended December 31, 2023 The following table sets forth a summary of our results of operations for the years ended December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (in thousands) INTEREST INCOME, NET Interest income $ 110,427 $ 95,953 Interest expense 73,502 67,052 NET INTEREST INCOME 36,925 28,901 REALIZED AND UNREALIZED GAINS (LOSSES), NET Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS (9,228) (37,526) Net unrealized gain (loss) on mortgage loans, debt at fair value option (see Note 3), and derivative contracts 23,761 63,489 TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET 14,533 25,963 EXPENSES Operating expenses 6,004 7,474 Operating expenses incurred with affiliate 1,845 2,105 Due diligence and transaction costs 782 310 Stock compensation 2,041 1,689 Securitization costs 3,799 2,484 Management fee incurred with affiliate 4,976 5,842 Total operating expenses 19,447 19,904 INCOME BEFORE INCOME TAXES 32,011 34,960 Income tax expense 3,261 1,246 NET INCOME (LOSS) 28,750 33,714 NET INCOME ALLOCABLE TO COMMON STOCKHOLDERS $ 28,750 $ 33,714 Other comprehensive income 1,500 16,152 TOTAL COMPREHENSIVE INCOME $ 30,250 $ 49,866 59 Net Interest Income The following table sets forth the components of net interest income for the years ended December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (in thousands) Interest income Interest income / expense Average balance Interest income / expense Average balance Residential mortgage loans $ 18,677 $ 271,658 $ 23,951 $ 443,781 Residential mortgage loans in securitization trusts 74,757 1,441,354 54,494 1,128,332 Commercial mortgage loans 345 5,231 541 7,525 RMBS and Majority-Owned Affiliates 12,851 146,829 12,304 175,291 CMBS 1,520 6,276 1,315 6,434 U.S.
Biggest changeThe following table sets forth a reconciliation from GAAP total stockholders’ equity and book value per share of common stock to economic book value and economic book value per share of common stock as of each quarter-end date of 2025 and as of December 31, 2024: December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 (in thousands except for share and per share data) GAAP total common stockholders’ equity for book value per share of common stock $ 267,523 $ 264,165 $ 246,389 $ 251,480 $ 238,967 Adjustments: Fair value adjustment for securitized debt held at amortized cost 48,789 52,770 61,846 63,593 68,784 Stockholders’ equity including economic book value adjustments $ 316,312 $ 316,935 $ 308,235 $ 315,073 $ 307,751 Number of shares of common stock outstanding at period end 24,914,647 24,914,035 23,765,202 23,500,175 23,500,175 Book value per share of common stock $ 10.74 $ 10.60 $ 10.37 $ 10.70 $ 10.17 Economic book value per share of common stock $ 12.70 $ 12.72 $ 12.97 $ 13.41 $ 13.10 59 Results of Operations Year Ended December 31, 2025, Compared to the Year Ended December 31, 2024 The following table sets forth a summary of our results of operations for the years ended December 31, 2025 and December 31, 2024: December 31, 2025 December 31, 2024 (in thousands) INTEREST INCOME, NET Interest income $ 143,655 $ 110,427 Interest expense 102,555 73,502 NET INTEREST INCOME 41,100 36,925 REALIZED AND UNREALIZED GAINS (LOSSES), NET Net realized gain (loss) on mortgage loans, derivative contracts, RMBS, and CMBS (10,863) (9,228) Net unrealized gain (loss) on trading securities, mortgage loans, portion of debt at fair value option, and derivative contracts 30,758 23,761 TOTAL REALIZED AND UNREALIZED GAINS (LOSSES), NET 19,895 14,533 EXPENSES Operating expenses 5,004 6,786 Operating expenses incurred with affiliate 1,901 1,845 Stock compensation 1,354 2,041 Securitization costs 3,569 3,799 Management fee incurred with affiliate 4,612 4,976 Total operating expenses 16,440 19,447 INCOME (LOSS) BEFORE INCOME TAXES 44,555 32,011 Income tax expense (benefit) 531 3,261 NET INCOME (LOSS) ALLOCABLE TO COMMON STOCKHOLDERS $ 44,024 $ 28,750 Other comprehensive income (loss) 2,161 1,500 TOTAL COMPREHENSIVE INCOME (LOSS) $ 46,185 $ 30,250 60 Net Interest Income The following table sets forth the components of net interest income for the years ended December 31, 2025 and December 31, 2024: December 31, 2025 December 31, 2024 (in thousands) Interest income Interest income / expense Average balance Interest income / expense Average balance Residential mortgage loans $ 20,120 $ 272,486 $ 18,677 $ 271,658 Residential mortgage loans in securitization trusts 105,452 1,879,665 74,757 1,441,354 Commercial mortgage loans 420 5,202 345 5,231 RMBS and Majority-Owned Affiliates 14,623 140,395 12,851 146,829 CMBS 990 5,275 1,520 6,276 U.S.
In addition, the agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction.
In addition, the agreement contains events of default (subject to certain materiality thresholds and grace periods), including payment defaults, breaches of covenants and/or certain representations and warranties, cross‑defaults, bankruptcy or insolvency proceedings and other events of default customary for this type of transaction.
We are the sole member of the Depositor and also own and hold the call rights on the XS tranche of bonds, which is the “controlling class” of the bonds.
We are the sole member of the depositor and also own and hold the call rights on the XS tranche of bonds, which is the “controlling class” of the bonds.
We are the sole member of the Depositor and also own and hold the call rights on the XS tranche of bonds, which is the “controlling class” of the bonds.
We are the sole member of the Depositor and also own and hold the call rights on the XS tranche of bonds, which is the “controlling class” of the bonds.
PriceServe obtains its price quotes from actual sales or quotes for sale of the same or similar securities and/or provides model‑based valuations that consider inputs derived from recent market activity including default rates, conditional prepayment rates, loss severity, expected yield to maturity, baseline discount margin/yield, recovery assumptions, tranche type, collateral coupon, age and loan size, and other inputs specific to each security.
PriceServe obtains its price quotes from actual sales or quotes for sale of the same or similar securities and/or provides model‑based valuations that consider inputs derived from recent market activity including default rates, conditional prepayment rates, loss severity, expected yield to maturity, baseline discount margin/yield, recovery assumptions, tranche type, collateral coupon, age and loan size, and other inputs specific to each security.
Our most restrictive covenants (when covenants are required by any of our three active lenders) included: (1) our minimum tangible net worth must not (i) decline 20% or more in the previous 30 days, 25% or more in the previous 90 days, or 35% or more in the previous year, or (ii) fall below $200.0 million of tangible net worth as of September 30, 2022 plus 50% of any capital contribution made or raised after September 30, 2022; (2) our minimum liquidity must not fall below the greatest of (x) the product of 5% and the aggregate repurchase price as it relates to Global Investment Bank 3 as of such date of determination, (y) $10.0 million and (z) any other amount of liquidity that we have covenanted to maintain in any other note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement, or similar credit facility or agreement for borrowed funds); and (3) the maximum ratio of our and our subsidiaries’ total indebtedness to tangible net worth must not be greater than 5:1.
