Armour Residential REIT, Inc.

Previous wording

References to “we,” “us,” “our,” or the “Company” are to ARMOUR Residential REIT, Inc. (“ARMOUR”) and its subsidiaries. References to “ACM” are to ARMOUR Capital Management LP, a Delaware limited partnership. ARMOUR owns a 10.8% equity interest in BUCKLER Securities LLC ("BUCKLER"), a Delaware limited liability company and a FINRA-regulated broker-dealer, controlled by ACM. Refer to the Glossary of Terms for definitions of capitalized terms and abbreviations used in this report.

Current wording

References to “we,” “us,” “our,” or the “Company” are to ARMOUR Residential REIT, Inc. (“ARMOUR”) and its subsidiary. References to “ACM” are to ARMOUR Capital Management LP, a Delaware limited partnership. ARMOUR owns a 10.8% equity interest in BUCKLER Securities LLC ("BUCKLER"), a Delaware limited liability company and a FINRA-regulated broker-dealer, controlled by ACM. Refer to the Glossary of Terms for definitions of capitalized terms and abbreviations used in this report.

Previous wording

At March 31, 2025 and December 31, 2024, we invested in MBS, issued or guaranteed by a U.S. GSE, such as Fannie Mae, Freddie Mac, or a government agency such as Ginnie Mae (collectively, Agency Securities). Our Agency Securities consist primarily of fixed rate loans. Our charter permits us to invest in MBS backed by fixed rate, hybrid adjustable rate and adjustable rate home loans as well as unsecured notes and bonds issued by GSEs, U.S. Treasuries and money market instruments.

Current wording

At June 30, 2025, our investments in securities included MBS, issued or guaranteed by a U.S. GSE, such as Fannie Mae, Freddie Mac, or a government agency such as Ginnie Mae (collectively, Agency Securities) and U.S. Treasury Securities. At December 31, 2024, we invested solely in MBS. Our investment in securities consist primarily of fixed rate loans. Our charter permits us to invest in MBS backed by fixed rate, hybrid adjustable rate and adjustable rate home loans as well as unsecured notes and bonds issued by GSEs, U.S. Treasuries and money market instruments.

Previous wording

The current U.S. administration has recently introduced tariffs on imports from a broad set of countries, including Canada, Mexico, European Union member states, Japan and China. In response to these tariffs, global trading partners have or are likely to impose their own tariffs. Such U.S. tariffs and responsive tariffs have increased the volatility of financial markets and interest rates. ARMOUR believes that it has acted to mitigate risk, moderate leverage and maximize liquidity.

Current wording

During the six months ended June 30, 2025, the current U.S. administration has introduced tariffs on imports from a broad set of countries, including Canada, Mexico, European Union member states, Japan and China. In response to these tariffs, global trading partners have imposed or may impose their own tariffs. Such U.S. tariffs and responsive tariffs have increased the volatility of financial markets and interest rates. ARMOUR believes that it has acted to mitigate risk, moderate leverage and maximize liquidity. The Company expects that it will remain focused on prioritizing liquidity through this period of increased market volatility and financial risks. The Company has met all of its obligations to repurchase agreement counterparties in a timely manner, while managing the risk of its assets and hedging portfolios. See Item 1A. "Risk Factors" for further discussion of the possible impact of tariffs on our business.

Previous wording

At the Federal Reserve Open Market Committee ("FOMC") meetings on January 29, 2025 and March 19, 2025, the Fed maintained the target range for the Federal Funds Rate at 4.25% to 4.50%. At the March 2025 meeting, the Fed stated that inflation remains somewhat elevated while economic activity has continued to expand at a solid pace, with the unemployment rate stabilizing at a low level in recent months and labor market conditions remaining solid. The Fed cautioned, however, that uncertainty around the economic outlook has increased, and stated that in considering the extent and timing of additional adjustments to the target range for the Federal Funds Rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks.

Current wording

At the Federal Reserve Open Market Committee meetings on May 7, 2025 and June 18, 2025, the Fed maintained the target range for the Federal Funds Rate at 4.25% to 4.50%. At the June 2025 meeting, the Fed stated that inflation remains somewhat elevated while economic activity has continued to expand at a solid pace, with the unemployment rate remaining low and labor market conditions remaining solid. The Fed cautioned, however, that uncertainty around the economic outlook remains elevated, and stated that in considering the extent and timing of additional adjustments to the target range for the Federal Funds Rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks.

