Core Insights - Armour Residential REIT, Inc. (NYSE: ARR) reported strong financial performance in Q4 2025, with interest income of $236.5 million, net income of $208.7 million, and diluted EPS of $1.86, reflecting year-over-year increases of 55.1%, $258.1 million, and $2.69 respectively [1][6] - The growth was primarily driven by improved average interest income on interest-earning assets and a decline in interest costs on average interest-bearing liabilities, indicating a sustainable performance outlook in the current macro environment [1][6] Financial Performance - In Q4 2025, ARR generated distributable earnings of $79.7 million, equating to $0.71 per share, while the book value per share increased by 6.5% sequentially to $18.63 [6] - The company paid dividends of $0.72 per share, resulting in a 16.4% annualized yield and a payout ratio of 101% relative to distributable earnings [6]

Core Viewpoint - ARMOUR Residential REIT reported a strong performance in Q4 2025, with significant economic returns driven by favorable market conditions in mortgage-backed securities [4][7]. Financial Performance - The quarter-end book value was $18.63 per common share, reflecting a 6.5% increase from September 30, with a current estimate of $18.37 per share as of February 17 [1][7]. - Distributable earnings available to common stockholders were $79.8 million, equating to $0.71 per common share, defined as net interest income plus TBA drop income, adjusted for interest-related expenses [2]. - GAAP net income available to common stockholders was reported at $208.7 million, or $1.86 per share, with net interest income of $50.4 million [3][7]. Market Conditions and Portfolio Management - The company experienced a total economic return of 10.63% for the quarter, attributed to tightening mortgage-backed securities spreads and a lower interest-rate environment [3][4]. - The portfolio grew over 10% from Q3, totaling over $20 billion in mortgage assets, with nearly 100% in agency MBS/CMBS/DUS and an implied leverage of 7.9x [6][10]. - Management characterized agency MBS as a "high conviction opportunity," supported by Federal Reserve easing and the FHFA's $200 billion MBS purchase mandate [6][11]. Capital and Funding Activities - ARMOUR raised approximately $138 million in common equity through an ATM program, described as "mildly dilutive," and improved repo funding conditions to roughly SOFR+15bp [5][8]. - The company issued $4.8 million of preferred stock under its preferred ATM program, contributing to its capital liquidity position of about 54% of total shareholders' equity [8][10]. Dividend Policy - ARMOUR maintained a monthly common dividend of $0.24 per share, totaling $0.72 for the quarter, with plans to continue paying an attractive and stable dividend [9][7]. Future Outlook - The management expressed a favorable outlook for 2026, citing supportive market dynamics and a focus on lowering mortgage spreads, with expectations of continued positive momentum [11][12]. - The company aims to be selective in capital-raising and investment opportunities, indicating a cautious approach to balance-sheet growth [19].

ARMOUR Residential REIT (NYSE:ARR) Q4 2025 Earnings call February 19, 2026 09:00 AM ET Company ParticipantsDave Storms - Director of Equity ResearchDesmond Macauley - Co-Chief Investment OfficerEric Hagen - Managing DirectorGordon Harper - CFOScott Ulm - CEOSergey Losyev - Co-Chief Investment OfficerConference Call ParticipantsTimothy D'Agostino - Research AnalystTrevor Cranston - Equity Research AnalystOperatorGood day. Welcome to the ARMOUR Residential REIT's Fourth Quarter 2025 Earnings Conference Call. ...