Our most restrictive covenants (when covenants are required by any of our four active lenders) included: (1) our minimum tangible net worth must not (i) decline 20% or more in the previous 30 days, 25% or more in the previous 90 days, or 35% or more in the previous year, or (ii) fall below $200.0 million of tangible net worth as of September 30, 2022 plus 50% of any capital contribution made or raised after September 30, 2022; (2) our minimum liquidity must not fall below the greatest of (x) the product of 5% and the aggregate repurchase price as it relates to Global Investment Bank 3 as of such date of determination, (y) $10.0 million and (z) any other amount of liquidity that we have covenanted to maintain in any other note, indenture, loan agreement, guaranty, swap agreement or any other contract, agreement or transaction (including, without limitation, any repurchase agreement, loan and security agreement, or similar credit facility or agreement for borrowed funds); and (3) the maximum ratio of our and our subsidiaries’ total indebtedness to tangible net worth must not be greater than 5:1.
We believe that these quotes are most reflective of the price that would be achieved if the bonds were sold to an independent third party on the 84 date of the consolidated financial statements. The portion of this liability for which we have elected the fair value option is categorized as Level 2 in the fair value hierarchy.
We believe that these quotes are most reflective of the price that would be achieved if the bonds were sold to an independent third party on the date of the consolidated financial statements. The portion of this liability for which we have elected the fair value option is categorized as Level 2 in the fair value hierarchy.
The spreads are meant to depict the required spread demanded by investors in the current environment. The matrix is segregated by loan structure type (hybrid arm, fixed rate, home equity line of credit, second lien, pay option arm, etc.), delinquency status, and loan to value strata. Significant matrix inputs are analyzed at the loan level.
The spreads are meant to depict the required spread demanded by investors in the current 83 environment. The matrix is segregated by loan structure type (hybrid arm, fixed rate, home equity line of credit, second lien, pay option arm, etc.), delinquency status, and loan to value strata. Significant matrix inputs are analyzed at the loan level.
For the year ended December 31, 2024, gains on our portfolios of residential mortgage loans, TBAs, and interest rate futures were the primary drivers of the total gain, offset by realized and unrealized losses on RMBS and whole pool agency residential mortgage-backed securities (“Whole Pool Agency RMBS”).
Comparatively, for the year ended December 31, 2024, realized and unrealized gains on our portfolios of residential mortgage loans, TBAs, and interest rate futures were the primary drivers of the total gain, offset by realized losses on RMBS and unrealized losses on whole pool agency residential mortgage-backed securities (“Whole Pool Agency RMBS”).
Management considers economic book value to provide investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for our legally held retained bonds, irrespective of the accounting model applied for GAAP reporting purposes.
Management considers economic book value to provide investors with a 58 useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for our legally held retained bonds, irrespective of the accounting model applied for GAAP reporting purposes.
We derecognized the mortgage loans sold in AOMT 2024-6 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of December 31, 2024.
We derecognized the mortgage loans sold in AOMT 2024-6 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of December 31, 2025.
We derecognized the mortgage loans sold in AOMT 2024-3 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of December 31, 2024.
We derecognized the mortgage loans sold in AOMT 2024-3 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of December 31, 2025.
VIEs for which we are not considered to be the primary beneficiary: We perform ongoing reassessments of whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion to change.
VIEs for which we are not considered to be the primary beneficiary: We perform ongoing reassessments of whether changes in the facts and circumstances regarding our involvement with a VIE causes our consolidation conclusion to change. 84
The remedies for such events of default are also customary for this type of transaction 77 and include the acceleration of the principal amount outstanding under the agreement and Multinational Bank 1’s right to liquidate the mortgage loans then subject to the agreement.
The remedies for such events of default are also customary for this type of transaction and include the acceleration of the principal amount outstanding under the agreement and Multinational Bank 1’s right to liquidate the mortgage loans then subject to the agreement.
General Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market.
General Angel Oak Mortgage REIT, Inc. is a real estate finance company focused on acquiring and investing in first and second lien non-QM loans and other mortgage-related assets in the U.S. mortgage market.
Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles. 53 We are externally managed and advised by our Manager, Falcons I, LLC, a registered investment adviser under the Investment Advisers Act of 1940 and an affiliate of Angel Oak Capital, a leading alternative credit manager with market leadership in mortgage credit that includes asset management, lending, and capital markets.
Our objective is to generate attractive risk-adjusted returns for our stockholders, through cash distributions and capital appreciation, across interest rate and credit cycles. 54 We are externally managed and advised by our Manager, Falcons I, LLC, a registered investment adviser under the Investment Advisers Act of 1940 and an affiliate of Angel Oak Capital, a leading alternative credit manager with market leadership in mortgage credit that includes asset management, lending and capital markets.
We have consolidated the AOMT 2024-10 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of December 31, 2024.
We have consolidated the AOMT 2024-10 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of December 31, 2025.
We expect to continue to purchase newly originated loans, which should continue to support overall portfolio valuations and securitization execution going forward. 54 Our investment performance Net Interest Margin (“NIM”).
We expect to continue to purchase newly originated loans, which should continue to support overall portfolio valuations and securitization execution going forward. Our investment performance Net Interest Margin (“NIM”).
(2) The whole pool RMBS presented as of December 31, 2024 were purchased from a broker to whom the Company owes approximately $202.0 million, payable upon the settlement date of the trade. See Part II, Item 8, Note 7 — Due to Broker in our audited consolidated financial statements included in this Annual Report on Form 10-K.
(2) The whole pool RMBS presented as of December 31, 2024 were purchased from a broker to whom the Company owed approximately $202.0 million, payable upon the settlement date of the trade. See Part II, Item 8, Note 7 — Due to Broker in our audited consolidated financial statements included in this Annual Report on Form 10-K.
Numbers presented may not sum 100% due to rounding. 68 RMBS We have participated in numerous securitization transactions alongside other Angel Oak entities. In return, we received our pro rata share of bonds from these securitizations, and cash. At times, we were allocated certain risk retention securities as part of these transactions.
Numbers presented may not sum 100% due to rounding. 69 RMBS We have participated in numerous securitization transactions alongside other Angel Oak entities. In return, we received our pro rata share of bonds from these securitizations, and cash. At times, we were allocated certain risk retention securities as part of these transactions.
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.
Additionally, we used the net proceeds from the offering of our 2029 senior 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.