Previous wording

The Fed also stated that it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, but beginning in April, it will slow the pace of decline of its securities holdings. It will reduce the monthly redemption cap on its Treasury securities to $5 billion from $25 billion, while maintaining the monthly redemption cap on its agency debt and agency mortgage-backed securities at $35 billion. Beginning on April 1, 2025, the Fed will roll over at auction the amount of principal payments from its holdings of Treasury securities maturing in each calendar month that exceeds a cap of $5 billion per month. It will also reinvest the amount of principal payments from its holdings of agency debt and agency mortgage-backed securities received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities.

Current wording

The Fed also stated that it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Effective June 20, 2025, the Fed will roll over at auction the amount of principal payments from its holdings of Treasury securities maturing in each calendar month that exceeds a cap of $5 billion per month. It will also reinvest the amount of principal payments from its holdings of agency debt and agency mortgage-backed securities received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities.

Previous wording

Our borrowings in the repurchase market have closely tracked the Federal Funds Rate, and SOFR. Traditionally, a lower Federal Funds Rate has indicated a time of increased net interest spread and higher asset values. Volatility in these rates and divergence from the historical relationship among these rates could negatively impact our ability to manage our securities portfolio. If rates were to increase as a result, our net interest spread and the value of our securities portfolio might suffer as a result. Our derivatives are either Federal Funds Rate or SOFR-based interest rate swap contracts (see Note 7 to the consolidated financial statements).

Current wording

Our borrowings in the repurchase market have closely tracked the Federal Funds Rate and SOFR. Traditionally, a lower Federal Funds Rate has indicated a time of increased net interest spread and higher asset values. Volatility in these rates and divergence from the historical relationship among these rates could negatively impact our ability to manage our securities portfolio. If rates were to increase, our net interest spread and the value of our securities portfolio might suffer as a result. Our derivatives are either Federal Funds Rate or SOFR-based interest rate swap contracts (see Note 7 to the consolidated financial statements).

Previous wording

We may reduce our mortgage spread exposure by entering in to certain TBA Agency Securities short positions. The TBA short positions may represent different securities and maturities than our MBS and TBA Agency Security long positions, and accordingly, may perform somewhat differently. While we expect our TBA Agency Securities short positions to perform well compared to our related mortgage securities, there can be no assurance as to their relative performance.

Current wording

We may reduce our mortgage spread exposure by entering into certain TBA Agency Securities short positions. The TBA short positions may represent different securities and maturities than our MBS and TBA Agency Security long positions, and accordingly, may perform somewhat differently. While we expect our TBA Agency Securities short positions to perform well compared to our related mortgage securities, there can be no assurance as to their relative performance.

Previous wording

The following table details the factors impacting our net interest income for three months ended March 31, 2025 and March 31, 2024.

Current wording

The following table details the factors impacting our net interest income for three and six months ended June 30, 2025 and June 30, 2024.

Previous wording

Three Months Ended March 31, 2025 vs. Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025 vs. Three and Six Months Ended June 30, 2024

Previous wording

◦The change in fair value of the securities was $211,430 for the three months ended March 31, 2025 compared to $(135,123) for the three months ended March 31, 2024.

Current wording

◦The change in fair value of the securities was $28,680 and $240,110 for the three and six months ended June 30, 2025 compared to $(14,989) and $(150,112) for the three and six months ended June 30, 2024.

Previous wording

◦Sales of our Agency Securities, trading resulted in realized gains (losses) of $(3,173) and $(2,626) for the three months ended March 31, 2025 and March 31, 2024, respectively.

Current wording

◦Sales of our Agency Securities, trading resulted in realized gains (losses) of $(12,135) and $(15,308) and $(97,881) and $(100,507) for the three and six months ended June 30, 2025 and June 30, 2024, respectively.

Previous wording

◦During the three months ended March 31, 2025, and March 31, 2024, we sold $234,204 and $347,896 (including $35,948 of receivables for unsettled sales), respectively, of Agency Securities, trading.

Current wording

◦During the three and six months ended June 30, 2025, and June 30, 2024, we sold $992,009 and $1,226,213 and $3,154,026 and $3,537,870, respectively, of Agency Securities, trading.