Financial Data and Key Metrics Changes - ARMOUR reported a total economic return of 10.63% for Q4 2025, benefiting from MBS spreads tightening and a lower interest rate environment [4] - GAAP net income available to common stockholders was $208.7 million, or $1.86 per share, while net interest income was $50.4 million [4] - Distributable earnings available to common stockholders were $79.8 million, or $0.71 per common share [4] - Quarter-end book value increased to $18.63 per common share, up 6.5% from September 30 [5] Business Line Data and Key Metrics Changes - ARMOUR's mortgage assets now total over $20 billion, with a portfolio growth of more than 10% from the end of Q3 2025 [9] - The portfolio remains nearly 100% agency MBS, agency CMBS, or DOS, with a net balance sheet duration of 0.14 years [12] - The company added over $3 billion of MBS pools and DOS across Q4 and early Q1 [12] Market Data and Key Metrics Changes - The market's appeal remains anchored in declining rate volatility and easing funding costs, supported by the Fed's efforts to lower rates [10] - Aggregate portfolio prepayments averaged 11.1 CPR through Q4 2025 and Q1 2026 to date, compared to 8.1 CPR in Q3 2025 [15] - The 30-year mortgage rate has remained in a tight 6%-6.3% band, recently shifting toward the low end of that range [15] Company Strategy and Development Direction - ARMOUR views agency MBS as a high conviction opportunity, with a focus on maintaining moderate leverage and a strong capital liquidity position [9] - The company aims to pay an attractive and stable dividend, with a medium-term outlook [20] - ARMOUR's strategy includes stress testing liquidity, applying systematic hedging, and deploying capital when opportunities arise [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positioning and strategy for 2026, anticipating continued favorable conditions for MBS [20] - The administration's focus on lowering mortgage spreads is expected to support a stable mortgage market [10] - Management noted that further declines in mortgage rates will require lower long-end Treasury yields, which have not declined in sync with front-end rate cuts [16] Other Important Information - ARMOUR raised approximately $3.8 million of capital by issuing preferred stock and $138 million under its common-at-the-market program [6][7] - The company has launched a new investor presentation to provide additional insights into the portfolio's transformation over time [20] Q&A Session Summary Question: Outlook for portfolio and interest-bearing assets growth in 2026 - Management indicated that growth depends on market behavior and capital raising opportunities [24] Question: Incremental returns on new investments given spread tightening - Current levered yield on thirty of fives is around 15%, with potential for additional returns from spread tightening and curve steepening [29] Question: Likelihood of further government actions to lower mortgage rates - Management noted that while some actions have been taken, further steps may introduce complexities that could counteract stability in mortgage spreads [34] Question: Current liquidity position and near-term outlook - Management confirmed liquidity is about 54% of total equity, reflecting moderate leverage and steady liquidity [37] Question: Risk of faster prepayments as mortgage rates lower - Management acknowledged increased prepayment risk but stated the portfolio is structured to mitigate this risk [39]

Financial Data and Key Metrics Changes - ARMOUR reported a total economic return of 10.63% for Q4 2025, benefiting from MBS spreads tightening and a lower interest rate environment [4] - GAAP net income available to common stockholders was $208.7 million, or $1.86 per share, with net interest income at $50.4 million [4] - Distributable earnings available to common stockholders were $79.8 million, or $0.71 per common share [4] - Quarter-end book value increased to $18.63 per common share, up 6.5% from September 30 [5] Business Line Data and Key Metrics Changes - ARMOUR's mortgage assets exceeded $20 billion, with a portfolio growth of over 10% from the end of Q3 2025 [8] - The portfolio remains nearly 100% agency MBS, agency CMBS, or US Treasuries, with a net balance sheet duration of 0.14 years [11] - Aggregate portfolio prepayments averaged 11.1 CPR through Q4 2025 and Q1 2026 to date, compared to 8.1 CPR in Q3 2025 [13] Market Data and Key Metrics Changes - The market's appeal remains anchored in declining rate volatility and easing funding costs, supported by the Fed's efforts to lower rates [9] - The 30-year mortgage rate has remained in a tight 6%-6.3% band, with recent shifts toward the low end of that range [13] - Repo conditions have improved materially, with repo rates averaging roughly SOFR plus 15 basis points [16] Company Strategy and Development Direction - ARMOUR views agency MBS as a high conviction opportunity, expecting continued favorable conditions in 2026 [8] - The company aims to maintain a consistent and predictable return profile for its assets, focusing on stress testing liquidity and systematic hedging [19] - The administration's focus on lowering mortgage spreads is expected to support a stable mortgage market, with GSEs playing a crucial role [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positioning and strategy for 2026, highlighting the importance of capital raising and investment opportunities [23] - The company anticipates that further declines in mortgage rates will require lower long-end Treasury yields, which have not declined in sync with front-end rate cuts [14] - Management noted that the risk of faster prepayments has increased, but the portfolio has been structured to mitigate this risk [37] Other Important Information - ARMOUR raised approximately $3.8 million of capital by issuing preferred stock and around $138 million through its common-at-the-market program [5][6] - The company has declared cash dividends of $0.24 per outstanding common share for January and February 2026 [6] Q&A Session Summary Question: Outlook for portfolio and interest-bearing assets growth in 2026 - Management indicated that growth depends on market behavior and capital raising opportunities, with no definitive outlook provided [23] Question: Incremental returns on new investments given spread tightening - Current levered yield on thirty of fives is around 15%, with potential for additional returns from further spread tightening and curve steepening [28][29] Question: Likelihood of government actions to lower mortgage rates - Management noted that while some actions have been taken, further steps may introduce complexities that could counteract the goal of stable mortgage spreads [33] Question: Current liquidity position and near-term outlook - Management confirmed liquidity at about 54% of total equity, reflecting moderate leverage and steady liquidity [36] Question: Risk of faster prepayments with lower mortgage rates - Management acknowledged the increased risk of faster prepayments but emphasized that the portfolio is structured to handle this risk [37]

FEBRUARY 18, 2026 ARMOUR RESIDENTIAL REIT Q4 2025 Investor Presentation 1 CORPORATE PROFILE ARMOUR Residential REIT, Inc. (NYSE: ARR) ARMOUR Residential REIT, Inc. ("ARMOUR"; NYSE: ARR) brings private capital into the mortgage markets to support home ownership for a broad and diverse spectrum of homeowners. We seek to create shareholder value through thoughtful investment and risk management of a leveraged and diversified portfolio of mortgage-backed securities issued or guaranteed by U.S Government-sponsor ...

