ARR

Annaly Capital Management, Inc.'s NLY third-quarter 2026 earnings available for distribution (EAD) per average common share of 80 cents beat the Zacks Consensus Estimate of 77 cents. The figure increased from 73 cents in the year-ago quarter. NLY's net interest income (NII) and net interest margin improved year over year in the reported quarter. The increase in EAD and stronger net interest income were encouraging. However, a decline in book value per common share (BVPS), higher funding costs and a GAAP net loss were concerning. Net loss available to common stockholders was $1.04 billion compared with net income of $791.3 million in the year-ago period. NII was $543.6 million in the reported quarter, which missed the Zacks Consensus Estimate of $596 million. The figure increased significantly from the year-ago quarter. Net interest spread (excluding the premium amortization adjustment, or PAA) was 1.42% in the third quarter, down from 1.50% in both the prior-year and prior quarters. Annaly's BVPS was $17.86 as of Sept. 30, 2026, down from $19.25 in the prior-year quarter. At the end of the reported quarter, the company's economic capital ratio was 14.2%, down from 14.8% in the year-ago quarter. The weighted average experienced constant prepayment rate was 9.6%, compared with 8.6% in the year-ago quarter. Annaly generated an annualized EAD return on average equity of 15.86% in the third quarter, up from 14.70% in the prior-year quarter. The company's total portfolio was $106.5 billion in the quarter, including a $91.8 billion Agency portfolio. The Residential Credit portfolio was $10.4 billion, while the mortgage servicing rights (MSR) portfolio increased to $4.3 billion in market value. Annaly's leverage increased in the quarter, with GAAP leverage at 8.0X, up from 7.1X in the year-ago quarter. Economic leverage rose to 5.9X from 5.7X in the prior-year period. The company reported total stockholders' equity of $15.8 billion as of quarter-end, down from $16.9 billion in the previous quarter. Liquidity remained important amid volatility in fixed-income markets. Annaly ended the quarter with $8.5 billion in total assets available for financing, including $4.2 billion in cash and unencumbered Agency mortgage-backed securities (MBS). The company maintained $8.3 billion in warehouse capacity across its Residential Credit and MSR businesses, including $2.8 billion of committed capacity. Annaly also issued 12 securitizations totaling a record $7.4 billion through its Residential Credit Group during the quarter. Against a challenging fixed-income market backdrop, NLY continued actively managing its hedge portfolio, primarily adding Treasury futures to offset market-driven extension and maintain a disciplined risk posture. The company ended the quarter with a hedge ratio of 100%, up from 92% in the year-ago quarter and 97% in the previous quarter. Funding costs increased during the quarter. Average GAAP costs of interest-bearing liabilities rose six basis points sequentially to 4.34%, while average economic costs increased seven basis points to 4.03%. Net interest margin, excluding PAA, was 1.69%, compared with 1.70% in the third quarter of 2025 and 1.76% in the previous quarter. The average yield on interest-earning assets, excluding PAA, was 5.45%, compared with 5.46% in both the year-ago and prior quarters. GAAP net interest margin improved to 1.54%, up marginally from the prior-year quarter. A key highlight for income-focused investors was that earnings again exceeded the common dividend. Annaly declared a quarterly common stock cash dividend of 75 cents per share, unchanged from the previous quarter and up from 70 cents in the year-ago period. EAD of 80 cents per share provided 1.07X coverage of the declared dividend. The company also continued raising equity capital to support its investment strategy. Annaly raised $757 million through its at-the-market sales program during the quarter, which it characterized as accretive. The capital-raising activity supports the company's ability to pursue investment opportunities across its Agency, Residential Credit and MSR strategies. Annaly's third-quarter results benefited from higher net interest income, improved GAAP net interest margin and stronger EAD per share. Earnings continued to cover the common dividend, while active hedging, liquidity management and equity issuance supported the company's investment strategy. However, the decline in book value per share, higher funding costs and increased leverage remain key concerns. The substantial GAAP net loss also highlights the impact of market-driven investment valuation changes on reported results.G Going forward, Annaly's performance will likely remain sensitive to interest-rate movements, mortgage prepayment trends and financing costs. Its ability to maintain dividend coverage while preserving book value and managing leverage will be important for sustaining shareholder returns. Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote NLY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. ARMOUR Residential REIT's ARR third-quarter 2026 results reflected distributable earnings available to common stockholders of 71 cents per share, which missed the Zacks Consensus Estimate of 73 cents. ARR's net interest income increased to $83.7 million from $38.5 million in the prior-year quarter. However, the company reported a GAAP net loss of $2.26 per common share against net income of $1.49 per share in the year-ago quarter. Book value per common share declined to $14.55 from $17.49 in the year-ago period. AGNC Investment Corp.'s AGNC third-quarter 2026 results reflected net spread and dollar roll income of 37 cents per common share, which missed the Zacks Consensus Estimates of 39 cents. The company reported a net loss of $1.17 per common share and a 16.9% sequential decline in tangible net book value per comon share to $7.13. Higher interest rates and weakness in the Agency mortgage-backed securities market pressured performance. However, AGNC maintained liquidity of $6.3 billion in unencumbered cash and Agency MBS and raised $992 million through its at-the-market common stock offering program. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report ARMOUR Residential REIT, Inc. (ARR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Oct. 22, 2026 - Chief Executive Officer - Scott Ulm - Chief Financial Officer - Gordon Harper - Co-Chief Investment Officer - Sergey Losyev - Co-Chief Investment Officer - Desmond Macauley Operator: Good day, and welcome to the ARMOUR Residential REIT's Third Quarter 2026 Earnings Conference Call [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to the CEO, Mr. Scott Ulm. Please go ahead, sir. Scott Ulm: Good morning, and welcome to our third quarter 2026 conference call. This morning, I'm joined by our Chief Financial Officer, Gordon Harper; as well as our Co-Chief Investment Officer, Sergey Losyev; and Desmond Macauley. Let me turn the call over now to Gordon to run through the financial results. Gordon Harper: Thank you, Scott. By now, everyone has access to ARMOUR's earnings release and our Q3 2026 investor presentation, which can be found on ARMOUR's website, www.rmmerit.com. This conference call includes forward-looking statements are intended to be subject to the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995. The Risk Factors section of ARMOUR's periodic reports filed with the Securities and Exchange Commission describe certain factors beyond ARMOUR's control that could cause actual results to differ materially from those expressed in or implied by these forward-looking statements. Those periodic filings can be found on the SEC's website at www.sec.gov. All of today's forward-looking statements are subject to change without notice. We disclaim any obligation to update them unless required by law. Also, today's discussion refers to certain non-GAAP measures. These measures are reconciled with comparable GAAP measures in our earnings release. An online replay of this conference call will be available on ARMOUR's website shortly and will continue for 1 year. Our results for the quarter reflect the significant widening of mortgage spreads in the last 3 weeks of the quarter as interest rates rose and the markets reacted to a more hawkish Federal Reserve. ARMOUR's Q3 GAAP net loss related to common stockholders was $327 million or a loss of $2.26 per common share. Net interest income was $83.7 million. Distributable earnings available to common stockholders was $102.3 million or $0.71 per common share. This non-GAAP measure is defined as net interest income plus TBA drop income adjusted for interest income or expense on our interest rate swaps and futures contracts minus net operating expenses. Total economic return was a negative 12.9% for the quarter. During Q3, ARMOUR raised approximately $205.7 million of capital by issuing approximately 12.4 million shares of common stock and $2.5 million of capital by issuing approximately 123,000 shares of preferred stock through our at-the-market offering programs. We also repurchased at the end of September 363,700 common shares. ARMOUR paid monthly common dividend of $0.24 per common share per month for a total of $0.72 for the quarter. We aim to pay an attractive dividend that is appropriate in context and