Cash Availability Cash and cash equivalents Our cash balance as of December 31, 2024 was sufficient to meet our liquidity covenants under our financing facilities and our senior unsecured notes. We believe that we maintain sufficient cash to continue to meet margin calls on our financing facilities, should such margin calls occur.
Cash Availability Cash and cash equivalents Our cash balance as of December 31, 2025 was sufficient to meet our liquidity covenants under our financing facilities and our Senior Unsecured Notes. We believe that we maintain sufficient cash to continue to meet margin calls on our financing facilities, should such margin calls occur.
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.
We deployed the majority of the net proceeds from the offering of our 2029 senior 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.
Our minimum liquidity requirement as of December 31, 2024 was $10.0 million. A description of each loan financing line is set forth as follows: Multinational Bank 1 Loan Financing Facility. On April 13, 2022, we and two of our subsidiaries entered into a master repurchase agreement with a multinational bank (“Multinational Bank 1”).
Our minimum liquidity requirement as of December 31, 2025 was $10.0 million. A description of each loan financing line is set forth as follows: 75 Multinational Bank 1 Loan Financing Facility On April 13, 2022, we and two of our subsidiaries entered into a master repurchase agreement with a multinational bank (“Multinational Bank 1”).
We have consolidated the AOMT 2024-4 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of December 31, 2024.
We have consolidated the AOMT 2025-4 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of December 31, 2025.
Numbers presented may not sum to 100% due to rounding. 65 The following charts illustrate additional characteristics of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2023, based on the product profile, borrower profile and geographic location (percentages are based on the aggregate unpaid principal balance of such loans): Characteristics of Our Residential Mortgage Loans as of December 31, 2023: Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2023.
Numbers presented may not sum to 100% due to rounding. 66 The following charts illustrate additional characteristics of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2024, based on the product profile, borrower profile and geographic location (percentages are based on the aggregate unpaid principal balance of such loans): Characteristics of Our Residential Mortgage Loans as of December 31, 2024: Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2024.
The interest rate on any outstanding balance under the master repurchase agreement that the applicable subsidiary is required to pay Multinational Bank 1 is generally in line with other similar agreements that the Company or one or more of its subsidiaries has entered into, where the interest rate is equal to the sum of (1) a pricing spread of 1.75% and (2) the average SOFR for each U.S.
The interest rate on any outstanding balance under the master repurchase agreement that the applicable subsidiary is required to pay Multinational Bank 1 is generally in line with other similar agreements that the Company or one or more of its subsidiaries has entered into, where the interest rate is equal to the sum of (1) a pricing spread from 1.65% to 2.10%, and (2) the average SOFR for each U.S.
The fair value hierarchy is categorized into three broad levels (Levels 1, 2, and 3) based on the inputs as described in Part II, Item 8, Note 10 – Fair Value Measurements .
The fair value hierarchy is categorized into three broad levels (Levels 1, 2, and 3) based on the inputs as described in Part II, Item 8, Note 9 – Fair Value Measurements .
Upon the occurrence of certain events relating to a change of control of us, we must make an offer to repurchase all outstanding senior unsecured notes at a price in cash equal to 101% of the principal amount of the senior unsecured notes, plus accrued and unpaid interest to, but excluding, the repurchase date.
Upon the occurrence of certain events relating to a change of control of the Company, the Company must make an offer to repurchase all outstanding Senior Unsecured Notes at a price in cash equal to 101% of the principal amount of the Senior Unsecured Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.
The decrease is due to the decline in our average Equity (as defined in the Management Agreement) for the year ended December 31, 2024 as compared to the same period in 2023.
The decrease is due to the decline in our average Equity (as defined in the Management Agreement) for the year ended December 31, 2025 as compared to the same period in 2024.
(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 $124.1 million, are not reflected in the consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its consolidated balance sheets.
(3) A portion of repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs). These bonds, with a fair value of $198.9 million, are not reflected in the consolidated balance sheets, as the Company reflects the assets of the VIE (residential mortgage loans in securitization trusts - at fair value) on its consolidated balance sheets.
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 are based on the aggregate unpaid principal balance of such loans): Note: No state in “Other” represents more than a 4% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024.
The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2025 (percentages are based on the aggregate unpaid principal balance of such loans): Note: No state in “Other” represents more than a 3% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2025.
On October 24, 2018, two of our subsidiaries entered into a master repurchase agreement with a global investment bank (“Global Investment Bank 3”) for which we serve as guarantor of our subsidiaries’ obligations. Our subsidiaries, are each considered a “Seller” under this agreement.
Global Investment Bank 3 Loan Financing Facility On October 24, 2018, two of our subsidiaries entered into a master repurchase agreement with a global investment bank (“Global Investment Bank 3”) for which we serve as guarantor of our subsidiaries’ obligations. Our subsidiaries, are each considered a “Seller” under this agreement.
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.
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 senior notes.
We will adjust our plans as appropriate in response to changes in our expectations and any potential changes in market conditions. Description of Existing Financing Arrangements As of December 31, 2024, we were a party to three uncommitted loan financing lines for a total borrowing capacity in an aggregate amount of up to $1.1 billion.
We will adjust our plans as appropriate in response to changes in our expectations and any potential changes in market conditions. Description of Existing Financing Arrangements As of December 31, 2025, we were a party to four uncommitted loan financing lines for a total borrowing capacity in an aggregate amount of up to $1.3 billion.
We and our subsidiary are also required to pay certain customary fees to Global Investment Bank 2 and to reimburse Global Investment Bank 2 for certain costs and expenses incurred in connection with its structuring, management and ongoing administration of the agreement. Global Investment Bank 3 Loan Financing Facility.
We and our subsidiary are also required to pay certain customary fees to Global Investment Bank 2 and to reimburse Global Investment Bank 2 for certain costs and expenses incurred in connection with its structuring, management and ongoing administration of the agreement.
(2) The whole pool RMBS presented as of December 31, 2023 were purchased from a broker to whom the Company owed approximately $392 million, payable upon the settlement date of the trade. See Part II, Item 8, Note 7 — Due to Broker in our audited consolidated financial statements included in this Annual Report on Form 10-K.
(2) The whole pool RMBS presented as of December 31, 2025 were purchased from a broker to whom the Company owes approximately $198.2 million, payable upon the settlement date of the trade. See Part II, Item 8, Note 7 — Due to Broker in our audited consolidated financial statements included in this Annual Report on Form 10-K.