Previous wording

◦During the three months ended March 31, 2024, we sold short $97,004 of U.S. Treasury Securities, resulting in losses of $(4,211) for the three months ended March 31, 2024.

Current wording

◦During the three and six months ended June 30, 2024, we sold short $772,253 and $869,257 of U.S. Treasury Securities, resulting in losses of $6,673 and $2,462 for the three and six months ended June 30, 2024.

Previous wording

◦Interest rate swap contracts' aggregate notional balance was $8,382,000 at March 31, 2025 and $7,232,000 at December 31, 2024.

Current wording

◦Interest rate swap contracts' aggregate notional balance was $10,259,000 at June 30, 2025 and $7,232,000 at December 31, 2024.

Previous wording

◦Our TBA Agency Securities aggregate notional balance was $900,000 at March 31, 2025 and $0 at December 31, 2024.

Current wording

◦Our TBA Agency Securities aggregate notional balance was $300,000 at June 30, 2025 and $0 at December 31, 2024.

Previous wording

The Company is managed by ACM, pursuant to a management agreement. The management fees are determined based on gross equity raised. Therefore, management fees increase when we raise capital and decline when we repurchase previously issued stock and make liquidation distributions as approved and so designated by a majority of the Board. However, because the management fee rate decreases to 0.75% per annum for gross equity raised in excess of $1.0 billion pursuant to the management agreement, the effective management fee rate declines as equity is raised. The cost of repurchased stock and any dividends specifically designated by the Board as liquidation distributions will reduce the amount of gross equity raised used to calculate the monthly management fee. Realized and unrealized gains and losses do not affect the amount of gross equity raised. At March 31, 2025 and March 31, 2024, the effective management fee, prior to management fees waived, was 0.90% and 0.93% based on gross equity raised of $4,873,845 and $4,230,648, respectively. During each of the three months ended March 31, 2025 and March 31, 2024 ACM voluntarily waived management fees of $1,650 (see Note 13 - Related Party Transactions).

Current wording

The Company is managed by ACM, pursuant to a management agreement. The management fees are determined based on gross equity raised. Therefore, management fees increase when we raise capital and decline when we repurchase previously issued stock and make liquidation distributions as approved and so designated by a majority of the Board. However, because the management fee rate decreases to 0.75% per annum for gross equity raised in excess of $1.0 billion pursuant to the management agreement, the effective management fee rate declines as equity is raised. The cost of repurchased stock and any dividends specifically designated by the Board as liquidation distributions will reduce the amount of gross equity raised used to calculate the monthly management fee. Realized and unrealized gains and losses do not affect the amount of gross equity raised. At June 30, 2025 and June 30, 2024, the effective management fee, prior to management fees waived, was 0.90% and 0.93% based on gross equity raised of $4,969,351 and $4,230,675, respectively. During each of the three and six months ended June 30, 2025 and June 30, 2024 ACM voluntarily waived management fees of $1,650 and $3,300, respectively, (see Note 13 - Related Party Transactions).

Previous wording

•For the three months ended March 31, 2024, other expenses included $9,010 of expenses related to the previously disclosed Special Committee internal investigation.

Current wording

•For the six months ended June 30, 2024, other expenses included $9,010 of expenses related to the previously disclosed Special Committee internal investigation.

Previous wording

Realized gains and losses on interest rate contracts and treasury futures terminated before their maturity are deferred and amortized over the remainder of the original term of the contract for REIT taxable income. At March 31, 2025 and December 31, 2024, we had approximately $(192,655) and $(189,450), respectively, of net deductible expense relating to previously terminated interest rate swap and treasury futures/shorts contracts amortizing through the years 2035 and 2034, respectively. At March 31, 2025, we had $257,341 of net operating loss carryforwards available for use indefinitely.

Current wording

Realized gains and losses on interest rate contracts and treasury futures terminated before their maturity are deferred and amortized over the remainder of the original term of the contract for REIT taxable income. At June 30, 2025 and December 31, 2024, we had approximately $(207,726) and $(189,450), respectively, of net deductible expense relating to previously terminated interest rate swap and treasury futures/shorts contracts amortizing through the years 2035 and 2034, respectively. At June 30, 2025, we had $257,341 of net operating loss carryforwards available for use indefinitely.