Monetary Policy and Market Conditions - Future Fed monetary policy could adversely impact the prices and liquidity of Agency Securities, potentially leading to a decline in net income if costs of funds increase without a corresponding rise in interest income [64]. - The market value of MBS is highly dependent on the support of GSEs by the U.S. government; any changes to this support could significantly reduce MBS market value and liquidity [66]. - The company may face increased financial market volatility and wider market spreads due to changes in U.S. fiscal policy, including the U.S. debt ceiling [68]. - Changes in trade policies and tariffs could lead to significant financial market volatility and negatively impact ARMOUR's business and financial condition [70]. Borrowing and Financing - ARMOUR's borrowings are primarily in the form of repurchase agreements, with a significant portion of its aggregate borrowings (47.0% as of December 31, 2025) coming from a single counterparty, BUCKLER [80]. - As of December 31, 2025, BUCKLER provided approximately $8,426,540, or 47.0% of the company's repurchase financing [127]. - The company maintains active repurchase financing arrangements with 22 different counterparties, including BUCKLER, to mitigate reliance on a single source of financing [133]. - The company has committed to provide on-demand subordinated loans to BUCKLER, totaling up to $200,000 through March 20, 2027, and an additional $50,000 through February 28, 2028 [130]. Management and Fees - The management fee structure for ACM is based on gross equity raised, which totaled $5,366,343 as of December 31, 2025, leading to an effective contractual management fee rate of 0.89% [114]. - ARMOUR's management fees do not decline with reductions in total stockholders' equity, which may lead to significant fees even during periods of total comprehensive loss [115]. - The management agreement allows ACM to terminate its service with 180 days' notice, and no termination fee is due from ACM [99]. - The management agreement with ACM will automatically renew for an additional five-year term unless ARMOUR provides a 180-day written notice of non-renewal [120]. Investment Performance and Risks - Distributable Earnings is considered a key measure of ARMOUR's investment performance, although it is a non-GAAP measure and not standardized [122]. - Distributable Earnings is a key performance measure for the company, defined as net interest income plus TBA Drop Income adjusted for interest rate swaps minus net operating expenses [123]. - The company may incur permanent equity losses if forced to sell MBS at distressed prices during market distress [74]. - ARMOUR's reliance on derivatives for risk management may not fully protect against interest rate risks, potentially leading to financial losses [71]. Conflicts of Interest and Governance - There are potential conflicts of interest in allocating investment opportunities among ARMOUR and other funds managed by ACM [105]. - The company is subject to conflicts of interest due to its relationship with ACM and its affiliates, which could affect decisions made in the best interest of stockholders [136]. - The management agreement limits ACM's liability, which could result in poor performance or losses for which ACM would not be liable [100]. REIT Compliance and Taxation - The company must dispose of a portion of its assets within 30 days after the end of the calendar quarter if it fails to comply with REIT tax requirements to avoid losing its REIT status [151]. - To maintain REIT qualification, at least 75% of the company's gross income must be derived from real estate-related sources and at least 75% of its assets must consist of cash, government securities, and qualified REIT real estate assets [157]. - The company may face substantial tax liabilities if it fails to qualify as a REIT, which could reduce cash available for distribution to stockholders [154]. - Changes in tax laws or regulations by the U.S. Congress or IRS could retroactively affect the company's ability to qualify as a REIT [152]. Cybersecurity and Technology Risks - ARMOUR has established an IT Security Committee (ITSC) to oversee cybersecurity measures and mitigate technology risks [206]. - The ITSC engages third-party service providers for regular audits and threat assessments to ensure cybersecurity strategies align with industry best practices [207]. - The ITSC conducts quarterly assessments of key third-party providers to manage risks associated with cybersecurity threats [208]. - The Audit Committee monitors cybersecurity risks and reviews policies and procedures to ensure effective governance [210]. - The ITSC implements advanced security measures and has a defined incident response plan for potential cybersecurity incidents [213].