(5) The fair value of the first loss pieces presented for AOMT 2023-1, AOMT 2023-5, and AOMT 2023-7 is the total at risk for the Majority-Owned Affiliates. 70 The following table provides certain information with respect to our RMBS portfolio received in AOMT securitization transactions and acquired from other third parties as of December 31, 2024: RMBS Repurchase Debt (1,3) Allocated Capital AOMT Third Party RMBS Total AOMT Third Party RMBS Total AOMT Third Party RMBS Total (in thousands) Mezzanine $ 12,735 $ — $ 12,735 $ 5,440 $ — $ 5,440 $ 7,295 $ — $ 7,295 Subordinate 73,548 — 73,548 19,829 — 19,829 53,719 — $ 53,719 Interest only / excess 12,508 — 12,508 — — — 12,508 — $ 12,508 Whole pool (2) — 201,452 201,452 — — — — 201,452 $ 201,452 Retained RMBS in VIEs (3) — — — 25,286 — 25,286 (25,286) — $ (25,286) Subtotal $ 98,791 $ 201,452 $ 300,243 $ 50,555 $ — $ 50,555 $ 48,236 $ 201,452 $ 249,688 Investment in Majority Owned Affiliates $ 20,680 $ — $ 20,680 $ — $ — $ — $ 20,680 $ — $ 20,680 Total $ 119,471 $ 201,452 $ 320,923 $ 50,555 $ — $ 50,555 $ 68,916 $ 201,452 $ 270,368 (1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs).
The following table provides certain information with respect to our RMBS portfolio received in AOMT securitization transactions and acquired from other third parties as of December 31, 2024: RMBS Repurchase Debt (1,3) Allocated Capital AOMT Third Party RMBS Total AOMT Third Party RMBS Total AOMT Third Party RMBS Total (in thousands) Mezzanine $ 12,735 $ — $ 12,735 $ 5,440 $ — $ 5,440 $ 7,295 $ — $ 7,295 Subordinate 73,548 — 73,548 19,829 — 19,829 53,719 — $ 53,719 Interest only / excess 12,508 — 12,508 — — — 12,508 — $ 12,508 Whole pool (2) — 201,452 201,452 — — — — 201,452 $ 201,452 Retained RMBS in VIEs (3) — — — 25,286 — 25,286 (25,286) — $ (25,286) Subtotal $ 98,791 $ 201,452 $ 300,243 $ 50,555 $ — $ 50,555 $ 48,236 $ 201,452 $ 249,688 Investment in Majority Owned Affiliates $ 20,680 $ — $ 20,680 $ — $ — $ — $ 20,680 $ — $ 20,680 Total $ 119,471 $ 201,452 $ 320,923 $ 50,555 $ — $ 50,555 $ 68,916 $ 201,452 $ 270,368 72 (1) Repurchase debt includes borrowings against retained bonds received from on-balance sheet securitizations (i.e., consolidated VIEs).
Due to market volatility, some of our cash was restricted, as further described below, by margin maintenance requirements by certain whole loan financing facility counterparties, along with cash collateral held by counterparties for interest rate futures and 82 repurchase obligations. We may also participate in upcoming securitizations either solely or with other Angel Oak entities.
Due to market volatility, some of our cash was restricted, as further described below, by margin maintenance requirements, along with cash collateral held by counterparties for interest rate futures and repurchase obligations. We may also participate in upcoming securitizations either solely or with other Angel Oak entities.
Our counterparties did not require any margin collateral for TBAs as of December 31, 2024. Restricted cash of approximately $2.9 million as of December 31, 2023 was comprised of: $2.5 million in interest rate futures margin collateral; and margin collateral for securities sold under agreements to repurchase of $0.3 million.
Our counterparties did not require any margin collateral for TBAs as of December 31, 2025. Restricted cash of approximately $2.1 million as of December 31, 2024 was comprised of: $0.9 million in interest rate futures margin collateral; and margin collateral for securities sold under agreements to repurchase of $1.2 million.
Our counterparties did not require any margin collateral for TBAs as of December 31, 2023.
Our counterparties did not require any margin collateral for TBAs as of December 31, 2024.
As of December 31, 2024, the advance rates (when required) of our three active lenders ranged from 75% to 92%, depending on the asset type and loan delinquency status.
As of December 31, 2025, the advance rates (when required) of our four active lenders ranged from 75% to 92%, depending on the asset type and loan delinquency status.
We also have the ability to leverage currently unleveraged securities or whole loan assets, if we deem those actions advisable. Restricted Cash Restricted cash of approximately $2.1 million as of December 31, 2024 was comprised of: $0.8 million in interest rate futures margin collateral; and margin collateral for securities sold under agreements to repurchase of $1.2 million.
We also have the ability to leverage currently unleveraged securities or whole loan assets, if we deem those actions advisable. Restricted Cash Restricted cash of approximately $3.7 million as of December 31, 2025 was comprised of: $2.5 million in interest rate futures margin collateral; and margin collateral for securities sold under agreements to repurchase of $1.2 million.
Interest expense increased for the year ended December 31, 2024 as compared to 2023 due to a higher average balance in our non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts as well as our senior unsecured notes issued in July 2024.
Interest expense increased for the year ended December 31, 2025 as compared to December 31, 2024 due to a higher average balance in our non-recourse securitization obligation, collateralized by residential mortgage loans in securitization trusts as well as our 2030 senior notes issued in May 2025.
We and our subsidiaries are also required to pay certain customary fees to Multinational Bank 1 and to reimburse Multinational Bank 1 for certain costs and expenses incurred in connection with its structuring, management, and ongoing administration of the master repurchase agreement. Global Investment Bank 2 Loan Financing Facility.
We and our subsidiaries are also required to pay certain customary fees to Multinational Bank 1 and to reimburse Multinational Bank 1 for certain costs and expenses incurred in connection with its structuring, management, and ongoing administration of the master repurchase agreement.
For information on the fees that are payable to our Manager under the Management Agreement, see Part II, Item 8, Note 12 – Related Party Transactions in our audited consolidated financial statements included in this Annual Report on Form 10-K. Distributable Earnings were approximately $7.0 million and $(28.1) million for the years ended December 31, 2024 and 2023, respectively.
For information on the fees that are payable to our Manager under the Management Agreement, see Part II, Item 8, Note 11 – Related Party Transactions in our audited consolidated financial statements included in this Annual Report on Form 10-K. 57 Distributable Earnings were approximately $14.6 million and $7.0 million for the years ended December 31, 2025 and December 31, 2024, respectively.
In June 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans, approximately 62% of which were mortgage loans originated by our affiliated mortgage origination companies, secured primarily by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2024-6 issued approximately $479.6 million in face value of bonds.
In June 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans secured primarily by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2024-6 issued approximately $479.6 million in face value of bonds.
We have consolidated the AOMT 2023-4 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of December 31, 2024 and December 31, 2023.
We have consolidated the AOMT 2025-10 securitization on our consolidated balance sheet, maintaining the residential mortgage loans held in the securitization trust and the related financing obligation thereto on our consolidated balance sheets as of December 31, 2025.
Whole loans and securitization activity During the year ended December 31, 2024, we purchased $683.7 million of newly-originated non-QM residential mortgage loans, with a weighted average coupon of 7.64%, weighted average LTV of 70.2% and weighted average credit score of 749.