Previous wording

(2)Our TBA Agency Securities were recorded as derivative instruments in our accompanying consolidated financial statements. Our TBA Agency Securities were reported at net carrying values of $192, at March 31, 2025 and were reported in Derivatives, at fair value on our consolidated balance sheets (see Note 7 to the consolidated financial statements).

Current wording

(2)Our TBA Agency Securities were recorded as derivative instruments in our accompanying consolidated financial statements. Our TBA Agency Securities were reported at net carrying values of $1,805, at June 30, 2025 and were reported in Derivatives, at fair value on our consolidated balance sheets (see Note 7 to the consolidated financial statements).

Previous wording

We have entered into repurchase agreements to finance the majority of our MBS. Our repurchase agreements are secured by our MBS and bear interest at rates that have moved in close relationship to the Federal Funds Rate and SOFR. We have established borrowing relationships with numerous investment banking firms and other lenders, 17 of which had open repurchase agreements with us at March 31, 2025 and December 31, 2024. We had outstanding balances under our repurchase agreements, net at March 31, 2025 and December 31, 2024 of $12,490,792 (net of reverse repurchase agreements of $512,750, $461,250 of which were with BUCKLER) and $10,713,830 (net of reverse repurchase agreements of $498,250, $447,063 of which were with BUCKLER) respectively. We had obligations to return securities received as collateral associated with our reverse repurchase agreements as of March 31, 2025 and December 31, 2024 of $506,340 and $493,433, respectively. At each of March 31, 2025 and December 31, 2024, BUCKLER accounted for 45.7% of our aggregate borrowings and had an amount at risk of 7.4% and 8.0%, respectively, of our total stockholders' equity with a weighted average maturity of 30 days and 15 days, respectively, on repurchase agreements (see Note 6 to the consolidated financial statements).

Current wording

We have entered into repurchase agreements to finance the majority of our MBS. Our repurchase agreements are secured by our MBS and bear interest at rates that have moved in close relationship to the Federal Funds Rate and SOFR. We have established borrowing relationships with numerous investment banking firms and other lenders, 17 of which had open repurchase agreements with us at June 30, 2025 and December 31, 2024. We had outstanding balances under our repurchase agreements, net at June 30, 2025 and December 31, 2024 of $12,810,087 (net of reverse repurchase agreements of $518,125, $466,875 of which were with BUCKLER) and $10,713,830 (net of reverse repurchase agreements of $498,250, $447,063 of which were with BUCKLER) respectively. We had obligations to return securities received as collateral associated with our reverse repurchase agreements as of June 30, 2025 and December 31, 2024 of $509,410 and $493,433, respectively. At June 30, 2025 and December 31, 2024, BUCKLER accounted for 49.3% and 45.7% of our aggregate borrowings and had an amount at risk of 7.7% and 8.0%, respectively, of our total stockholders' equity with a weighted average maturity of 20 days and 15 days, respectively, on repurchase agreements (see Note 6 to the consolidated financial statements).

Previous wording

Our repurchase agreements require excess collateral, known as a “haircut.” At March 31, 2025, the average gross haircut percentage was 2.74% compared to 2.77% at December 31, 2024.

Current wording

Our repurchase agreements require excess collateral, known as a “haircut.” At June 30, 2025, the average gross haircut percentage was 2.68% compared to 2.77% at December 31, 2024.

Previous wording

We use various contracts to manage our interest rate risk as we deem prudent in light of market conditions and the associated costs with counterparties that have a high-quality credit rating and with futures exchanges. We generally pay a fixed rate and receive a floating rate with the objective of fixing a portion of our borrowing costs and hedging the change in our book value to some degree. The floating rate we receive is generally the Federal Funds Rate or SOFR. We had contractual commitments under derivatives at March 31, 2025 and December 31, 2024. At March 31, 2025 and December 31, 2024, we had derivatives with a net fair value of $653,530 and $906,778, respectively (see Note 7 to the consolidated financial statements).

