ARMOUR Residential REIT, Inc.

What they do

ARMOUR is a Maryland corporation that has elected to be taxed as a REIT and is managed by ARMOUR Capital Management LP (ACM). It invests in mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, plus U.S. Treasury Securities, and earns the spread between asset yields and borrowing costs. It finances securities mainly through repurchase agreements with maturities from overnight to three months, and uses interest rate swaps, basis swaps and swaptions to hedge rate risk.

Revenue drivers

• Net interest income on Agency MBS — The core earnings source is the spread between yield on the securities portfolio and the cost of repurchase financing. Portfolio of $21.8 billion at June 30, 2026 was 94.5% Agency MBS. Q2 2026 net interest income was $76.8 million.
• U.S. Treasury Securities — Treasuries were 2.7% of the June 30, 2026 portfolio, a smaller allocation used alongside Agency MBS and permitted by the charter.
• TBA Agency Securities — To Be Announced Agency Securities were 2.8% of the June 30, 2026 portfolio and are included in implied leverage of 7.73 to 1.
• Equity capital raised through ATM programs — ARMOUR issued 12,714,990 common shares for $218.7 million and 197,939 preferred shares for $4.1 million in Q2 2026. BUCKLER Securities LLC, an affiliate, was placement agent for 62% of common shares issued through the ATM programs in 2025.

Recent performance

Q2 2026 GAAP net income related to common stockholders was $111.5 million, or $0.86 per common share, with net interest income of $76.8 million. Distributable Earnings available to common stockholders were $93.2 million, or $0.72 per share, and total economic return was 4.8%. Book value per common share was $17.53 at June 30, 2026, up 0.6% from $17.42 at March 31, 2026, but below $18.63 at December 31, 2025. Average interest income on interest earning assets was 4.93% against interest cost of 3.83%, and the economic net interest spread was 1.82%. The company paid common dividends of $0.24 per share per month, or $0.72 for the quarter.

Strategy

Management describes its approach as prioritizing common share dividends appropriate for the intermediate term rather than reacting to short-term market fluctuations. It stresses liquidity, systematic hedging and disciplined capital deployment, and had $1.2 billion of liquidity including cash and unencumbered securities at June 30, 2026. The portfolio is diversified across Agency MBS, Treasuries and TBA Agency Securities, with $15.9 billion notional of interest rate swaps as of June 30, 2026. The company continues to raise common and preferred equity through at-the-market offering programs, including $88.3 million of common capital raised through July 14, 2026. The management agreement with ACM runs through December 31, 2029, with contractual management fee commitments of $47.748 million per year for 2026 through 2029.

Risks

• Interest rate and spread risk — With asset maturities generally longer than liabilities, rising short-term rates tend to reduce net interest income and the market value of assets and book value.
• Leverage and repurchase financing — Borrowings are generally six to ten times total stockholders' equity and some agreements cap leverage at twelve times equity; the debt-to-equity ratio was 7.54 to 1 at June 30, 2026, with implied leverage of 7.73 to 1.
• Counterparty concentration with BUCKLER — Repurchase agreements with affiliate BUCKLER Securities LLC were 46.8% of net repurchase agreements at June 30, 2026, and BUCKLER is the primary placement agent for the ATM program.
• Management fee waiver termination — ACM terminated its voluntary waiver of $550 per month of contractual management fees effective for fees payable after February 1, 2026, so that cost is no longer reduced.

Outlook

CEO Scott Ulm said the company continues to prioritize common share dividends appropriate for the intermediate term rather than short-term market fluctuations, and that it stress tests liquidity, applies systematic hedging and deploys capital appropriately. Management stated it is well positioned to attenuate downside risks while taking advantage of opportunities. No specific earnings or book value guidance was provided in the release.