Comparatively, during the year ended December 31, 2024, we purchased $683.7 million of newly-originated non-QM residential mortgage loans, with a weighted average coupon of 7.64%, weighted average CLTV of 70.2% and weighted average credit score of 749.
In April 2024, we were the sole participant in a securitization transaction of a pool of residential mortgage loans, approximately 79% of which were mortgage loans originated by our affiliated mortgage origination companies, secured exclusively by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2024-4 issued approximately $299.8 million in face value of bonds.
In April 2024, 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 2024-4 issued approximately $299.8 million in face value of bonds.
Securitization Transactions In December 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans, approximately 36% of which were mortgage loans originated by our affiliated mortgage origination companies,secured primarily by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2024-13 issued approximately $288.9 million in face value of bonds.
In December 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans secured primarily by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2024-13 issued approximately $288.9 million in face value of bonds.
Numbers presented may not sum to 100% due to rounding. 67 The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2023: ($ in thousands) UPB $1,334,963 Fair Value 1,221,067 Number of loans 3,112 Weighted average loan coupon 4.7% Average loan amount $429 Weighted average LTV at loan origination and deal date 68.0% Weighted average credit score at loan origination and deal date 742 Current 3-month CPR 5.6% Percentage of loans 90+ days delinquent (based on UPB) 1.0% The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2023 (percentages are based on the aggregate unpaid principal balance of such loans): Note: No state in “Other” represents more than a 4% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2023.
Numbers presented may not sum to 100% due to rounding. 68 The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024: ($ in thousands) UPB $1,781,311 Fair Value $1,696,995 Number of loans 4,183 Weighted average loan coupon 5.6% Average loan amount $427 Weighted average CLTV at loan origination and deal date 67.0% Weighted average credit score at loan origination and deal date 743 Current 3-month CPR 7.4% Percentage of loans 90+ days delinquent (based on UPB) 2.0% The following chart illustrates the geographic distribution of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024 (percentages are based on the aggregate unpaid principal balance of such loans): Note: No state in “Other” represents more than a 4% concentration of the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024.
Numbers presented may not sum to 100% due to rounding 66 Residential Mortgage Loans Held in Securitization Trusts The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2024: ($ in thousands) UPB $1,781,311 Fair Value 1,696,995 Number of loans 4,183 Weighted average loan coupon 5.6% Average loan amount $427 Weighted average LTV at loan origination and deal date 67.0% Weighted average credit score at loan origination and deal date 743 Current 3-month conditional prepayment rate (“CPR”) (1) 7.4% Percentage of loans 90+ days delinquent (based on UPB) 2.0% (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.
Numbers presented may not sum to 100% due to rounding 67 Residential Mortgage Loans Held in Securitization Trusts The following table sets forth the information regarding the underlying collateral of our residential mortgage loans held in securitization trusts as of December 31, 2025: ($ in thousands) UPB $2,090,583 Fair Value $2,076,776 Number of loans 4,947 Weighted average loan coupon 6.0% Average loan amount $424 Weighted average CLTV at loan origination and deal date 66.9% Weighted average credit score at loan origination and deal date 747 Current 3-month conditional prepayment rate (“CPR”) (1) 12.6% Percentage of loans 90+ days delinquent (based on UPB) 1.7% (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.
Income Taxes During the year ended December 31, 2024, we recorded an income tax expense of approximately $3.3 million based on our income taxes arising from income associated with assets held in our TRS.
Income Taxes During the year ended December 31, 2025 and December 31, 2024 we recorded an income tax expense of approximately $0.5 million and $3.3 million, respectively based on our income associated with assets held in our TRS.
The following table sets forth additional information regarding our portfolio, including the manner in which our equity capital was allocated among investment types, as of December 31, 2024: Fair Value Collateralized Debt Allocated Capital % of Total Capital Portfolio: ($ in thousands) Residential mortgage loans $ 183,064 $ 129,459 $ 53,605 21.0 % Residential mortgage loans in securitization trust 1,696,995 1,593,612 103,383 40.5 % Total whole loan portfolio $ 1,880,059 $ 1,723,071 $ 156,988 61.5 % Investment securities RMBS $ 300,243 $ 50,555 $ 249,688 97.8 % Investment in Majority-Owned Affiliates (1) 20,680 — 20,680 8.1 % Total investment securities $ 320,923 $ 50,555 $ 270,368 105.9 % Total investment portfolio $ 2,200,982 $ 1,773,626 $ 427,356 167.4 % Target assets $ 2,200,982 $ 1,773,626 $ 427,356 167.4 % Cash $ 40,762 $ — $ 40,762 15.9 % Other assets and liabilities (2) (212,801) — (212,801) (83.3) % Total $ 2,028,943 $ 1,773,626 $ 255,317 100.0 % (1) Our Investment in Majority-Owned Affiliates is held at its amortized cost basis.
The following table sets forth additional information regarding our portfolio including the manner in which our equity capital was allocated among investment types, as of December 31, 2024: Fair Value Collateralized Debt Allocated Capital % of Total Capital Portfolio: ($ in thousands) Residential mortgage loans $ 183,064 $ 129,459 $ 53,605 21.0 % Residential mortgage loans in securitization trust 1,696,995 1,593,612 103,383 40.5 % Total whole loan portfolio $ 1,880,059 $ 1,723,071 $ 156,988 61.5 % Investment securities RMBS $ 300,243 $ 50,555 $ 249,688 97.8 % Investment in Majority-Owned Affiliates (1) 20,680 — 20,680 8.1 % Total investment securities $ 320,923 $ 50,555 $ 270,368 105.9 % Total investment portfolio $ 2,200,982 $ 1,773,626 $ 427,356 167.4 % Target assets $ 2,200,982 $ 1,773,626 $ 427,356 167.4 % Cash $ 40,762 $ — $ 40,762 15.9 % Other assets and liabilities (2) (212,801) — (212,801) (83.3) % Total $ 2,028,943 $ 1,773,626 $ 255,317 100.0 % (1) Our Investment in Majority-Owned Affiliates is held at its amortized cost basis (2) Other assets and liabilities presented is calculated as a net liability substantially comprised of $202 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued Whole Pool Agency RMBS, and excluding the portion of “other assets” which includes our investment in a Majority-Owned Affiliates, which is considered a target asset.