Current wording

We use various contracts to manage our interest rate risk as we deem prudent in light of market conditions and the associated costs with counterparties that have a high-quality credit rating and with futures exchanges. We generally pay a fixed rate and receive a floating rate with the objective of fixing a portion of our borrowing costs and hedging the change in our book value to some degree. The floating rate we receive is generally the Federal Funds Rate or SOFR. We had contractual commitments under derivatives at June 30, 2025 and December 31, 2024. At June 30, 2025 and December 31, 2024, we had derivatives with a net fair value of $522,241 and $906,778, respectively (see Note 7 to the consolidated financial statements).

Previous wording

At March 31, 2025, we had interest rate swap contracts with an aggregate notional balance of $8,382,000, a weighted average swap rate of 2.00% and a weighted average term of 68 months. At December 31, 2024, we had interest rate swap contracts with an aggregate notional balance of $7,232,000, a weighted average swap rate of 1.66% and a weighted average term of 76 months. We also had TBA Agency Securities with an aggregate notional balance of $900,000 at March 31, 2025. We did not have TBA Agency Securities at December 31, 2024 (see Note 7 to the consolidated financial statements).

Current wording

At June 30, 2025, we had interest rate swap contracts with an aggregate notional balance of $10,259,000, a weighted average swap rate of 2.32% and a weighted average term of 60 months. At December 31, 2024, we had interest rate swap contracts with an aggregate notional balance of $7,232,000, a weighted average swap rate of 1.66% and a weighted average term of 76 months. We also had TBA Agency Securities with an aggregate notional balance of $300,000 at June 30, 2025. We did not have TBA Agency Securities at December 31, 2024 (see Note 7 to the consolidated financial statements).

Previous wording

The following table details the changes in the fair value of our interest rate swap contracts for the three months ended March 31, 2025 and for the year ended December 31, 2024.

Current wording

The following table details the changes in the fair value of our interest rate swap contracts for the six months ended June 30, 2025 and for the year ended December 31, 2024.

Previous wording

Although we attempt to structure our derivatives to offset the changes in asset prices, the complexity of the actual and expected prepayment characteristics of the underlying mortgages as well as the volatility in mortgage interest rates relative to U.S. Treasury and interest rate swap contract rates makes achieving high levels of offset difficult. We recognized net (losses) gains related to our derivatives of $(191,218) and $156,448, for the three months ended March 31, 2025 and March 31, 2024, respectively.

Current wording

Although we attempt to structure our derivatives to offset the changes in asset prices, the complexity of the actual and expected prepayment characteristics of the underlying mortgages as well as the volatility in mortgage interest rates relative to U.S. Treasury and interest rate swap contract rates makes achieving high levels of offset difficult. We recognized net (losses) gains related to our derivatives of $(108,022) and $(299,240) and $49,682 and $206,130, for the three and six months ended June 30, 2025 and June 30, 2024, respectively.

Previous wording

As required by the Dodd-Frank Act, the Commodity Futures Trading Commission has adopted rules requiring certain interest rate swap contracts to be cleared through a derivatives clearing organization. We are required to clear certain new interest rate swap contracts. Centrally-cleared interest rate swaps may have higher margin requirements than bilateral interest rate swaps. We have established an account with a futures commission merchant for this purpose. At March 31, 2025 and December 31, 2024, we had $3,175,000 and $2,025,000, respectively, of notional amount of centrally-cleared interest rate swap contracts.

Current wording

As required by the Dodd-Frank Act, the Commodity Futures Trading Commission has adopted rules requiring certain interest rate swap contracts to be cleared through a derivatives clearing organization. We are required to clear certain new interest rate swap contracts. Centrally-cleared interest rate swaps may have higher margin requirements than bilateral interest rate swaps. We have established an account with a futures commission merchant for this purpose. At June 30, 2025 and December 31, 2024, we had $5,125,000 and $2,025,000, respectively, of notional amount of centrally-cleared interest rate swap contracts.

Previous wording

At March 31, 2025, our liquidity totaled $847,961, consisting of $49,115 of cash and cash equivalents plus $798,846 of unencumbered Agency Securities and U.S. government securities (including securities received as reverse margin collateral). Our primary sources of funds are borrowings under repurchase arrangements, monthly principal and interest payments on our MBS and cash generated from our operating results.

Current wording

At June 30, 2025, our liquidity totaled $772,948, consisting of $141,166 of cash and cash equivalents plus $631,782 of unencumbered Agency Securities and U.S. Treasury Securities (including securities received as reverse margin collateral). Our primary sources of funds are borrowings under repurchase arrangements, monthly principal and interest payments on our MBS and cash generated from our operating results.

