Angel Oak Financial Strategies Income Term Trust Increases Monthly Distribution to $0.115 Per Share

Angel Oak Financial Strategies Income Term Trust has declared a distribution of $0.115 per share for August 2025, a 10% increase from the previous month. The fund will maintain its level distribution policy at the new higher rate. The increased distribution is due to higher coupon investments resulting from the deployment of proceeds from a recent Rights Offering into bank debt with higher coupons.

Angel Oak Financial Strategies Income Term Trust (FINS), a closed-end fund traded on the New York Stock Exchange under the symbol FINS, has declared a distribution of $0.115 per share for August 2025. This represents a 10% increase from the previous month's distribution of $0.109 per share, and the fund intends to maintain its level distribution policy at this new, higher rate. The record date for the distribution is August 15, 2025, with the payable date set for August 29, 2025. The fund will trade ex-distribution on August 15, 2025 [1].

The increased distribution is attributed to higher coupon investments resulting from the deployment of proceeds from a recent Rights Offering into bank debt with higher coupons. Angel Oak Capital Advisors, the fund's investment manager, rapidly deployed the proceeds from the Rights Offering into money center and regional bank debt to eliminate cash drag. Approximately half of the proceeds were re-deployed into higher-coupon community bank bonds, with an average coupon of 7.68% (ranging from 7.00% to 9.00%). These new bonds have coupons over 100 basis points higher than the fund's average coupon of 6.51% as of June 30, 2025 [1].

The fund's investment team believes several factors offer additional upside to the net asset value (NAV) in the current environment. Positive tailwinds from strong banking sector fundamentals, including strong credit, improving net interest margins, and stronger loan growth, are expected to contribute to NAV growth. Additionally, over $100 million of fixed-rate bank debt in the portfolio is set to transition from fixed to floating rate over the next 24 months, resulting in higher coupons or refinancing by the issuer. Increased M&A activity, traditionally an alpha generator for the strategy, has also been accelerating in 2025 under a more favorable regulatory environment [1].

While the fund seeks to pay a distribution at a rate that is representative of net investment income actually earned, a portion of each distribution may be treated as paid from sources other than net investment income. As required by Section 19(a) of the Investment Company Act of 1940, a notice will be distributed to shareholders in the event that a portion of a monthly distribution is derived from sources other than undistributed net investment income. The final determination of the source and tax characteristics of these distributions will depend upon the fund’s investment experience during its fiscal year and will be made after the fund’s year end [1].

The fund, led by Angel Oak Capital Advisors' experienced financial services team, invests predominantly in U.S. financial sector debt as well as selective opportunities across financial sector preferred and common equity. Under normal circumstances, at least 50% of FINS’ portfolio is publicly rated investment grade or, if unrated, judged to be of investment grade quality by Angel Oak Capital Advisors [1].

References:
[1] https://markets.ft.com/data/announce/detail?dockey=600-202508011300BIZWIRE_USPRX____20250801_BW358071-1