Certain information regarding the mortgage loans underlying our portfolio of RMBS issued in AOMT securitization transactions is set forth below as of December 31, 2024 and 2023 unless otherwise stated: As of December 31, 2024 AOMT 2019 Securitizations AOMT 2020 Securitizations AOMT 2023 Securitizations AOMT 2024 Securitizations ($ in thousands) UPB of loans $286,875 $148,016 $1,093,694 $1,153,975 Number of loans 1053 466 2122 2629 Weighted average loan coupon 7.19 % 5.83 % 5.23 % 5.79 % Average loan amount $272 $318 $515 $439 Weighted average LTV at loan origination and deal date 69 % 74 % 68 % 69 % Weighted average credit score at loan origination and deal date 708 719 732 737 Current 3-month CPR (1) 10.1 % 13.2 % 7.4 % 9.1 % 90+ day delinquency (as a % of UPB) 8.3 % 4.0 % 2.6 % 1.6 % Weighted Average 90+ Delinquency (as a % of Original Balance) 1.3 % 1.3 % 2.5 % 2.1 % Weighted Average LTV of 90+ Delinquent Loans (FHFA HPI Estimate) (2) 47.2 % — % 67.0 % 70.2 % Fair value of first loss piece (3,5,6) $19,226 $23,405 $10,995 $18,650 Investment thickness (4) 21.92 % 20.96 % 7.77 % 9.59 % (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.
(5) Represents the average size of the subordinate securities we own as investments in each securitization relative to the average current size of the securitization. 70 December 31, 2024 AOMT 2019 Securitizations AOMT 2020 Securitizations AOMT 2023 Securitizations AOMT 2024 Securitizations ($ in thousands) UPB of loans $286,875 $148,016 $1,093,694 $1,153,975 Number of loans $ 1,053 $ 466 $ 2,122 $ 2,629 Weighted average loan coupon 7.19 % 5.83 % 5.23 % 5.79 % Average loan amount $ 272 $ 318 $ 515 $ 439 Weighted average CLTV at loan origination and deal date 69 % 74 % 68 % 69 % Weighted average credit score at loan origination and deal date 708 719 732 737 Current 3-month CPR (1) 10.1 % 13.2 % 7.4 % 9.1 % 90+ day delinquency (as a % of UPB) 8.3 % 4.0 % 2.6 % 1.6 % Weighted Average 90+ Delinquency (as a % of Original Balance) 1.3 % 1.3 % 2.5 % 2.1 % Weighted Average CLTV of 90+ Delinquent Loans (FHFA HPI Estimate) (2) 47.2 % — % 67.0 % 70.2 % Fair value of first loss piece (3, 4) $ 19,226 $ 23,405 $ 10,995 $ 18,650 Investment thickness (5) 21.92 % 20.96 % 7.77 % 9.59 % (1) CPR is a method of expressing the prepayment rate for a mortgage pool that assumes that a constant fraction of the remaining principal is prepaid each month or year.
(2) 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.
(2) Other assets and liabilities presented is calculated as a net liability substantially comprised of $198.2 million due to broker for our quarter-end purchase of certain Freddie Mac and Fannie Mae-issued Whole Pool Agency RMBS, and excluding the portion of “other assets” which includes our investment in Majority-Owned Affiliates, which is considered a target asset. 63 As of December 31, 2024, our portfolio consisted of approximately $2.2 billion of residential mortgage loans, RMBS, and other target assets.
Overall, the increase in interest income offset the increase in interest expense and drove the $8.0 million increase to net interest income.
Overall, the increase in interest income offset the increase in interest expense and drove the $4.2 million increase to net interest income.
The table below sets forth a reconciliation of net income allocable to common stockholders, calculated in accordance with GAAP, to Distributable Earnings for the years ended December 31, 2024 and 2023: December 31, 2024 December 31, 2023 ($ in thousands) Net income (loss) allocable to common stockholders $ 28,750 $ 33,714 Adjustments: Net unrealized (gains) losses on trading securities 1,026 (484) Net unrealized (gains) losses on derivatives (2,849) 16,985 Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation (5,313) (15,890) Net unrealized (gains) losses on residential loans (16,598) (64,009) Net unrealized (gains) losses on commercial loans (27) (91) Non-cash equity compensation expense 2,041 1,689 Distributable Earnings $ 7,030 $ (28,086) 56 Distributable Earnings Return on Average Equity Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total common stockholders’ equity.
The table below sets forth a reconciliation of net income allocable to common stockholders, calculated in accordance with GAAP, to Distributable Earnings for the years ended December 31, 2025 and December 31, 2024: December 31, 2025 December 31, 2024 ($ in thousands) Net income (loss) allocable to common stockholders $ 44,024 $ 28,750 Adjustments: Net unrealized (gains) losses on trading securities (216) 1,026 Net unrealized (gains) losses on derivatives 1,307 (2,849) Net unrealized (gains) losses on residential loans in securitization trusts and non-recourse securitization obligation (28,578) (5,313) Net unrealized (gains) losses on residential loans (3,271) (16,598) Net unrealized (gains) losses on commercial loans — (27) Non-cash equity compensation expense 1,354 2,041 Distributable Earnings $ 14,620 $ 7,030 Distributable Earnings Return on Average Equity Distributable Earnings Return on Average Equity is a non-GAAP measure and is defined as annual or annualized Distributable Earnings divided by average total common stockholders’ equity.
Net interest income for the years ended December 31, 2024 and 2023 was $36.9 million and $28.9 million, respectively.
Net interest income for the years ended December 31, 2025 and December 31, 2024 was $41.1 million and $36.9 million, respectively.
We may redeem our senior unsecured 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 our senior unsecured notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
(3) The Company may redeem the Senior Unsecured Notes in whole or in part at any time on or after the optional redemption date, at a redemption price equal to 100% of the outstanding principal amount of the Senior Unsecured Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.
In addition, the amount or timing of our reported earnings may be impacted by technical accounting issues and estimates. 83 Management discusses the ongoing development and selection of the critical accounting policies as set forth below with the Audit Committee of our Board of Directors: Fair Value Measurements We report various investments at fair value, including certain eligible financial instruments elected to be accounted for under the fair value option.
Management discusses the ongoing development and selection of the critical accounting policies as set forth below with the Audit Committee of our Board of Directors: Fair Value Measurements We report various investments at fair value, including certain eligible financial instruments elected to be accounted for under the fair value option.
Expenses Operating Expenses For the years ended December 31, 2024 and 2023, our operating expenses were $6.0 million and $7.5 million, respectively. Our operating expenses decreased 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 loans portfolios.
Expenses Operating Expenses For the years ended December 31, 2025 and December 31, 2024, our operating expenses were $5.0 million and $6.8 million, respectively. Our operating expenses decreased compared to the comparative period due to continued cost savings actions such as in-sourcing of key accounting functions and vendor contract negotiations.
