Net income per common share of $0.74 compared to net loss of $0.40 in Q2 2025
Earnings available for distribution per common share(1) of $0.58, unchanged from Q2 2025
Common stock dividend of $0.34 per common share, unchanged from Q2 2025
Book value per common share(2) of $8.41 compared to $8.05 as of June 30, 2025
Economic return(3) of 8.7% compared to (4.8)% in Q2 2025
Update from John Anzalone, Chief Executive Officer
"The strong momentum that began in mid-April continued throughout the third quarter, as financial markets benefited from expectations for easing monetary policy, strong corporate earnings and improved economic growth. Agency RMBS performed well, with declining interest rate volatility and robust investor demand driving higher valuations in most coupons. Additionally, swap spreads reversed a portion of their tightening experienced during the second quarter, providing a tailwind for performance. These factors led to a 4.5% increase in book value per common share to $8.41 at quarter end, and, when combined with our $0.34 dividend, resulted in a positive economic return of 8.7% for the quarter.
"Our debt-to-equity ratio was 6.7x at the end of the quarter, up slightly from 6.5x as of June 30, 2025 as we continued to reduce the percentage of our capital structure comprised of preferred stock and positioned the Company to further benefit from positive Agency RMBS performance. At quarter end, our $5.7 billion investment portfolio consisted of $4.8 billion Agency RMBS and $0.9 billion Agency CMBS, and we maintained a sizable balance of unrestricted cash and unencumbered investments totaling $423 million. As of October 24, 2025, we estimate book value per common share to be between $8.31 and $8.65(4).
"Given the notable decline in interest rate volatility, we remain constructive on Agency RMBS, though we view near-term risks as balanced following its recent strong performance. Our longer-term outlook for the sector remains favorable, as we expect investor demand to broaden given lower interest rate volatility, a steeper yield curve and attractive valuations. In addition, Agency CMBS continues to offer attractive risk-adjusted yields and diversification benefits relative to our Agency RMBS holdings, supported by its stable cash flow profile and lower sensitivity to interest rate fluctuations. Lastly, we believe anticipated changes to bank regulatory capital rules would increase demand for Agency RMBS and Agency CMBS, providing further support for both sectors."
(1) Earnings available for distribution (and by calculation, earnings available for distribution per common share) is a non-Generally Accepted Accounting Principles ("GAAP") financial measure. Refer to the section entitled "Non-GAAP Financial Measures" for important disclosures and a reconciliation to the most comparable U.S. GAAP measure.
(2) Book value per common share as of September 30, 2025 and June 30, 2025 is calculated as total stockholders' equity less the liquidation preference of the Company's Series C Preferred Stock ($173.3 million as of September 30, 2025 and $175.5 million as of June 30, 2025), divided by total common shares outstanding.
(3) Economic return for the quarter ended September 30, 2025 is defined as the change in book value per common share from June 30, 2025 to September 30, 2025 of $0.36; plus dividends declared of $0.34 per common share; divided by the June 30, 2025 book value per common share of $8.05. Economic return for the quarter ended June 30, 2025 is defined as the change in book value per common share from March 31, 2025 to June 30, 2025 of ($0.76); plus dividends declared of $0.34 per common share; divided by the March 31, 2025 book value per common share of $8.81.
(4) Book value per common share as of October 24, 2025 is adjusted to exclude a pro rata portion of the current quarter's common stock dividend (which for purposes of this calculation is assumed to be the same as the previous quarter) and is calculated as total stockholders' equity less the liquidation preference of the Company's Series C Preferred Stock ($172.6 million as of October 24, 2025), divided by total common shares outstanding of 70.9 million.
Key performance indicators for the quarters ended September 30, 2025 and June 30, 2025 are summarized in the table below.
($ in millions, except share amounts)
Q3 2025
Q2 2025
Variance
Average Balances (1)
(unaudited)
(unaudited)
Average earning assets (at amortized cost)
$5,382.2
$5,078.9
$303.3
Average borrowings
$4,889.8
$4,577.6
$312.2
Average total stockholders' equity
$748.0
$709.9
$38.1
U.S. GAAP Financial Measures
Total interest income
$72.9
$70.6
$2.3
Total interest expense
$55.3
$52.9
$2.4
Net interest income
$17.6
$17.7
($0.1)
Total expenses
$4.5
$4.9
($0.4)
Net income (loss) attributable to common stockholders
$50.2
($26.6)
$76.8
Average earning asset yields
5.42 %
5.56 %
(0.14) %
Average cost of funds
4.52 %
4.62 %
(0.10) %
Average net interest rate margin
0.90 %
0.94 %
(0.04) %
Period-end weighted average asset yields (2)
5.42 %
5.46 %
(0.04) %
Period-end weighted average cost of funds
4.35 %
4.48 %
(0.13) %
Period-end weighted average net interest rate margin
1.07 %
0.98 %
0.09 %
Book value per common share (3)
$8.41
$8.05
$0.36
Earnings (loss) per common share (basic)
$0.74
($0.40)
$1.14
Earnings (loss) per common share (diluted)
$0.74
($0.40)
$1.14
Debt-to-equity ratio
6.7x
6.5x
0.2x
Non-GAAP Financial Measures (4)
Earnings available for distribution
$39.0
$38.2
$0.8
Effective interest expense
$26.2
$24.3
$1.9
Effective net interest income
$46.8
$46.4
$0.4
Effective cost of funds
2.14 %
2.12 %
0.02 %
Effective interest rate margin
3.28 %
3.44 %
(0.16) %
Earnings available for distribution per common share
$0.58
$0.58
$0.00
Economic debt-to-equity ratio
6.7x
6.5x
0.2x
(1) Average earning assets, average borrowings and average total stockholders' equity are calculated based on the weighted month-end balances of mortgage-backed securities at amortized cost, repurchase agreement borrowings and total U.S. GAAP stockholders' equity, respectively.