Previous wording

Our primary uses of cash are to purchase MBS, pay interest and principal on our borrowings, fund our operations and pay dividends. From time to time, we purchase or sell assets for forward settlement up to 90 days in the future to lock in purchase prices or sales proceeds. At March 31, 2025 and December 31, 2024, we financed our securities portfolio with $12,490,792 (net of reverse repurchase agreements of $512,750, $461,250 of which were with BUCKLER) and $10,713,830 (net of reverse repurchase agreements of $498,250, $447,063 of which were with BUCKLER) of borrowings under repurchase agreements, respectively. At March 31, 2025 and December 31, 2024, we had obligations to return securities received as collateral associated with our reverse repurchase agreements of $506,340 and $493,433, respectively.

Current wording

Our primary uses of cash are to purchase MBS, pay interest and principal on our borrowings, fund our operations and pay dividends. From time to time, we purchase or sell assets for forward settlement up to 90 days in the future to lock in purchase prices or sales proceeds. At June 30, 2025 and December 31, 2024, we financed our securities portfolio with $12,810,087 (net of reverse repurchase agreements of $518,125, $466,875 of which were with BUCKLER) and $10,713,830 (net of reverse repurchase agreements of $498,250, $447,063 of which were with BUCKLER) of borrowings under repurchase agreements, respectively. At June 30, 2025 and December 31, 2024, we had obligations to return securities received as collateral associated with our reverse repurchase agreements of $509,410 and $493,433, respectively.

Previous wording

We generally seek to borrow (on a recourse basis) between six and ten times the amount of our total stockholders’ equity. Our debt to equity ratios at March 31, 2025 and December 31, 2024, were 7.33:1 and 7.87:1, respectively. Our leverage ratios, including notional on our TBA Agency Securities, were 7.87:1 at each of March 31, 2025 and December 31, 2024, respectively. Implied leverage, including TBA Securities and forward settling sales and unsettled purchases was 7.87:1 and 7.95:1 at March 31, 2025 and December 31, 2024, respectively.

Current wording

We generally seek to borrow (on a recourse basis) between six and ten times the amount of our total stockholders’ equity. Our debt to equity ratios at June 30, 2025 and December 31, 2024, were 7.72:1 and 7.87:1, respectively. Our leverage ratios, including our TBA Agency Securities, were 7.90:1 and 7.87:1 at June 30, 2025 and December 31, 2024, respectively. Implied leverage, including TBA Securities and forward settling sales and unsettled purchases was 8.29:1 and 7.95:1 at June 30, 2025 and December 31, 2024, respectively.

Previous wording

The following tables present our equity transactions for the three months ended March 31, 2025 and for the year ended December 31, 2024 (see Note 10 and Note 13 to the consolidated financial statements).

Current wording

The following tables present our equity transactions for the six months ended June 30, 2025 and for the year ended December 31, 2024 (see Note 10 and Note 13 to the consolidated financial statements).

Previous wording

The following table reconciles the fees incurred in accordance with the management agreement for the three months ended March 31, 2025 and March 31, 2024 (see Note 8 to the consolidated financial statements).

Current wording

The following table reconciles the fees incurred in accordance with the management agreement for the three and six months ended June 30, 2025 and June 30, 2024 (see Note 8 to the consolidated financial statements).

Previous wording

We adopted the 2009 Stock Incentive Plan (as amended, the “Plan”) to attract, retain and reward directors and other persons who provide services to us in the course of operations. The Plan authorizes the Board to grant awards including common stock, restricted shares of common stock (“RSUs”), stock options, performance shares, performance units, stock appreciation rights and other equity and cash-based awards (collectively, “Awards”), subject to terms as provided in the Plan. At March 31, 2025, there were 228 shares available for future issuance under the Plan.

Current wording

We adopted the 2009 Stock Incentive Plan (as amended, the “Plan”) to attract, retain and reward directors and other persons who provide services to us in the course of operations. The Plan authorizes the Board to grant awards including common stock, restricted shares of common stock (“RSUs”), stock options, performance shares, performance units, stock appreciation rights and other equity and cash-based awards (collectively, “Awards”), subject to terms as provided in the Plan. At June 30, 2025, there were 93 shares available for future issuance under the Plan.