Financial Performance - ARMOUR's total economic return for 2025 was 12.79%, with Q4 2025 total economic return at 10.63%[4] - GAAP net income available to common stockholders was $208.7 million, or $1.86 per common share[5] - Distributable Earnings available to common stockholders were $79.8 million, representing $0.71 per common share[5] - Net income for Q4 2025 reached $211.7 million, compared to $159.3 million in Q3 2025, indicating strong financial performance[19] - The company reported a net income per common share of $1.86 in Q4 2025, an increase from $1.49 in Q3 2025[19] Investment Portfolio - The investment portfolio grew by approximately 60% in 2025, deploying $878 million in capital to acquire mortgage-backed securities (MBS)[4] - The portfolio totaled $20.0 billion, with 97.0% in Agency MBS and 3.0% in U.S. Treasury Securities[5] - Economic interest income for Q4 2025 was $236.5 million, up from $210.2 million in Q3 2025, reflecting growth in interest-earning assets[21] - The average yield on agency securities was 5.01% in Q4 2025, slightly down from 5.08% in Q3 2025[21] Shareholder Equity - Book value per common share increased by 6.5% to $18.63 compared to $17.49 at September 30, 2025[5] - Total stockholders' equity rose to $2.261 billion from $1.361 billion year-over-year[12] Liquidity and Debt - Liquidity, including cash and unencumbered securities, was $1.2 billion[5] - The debt to equity ratio was 7.94:1, with implied leverage of 8.07:1[5] Earnings and Dividends - Net interest income for Q4 2025 was $50.4 million, up from $38.5 million in Q3 2025, reflecting a significant increase[19] - Distributable earnings available to common stockholders increased to $79.8 million in Q4 2025 from $75.3 million in Q3 2025[19] - ARMOUR paid monthly cash dividends of $0.24 per share for common stock in Q4 2025, maintaining consistent dividend payments[23] Share Count - The weighted average common shares outstanding increased to 112,243,115 in Q4 2025 from 104,572,250 in Q3 2025[19] Expenses - ARMOUR's total expenses after fees waived were $14.0 million in Q4 2025, compared to $13.3 million in Q3 2025[19]

Core Viewpoint - ARMOUR Residential REIT reported strong financial performance for Q4 2025, achieving a total economic return of 10.63% for the quarter and 12.79% for the year, driven by a significant increase in its investment portfolio and favorable market conditions [4][6]. Q4 2025 Results - The company recorded a GAAP net income of $208.7 million, equating to $1.86 per common share, with net interest income of $50.4 million [6]. - Distributable earnings available to common stockholders were $79.8 million, or $0.71 per common share [6]. - The average interest income on interest-earning assets was 4.97%, while the interest cost on average interest-bearing liabilities was 4.27%, resulting in an economic net interest spread of 1.77% [6][22]. December 31, 2025 Financial Position - The total stockholders' equity increased to $2.261 billion, up from $2.129 billion at the end of Q3 2025 [10]. - The company's portfolio totaled $20.0 billion, primarily composed of 97.0% Agency mortgage-backed securities (MBS) and 3.0% U.S. Treasury Securities [6]. - Liquidity, including cash and unencumbered securities, stood at $1.2 billion [6]. Management's Commentary - The CEO highlighted a 60% growth in the investment portfolio, with $878 million deployed in MBS acquisitions during 2025 [4]. - The company benefited from tightening MBS spreads, lower volatility, and a favorable interest rate environment [4]. - ARMOUR aims to maintain robust liquidity and dynamically adjust hedges for disciplined risk management [4]. Dividends - ARMOUR paid monthly cash dividends of $0.24 per share for Q4 2025, totaling $0.72 per share for the quarter [25]. - Future dividends will be determined based on the company's financial performance and market conditions [25].

Core Viewpoint - ARMOUR Residential REIT, Inc. announced a cash dividend of $0.24 for March 2026, with a record date of March 16, 2026, and a payment date of March 30, 2026 [1][2]. Dividend Information - The March 2026 cash dividend is set at $0.24 per share [2]. - The holder of record date is March 16, 2026, and the payment date is March 30, 2026 [2]. Tax Matters - ARMOUR is taxed as a real estate investment trust (REIT) and must distribute substantially all of its ordinary REIT taxable income to maintain this status [3]. - Dividends exceeding current tax earnings and profits are generally not taxable to common stockholders [3]. - The board of directors determines actual dividends based on various factors, including operational results, cash flows, financial condition, capital requirements, and market conditions [3]. Company Overview - ARMOUR primarily invests in fixed-rate residential, adjustable-rate, and hybrid adjustable-rate residential mortgage-backed securities issued or guaranteed by U.S. Government-sponsored enterprises [4]. - The company is externally managed and advised by ARMOUR Capital Management LP, which is registered with the SEC [4].