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We reported GAAP earnings of $0.13 per share for the second quarter, largely driven by a solid increase in net interest income.
Contributions from credit loss reserve reversals were more modest this quarter versus Q1, $8.8 million versus $22.8 million as were unrealized gains on fair value loans, $6 million in Q2 versus $31 million in Q1.
GAAP book value was $4.65, up $0.02 from March 31, and economic book value was $5.12, up $0.03 from March 31.
Economic return, both GAAP and economic for the second quarter, was 2.6%.
And this follows economic returns in Q1 of 3.6% and 5%, respectively.
Our leverage ticked up slightly over the quarter to 1.8 to one versus 1.6 to one, and we paid $0.10 dividend to shareholders on July 30, which is a 33% increase from the dividend paid in April.
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Our efforts to lower interest expense through securitizations had a visible impact on our second-quarter earnings as interest expense declined by $4.5 million or 15% from the first quarter.
Net interest income for the second quarter increased by $8 million or 16% versus the prior quarter.
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Again, continuing the theme of aggressively taking advantage of available market opportunities, we executed 2 additional securitizations on over $850 million of UPB at attractive levels in the second quarter.
As you can see on this page, AAA yields on bonds sold for the Non-QM1 deal was 112 basis points and 110 basis points on the RPL1 deal.
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Our investment portfolio grew by $300 million in the second quarter, which is a milestone of sorts as it is the first quarter in the last six quarters that our portfolio has increased.
New loan acquisitions in the second quarter were $857 million, which is more than two times the last three quarters combined.
On the financing side, you can see that two-thirds of our asset-backed financing is nonmark to market with over 70% of the nonmark-to-market financing in the form of securitizations as we continue to term out and reduce the cost of nonmark-to-market debt.
Net income to common shareholders was $58.5 million or $0.13 per share.
The key items impacting our results are as follows: net interest income of $59 million was $8 million or 16% higher sequentially.
Interest income on our loan portfolio was also approximately $5 million higher, primarily driven by higher prepayments and lower delinquency levels on purchase credit deteriorated and purchased nonperforming loans.
Similarly to the prior quarter, interest income from our securities investments included approximately $8 million of accretion on an MSR term note investment that was redeemed at par but that we have taken an impairment charge on in Q1 of 2020.
Our net interest spread increased to an impressive 3.02% this quarter.
We reduced our overall CECL allowance on carrying value loans to $54.3 million, reflecting lower loan balances and adjustments to estimated levels of future unemployment and home price appreciation used in our credit loss modeling.
This reversal and other net adjustments to our CECL reserves positively impacted net income for the quarter by $8.9 million.
After the significant increase in CECL reserves taken in Q1 2020 when uncertainty related to COVID-19 economic impacts were at their highest, we reduced our CECL reserves by approximately $90 million in the subsequent five quarters.
Actual charge-off experience continues to remain very modest, with approximately $1.6 million of net charge-offs taken in the six-month period ended June 30, 2021.
Net gains of $6 million were recorded, primarily reflecting the impact of market value changes.
Finally, our operating and other expenses were $22.8 million for the quarter, in line with the previous quarter.
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The pace of annual home price increases have reached levels not seen in over 40 years.
Unemployment rate has broken through 6% and is expected to continue to move lower with the economy reopening.
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We purchased over $370 million over the second quarter, which is an increase of 85% over the previous quarter.
The 3-month average CPR for the portfolio was 40.
We executed on the securitization in the second quarter, bringing the total amount of collateral securitized to approximately $1.75 billion.
Securitization, combined with nonmark-to-market term facility has resulted in over 70% of our Non-QM portfolio to be financed with nonmark-to-market leverage.
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Through our servicers, we granted almost 32% of the portfolio temporary payment relief, which we believe help put our borrowers in a better position for long-term payment performance.
In the second quarter, we saw serious delinquency rates improved by 0.1% and 30-day delinquencies drop by 1.4%.
