🧾 What This Document Is 📄

This document is an 8-K filing, which is a significant report used by public companies to announce major events that investors should know about quickly. It serves as a detailed announcement of Armour Residential REIT, Inc.'s (ARR) unaudited financial results for the first quarter (Q1) of 2026, covering the period up to March 31, 2026.

You should expect to find a deep dive into the company's quarterly financial performance, its current financial health, and the structural details of its investment portfolio. Because the company is a REIT (Real Estate Investment Trust), much of the filing focuses on its interest rate exposure, its dividends, and how it measures its returns.

👉 Headline: While the company reported a GAAP net loss for Q1 2026, it raised substantial capital through stock issuance and maintained a highly liquid portfolio, demonstrating management's commitment to its dividend strategy.

🏢 What The Company Does 🏰

In simple terms, Armour Residential REIT is a company that invests primarily in mortgage-backed securities (MBS). MBS are bonds secured by pools of mortgages. Instead of owning physical properties, Armour manages financial assets related to real estate loans.

The company's core business involves investing in fixed-rate, adjustable-rate, and hybrid adjustable-rate residential mortgage-backed securities. These securities are often issued or guaranteed by U.S. Government-sponsored enterprises or the Government National Mortgage Association (Fannie Mae/Freddie Mac).

👉 Scale: The company's portfolio is large, totaling $21.1 billion (as of March 31, 2026). The portfolio is heavily concentrated in Agency mortgage-backed securities (92.5%).

💰 Quarterly Financial Performance 📈

This section covers the primary financial outcomes for Q1 2026, presenting both Generally Accepted Accounting Principles (GAAP) and specialized non-GAAP metrics. It’s critical to note that the GAAP measures show the company's legally recognized profit, while the non-GAAP measures are how management analyzes operational strength for dividend purposes.

GAAP Net Loss vs. Distributable Earnings:

• GAAP Net Loss: The GAAP net loss related to common stockholders was $(58.0)$ million, or $(0.49)$ per common share. This means that under strict accounting rules, the company recorded a loss in the quarter.
• Distributable Earnings: This non-GAAP measure—which excludes certain realized gains and losses—was $$90.5$ million, translating to $$0.76$ per common share. Management uses this metric because it is designed to be more stable over time and is used by the Board of Directors when determining dividend levels.

Interest Rate Metrics:

• Interest Income vs. Expense: The company reported a net interest income of $$70.7$ million. The average interest income on interest-earning assets was 4.88%, while the average interest cost on liabilities was 3.84%.
• Economic Interest Spread: Management tracked an "Economic net interest spread" of 1.84%. This measure is designed to reflect the company's total cost of funds more accurately than just standard interest expense alone.

💰 Financial Position as of March 31, 2026 🏛️

This section provides a snapshot of the company's balance sheet—what it owns (assets) and what it owes (liabilities) at the end of the first quarter.

Liquidity and Portfolio Size:

• Liquidity: The company maintained strong liquidity, including cash and unencumbered securities, totaling $$1.1$ billion.
• Portfolio Composition: The total portfolio value stood at $$21.1$ billion. This portfolio was composed of $92.5%$ Agency MBS, $4.7%$ U.S. Treasury Securities, and $2.8%$ of To Be Announced ("TBA") securities.

Leverage and Debt:

• Book Value: The book value per common share was $$17.42$, which represented a decline of $6.5%$ compared to the $$18.63$ recorded at the end of 2025.
• Debt to Equity Ratio: The debt to equity ratio (based on repurchase agreements divided by total stockholders’ equity) was $7.90:1$. This is a high ratio, indicating the company is highly leveraged, meaning it relies heavily on debt to finance its assets.

💸 Capital Actions and Capital Raising 💵

The company was highly active in fundraising and capital structure management during Q1 2026. Management actively raised capital to support its operations and dividends.

Capital Raises:

• The company raised $$215.3$ million of capital by issuing $11,820,056$ shares of common stock through an at-the-market offering program.
• Additionally, it raised $$6.4$ million of capital by issuing $306,823$ shares of preferred stock via a similar offering program.