Total Realized and Unrealized Gains (Losses) The components of total realized and unrealized gains (losses), net for the years ended December 31, 2024 and 2023 are set forth as follows: 60 December 31, 2024 December 31, 2023 (in thousands) Realized and unrealized gain (loss) on residential mortgage loans $ 9,525 $ 26,564 Realized and unrealized gain (loss) on residential loans held in securitization trusts, net of non-recourse securitization obligation 887 13,031 Realized loss on RMBS (2,916) (2,152) Realized and unrealized gain (loss) on Whole Pool Agency RMBS (6,730) (16,458) Realized loss on CMBS (248) (260) Unrealized gain on commercial mortgage loans 28 121 Unrealized appreciation (depreciation) on interest rate futures 1,828 (3,948) Realized and unrealized gain (loss) on TBAs 6,397 3,486 Realized gain on interest rate futures 5,848 5,493 Unrealized loss on U.S.
Total Realized and Unrealized Gains (Losses) The components of total realized and unrealized gains (losses), net for the years ended December 31, 2025 and December 31, 2024 are set forth as follows: 61 December 31, 2025 December 31, 2024 (in thousands) Realized and unrealized gain on residential mortgage loans $ 5,255 $ 9,525 Realized and unrealized gain (loss) on residential loans held in securitization trusts, net of non-recourse securitization obligation 22,458 887 Realized loss on RMBS (2,295) (2,916) Realized and unrealized gain (loss) on Whole Pool Agency RMBS 1,960 (6,730) Realized loss on CMBS (603) (248) Unrealized gain on commercial mortgage loans — 28 Unrealized appreciation (depreciation) on interest rate futures (1,019) 1,828 Realized and unrealized gain (loss) on TBAs (2,166) 6,397 Realized gain (loss) on interest rate futures (3,108) 5,848 Unrealized loss on U.S.
In the transaction, AOMT 2024-10 issued approximately $316.8 million in face value of bonds. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $260.4 million and retained cash of $39.4 million, which was used for new loan purchases and operational purposes.
We used the proceeds of the securitization transaction to repay outstanding debt of approximately $260.4 million and retained cash of $39.4 million, which was used for new loan purchases and operational purposes.
We derecognized the mortgage loans sold in AOMT 2023-7 and recorded an investment in majority-owned affiliates located within “other assets” on our consolidated balance sheet as of December 31, 2024.
We derecognized the mortgage loans sold in AOMT 2024-13 and recorded investments in RMBS and majority-owned affiliates (which is located within “other assets” on our consolidated balance sheet) as of December 31, 2025.
Numbers presented may not sum to 100% due to rounding. 73 The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2023 (percentages are based on the aggregate unpaid principal balance of such loans): Geographic Diversification of Loans Underlying Our Portfolio of RMBS Issued in AOMT Securitization Transactions (as of December 31, 2023) No state in “Other” represents more than a 4% concentration of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2023.
The following chart illustrates the geographic diversification of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2024 (percentages are based on the aggregate unpaid principal balance of such loans): Geographic Diversification of Loans Underlying Our Portfolio of RMBS Issued in AOMT Securitization Transactions (as of December 31, 2024) No state in “Other” represents more than a 3% concentration of the loans underlying our portfolio of RMBS issued in AOMT securitization transactions as of December 31, 2024.
The following table presents the amounts of collateralized borrowings outstanding under repurchase facilities as of the end of each quarter, the average amount of collateralized borrowings outstanding under repurchase facilities during the quarter and the highest balance of any month end during the quarter: Quarter End Quarter End Balance Average Balance in Quarter Highest Month-End Balance in Quarter (in thousands) Q1 2023 442,214 180,165 442,214 Q2 2023 340,701 101,731 340,701 Q3 2023 188,101 87,279 188,101 Q4 2023 193,656 62,536 193,656 Q1 2024 193,493 69,254 193,493 Q2 2024 201,051 66,804 201,051 Q3 2024 102,876 57,842 102,876 Q4 2024 50,555 53,412 51,843 We utilize short‑term repurchase facilities on our RMBS portfolio and to finance assets for REIT asset test purposes.
The following table presents the amounts of collateralized borrowings outstanding under repurchase facilities as of the end of each quarter, the average amount of collateralized borrowings outstanding under repurchase facilities during the quarter and the highest balance of any month end during the quarter: Quarter End Quarter End Balance Average Balance in Quarter Highest Month-End Balance in Quarter (in thousands) Q1 2024 193,493 69,254 193,493 Q2 2024 201,051 66,804 201,051 Q3 2024 102,876 57,842 102,876 Q4 2024 50,555 53,412 51,843 Q1 2025 148,467 62,631 148,467 Q2 2025 68,062 71,980 148,467 Q3 2025 54,041 64,557 68,062 Q4 2025 54,041 54,041 54,041 We utilize short‑term repurchase facilities on our RMBS portfolio and to finance assets for REIT asset test purposes.
AOMT 2024-3, AOMT 2024-6, and AOMT 2024-13 were securitization transactions entered into with other Angel Oak affiliates, for which we are not considered to be a "primary beneficiary" of the applicable securitization vehicle.
AOMT 2025-6 and AOMT 2025-HB2 were securitization transactions entered into with other Angel Oak affiliates, for which we are not considered to be a “primary beneficiary”of the applicable securitization vehicle.
Residential Mortgage Loans The following table sets forth additional information on the residential mortgage loans in our portfolio as of December 31, 2024: Portfolio Range Portfolio Weighted Average ($ in thousands) Unpaid principal balance (“UPB”) $75 - $2,995 $537 Interest rate 3.87%-11.88% 7.4% Maturity date 8/8/2039 - 9/26/2064 November 2054 FICO score at loan origination 628-822 752 LTV at loan origination 31.9%-90.0% 71.7% DTI at loan origination 1.94%-50.0% 31.2% Percentage of first lien loans N/A 96.7% Percentage of loans 90+ days delinquent (based on UPB) N/A —% 63 The following table sets forth additional information on the residential mortgage loans in our portfolio as of December 31, 2023: Portfolio Range Portfolio Weighted Average ($ in thousands) UPB $18-$3,410 $492 Interest rate 2.99%-12.50% 6.8% Maturity date 9/27/2048 - 11/27/2063 December 2053 FICO score at loan origination 624-825 748 LTV at loan origination 9.0%-90.0% 69.4% DTI at loan origination 1.9%-59.1% 30.9% Percentage of first lien loans N/A 100% Percentage of loans 90+ days delinquent (based on UPB) N/A 0.9% The following charts illustrate the distribution of the credit scores and interest rates by the number of loans in our residential mortgage loan portfolio as of December 31, 2024: The following charts illustrate the distribution of the credit scores and interest rates by the number of loans in our residential mortgage loan portfolio as of December 31, 2023: 64 The following charts illustrate additional characteristics of our residential mortgage loans in our portfolio that we owned directly as of December 31, 2024, based on the product profile, borrower profile and geographic location (percentages are based on the aggregate unpaid principal balance of such loans): Characteristics of Our Residential Mortgage Loans as of December 31, 2024: Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2024.