stable over the medium term. On October 29, 2026, a cash dividend of $0.24 per outstanding common share will be paid to holders of record on October 15, 2026. We've also declared a cash dividend of $0.24 per outstanding common share payable on November 27 to holders of record on November 16, 2026. Quarter end book value was $14.55 per common share, down 17% from June 30, 2026. Our most current available estimate of book value is as of Monday, October 19, and was $14.65 per common share, which reflects the accrual of the October common dividend I discussed previously. I will now turn the call over to Chief Executive Officer, Scott Ulm, to discuss ARMOUR portfolio position and current strategy. Scott Ulm: Thanks, Gordon. Agency MBS faced a challenging late third quarter as macroeconomic pressures overwhelmed the favorable supply-demand dynamics that had supported the market earlier in the year. Persistent inflation prompted the Federal Reserve to raise rates by 25 basis points in September, its first hike since 2023 and signal further tightening. Expectations for higher policy rates, geopolitical tensions, rising fiscal deficits and increased corporate debt issuance drove broad repricing of global bond markets. Treasury yields rose 70 to 80 basis points over the quarter, while interest rate volatility spiked in September. The sharp increase in yields extended mortgage duration with associated selling pressures likely amplifying the MBS sell-off as the speed of the move sideline potential buyers. Today, mortgage spreads sit near their widest of the year, offering more compelling valuations that support our constructive medium-term outlook. Near term, we believe a sustained recovery in mortgage prices would require greater stability in treasury yields and volatility. Renewed inflation pressures could prompt further Fed tightening action, while geopolitical tensions could prolong market volatility. Our base case remains a shallow Fed hiking cycle rather than a repeat of 2022, '23 as labor market continues to show no buildup in wage pressures, reducing the risk of a wage price spiral. This view is broadly consistent with the Fed's September summary of economic projections in which even some of the more hawkish participants anticipated only one additional 25 basis point hike in 2026, followed by another 25 basis point increase in 2027. Looking ahead to the fourth quarter, the underlying supply-demand backdrop remains supportive. Elevated mortgage rates continue to constrain origination and net Agency MBS supply, while limited financing activity and favorable repo conditions support portfolio carry. GSE retained portfolios declined modestly by a reported $2.5 billion in July and August, following substantial purchases earlier in the year, likely reflecting paydowns that were not fully reinvested rather than outright asset sales. We believe Fannie Mae and Freddie have resumed buying during September's volatility, consistent with their role in supporting the Agency MBS market, although official holdings data remain pending. With more than $100 billion of capacity remaining under their regulatory caps, we continue to view the GSEs as meaningful potential backstop buyers at wider spreads. I'll now turn it over to Sergey for more detail on our portfolio. Sergey Losyev: Thank you, Scott. ARMOR REIT entered the third quarter with historically low leverage and limited net duration exposure, which helped us navigate heightened market volatility. Still, the portfolio's option adjusted spread widened by 20 basis points with approximately 80% of that widening occurring in September. This, in turn, pressured book value and pushed implied leverage, excluding treasuries to 8.2x and net duration exposure to 0.38 years by quarter end, higher yet still historically moderate levels. The available liquidity stood at an ample $1.02 billion at the end of Q3 and is expected to remain near that level through the end of October. ARMOUR net added approximately $1.4 billion of MBS assets over the course of the third quarter. Starting in late September, we sold approximately $900 million, consisting primarily of DUS pools and deep discount seasoned MBS. Those sales capture relative out performance versus the broader mortgage market and help maintain our strong liquidity position and portfolio target leverage. We plan to eventually reinvest these proceeds and paydowns into moderate discount priced MBS, which have widened the most in September and present the most attractive opportunities with levered returns running from 15% to 18% depending on the coupon. Portfolio prepayments averaged 8.5% CPR in Q3, down 25% from the prior quarter. With the 30-year conforming mortgage rates nearing 7.5%, we expect prepayment speeds to remain broadly stable in the coming months, providing greater predictability for portfolio earnings and improving convexity profile of our mortgage assets. ARMOR's mortgage portfolio remains invested exclusively in Agency MBS and DUS securities, consistent with its strategy since the 3rd October, since the third quarter of 2020. And over 96% of our MBS holdings are concentrated in specified pools with favorable prepayment characteristics. Our hedging strategy is designed to manage duration risk across the yield curve and limit exposure to rising funding costs. Our swap hedge to ratio -- hedge to repo ratio stands at approximately 89%, its highest level since 2022. While we believe markets may be pricing in more Fed rate hikes than will ultimately materialize, our hedging position is designed to protect earnings against further increases in short-term rates should inflation and macroeconomic pressures persist. Despite the New York Fed suspension of treasury bill purchases in August, repo spreads to SOFR have remained tight. Supporting stable portfolio funding through September's Fed rate hike, and we financed nearly 50% of our portfolio through affiliated broker-dealer Buckler Securities, securities, where we selectively use overnight repo to avoid paying term premiums on longer-term financing. While Chair Powell has moved quickly to establish policy task forces, we do not anticipate significant changes to the Fed's balance sheet policy that would disrupt repo or Agency MBS markets, particularly ahead of the midterm elections. And back to you, Scott. Scott Ulm: Thanks, Sergey. Monthly dividends are central to ARR's investment approach, providing shareholders with a regular source of income. We set our dividend at a level we consider appropriate for the medium term. Recent volatility in interest rates and Agency MBS spreads has pressured both our share price and book value, resulting in an unusually high dividend at current market prices. We remain constructive on the Agency MBS market and believe many of the factors driving recent volatility are likely to resolve over the coming months and into next year. Thank you for joining today's call and for your continued interest in ARMOUR. Operator: [Operator Instructions] and our first question for today will come from Doug Harter with BTIG please go ahead. Douglas Harter: Hoping you [Technical Difficulty] Could talk about the decision to sell assets in September and kind of the thought process of taking leverage up versus selling assets? Sergey Losyev: This is Sergey. Yes. So we sold primarily 5-year and 10-year DUS pools as well as some of the deeper discount coupon with maybe 50 to 60 WALA seasoning. This type of collateral really outperformed in September. So the opportunity presented itself to manage our liquidity, manage our leverage and also take profits on some of these assets that have outperformed. So it was really a combination of things that were driving that trade decision. We plan to reinvest the proceeds into some of the coupons that have widened the most over the course of September, particularly 4.5, 5, but as well as some of the higher coupons, which have benefited from slower prepayment environment here at higher rates. Douglas Harter: Great. Appreciate that. And then on kind of the capital actions, you guys both issued common and preferred, but also bought back stock. Just hoping you could talk about kind of what levels you kind of see interesting to kind of undertake kind of all the various capital actions that you did in the quarter? Sergey Losyev: Yes. Sure, Doug. Look, we look at issuing under the ATM when we have an attractive price, which means that we're pretty tight to book value when -- and that was sort of the story of the first part of the quarter. And the story of the second part of the quarter is we hit some volatility and saw that we were a good ways away. And that's when we feel we should always be on both sides of the market. And so we just felt the need to put a mark in the book there and buy back some stock. So it's really just that simple. Of course, the moment when you're seeing attractive prices to repurchase is probably when you're also very mindful of liquidity. So we keep that in mind, too, but there is always our sense that we need to look at both sides here. Operator: The next question will come from Trevor Cranston with JMP please go ahead. Trevor Cranston: You made the comment towards the end of the prepared remarks about the dividend yield being unusually high right now. Can you maybe expand on your comments around