Previous wording

At March 31, 2025, there was approximately $5,691 of unvested stock based compensation related to the Awards (based on a weighted grant date price of $36.09 per share), which we expect to recognize as an expense as follows: for the remainder of 2025 an expense of $1,480, in 2026 an expense of $1,793, and thereafter an expense of $2,418. Our policy is to account for forfeitures as they occur. We also pay each of our non-executive Board members quarterly fees, which are payable in cash, common stock, RSUs or a combination of common stock, RSUs and cash at the option of the director. Compensation to be paid to our non-executive Board in the form of cash and common equity is $1,219 annually (see Note 9 to the consolidated financial statements).

Current wording

At June 30, 2025, there was approximately $7,304 of unvested stock based compensation related to the Awards (based on a weighted grant date price of $26.69 per share), which we expect to recognize as an expense as follows: for the remainder of 2025 an expense of $897, in 2026 an expense of $2,237, and thereafter an expense of $4,170. Our policy is to account for forfeitures as they occur. We also pay each of our non-executive Board members quarterly fees, which are payable in cash, common stock, RSUs or a combination of common stock, RSUs and cash at the option of the director. Compensation to be paid to our non-executive Board in the form of cash and common equity is $1,219 annually (see Note 9 to the consolidated financial statements).

Previous wording

We may increase our capital resources by obtaining long-term credit facilities or making public or private offerings of equity or debt securities, including classes of preferred stock, common stock and senior or subordinated notes to meet our liquidity requirements. As of the date hereof, we have "at-the-market" offering programs with 3,136 shares of 7.00% Series C Cumulative Redeemable Preferred Stock available under the Preferred C ATM Sales Agreement and 18,060 shares of common stock available under the 2023 Common stock ATM Sales Agreement. In accordance with the terms of these agreements, we may offer and sell shares of stock over a period of time and from time to time, with BUCKLER and other agents as sales agents (see Note 10 to the consolidated financial statements). These liquidity requirements include maturing repurchase agreements, settling TBA Agency Security positions and potentially making net payments on our interest rate swap contracts, and in each case, continuing to meet ongoing margin requirements. Such financing will depend on market conditions for capital raises and for the investment of any proceeds and there can be no assurances that we will successfully obtain any such financing.

Current wording

We may increase our capital resources by obtaining long-term credit facilities or making public or private offerings of equity or debt securities, including classes of preferred stock, common stock and senior or subordinated notes to meet our liquidity requirements. As of the date hereof, we have "at-the-market" offering programs with 3,136 shares of 7.00% Series C Cumulative Redeemable Preferred Stock available under the Preferred C ATM Sales Agreement and 8,233 shares of common stock available under the 2023 Common stock ATM Sales Agreement. In accordance with the terms of these agreements, we may offer and sell shares of stock over a period of time and from time to time, with BUCKLER and other agents as sales agents (see Note 10 to the consolidated financial statements). These liquidity requirements include maturing repurchase agreements, settling TBA Agency Security positions and potentially making net payments on our interest rate swap contracts, and in each case, continuing to meet ongoing margin requirements. Such financing will depend on market conditions for capital raises and for the investment of any proceeds and there can be no assurances that we will successfully obtain any such financing.

Previous wording

We update our fair value estimates at the end of each business day to reflect current market dynamics. During times of high market volatility, it can be difficult to obtain accurate market information timely, and accordingly, the confidence interval around our valuation estimates will increase, potentially significantly. During the three months ended March 31, 2025, the largest inter-day movement in the overall estimated values of our investment and hedge positions translated to a change in estimated book value of (0.28) per common share. Similarly, 98% of inter-day movements in estimated value translated to changes in estimated book value per share of 0.43 or less.

Current wording

We update our fair value estimates at the end of each business day to reflect current market dynamics. During times of high market volatility, it can be difficult to obtain accurate market information timely, and accordingly, the confidence interval around our valuation estimates will increase, potentially significantly. During the three and six months ended June 30, 2025, the largest inter-day movement in the overall estimated values of our investment and hedge positions translated to a change in estimated book value of (0.44) per common share. Similarly, 98% of inter-day movements in estimated value translated to changes in estimated book value per share of 0.68 or less.