(2) Period-end weighted average asset yields are based on amortized cost as of period-end and incorporate future prepayment and loss assumptions when appropriate.
(3) Book value per common share is calculated as total stockholders' equity less the liquidation preference of the Company's Series C Preferred Stock ($173.3 million as of September 30, 2025 and $175.5 million as of June 30, 2025), divided by total common shares outstanding.
(4) Earnings available for distribution (and by calculation, earnings available for distribution per common share), effective interest expense (and by calculation, effective cost of funds), effective net interest income (and by calculation, effective interest rate margin), and economic debt-to-equity ratio are non-GAAP financial measures. Refer to the section entitled "Non-GAAP Financial Measures" for important disclosures and a reconciliation to the most comparable U.S. GAAP measures of net income (loss) attributable to common stockholders (and by calculation, basic earnings (loss) per common share), total interest expense (and by calculation, cost of funds), net interest income (and by calculation, net interest rate margin) and debt-to-equity ratio.
Portfolio Composition
The following table summarizes certain characteristics of the Company's MBS portfolio as of September 30, 2025 and June 30, 2025.
As of
September 30, 2025
June 30, 2025
$ in thousands
Fair Value
Percentage of Portfolio
Period-end Weighted Average Yield
Fair Value
Percentage of Portfolio
Period-end Weighted Average Yield
Agency RMBS:
30 year fixed-rate pass-through coupon:
4.5 %
745,869
13.0 %
4.91 %
640,423
12.3 %
4.95 %
5.0 %
1,238,419
21.5 %
5.24 %
967,373
18.6 %
5.32 %
5.5 %
1,224,244
21.3 %
5.56 %
1,035,347
20.0 %
5.58 %
6.0 %
1,340,686
23.3 %
5.93 %
1,259,271
24.3 %
5.95 %
6.5 %
229,541
4.0 %
6.14 %
319,789
6.2 %
6.16 %
Total 30 year fixed-rate pass-through
4,778,759
83.1 %
5.51 %
4,222,203
81.4 %
5.58 %
Agency-CMO
70,960
1.2 %
10.18 %
71,835
1.4 %
9.75 %
Agency CMBS
899,519
15.7 %
4.62 %
891,521
17.2 %
4.62 %
Total MBS portfolio
5,749,238
100.0 %
5.42 %
5,185,559
100.0 %
5.46 %
The following table summarizes certain characteristics of the Company's borrowings as of September 30, 2025 and June 30, 2025.
As of
$ in thousands
September 30, 2025
June 30, 2025
Amount Outstanding
Weighted Average Interest Rate
Weighted Average Remaining Maturity (days)
Amount Outstanding
Weighted Average Interest Rate
Weighted Average Remaining Maturity (days)
Repurchase agreements - Agency RMBS
4,292,146
4.35 %
20
3,798,981
4.48 %
24
Repurchase agreements - Agency CMBS
857,935
4.35 %
24
836,900
4.48 %
26
Total borrowings
5,150,081
4.35 %
21
4,635,881
4.48 %
24
The following tables summarize certain characteristics of the Company's interest rate swaps whereby the Company pays fixed interest rates and receives floating interest rates based on the secured overnight financing rate as of September 30, 2025 and June 30, 2025.
$ in thousands
As of September 30, 2025
Maturities
Notional
Amount
Weighted Average Fixed Pay Rate
Weighted Average Floating Receive Rate
Weighted Average Years to Maturity
Less than 3 years
1,555,000
0.31 %
4.24 %
1.9
3 to 5 years
450,000
0.47 %
4.24 %
4.5
5 to 7 years
500,000
0.61 %
4.24 %
5.1
7 to 10 years
430,000
4.13 %
4.24 %
9.3
Greater than 10 years
445,000
1.99 %
4.24 %
19.0
Total
3,380,000
1.08 %
4.24 %
5.9
$ in thousands
As of June 30, 2025
Maturities
Notional
Amount
Weighted Average Fixed Pay Rate
Weighted Average Floating Receive Rate
Weighted Average Years to Maturity
Less than 3 years
1,380,000
0.31 %
4.45 %
2.0
3 to 5 years
375,000
0.39 %
4.45 %
3.8
5 to 7 years
750,000
0.57 %
4.45 %
5.3
7 to 10 years