that and how you guys are thinking about the appropriate dividend level today in light of where you're seeing current market returns? Sergey Losyev: Well, look, we've had volatility both in stock price and book value, which has driven those down. Our view remains constructive here and that a number of the factors that have driven this are -- have a good probability of resolving, maybe not this month, but over the not too long period. And so that plus the fact that we feel that our -- while we don't give forward guidance, as you guys know, our earnings available for distributions, we think, are going to be in the range of the dividend for the coming quarter. So given all of that, also the fact that we've already announced November should give you a sense of how we're feeling. Suggests that there's really, really nothing to do here. And we are where we are on this. Operator: The next question will come from Marissa Lobo with UBS. Unknown Analyst: I just wanted to ask about leverage, just given where wider mortgage spreads are and what you described as favorable repo conditions, how are you feeling about the willingness to add to leverage here? Or -- and what is your target range? Desmond Macauley: Yes. Marissa, this is Desmond Macauley. So our leverage as of Monday, October 19 was 7.9 turns. That's excluding our treasury loans and making some adjustments for expected paydowns. We are comfortable with that level. In the near term, there could be bouts of volatility in the period leading up to the elections. In addition, recent inflation data has been higher than expected. In the medium term, however, we are constructive given mortgage spreads around the wides of the year plus improved technicals and fundamentals in the mortgage market. So we do have dry powder to add leverage as warranted when we have greater clarity on the macroeconomic outlook as well as inflation. Unknown Analyst: Okay. Great. And on policy, I mean, just given the increased use of housing policy to influence rate and MBS demand, how are you incorporating that risk into your portfolio construction? And do you see it as primarily an upside to book value or impacting prepayments ultimately? Desmond Macauley: Stability is good. I think there's a lot of desire to improve affordability here. But we're -- I think across -- we are so out of the money. You'd have to have a pretty good move that would start to impact the optionality there. So delighted that there's focus on keeping stability and improving mortgage rates. But I would -- my sense would be we are -- we've got a long way to go before we start to see a different prepayment environment. Operator: The next question will come from Jason Weaver with JonesTrading. Unknown Analyst: This is Val Almar filling in for Jason Weaver. So that duration moved up to 0.38 from about 0. Was that a deliberate position or extension you haven't fully hedged yet there? Desmond Macauley: Yes, Jason. So as you know, we came into the quarter with our duration relatively flat. And we managed it very closely to a moderate duration profile even with a sharp increase in rates. Now in the back end, we are targeting around flat duration but within our band. So we allow that duration to move as our negative convexity plays a role in moving duration in the back end. So -- and then in the front end of the curve, we target just a very slight positive duration, given that we think market pricing of rate hikes are more than we anticipate. So overall, we manage our duration across the curve. We are looking to keep it within very tight bands. But at the same time, we allow some amount of duration movement so that we don't rehedge very frequently. Does that answer your question? Unknown Analyst: Yes, it does. And then just a quick one here. With the Fed now, hiking, are you thinking about like swaps versus futures from here or... Desmond Macauley: We still like on a nominal basis, about an 80-20 mix of swaps versus futures. At the longer end of the curve, we think swaps fair value -- and on the shorter end of the curve, we favor using swaps largely because of swap spread volatility. But overall, the mix that we are still looking at is about 80% swaps, 20% futures. Operator: The next question will come from Timothy D'Agostino with B. Riley Securities. Timothy D'Agostino: Just in mind, I know we kind of talked about share repurchases and leverage. But I guess just trying to see if you have any thoughts or providing color on whether you see any kind of friction between the 2 What -- where earlier you talked about repurchasing stock when it's attractive. But then again, you mentioned in another question about additional dry powder to add leverage where you see opportunity. So I just want to know how you balance maybe share repurchases versus adding more leverage? And then if you kind of feel any friction between the 2 as you kind of progress through the quarter, if you see attractive options to put capital -- leverage capital to work while your stock continues to trade below book value. Desmond Macauley: So the issue is -- leverage is largely an output here. The real driver is managing liquidity. So that's where that question really comes in, which is -- how are you feeling about liquidity? How much do you want to spend? Also, always mindful that when you take the stock back in, it may be both -- it has both a cost and it may not necessarily be a good time to get it back out there. So you have all of those factors that weigh on your question of, gee, is now the time to buy some stock back. So you have to see something pretty compelling, and it also has to fit in the context of how you are managing your overall liquidity levels, and that weighs on what sort of quantum you're willing to do. I think we're probably conservative in making that decision. But as I said before, we always feel that we have to be willing to be on both sides of the market. I hope that's responsive. Operator: The next question will come from Jason Stewart with Compass Point. Jason Stewart: A question on liquidity and funding markets. Sometimes we see the funding markets become a little skittish going into the end of the year when volatility is high. How are you feeling about the depth of repo today and managing that going into the end of the year? Desmond Macauley: Jason, this probably was one of the few quarters when the quarter end repo was extremely liquid and soft. So we continue to see tight repo to SOFR spreads here early in Q4. We do expect some balance sheet tightening up into year-end. But we also know that the New York Fed stands by in terms of reopening their RRPs or the T-bill purchases that we were doing earlier in the year in case liquidity gets tight in the banking system. So from that standpoint, repo has really been the shining star here of the market and giving us a lot of confidence into year-end even. Scott Ulm: And I'd also note, while we're active with 20 counter parties across the global street, if you will, we also enjoy the ability to finance about half of our portfolio through our securities affiliate BUCKLER. And that also gives us access across the curve as we mentioned, the ability to go overnight if we wish as well as access to term opportunities. So we try to keep all of those options open, which has been extremely helpful when we found things a little bit tighter, even though that's not the situation we're in this quarter, thankfully. Jason Stewart: Got it. Okay. That's helpful. And then on the GSEs, I mean, I think we all know how much capacity is left to buy and where we're at in terms of spread levels. Are you looking for any markers for increased activity and maybe as a catalyst for spread tightening from the GSEs? Desmond Macauley: Yes. So I mean, look, we had an official confirmation from pool data in September regarding GSE activity. We've also seen them cut down the specified pool auction sizes throughout the month. So some of these signs do point to the fact that they were engaged in the market. We haven't seen the official numbers yet. Of course, they're coming towards the end of the month, but it will be interesting to see back in March, when we had similar spread levels, volatility spike, we saw them policing in the market from the spread standpoint. So we do expect some buying to show up. Operator: The next question will come from David Storms with Stonegate Capital. David Storms: Just curious with the volatility in September, have you made any changes to the liquidity stress testing that you do? Or are you kind of looking through some of this volatility and keeping a focus on the medium term? Desmond Macauley: Yes. Dave, the stress testing that we had even going into September is pretty robust, and we test our liquidity on the extreme stress scenarios. We use COVID-like levels in terms of what took place at that time. So we like to be consistent there. We've not had to change anything. We continue to monitor our liquidity. And that obviously plays a role in terms of how we look at leverage too in deciding whether we want to increase leverage or keep it around these levels. So haven't changed it, but it was pretty robust. And extreme stress testing scenario we had going into September. And that enabled us to stay focused and not have to sell assets because of liquidity. David Storms: Understood. And if I could sneak one more in, just maybe a clarification on where you expect Fed rates to go. It sounded like in the prepared remarks, you were in line with market expectations on fund rate cut this year and one next year. But then an answer to one of the questions, it sounded like you were positioning yourself to be a little more dovish on the short end of the curve, thinking that markets were pricing in early rate cuts. Did I miss something there? Desmond Macauley: Markets are pricing about 3 to 4 cuts by the end of 2027. And our view here is the base case is 2 cuts by the end of 2027. So we are on the dovish side of the market. But if you compare our view to the dot plot by the FOMC, that's really on the hawkish side. The most hawkish members are expecting just 2 cuts, one at the end of this year and one at the end of next year. The reason for us having just a slight positive duration in the front end is because we do feel that market pricing of Hikes is more than we anticipate. Does that clear that up? Operator: And this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Scott Ulm for any closing remarks. Please go ahead. Scott Ulm: Thank you very much. We appreciate your interest in ARMOUR REIT, and thank you for attending this morning. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. ARMOUR (ARR) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Performance was significantly impacted by a 20 basis point widening in mortgage spreads during the final three weeks of Q3, driven by a hawkish Federal Reserve shift and rising Treasury yields. - Management attributes the sharp book value decline to interest rate volatility and duration extension, which sidelined potential buyers and pressured global bond markets. - The portfolio maintained historically moderate leverage and limited net duration exposure, which served as a defensive buffer against the late-quarter market volatility. - Strategic asset sales of approximately $900 million in DUS pools and seasoned MBS were executed to capture relative outperformance and bolster liquidity for future reinvestment. - Management views current mortgage spreads as sitting near the widest levels of the year, creating more compelling valuations for a constructive medium-term outlook. - Operational focus remains on specified pools with favorable prepayment characteristics, which now comprise over 96% of the company's Agency MBS holdings. - The hedging strategy was adjusted to its highest swap-to-repo ratio since 2022 to protect earnings against potential persistent inflation and short-term rate increases. - Management's base case assumes a shallow Federal Reserve hiking cycle, anticipating only one additional 25 basis point hike in 2026 and one in 2027. - Future reinvestment strategy targets moderate discount priced MBS in the 4.5% to 5% coupon range, where management sees attractive levered returns of 15% to 18%. - Prepayment speeds are expected to remain broadly stable due to 30-year conforming mortgage rates nearing 7.5%, which management believes will improve the portfolio's convexity profile. - The GSEs are viewed as a critical backstop for the market, with management expecting them to utilize their remaining $100 billion in capacity to support spreads at current levels. - Guidance for the fourth quarter assumes that underlying supply-demand dynamics will remain supportive as elevated rates continue to constrain new Agency MBS supply. - ARMOUR utilized its at-the-market offering programs to raise $205.7 million in common capital early in the quarter when shares traded near book value. - The company pivoted to common share repurchases in late September as market volatility created a significant discount to book value, signaling a commitment to value preservation. - Financing risk is mitigated by utilizing affiliated broker-dealer Buckler Securities for nearly 50% of portfolio funding, allowing for selective use of overnight repo to avoid term premiums. - Management flagged geopolitical tensions and renewed inflation pressures as primary near-term risks that could prolong market volatility and delay a recovery in mortgage prices. - Management explained the sales targeted DUS pools and deep discount MBS that had outperformed the broader market, allowing them to lock in profits and manage liquidity. - The proceeds are intended for rotation into coupons that widened the most in September, specifically the 4.5 and 5 coupons. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management stated that Distributable Earnings are expected to remain in the range of the dividend for the coming quarter. - The decision to declare the November dividend reflects management's view that current market volatility is likely to resolve over the medium term. - Management views leverage as an output of liquidity management; repurchases are only executed when the discount is compelling and liquidity levels are robust. - They admitted to being conservative with buybacks to ensure they maintain enough 'dry powder' to capitalize on wider mortgage spreads. - ARMOUR is maintaining a slight positive duration in the front end of the curve because they believe the market is pricing in more rate hikes than will actually occur. - Their base case of two total cuts by the end of 2027 is lower than the market's expectation of three to four cuts, placing them on the dovish side of the market, though this view remains hawkish compared to the FOMC dot plot., Management's view is on the hawkish side compared to the FOMC dot plot, aligning with the most hawkish members who expect only two rate cuts by the end of 2027. - Management confirmed they use 'COVID-like' extreme stress scenarios for liquidity planning, which allowed them to avoid forced asset sales during the September volatility. - They expressed confidence in year-end funding, noting that repo markets have remained a 'shining star' with tight spreads to SOFR despite broader market turbulence.

- Interested in ARMOUR Residential REIT, Inc.? Here are five stocks we like better. - ARMOUR reported significant third-quarter losses: GAAP net loss was $327 million, or $2.26 per share, while book value fell 17% to $14.55 per share. Total economic return was negative 12.9% as rising Treasury yields and widening mortgage spreads pressured Agency MBS. - Management maintained a cautious but constructive outlook: Mortgage spreads are near their widest levels of the year, creating potentially attractive reinvestment opportunities, though a sustained recovery depends on more stable interest rates and lower volatility. - Liquidity and dividends remained key priorities: ARMOUR ended the quarter with $1.02 billion in liquidity, leverage of 8.2 times excluding Treasuries, and continued monthly dividends of $0.24 per share. Management said distributable earnings should be roughly in line with the dividend in the coming quarter. - 6 Mortgage REITS: How Badly Could Rising Rates Hurt Them? ARMOUR Residential REIT (NYSE:ARR) reported a third-quarter 2026 GAAP net loss attributable to common stockholders of $327 million, or $2.26 per common share, as a late-quarter widening in mortgage spreads and rising interest rates pressured the company's book value. Chief Financial Officer Gordon Harper said net interest income totaled $83.7 million for the quarter, while distributable earnings available to common stockholders, a non-GAAP measure, were $102.3 million, or $0.71 per share. Total economic return was negative 12.9% during the quarter. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over Quarter-end book value was $14.55 per common share, down 17% from June 30. The company's estimate of book value as of Oct. 19 was $14.65 per share, including the accrual of its October common dividend. CEO Scott Ulm said Agency mortgage-backed securities faced a difficult final three weeks of the quarter as persistent inflation, a more hawkish Federal Reserve, geopolitical tensions, fiscal deficits and increased corporate debt issuance contributed to a broad bond-market repricing. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Treasury yields rose by roughly 70 to 80 basis points during the quarter, while interest-rate volatility increased in September. Ulm said the rise in yields extended mortgage duration and contributed to selling pressure in the MBS market. "Today, mortgage spreads sit near their widest of the year, offering more compelling valuations that support our constructive medium-term outlook," Ulm said. He added that a sustained recovery in mortgage prices would likely require greater stability in Treasury yields and interest-rate volatility. → IonQ's Bold Expansion Could Leave Shareholders Paying the Price Management's base case is for a shallow Federal Reserve hiking cycle rather than a repeat of the tightening seen in 2022 and 2023. The company said it sees limited wage pressure in the labor market and noted that some of the Fed's more hawkish policymakers projected one additional 25-basis-point rate increase in 2026 and another in 2027. Co-Chief Investment Officer Sergey Losyev said ARMOUR entered the quarter with historically low leverage and limited net duration exposure. However, its portfolio option-adjusted spread widened by 20 basis points, with about 80% of the move occurring in September. At quarter-end, implied leverage, excluding Treasuries, was 8.2 times and net duration exposure was 0.38 years. Available liquidity stood at $1.02 billion and was expected to remain near that level through the end of October. The company added about $1.4 billion of MBS assets during the quarter, then sold roughly $900 million beginning in late September. The sales consisted primarily of DUS pools and deep-discount seasoned MBS, assets that Losyev said had outperformed the broader mortgage market. ARMOUR intends to eventually reinvest sale proceeds and paydowns into moderately discounted MBS, including securities in coupons that widened significantly in September. Losyev said estimated levered returns on those opportunities ranged from 15% to 18%, depending on coupon. - Portfolio prepayments averaged 8.5 CPR in the third quarter, down 25% from the prior quarter. - More than 96% of MBS holdings were in specified pools with favorable prepayment characteristics. - The portfolio remained invested exclusively in Agency MBS and DUS securities. - The company's swap hedge-to-repo ratio was approximately 89%, its highest level since 2022. Losyev said ARMOUR financed nearly half of its portfolio through affiliated broker-dealer Buckler Securities, allowing it to use overnight repo selectively rather than pay term premiums for longer-term financing. Management said repo spreads remained tight relative to SOFR and described funding conditions as supportive. During the quarter, ARMOUR raised approximately $205.7 million by issuing about 12.4 million common shares through its at-the-market programs. It also raised $2.5 million through the issuance of approximately 123,000 preferred shares. At the end of September, the company repurchased 363,700 common shares. Ulm told analysts that the company issues stock through its at-the-market program when its share price is close to book value, while repurchases may be considered when the shares trade at a wider discount. He said liquidity management is the principal consideration in balancing buybacks and portfolio leverage. ARMOUR paid monthly common dividends of $0.24 per share, or $0.72 for the quarter. The company said it expects to pay a $0.24 cash dividend on Oct. 29 to shareholders of record on Oct. 15, and declared another $0.24 dividend payable Nov. 27 to shareholders of record on Nov. 16. Ulm said recent declines in the company's stock price and book value had created an "unusually high" dividend yield at current market prices. He said management believes earnings available for distribution should be in the range of the dividend in the coming quarter, while emphasizing that the company does not provide forward guidance. Co-Chief Investment Officer Desmond Macauley said leverage was 7.9 times as of Oct. 19, excluding Treasury long positions and with adjustments for expected paydowns. He said the company was comfortable at that level but retained capacity to add leverage when there is greater clarity on the macroeconomic and inflation outlook. Management also said it expects the underlying Agency MBS supply-and-demand backdrop to remain supportive. Ulm noted that elevated mortgage rates have constrained mortgage originations and net Agency MBS supply. The company believes Fannie Mae and Freddie Mac may have resumed purchases during September's volatility and could serve as potential buyers at wider spreads, though official holdings data remained pending. Macauley said ARMOUR continues to use robust liquidity stress testing based on extreme scenarios, including COVID-era conditions, and did not change those tests following September's market volatility. He said the company did not need to sell assets because of liquidity pressures. ARMOUR Residential REIT, Inc is a real estate investment trust that invests primarily in residential mortgage-backed securities. Its portfolio generally consists of securities issued or guaranteed by U.S. government-sponsored enterprises, including Fannie Mae and Freddie Mac, or by U.S. government agencies such as Ginnie Mae. The company invests in a range of agency mortgage securities, including fixed-rate and adjustable-rate mortgage pass-through securities, collateralized mortgage obligations, specified pools and to-be-announced securities. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ARMOUR Residential REIT Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Armour Residential REIT (ARR) came out with quarterly earnings of $0.71 per share, missing the Zacks Consensus Estimate of $0.73 per share. This compares to earnings of $0.72 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -2.74%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.69 per share when it actually produced earnings of $0.72, delivering a surprise of +4.35%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Armour Residential REIT, which belongs to the Zacks REIT and Equity Trust industry, posted revenues of $83.74 million for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 3.64%. This compares to year-ago revenues of $38.52 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Armour Residential REIT shares have lost about 28.3% since the beginning of the year versus the S&P 500's gain of 12.7%. While Armour Residential REIT has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Armour Residential REIT was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.73 on $84.1 million in revenues for the coming quarter and $2.93 on $312.4 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust is currently in the bottom 18% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, KKR Real Estate Finance (KREF), has yet to report results for the quarter ended September 2026. The results are expected to be released on October 28. This real estate finance company is expected to post quarterly earnings of $0.06 per share in its upcoming report, which represents a year-over-year change of +300%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. KKR Real Estate Finance's revenues are expected to be $15.5 million, down 38.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ARMOUR Residential REIT, Inc. (ARR) : Free Stock Analysis Report KKR Real Estate Finance Trust (KREF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

VERO BEACH, Florida, Oct. 21, 2026 (GLOBE NEWSWIRE) -- ARMOUR Residential REIT, Inc. (NYSE: ARR and ARR PRC) ("ARMOUR" or the "Company") today announced the Company's unaudited Q3 results and September 30, 2026 financial position. Q3 2026 Results - GAAP net loss related to common stockholders of $(327.0) million or $(2.26) per common share. - Reported book value per common share of $14.55 and declared common stock dividends of $0.24 per share per month, or $0.72 per share for Q3, resulting in a total economic return of (12.9)%, which is change in book value for the period plus common dividends paid for the quarter. - Net interest income of $83.7 million. - Distributable Earnings available to common stockholders of $102.3 million, which represents $0.71 per common share (see explanation of this non-GAAP measure on page 5). - Average interest income on interest earning assets of 4.99% and interest cost on average interest bearing liabilities of 3.89%. - Economic interest income was 4.90% less economic interest expense of 3.07% for an economic net interest spread of 1.83% (see explanation of this non-GAAP measure on page 7). - Raised $205.7 million of capital by issuing 12,366,481 shares of common stock through an at the market offering program. - Repurchased 363,700 shares of common stock under the Company's common stock repurchase authorization. - Raised $2.5 million of capital by issuing 123,374 shares of preferred stock through an at the market offering program. September 30, 2026 Financial Position - Liquidity, including cash and unencumbered securities, of $1.0 billion. - Portfolio totaled $21.3 billion, comprised of 94.0% Agency mortgage-backed securities ("MBS") and 2.2% U.S. Treasury Securities and 3.8% of To Be Announced ("TBA") Agency Securities. - Repurchase agreements, net totaled $19.4 billion; 49.8% were with ARMOUR affiliate BUCKLER Securities LLC. - Debt to equity ratio of 8.24:1 (based on repurchase agreements divided by total stockholders' equity). Implied leverage, including TBA Agency Securities and forward settling sales and unsettled purchases was 8.41:1. - Average debt to equity ratio for the three and nine months ending September 30, 2026 was 7.58:1 and 7.76:1. Average implied leverage, including TBA Agency Securities and forward settling sales and unsettled purchases, for the three and nine months ended September 30, 2026 was 7.94:1 and 8.06:1. - Interest Rate swap contracts totaled $17.0 billion of notional amount. Management's Remarks "Mortgage spreads widened late in the third quarter as interest rates rose and markets reacted to a more hawkish Federal Reserve. Despite this volatility, we remain constructive on the MBS market and believe the outlook remains favorable," said Scott Ulm, the Company's Chief Executive Officer. "Our approach remains consistent: we stress-test liquidity, employ systematic hedging strategies, and deploy capital opportunistically. Our portfolio is designed to attenuate downside risks and capitalize on attractive investment opportunities. We believe this disciplined strategy enables ARMOUR to navigate changing market