In addition, almost 40% of those delinquent loans made a payment in June.
Many delinquent borrowers are on repayment plans, which will cause them to cure their delinquency status over the next six to 12 months.
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Updated letter agreements between the treasury and the GSEs relating to the 2008 senior preferred stock purchase agreement restricted the percentage of loans purchased by the GSEs backed by investor properties and second homes to 7%.
We were able to source over $300 million of this product in the second quarter from our existing originator relationships at attractive prices.
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Our RPL portfolio of $1 billion has been impacted by the pandemic but continues to perform well.
Eighty-one percent of our portfolio remains less than 60 days delinquent.
And although the percentage of 60 -- the portfolio 60 days delinquent in status was 26%, a quarter of those borrowers continue to make payments.
Prepayment speeds in the second quarter moderated a bit, but continue to be elevated at a three-month CPR of 15 as mortgage rates continue to be historically low and more borrowers gained equity with the increase of home prices.
While 30% of our RPL borrowers were impacted by COVID, we have worked with our servicers to provide assistance to borrowers and have seen improvement in delinquency levels over the quarter.
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Lima's originated over $3 billion since inception and has shown that they can reliably originate over $1 billion annually with a clear path to grow significantly beyond that.
At closing of the acquisition, we added $152 million of business purpose loans to our balance sheet.
We've already refinanced expensive financial, a BPL securitization, and subordinated debt that Lima needed to put in place during 2020, which will save over 500 basis points in financing costs over time.
Turning to Page 17, where we will discuss the fix and flip portfolio.
Our portfolio declined modestly by about $32 million in the second quarter as principal paydowns continue to exceed loan acquisitions.
Second-quarter loan acquisitions more than doubled from the first quarter as we acquired $68 million in UPB and $118 million in max loan amount in the quarter.
Third-quarter acquisitions are on track to increase even further as we've already added in excess of $150 million max loan amount of fix and flip loans and fuel others.
The fix and flip portfolio delivered strong income in the second quarter with average portfolio yield of approximately 6.4% in the quarter.
The housing market continues to be extremely strong with record-low mortgage rates and low levels of inventory supporting annual home price depreciation in excess of 15%.
Sixty-plus day delinquent loans continue to decline and dropped $29 million to $120 million at the end of the second quarter.
Since inception, we have collected approximately $4.8 million in these types of fees across our fix and flip portfolio.
Sixty-plus day delinquency as a percentage of UPB declined 4% to 28% and remains elevated.
But keep in mind that we have purchased over $2.1 billion of fix and flip loans and had over $1.5 billion pay off in full.
Due to the short-term nature of fix and flip loans with expected payoff in about six to 12 months, delinquent loans can be outstanding for longer than performing loans due to the time it takes to complete foreclosure.
Finally, the fix and flip loan reserves continued to trend down in the second quarter, declining by $2.1 million, primarily due to improved economic expectations and a strong housing market.
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The portfolio yield has remained steady in a mid- to high 5% range post-COVID and was 5.76% in the second quarter.
Underlying credit trends remained solid and 60-plus day delinquency declined 90 basis points to 4.9% at the end of the second quarter.
Purchase activity increased significantly from the first quarter as we purchased $102 million of single-family rental loans in the second quarter and grew the single-family rental portfolio for the second quarter in a row.
The pace of acquisitions has continued to accelerate into the third quarter, and we have already added approximately $100 million in the month of July.
Over two-thirds of our single-family rental portfolio is financed with nonmark-to-market financing and over 15% through securitizations.
We priced our first single-family rental securitization in the first quarter of 2021, where the weighted average coupon of bond sold was only 106 basis points.

Summary:
We reported GAAP earnings of $0.13 per share for the second quarter, largely driven by a solid increase in net interest income.
Net interest income for the second quarter increased by $8 million or 16% versus the prior quarter.
Net income to common shareholders was $58.5 million or $0.13 per share.