Residential Mortgage Loans The following table sets forth additional information on the residential mortgage loans in our portfolio as of December 31, 2025: Portfolio Range Portfolio Weighted Average ($ in thousands) Unpaid principal balance (“UPB”) $10 - $3,497 $386 Interest rate 3.87% - 13.41% 7.38% Maturity date 1/26/2040 - 10/19/2065 June 2055 FICO score at loan origination 628 - 850 760 CLTV at loan origination 8.7% - 85.0% 70.5% DTI at loan origination 1.7% - 50.0% 32.4% Percentage of first lien loans N/A 89.1% Percentage of loans 90+ days delinquent (based on UPB) N/A 0.4% The following table sets forth additional information on the residential mortgage loans in our portfolio as of December 31, 2024: 64 Portfolio Range Portfolio Weighted Average ($ in thousands) Unpaid principal balance (“UPB”) $75 - $2,995 $537 Interest rate 3.87% - 11.88% 7.40% Maturity date 8/8/2039 - 9/26/2064 November 2054 FICO score at loan origination 628 - 822 752 CLTV at loan origination 31.9% - 90.0% 71.7% DTI at loan origination 1.94% - 50.0% 31.2% Percentage of first lien loans N/A 96.7% Percentage of loans 90+ days delinquent (based on UPB) N/A —% The following charts illustrate the distribution of the credit scores and interest rates by the number of loans in our residential mortgage loan portfolio as of December 31, 2025: The following charts illustrate the distribution of the credit scores and interest rates by the number of loans in our residential mortgage loan portfolio as of December 31, 2024: 65 The following charts illustrate additional characteristics of our residential mortgage loans in our portfolio that we owned directly as of December 31, 2025, based on the product profile, borrower profile and geographic location (percentages are based on the aggregate unpaid principal balance of such loans): Characteristics of Our Residential Mortgage Loans as of December 31, 2025: Note: No state in “Other” represents more than a 3% concentration of the residential mortgage loans in our portfolio that we owned directly as of December 31, 2025.
Through our relationship with our Manager, we benefit from Angel Oak’s vertically integrated platform and in‑house expertise, providing us with the resources that we believe are necessary to generate attractive risk‑adjusted returns for our stockholders.
Angel Oak Mortgage Lending, an affiliated Angel Oak mortgage origination platform, is a market leader in non‑QM loan production. Through our relationship with our Manager, we benefit from Angel Oak’s vertically integrated platform and in‑house expertise, providing us with the resources that we believe are necessary to generate attractive risk‑adjusted returns for our stockholders.
Operating Expenses Incurred with Affiliate For the years ended December 31, 2024 and 2023, our operating expenses incurred with affiliate were $1.8 million and $2.1 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, decreased versus the comparative period due to a rationalization of resources.
Operating Expenses Incurred with Affiliate For the years ended December 31, 2025 and December 31, 2024, our operating expenses incurred with affiliate were $1.9 million and $1.8 million, respectively. These expenses, which are substantially comprised of payroll reimbursements to our Manager, increased slightly versus the comparative period due to standard annual compensation increases.
In March 2024, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans, approximately 60% of which were mortgage loans originated by our affiliated mortgage origination companies, secured primarily by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2024-3 issued approximately $439.6 million in face value of bonds.
In May 2025, we and other affiliated entities participated in a securitization transaction of a pool of residential mortgage loans secured primarily by first liens on one‑to‑four family residential properties. In the transaction, AOMT 2025-6 issued approximately $349.7 million in face value of bonds.
Certain of these portfolio assets are located in states such as Florida and California where natural disasters such as hurricanes, wildfires, and earthquakes may occasionally occur. We require all of our collateral to be adequately insured.
Our Portfolio As of December 31, 2025, our portfolio consisted of approximately $2.7 billion of residential mortgage loans, RMBS, and other target assets. Certain of these portfolio assets are located in states such as Florida and California where natural disasters such as hurricanes, wildfires, and earthquakes may occasionally occur. We require all of our collateral to be adequately insured.
We expect quarter-to-quarter GAAP earnings volatility from our business activities. This volatility can occur for a variety of reasons, particularly changes in the fair values of consolidated assets and liabilities.
We expect quarter-to-quarter GAAP earnings volatility from our business activities. This volatility can occur for a variety of reasons, particularly changes in the fair values of consolidated assets and liabilities. In addition, the amount or timing of our reported earnings may be impacted by technical accounting issues and estimates.
Our proportionate share of 34.42% of the retained bonds and investments in MOAs was approximately $8.7 million, including a retained discount on issuance of approximately $2.7 million. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $63.5 million and retained cash of $10.7 million, which was used for operational purposes.
Our proportionate share of 21.03% of the retained bonds and investments in MOAs was approximately $7.0 million, including a retained discount on issuance of approximately $0.2 million. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $43.4 million and released cash of $12.4 million, which was used for new loan purchases and operational purposes.
ATM Program 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 unamortized debt issuance costs will be amortized until maturity. 81 ATM Program On August 8, 2024, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) to sell shares of the Company’s common stock from time to time having an aggregate gross sales price of up to $75.0 million, of which $60.2 million remains available as of December 31, 2025, through an “at the market” equity offering program (the “ATM Program”).
Our proportionate share of 41.21% of the retained bonds and investments in MOAs was approximately $21.8 million, including a retained discount on issuance of approximately $6.8 million. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $190.1 million and retained cash of $15.9 million, which was used for operational purposes.
Our proportionate share of 24.94% of the retained bonds was approximately $8.1 million, including a retained premium on issuance of approximately $2.7 million. We used the proceeds of the securitization transaction to repay outstanding debt of approximately $73.1 million and retained cash of $9.2 million, which was used for operational purposes.
Our interest income for the year ended December 31, 2024 was $110.4 million compared to $96.0 million in the prior year, and our interest expense for the year ended December 31, 2024 was $73.5 million compared to $67.1 million in the prior year.
Our interest income for the year ended December 31, 2025 was $143.7 million compared to $110.4 million in the prior year, and our interest expense for the year ended December 31, 2025 was $102.6 million compared to $73.5 million in the prior year.
Financing cash inflows of $99.0 million for the year ended December 31, 2024 as compared to outflows of $107.7 million for the year ended December 31, 2023 were primarily due funds received from increased securitization activity in the year ended December 31, 2024 compared to the year ended December 31, 2023.
Treasury securities between the comparative periods. 82 Financing cash inflows of $395.7 million for the year ended December 31, 2025 as compared to $99.3 million of inflows for the year ended December 31, 2024 were primarily due funds received from increased securitization activity in the year ended December 31, 2025 compared to the year ended December 31, 2024.

… 148 more changes not shown on this page.

Other AOMN 10-K year-over-year comparisons