conditions, support sustainable dividends, and protect long-term shareholder value." Company Update, October 19, 2026 - Common stock outstanding of 148,415,420 shares. - Liquidity, including cash and unencumbered securities, exceeded $897.0 million, this excludes MBS principal and interest receivable due in October 2026 which totaled $253.2 million. - Securities portfolio included approximately $20.8 billion of Agency MBS (including TBA Agency Securities) and U.S. Treasury Securities. - Debt to equity ratio (based on repurchase agreements divided by total stockholders' equity) was 7.99 to 1; Implied leverage, including TBA Agency Securities and forward settling sales and unsettled purchases was 8.21 to 1. Book value per common share consisted of: | | | | | | September 30, 2026 | | December 31, 2025 | | (in millions except per share) | | | | Stockholders' Equity | | | | Common stock, at par value - 148,415,420 and 111,915,020 shares outstanding, respectively | | $ | 0.1 | | | $ | 0.1 | Additional paid-in capital | | | 6,094.1 | | | | 5,446.2 | Cumulative distributions to stockholders | | | (2,961.6 | ) | | | (2,667.1 | ) Accumulated net loss | | | (781.9 | ) | | | (518.2 | ) Total Stockholders' Equity | | $ | 2,350.7 | | | $ | 2,261.0 | Less: liquidation preference - 7.00% Cumulative Redeemable Preferred C Stock - 7,675,968 and 7,047,832 shares outstanding | | | (191.9 | ) | | | (176.2 | ) Equity Attributable to Common Stockholders | | $ | 2,158.8 | | | $ | 2,084.8 | Book value per common share | | $ | 14.55 | | | $ | 18.63 | | | | | | | | | The major drivers of the change in the Company's financial position were: | | | | | | Q3 2026 | | Q2 2026 | | (in millions) | | | | Total Stockholders' Equity – Beginning | | $ | 2,579.1 | | | $ | 2,337.0 | Income | | | | Investment in securities: | | | | Loss on MBS | | $ | (1,165.1 | ) | | $ | (42.6 | ) Loss on U.S. Treasury Securities | | | (18.2 | ) | | | (10.4 | ) Gain (Loss) on TBA Agency Securities | | | (34.4 | ) | | | 1.9 | Gain on interest rate swaps | | | 515.1 | | | | 110.8 | Gain (Loss) on futures contracts | | | 311.7 | | | | (4.5 | ) Net Interest Income | | | 83.7 | | | | 76.8 | Total Expenses | | | (16.5 | ) | | | (17.2 | ) Net Income (Loss) | | $ | (323.7 | ) | | $ | 114.8 | Preferred stock dividends | | | (3.3 | ) | | | (3.3 | ) Common stock dividends | | | (105.4 | ) | | | (93.1 | ) Capital Activities | | | | Issuance of Preferred stock | | | 2.5 | | | | 4.1 | Issuance of common stock | | | 206.7 | | | | 219.6 | Common shares repurchased | | | (5.2 | ) | | | — | Total Stockholders' Equity – Ending | | $ | 2,350.7 | | | $ | 2,579.1 | | | | | | | | | Condensed Balance Sheet (unaudited) | | | | | | September 30, 2026 | | December 31, 2025 | | (in millions) | | | | Assets | | | | Cash and cash equivalents | | $ | 99.7 | | | $ | 63.3 | Cash collateral posted to counterparties | | | 34.2 | | | | 226.7 | Agency Securities, at fair value | | | 19,991.9 | | | | 19,417.6 | U.S. Treasury Securities, at fair value | | | 474.0 | | | | 598.1 | Receivable for unsettled sales | | | 411.8 | | | | — | Derivatives, at fair value | | | 1,360.2 | | | | 611.5 | Accrued interest receivable | | | 93.2 | | | | 86.2 | Prepaid and other | | | 2.9 | | | | 1.7 | Total Assets | | $ | 22,467.9 | | | $ | 21,005.1 | | | | | Liabilities | | | | Repurchase agreements, net | | $ | 19,379.1 | | | $ | 17,941.8 | Cash collateral posted by counterparties | | | 649.5 | | | | 419.4 | Payable for unsettled purchases | | | — | | | | 302.1 | Derivatives, at fair value | | | 24.4 | | | | 19.3 | Accrued interest payable- repurchase agreements | | | 58.3 | | | | 59.3 | Accounts payable and other accrued expenses | | | 5.9 | | | | 2.2 | Total Liabilities | | $ | 20,117.2 | | | $ | 18,744.1 | | | | | Stockholders' Equity | | | | 7.00% Cumulative Redeemable Preferred C Stock ($0.001 par value per share, $25.00 per share liquidation preference) | | $ | — | | | $ | — | Common stock ($0.001 par value per share) | | | 0.1 | | | | 0.1 | Additional paid-in capital | | | 6,094.1 | | | | 5,446.2 | Cumulative distributions to stockholders | | | (2,961.6 | ) | | | (2,667.1 | ) Accumulated net loss | | | (781.9 | ) | | | (518.2 | ) Total Stockholders' Equity | | | 2,350.7 | | | | 2,261.0 | Total Liabilities and Stockholders' Equity | | $ | 22,467.9 | | | $ | 21,005.1 | | | | | | | | | Non-GAAP Financial Measures Distributable Earnings Distributable Earnings is a non-GAAP measure defined as net interest income plus TBA Drop Income adjusted for the net coupon effect of interest rate swaps and futures contracts minus net operating expenses. Distributable Earnings is based on the historical cost basis of our Agency Securities, interest rate swaps and futures contracts. Distributable Earnings differs, potentially significantly, from net interest income and from net income (loss) (which includes realized gains and losses and market value adjustments). For a portion of its Agency Securities the Company may enter into TBA forward contracts for the purchase or sale of Agency Securities at a predetermined price, face amount, issuer, coupon and stated maturity on an agreed-upon future date, but the particular Agency Securities to be delivered are not identified until shortly before the TBA settlement date. The Company accounts for TBA Agency Securities as derivative instruments if it is reasonably possible that it will not take or make physical delivery of the Agency Securities upon settlement of the contract. The Company may choose, prior to settlement, to move the settlement of these securities out to a later date by entering into an offsetting short or long position (referred to as a "pair off"), net settling the paired off positions for cash, and simultaneously purchasing or selling a similar TBA Agency Security for a later settlement date. This transaction is commonly referred to as a "dollar roll." The Company accounts for TBA dollar roll transactions as a series of derivative transactions. Forward settling TBA contracts typically trade at a discount, or "Drop," to the regular settled TBA contract to reflect the expected interest income on the underlying deliverable Agency Securities, net of an implied financing cost, which would have been earned by the buyer if the contract settled on the next regular settlement date. When the Company enters into TBA contracts to buy Agency Securities for forward settlement, it earns this "TBA Drop Income," because the TBA contract is essentially equivalent to a leveraged investment in the underlying Agency Securities. The amount of TBA Drop Income is calculated as the difference between the spot price of similar TBA contracts for regular settlement and the forward settlement price on the trade date. The Company generally accounts for TBA contracts as derivatives and TBA Drop Income is included as part of the periodic changes in fair value of the TBA contracts that the Company recognizes currently in the Other Income (Loss) section of its Consolidated Statement of Operations. Distributable Earnings and Distributable Earnings per common share The Company believes that Distributable Earnings and Distributable Earnings per common share may be useful to investors because our Board of Directors may consider Distributable Earnings and Distributable Earnings per common share as part of its deliberations when determining the level of dividends on our common stock. Distributable Earnings and Distributable Earnings per common share tend to be more stable over time and this practice is designed to increase the stability of our common stock dividend from month to month. However, because Distributable Earnings is an incomplete measure of the Company's financial performance and involves significant differences from net interest income and net income (loss) computed in accordance with GAAP, Distributable Earnings should be considered as supplementary to, and not as a substitute for, the Company's net interest income and net income (loss) computed in accordance with GAAP as a measure of certain aspects of the Company's financial performance. The below table shows the reconciliation of the elements of Distributable Earnings and Distributable Earnings per common share to the Company's Net Interest Income, Net Income and Net Income per common share. | | Q3 2026 | | Q2 2026 | | ($ in millions except, share and per share) | | | | Net Interest Income | | $ | 83.7 | | | $ | 76.8 | TBA Drop and interest margin income | | | 3.4 | | | | 1.2 | Net interest income on interest rate swaps | | | 31.8 | | | | 33.3 | Net interest income on futures contracts | | | 3.2 | | | | 2.4 | Total Expenses | | | (16.5 | ) | | | (17.2 | ) Distributable Earnings | | $ | 105.6 | | | $ | 96.5 | Dividends on Preferred Stock | | | (3.3 | ) | | | (3.3 | ) Distributable Earnings available to common stockholders | | $ | 102.3 | | | $ | 93.2 | Distributable Earnings per common share | | $ | 0.71 | | | $ | 0.72 | | | | | Net Income (Loss) | | $ | (323.7 | ) | | $ | 114.8 | Items Excluded from Distributable Earnings: | | | | Loss on MBS | | | 1,165.1 | | | | 42.6 | Loss on U.S. Treasury Securities | | | 18.2 | | | | 10.4 | (Gain) Loss on TBA Agency Securities, less TBA Drop Income | | | 37.8 | | | | (0.7 | ) Gain on interest rate swaps | | | (483.3 | ) | | | (77.5 | ) (Gain) Loss on futures contracts | | | (308.5 | ) | | | 6.9 | Total items excluded | | $ | 429.3 | | | $ | (18.3 | ) Distributable Earnings | | $ | 105.6 | | | $ | 96.5 | Dividends on Preferred Stock | | | (3.3 | ) | | | (3.3 | ) Distributable Earnings available to common stockholders | | $ | 102.3 | | | $ | 93.2 | Distributable Earnings per common share | | $ | 0.71 | | | $ | 0.72 | | | | | Net Income (Loss) | | $ | (323.7 | ) | | $ | 114.8 | Dividends on Preferred Stock | | | (3.3 | ) | | | (3.3 | ) Net Income (Loss) available (related) to common stockholders | | $ | (327.0 | ) | | $ | 111.5 | Net Income (Loss) per common share | | $ | (2.26 | ) | | $ | 0.86 | Weighted average common shares outstanding | | | 144,563,620 | | | | 130,018,574 | | | | | | | | | Economic Interest Income, Economic Interest Expense, Economic Net Interest Income/Net Interest Spread and Economic Net Yield on Interest Earning Assets The Company believes that these non-GAAP measures, which include the effects of TBA drop income and net interest income (expense) on interest rate swaps and futures contracts, may be useful to investors because they reflect items that we consider in the management of the Company's investment portfolio and related funding. The Company believes that the inclusion in economic net interest income of interest rate swaps and futures contracts, which are recognized under GAAP in gain/loss on derivative instruments, is meaningful as interest rate swaps are the primary instrument the Company uses to economically hedge against fluctuations in the Company's borrowing costs and their inclusion is more indicative of the Company's total cost of funds than interest expense alone. It does not include all interest earning assets and interest bearing liabilities, such as cash collateral posted by counterparties. Accordingly, it is not a substitute for net interest income or net income (loss) determined in accordance with GAAP and should be considered as supplementary to such GAAP measures as a measure of certain aspects of the Company's financial performance. | | Q3 2026 | | | Q2 2026 | | (in millions) | | | | | (in millions) | | | | Income (Expense) | | Average Balance | | Average Rate | | | Income (Expense) | | Average Balance | | Average Rate | | | | | | | | | | | | | Interest Bearing Assets: | | | | | | | | | | | | | Agency Securities, Net of Amortization | | $ | 268.2 | | | $ | 21,346.5 | | 5.03 | % | | | $ | 254.4 | | | $ | 20,477.7 | | 4.97 | % Cash Equivalents & Treasury Securities | | | 6.1 | | | | 660.9 | | 3.67 | % | | | | 9.5 | | | | 941.9 | | 4.03 | % Total Interest Income/Average Interest Earning Assets | | | 274.3 | | | | 22,007.4 | | 4.99 | % | | | | 263.9 | | | | 21,419.6 | | 4.93 | % TBA drop income (loss)/Implied Average TBA Agency Securities | | | 3.5 | | | | 691.2 | | 2.01 | % | | | | 1.2 | | | | 395.6 | | 1.20 | % Economic interest income | | $ | 277.8 | | | $ | 22,698.6 | | 4.90 | % | | | $ | 265.1 | | | $ | 21,815.2 | | 4.86 | % | | | | | | | | | | | | | Interest Bearing Liabilities: | | | | | | | | | | | | | Repurchase Agreements | | $ | (190.6 | ) | | $ | 19,598.4 | | (3.89 | )% | | | $ | (187.1 | ) | | $ | 19,558.9 | | (3.83 | )% Total Interest Expense/Average Interest Bearing Liabilities | | | (190.6 | ) | | | 19,598.4 | | (3.89 | )% | | | | (187.1 | ) | | | 19,558.9 | | (3.83 | )% Implied Average TBA Funding Positions | | | — | | | | 694.7 | | — | % | | | | — | | | | 392.0 | | — | % Net interest income (expense) on interest rate swaps | | | 31.8 | | | | — | | 0.65 | % | | | | 33.3 | | | | — | | 0.68 | % Net interest income (expense) on futures contracts | | | 3.2 | | | | — | | 0.06 | % | | | | 2.4 | | | | — | | 0.05 | % Economic interest expense | | $ | (155.6 | ) | | $ | 20,293.1 | | (3.07 | )% | | | $ | (151.4 | ) | | $ | 19,950.9 | | (3.04 | )% Economic net interest income/net interest spread | | $ | 122.2 | | | | | 1.83 | % | | | $ | 113.7 | | | | | 1.82 | % Economic net yield on interest earning assets | | | | | | 2.15 | % | | | | | | | 2.08 | % | | | | | | | | | | | | | | | Conference Call As previously announced, the Company will provide an online, real-time webcast of its conference call with equity analysts covering Q3 2026 operating results on Thursday, October 22, 2026, at 8:00 a.m. (Eastern Time). The live broadcast will be available online and can be accessed at https://event.choruscall.com/mediaframe/webcast.html?webcastid=aRqGLlv9. To monitor the live webcast, please visit the website at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. An online replay of the event will be available on the Company's website at www.armourreit.com and continue for one year. Dividends ARMOUR paid monthly cash dividends of $0.24 per share of the Company's common stock for each month in Q3 2026. On October 29, 2026, a cash dividend of $0.24 per outstanding common share will be paid to holders of record on October 15, 2026. We have also declared a cash dividend of $0.24 per outstanding common share payable November 27, 2026 to holders of record on November 16, 2026. ARMOUR's Board of Directors will determine future common dividend rates based on an evaluation of the Company's results, financial position, real estate investment trust ("REIT") tax requirements, and overall market conditions as the quarter progresses. In order to maintain ARMOUR's tax status as a REIT, the Company is required to timely distribute substantially all of its ordinary REIT taxable income for the tax year. ARMOUR paid monthly cash dividends of $0.14583 per share of the Company's Series C Preferred Stock for each month in Q3 2026. On October 27, 2026, a cash dividend of $0.14583 per outstanding share of Series C Preferred Stock will be paid to holders of record on October 15, 2026. We have also declared cash dividends of $0.14583 per outstanding share of Series C Preferred Stock payable November 27, 2026 and December 28, 2026, to holders of record on November 15, 2026 and December 15, 2026, respectively. ARMOUR Residential REIT, Inc. ARMOUR invests primarily in fixed rate residential, adjustable rate and hybrid adjustable rate residential mortgage-backed securities issued or guaranteed by U.S. Government-sponsored enterprises or guaranteed by the Government National Mortgage Association. ARMOUR is externally managed and advised by ARMOUR Capital Management LP, an investment advisor registered with the Securities and Exchange Commission ("SEC"). Safe Harbor This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Additional information concerning these and other risk factors are contained in the Company's most recent filings with the SEC. All subsequent written and oral forward-looking statements concerning the Company are expressly qualified in their entirety by the cautionary statements above. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law. Additional Information Investors, security holders and other interested persons may find ARMOUR's most recent Company Update and additional information regarding the Company at the SEC's internet site at www.sec.gov, or the Company website at www.armourreit.com or by directing requests to: ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963, Attention: Investor Relations. Contact Gordon M. Harper, Chief Financial Officer, ARR, (772) 617-4340, [email protected]

ARMOUR Residential REIT has seen a mixed share price journey in recent years, which puts fresh focus on whether today's valuation is genuinely supported by its earnings power. With a recent pullback still hanging over the chart, investors are asking how well the current P/E lines up with the profits the mortgage REIT can actually generate. - Over the past 5 years the stock has fallen 42.3%, which puts extra weight on the question of how much of ARMOUR Residential REIT's earnings potential is already reflected in the current price. - The business relies on earning a spread between its mortgage assets and funding costs, so any change in that spread can directly influence how much profit is available to support the equity valuation. - Your read on ARMOUR Residential REIT is one view; the desks covering it have another. See what analysts think ARMOUR Residential REIT's shares could be worth. For investors, the debate is whether ARMOUR Residential REIT's recent share price still lines up cleanly with what its earnings justify today. If you want to stress test whether ARMOUR Residential REIT's earnings based valuation question shows up elsewhere in the market, compare it with companies in the 27 high quality undervalued stocks. The P/E ratio is a practical fit for ARMOUR Residential REIT because investors often anchor returns on the income the mortgage portfolio can reliably earn. ARMOUR trades on roughly 4.6x earnings, which is below both the Mortgage REITs industry average of about 7.7x and the peer group on roughly 5.2x. That points to a market that is pricing the shares more cautiously than many similar income focused vehicles. The fair value model, which adjusts the expected multiple for ARMOUR Residential REIT's profitability profile, balance sheet and risk characteristics, implies a higher P/E than the current 4.6x level. On this framework the stock screens undervalued on earnings, although the low multiple also captures investor questions about how stable those profits will be through different rate and spread conditions. For a clearer sense of how large that gap is and whether it looks justified by ARMOUR Residential REIT's fundamentals, compare the current multiple with the detailed model output in. Explore the numbers behind ARMOUR Residential REIT's P/E valuation. Narratives for ARMOUR Residential REIT pick up where this valuation puzzle leaves off and outline which expectations for future growth, margins and earnings would need to hold for the shares to be worth meaningfully more or less than today. Each scenario links a fair value estimate to a specific path of potential catalysts and risks, so you can track over time which version of ARMOUR Residential REIT's story appears to be taking shape on Simply Wall St's Community page. One of the top community narratives on ARMOUR Residential REIT: 21% undervalued "Improving access to equity capital, as evidenced by successful bought deals and ATM issuance, positions ARMOUR to opportunistically scale into attractive spreads..." Discover why this Narrative puts ARMOUR Residential REIT at 21% undervalued. Before you decide how ARMOUR Residential REIT fits into your watchlist, it is worth knowing that recent management share transactions have triggered a fresh signal in our checks, with the individuals, size and possible messages left for you to review. See the recent insider selling flagged for ARMOUR Residential REIT. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ARR. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Delivered a 4.8% total economic return as mortgage option-adjusted spreads tightened 7 basis points, offsetting a bear-flattening U.S. Treasury curve. Attributed sector resilience to favorable supply-demand technicals, specifically negative net issuance of Fannie Mae and Freddie Mac securities and strong bond fund inflows. Maintained a neutral interest rate view with net balance sheet duration near zero, reflecting a shift from prior quarters to protect against potential rate volatility. Prioritized specified pools with favorable prepayment characteristics, which now represent over 95% of the mortgage-backed securities portfolio. Leveraged the broker-dealer affiliate, BUCKLER, for attractive overnight and shorter-dated financing as term funding premiums increased. Viewed the GSEs' retained portfolios as a strategic backstop, noting over $100 billion in remaining capacity to support stable spreads if market valuations widen. Assumes the Federal Reserve will remain on hold through the fall, though management remains mindful of potential rate hikes if energy-driven inflation persists. Expects prepayment speeds to stabilize around 8.8 CPR in the current rate environment, down from the second quarter average of 11.4 CPR. Anticipates a range-bound market environment through the summer, supported by low supply and continued demand for Agency MBS as an alternative to corporate credit. Maintains a discipline-first approach to capital deployment until the Federal Reserve's new leadership framework and reaction function are better understood. Projects that midterm elections will likely prevent any disruptive balance sheet proposals regarding the repo or Agency MBS markets in the near term. Raised approximately $218.7 million in common equity during Q2, utilizing the ATM program to lower average costs by spreading fixed expenses over a larger capital base. Noted a fifth consecutive quarter of growth in both assets and the capital base, with over $1.3 billion in new mortgage assets added since April. Maintained a strong liquidity position of over $1.2 billion, representing nearly 50% of total equity, despite higher haircut requirements on longer-duration hedges. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management identified static returns in the mid-teens for 30-year 5% to 6% coupons, assuming 8 turns of leverage and neutral duration. Noted that a 10 basis point tightening in spreads could add an additional 4% to 5% to total return through book value gains. Specified pools are viewed as fully valued, leading the firm to increase tactical TBA positions where 'specialness' has returned to the market. Management continues to favor specified pools for long-term book value stability, focusing on liquid assets with lower loan balance stories. The firm is rotating out of 5-year CMBS pools into 10-year positions to capture better convexity and take advantage of negative swap spreads. CMBS serves as a substitute for more expensive specified pools while allowing for a more targeted approach to the long end of the yield curve. The firm favors OIS and SOFR pay-fixed swaps for shorter and intermediate maturities where spread volatility is lower. Management indicated they might increase duration and position for a 'bull steepener' if inflation begins to normalize, though they are not at that point yet.

This article first appeared on GuruFocus. Total Economic Return: 4.8% for the second quarter. GAAP Net Income: $111.5 million, or $0.86 per common share. Net Interest Income: $76.8 million. Distributable Earnings: $93.2 million, or $0.72 per common share. Capital Raised: $218.7 million from common stock and $4.1 million from preferred stock. Common Stock Dividends: $0.24 per share per month, totaling $0.72 for the quarter. Quarter-End Book Value: $17.53 per common share, up 0.6% from March 31, 2026. Portfolio Size: Over $22 billion, with $1.3 billion of new mortgage assets added. Aggregate Portfolio Prepayments: Averaged 11.4 CPR in Q2, declining to 8.8 CPR in July. Implied Leverage: Around 7.5 turns. Liquidity Position: Over $1.2 billion, nearly 50% of total equity. Warning! GuruFocus has detected 4 Warning Sign with ARR. Is ARR fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. ARMOUR Residential REIT Inc (NYSE:ARR) delivered a strong total economic return of 4.8% for the second quarter of 2026. The company reported a GAAP net income of $111.5 million, or $0.86 per common share, indicating solid profitability. ARMOUR raised approximately $218.7 million of capital through common stock issuance, enhancing its capital base. The company maintained a stable dividend payout of $0.24 per common share per month, totaling $0.72 for the quarter. ARMOUR's asset portfolio grew for the fifth consecutive quarter, reaching over $22 billion, demonstrating consistent expansion. The macroeconomic environment, including geopolitical uncertainty and a flatter yield curve, poses potential challenges for ARMOUR's sector. ARMOUR's estimated book value as of July 20, 2026, was slightly lower at $17 per common share, reflecting the impact of dividend accruals. The company faces potential risks from firmer inflation and a more hawkish Federal Reserve, which could widen mortgage spreads. ARMOUR's liquidity as a percentage of total equity has been on a downtrend for the last couple of quarters, raising concerns about financial flexibility. The company remains cautious about raising preferred stock capital due to low trading volumes and unattractive pricing. Q: Scott, can you discuss your outlook for capital raising and how it ties to your expectations for range-bound spreads and associated risks? A: Scott Ulm, CEO: We approach capital by evaluating opportunities and the potential to lower costs by spreading them over a larger capital base. Our marginal fee is 75 basis points, so raising capital reduces our average costs. We consider these factors to determine market opportunities and execution strategies. Q: What are you seeing in terms of incremental returns as you raise and deploy capital in today's market? A: Desmond Macauley, Co-Chief Investment Officer: We see static returns in the mid-teens for certain investments, assuming about 8 turns of leverage and hedging with swaps. If spreads tighten by 10 basis points, it could add another 4% to 5% to our total return through book value. We expect spreads to stay range-bound near term but are constructive on the market long-term. Q: How are you thinking about specified pools versus TBAs today, and has the relative value of prepayment protection changed? A: Sergey Losyev, Co-Chief Investment Officer: Specified pools are fully valued versus TBAs, which have seen some specialness return but remain volatile. We focus on finding good convexity collateral for long-term portfolio value, concentrating on specified pools with favorable prepayment characteristics. Q: Can you discuss your approach to rate hedging given the flattening yield curve and potential Fed hikes? A: Desmond Macauley, Co-Chief Investment Officer: We maintain a flat duration profile and favor adding swaps in the front end of the curve due to less spread volatility. For longer durations, we use a balanced mix of swaps, treasury futures, and treasuries. We may increase duration positioning if inflation normalizes. Q: Could you provide insight into your leverage position and whether you might increase it if inflation normalizes? A: Desmond Macauley, Co-Chief Investment Officer: Our leverage targets consider spreads, macroeconomic environment, and liquidity stress tests. If spreads widen temporarily, we might increase leverage, expecting volatility to decline and spreads to tighten. Currently, we are comfortable with our leverage, considering market risks and the Fed's reaction function. For the complete transcript of the earnings call, please refer to the full earnings call transcript.