ARMOUR Residential REIT (NYSE:ARR) reported what management repeatedly characterized as a strong fourth quarter of 2025, citing tightening mortgage-backed securities (MBS) spreads, lower MBS volatility, and a lower interest-rate environment as key drivers of performance. Executives also said positive market momentum observed in the fourth quarter had continued into the first quarter of 2026.
Fourth-quarter results and book value update
Chief Financial Officer Gordon Harper said ARMOUR generated a total economic return of 10.63% for the quarter. GAAP net income available to common stockholders was $208.7 million, or $1.86 per share, and net interest income was $50.4 million.
Quarter-end book value was $18.63 per common share, up 6.5% from September 30. Management also provided a more recent estimate: Harper said the company’s “current available estimate” of book value as of Tuesday, February 17 was $18.37 per common share, reflecting payment of the January dividend and accrual of the full February dividend payable February 27, 2026.
Capital raising and dividend declarations
Harper said ARMOUR raised about $3.8 million during the quarter through issuance of roughly 183,000 shares of preferred stock via an at-the-market (ATM) program. Separately, through February 11, 2026, ARMOUR raised about $138 million through its common stock ATM program by issuing about 7.5 million shares, which Harper described as “mildly dilutive.” The company also issued $4.8 million of preferred stock (about 230,000 shares) under its preferred ATM program through that same February date.
ARMOUR paid monthly common dividends of $0.24 per share (totaling $0.72 for the quarter). The company said it aims to pay “an attractive dividend” that is “appropriate in the context and stable over the medium term.” Management noted the company paid a $0.24 common dividend on January 29 to holders of record as of January 15, and declared $0.24 common dividends payable February 27 and March 30 to holders of record on February 17 and March 16, respectively.
Portfolio positioning and market outlook
CEO Scott Ulm said the portfolio grew for a second consecutive quarter, increasing by more than 10% from the end of the third quarter of 2025, which he attributed to roughly 22 basis points of spread tightening while maintaining “moderate leverage.” He said ARMOUR’s mortgage assets total over $20 billion and described the company’s capital liquidity position as about 54% of total shareholders’ equity as of the end of January.
Ulm reiterated management’s view that agency MBS became a “high conviction opportunity” starting with the Federal Reserve’s easing cycle in the third quarter of 2024, and he said the backdrop for 2026 had turned “materially more supportive.” While noting that MBS spreads had tightened meaningfully so far in 2026, he said the market still benefits from declining rate volatility and easing funding costs, supported by the Fed’s efforts to lower rates and maintain ample banking liquidity.
Ulm also pointed to supply-and-demand dynamics as favorable, citing an administration focus on lowering mortgage spreads and an expectation that Fannie Mae and Freddie Mac will support that objective through the FHFA’s $200 billion MBS purchase mandate. He said net issuance of conventional MBS was negative in the fourth quarter, which he said helped revive returns in the TBA roll market.
Duration, leverage, and coupon allocation
Co-Chief Investment Officer Desmond Macauley said ARMOUR’s most recent net balance sheet duration was 0.14 years, with a modest positive bias to the front end of the curve. Implied leverage, excluding Treasury longs, was 7.9 times. He said the portfolio remains nearly 100% agency MBS, agency CMBS or DUS, and U.S. Treasuries used to target specific yield-curve exposures.
Macauley said the company added over $3 billion of MBS pools and DUS across the fourth quarter and early first quarter, and that its purchase mix shifted as rates and spreads moved. Early in the fourth quarter, management determined it was attractive to overweight premium dollar MBS; later, anticipating GSE purchases concentrating in near-par coupons, ARMOUR added over $1 billion of 4.5- and 5-coupon MBS ahead of an early-January announcement referenced on the call.
As “belly” coupons tightened to “historically rich levels,” Macauley said the company shifted toward lower coupons and seasoned collateral. He also said that nearly 30% of assets are in prepayment-protected agency CMBS pools and discount MBS, and that specified MBS pools with some form of prepayment protection comprise over 92% of the portfolio.
Funding conditions, prepayments, and Q&A highlights
Macauley said aggregate portfolio prepayments averaged 11.1 CPR through fourth-quarter 2025 and first-quarter 2026 to date, versus 8.1 CPR in the third quarter. He said that despite tighter mortgage spreads, the 30-year mortgage rate remained in a 6% to 6.3% range, recently shifting toward the low end, and warned that a sustained move below 6% could trigger faster refinancing in certain coupons.
On funding, Macauley said 2026 repo conditions improved materially versus the prior year, with repo rates averaging roughly SOFR plus 15 basis points. He said ARMOUR finances the portfolio across 23 active repo counterparties, with about 80% of repo principal financed at a 3% haircut or lower, and a weighted average haircut of about 2.75%. He added that Buckler Securities accounts for roughly 40% to 60% of ARMOUR’s repo financing.
In response to an analyst question about incremental returns relative to the dividend, Macauley said the levered yield on 30-year 5s (described as the production coupon) was around the mid-teens, “about 15%,” under an example framework assuming eight turns of leverage and hedging to 0.5 duration over roughly three months. He said an additional 10 basis points of OAS tightening could add about 4% to return, and another 50 basis points of curve steepening could add around 1%. He also said ARMOUR’s marginal common equity hurdle rate was about 16%, citing the common dividend and a 75-basis-point management fee on new equity.
Asked about the outlook for balance-sheet growth, Ulm said it would depend on both capital-raising opportunities and investment opportunities, describing the company as “discriminat[ing] a fair amount” in determining what is attractive. Management also said it launched a new investor presentation on its website.
About ARMOUR Residential REIT (NYSE:ARR)
ARMOUR Residential REIT (NYSE:ARR) is a mortgage real estate investment trust that was formed in 2008 to acquire and manage a portfolio of residential mortgage-backed securities (RMBS). The company’s investments are primarily agency-sponsored and agency-guaranteed RMBS issued by U.S. government-sponsored enterprises, along with credit risk transfer securities and select non-agency residential and multifamily RMBS. By focusing on high-quality mortgage assets, ARMOUR Residential REIT seeks to generate stable income and preserve capital through diversified exposure to the U.S.