Stock Management:

• The company repurchased $125,000$ shares of common stock using its existing repurchase authorization.
• The ongoing capital generation was robust, with cumulative distributions to stockholders (reflecting dividends paid) increasing to $$2,756.5$ million (from $$2,667.1$ million at the end of 2025).

📑 Detailed Financial Accounting Measures ⚙️

The filing provides several detailed non-GAAP metrics that give insight into the complex mechanics of the REIT's investments, particularly concerning derivatives and structured funding.

Understanding TBA Securities:

• The REIT uses special derivatives called TBA (To Be Announced) securities. The filing explains that when the company enters into a forward contract to buy Agency Securities, it earns "TBA Drop Income."
• This TBA Drop Income is calculated as the difference between the spot price and the forward settlement price, and management includes this in its Distributable Earnings because it’s considered an equivalent leveraged investment.

Economic Interest Income and Expense:

• Management calculated an "Economic interest income" of $$250.0$ million for Q1 2026. This figure combines the core interest income with the effects of interest rate swaps and futures contracts.
• The "Economic interest expense" was $$141.0$ million. The resulting "Economic net interest income/net interest spread" was $1.84%$. This measure is considered by management to be the most holistic view of their true borrowing costs.

🗣️ Management’s Strategic Outlook and Comments 💼

Scott Ulm, the Company's CEO, addressed the market environment and the company's strategy in his remarks. The tone is one of resilience, emphasizing strategic deployment of capital despite market volatility.

CEO Commentary:

• Scott Ulm stated: "Our approach remains to grow and deploy capital thoughtfully during spread dislocations, maintain robust liquidity, and dynamically adjust hedges for disciplined risk management."
• He also added: "We continue to prioritize maintaining common share dividends appropriate for the intermediate term rather than focusing on short-term market fluctuations. We are confident in our positioning, strategy, and ability to deliver value for shareholders."
• Why it matters: This commentary signals that management views short-term market turmoil as an opportunity to act strategically, prioritizing stable shareholder returns (dividends) over reacting to day-to-day market swings.

💰 Dividend and Future Payments 🗓️

The REIT operates on a systematic dividend schedule for both common and preferred shareholders, providing predictability to its income streams.

Common Stock Dividends:

• The company paid monthly cash dividends of $$0.24$ per share for each month in Q1 2026.
• The Board of Directors will determine future common dividend rates based on a comprehensive review of results, REIT tax requirements, and market conditions.

Preferred Stock Dividends:

• Armour paid monthly cash dividends of $$0.14583$ per share of the Series C Preferred Stock for each month in Q1 2026.
• Dividend payments are scheduled for future dates:
  • Common Stock: A dividend of $$0.24$ will be paid on April 29, 2026, to record holders on April 15, 2026.
  • Preferred Stock: Payments are scheduled for May 27, 2026, and June 29, 2026.

📞 Key Dates and Contacts ℹ️

For investors looking for more information, the filing provided clear instructions on follow-up communications and resources.

• Conference Call: The Company will hold a conference call covering Q1 2026 results on Thursday, April 23, 2026, at 9:00 a.m. (Eastern Time).
• Online Access: The webcast link provided is: https://event.choruscall.com/mediaframe/webcast.html?webcastid=CdUUe5Qw.
• Investor Relations Contact: For further inquiries, investors can contact Gordon M. Harper, Chief Financial Officer, at (772) 617-4340 or [email protected].

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🧠 The Analogy 🏗️

Think of Armour REIT as a sophisticated financial vault manager. Instead of owning physical cash and checking accounts, the manager's vault is filled with many different types of loans (mortgage-backed securities) issued by homeowners. The manager doesn't get paid from a single source; they get paid from the interest collected by thousands of different loan payments. When the manager makes a bet (like entering a forward contract), they are essentially locking in a predictable interest rate, which helps smooth out the uneven cash flow from the different loans and helps them calculate a stable, reliable dividend payment, even if the overall market interest rates jump around.

🧩 Final Takeaway ✨

Armour successfully generated over $$90$ million in Distributable Earnings for Q1 2026, allowing it to maintain its dividends and raise significant capital. However, its high leverage (debt to equity of $7.90:1$) and dependency on complex financial instruments highlight its sensitivity to fluctuating interest rates and market conditions.