Armour Residential REIT, Inc.
For the period ended Mar 31, 2026. Filed Apr 22, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 22, 2026
ARR$12.60+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-10-22.
0001428205-25-000233
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-22.
0001428205-26-000059
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 177 previous paragraphs and 170 current paragraphs.
127 unchanged; 34 reworded; 8 added; 15 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
First Quarter 2026 Trends
Current report
The Middle East conflict that began in late February 2026 materially increased U.S. interest rate volatility, primarily through its effect on energy markets. As oil prices rose sharply amid concerns about potential supply disruptions, particularly through the Strait of Hormuz, market participants reassessed the inflation outlook and the likely path of monetary policy. Expectations shifted toward a more prolonged “higher for longer” Federal Reserve stance, with the anticipated number of rate cuts for 2026 falling close to zero and futures markets at times assigning a meaningful probability to additional rate hikes. The conflict also contributed to a pronounced bear flattening of the U.S. Treasury curve and a more challenging technical environment for Agency MBS, resulting in greater mortgage spread volatility. Although the ceasefire announced on April 8, 2026 has partially reversed the most severe effects on interest rates and mortgage spreads, ARMOUR expects volatility to remain elevated until the conflict is more definitively resolved and, accordingly, intends to continue prioritizing risk management during this period of heightened uncertainty.
Current report
In 2025, the U.S. administration imposed tariffs on imports from a broad range of countries, including Canada, Mexico, member states of the European Union, Japan, and China. In response, several trading partners imposed, and others may yet impose, retaliatory tariffs. In February 2026, the U.S. Supreme Court held that the administration may not rely on the International Emergency Economic Powers Act, or IEEPA, to impose broad-based tariffs. The administration has since turned to alternative temporary statutory authorities to maintain certain surcharges and has indicated that it intends to preserve a broader tariff regime through other trade rules and legal authorities. These U.S. tariffs, together with actual and potential retaliatory measures, contributed to increased volatility in financial markets and interest rates in the prior year and could do so again. Accordingly, ARMOUR expects to continue prioritizing liquidity considering the potential for renewed market volatility and related financial risks. The Company has met all its obligations to repurchase agreement counterparties in a timely manner, while managing the risk of its assets and hedging portfolios.
Current report
At the March 18, 2026 meeting, the Fed stated that it will roll over at auction all principal payments from its Treasury securities and reinvest all principal payments from its agency securities holdings (agency debt and agency mortgage-backed securities) into Treasury bills. This is consistent with its decision to conclude the reduction of its aggregate securities holdings, effective December 1, 2025.
Current report
At its December 2025 meeting, the Federal Open Market Committee announced a reserve management purchase program (RMP) designed to maintain adequate reserve liquidity in the banking system. The program was originally intended to operate at an elevated pace through approximately April 2026, after which the Federal Reserve indicated that purchase sizing would likely be reduced in line with expected seasonal patterns in its liabilities though the ultimate pace and timing of any such adjustment would remain data-dependent and subject to prevailing market conditions. To the extent that a reduction in Treasury bill purchases materializes, it could introduce some uncertainty into short-term funding and repurchase markets. ARMOUR continues to monitor developments in Federal Reserve operations closely, as shifts in repurchase availability or funding costs could affect the Company's borrowing environment. At present, we do not view this as a material near-term risk, but we believe prudent portfolio management warrants ongoing attention to this program and its potential effects on short-term funding markets.
Current report
Net Income (Loss)
Current report
◦The change in fair value of the securities was $(10,190) and $(12,906), for the three months ended March 31, 2026 and March 31, 2025, respectively.
Removed paragraphs (15)
Previous report
Third Quarter 2025 Trends
Previous report
During the nine months ended September 30, 2025, the 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, global trading partners have imposed or may impose their own tariffs. Such U.S. tariffs and responsive tariffs increased the volatility of financial markets and interest rates, though volatility is currently lower, influenced by other factors such as the Federal Reserve resumption of interest-rate normalization. ARMOUR expects that it will continue prioritizing liquidity, given the potential for renewed 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 report
The Fed stated that it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Effective September 18, 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 report
Net Income
Previous report
◦The change in fair value of the securities was $5,797 and $(9,996) and $(21,695) and $5,914, for the three and nine months ended September 30, 2025 and September 30, 2024, respectively.
Previous report
•For the nine months ended September 30, 2024, other expenses included $9,010 of expenses related to the previously disclosed Special Committee internal investigation.
Previous report
Use of derivative instruments may fail to protect or could adversely affect us because, among other things:
Previous report
•available derivatives may not correspond directly with the interest rate risk for which protection is sought (e.g., the difference in interest rate movements for long-term U.S. Treasury Securities compared to Agency Securities);
Previous report
•the duration of the derivatives may not match the duration of the related liability;
Previous report
•the counterparty to a derivative agreement with us may default on its obligation to pay or not perform under the terms of the agreement and the collateral posted may not be sufficient to protect against any consequent loss;
Previous report
•we may lose collateral we have pledged to secure our obligations under a derivative agreement if the associated counterparty becomes insolvent or files for bankruptcy;
Previous report
•we may experience a termination event under one or more of our derivative agreements related to our REIT status, equity levels and performance, which could result in a payout to the associated counterparty and a taxable loss to us;
Previous report
•the credit-quality of the party owing money on the derivatives may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; and
Previous report
•the value of derivatives may be adjusted from time to time in accordance with GAAP to reflect changes in fair value; downward adjustments, or “mark-to-market losses,” would reduce our net income or increase any net loss.
Previous report
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 nine months ended September 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.
Reworded paragraphs (34)
Previous wording
At September 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.
Current wording
At March 31, 2026 and December 31, 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. 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
At the Federal Reserve Open Market Committee meeting on July 30, 2025, the Fed maintained the target range for the Federal Funds Rate at 4.25% to 4.50%. At the September 17, 2025 meeting, the Fed lowered the target range for the Federal Funds Rate to 4.00% to 4.25%. The Fed stated that inflation remains somewhat elevated while growth of economic activity moderated in the first half of the year. The Fed also stated that uncertainty around the economic outlook remains elevated, and in considering 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 meeting on January 28, 2026 and March 18, 2026, the Fed maintained the target range for the Federal Funds Rate at 3.50% to 3.75%. At the March 18, 2026 meeting, the Fed noted that inflation remains somewhat elevated while economic activity has been expanding at a solid pace. The Fed stated that uncertainty about the economic outlook remains elevated and implications of developments in the Middle East for the U.S. economy are uncertain. The Fed also 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
Below is the Fed's target range for the Federal Funds Rate at each Fed meeting where a change was made since the beginning of 2023.
Current wording
Below is the Fed's target range for the Federal Funds Rate at each Fed meeting where a change was made since 2024.
Previous wording
Net Income for the three and nine months ended September 30, 2025 compared to Net Income for the three and nine months ended September 30, 2024 reflected gains on our trading securities and interest income from a larger average securities portfolio, offset by losses on derivatives and interest expense on a larger average balance of repurchase agreements compared to the three and nine months ended September 30, 2024.
Current wording
Net Loss for the three months ended March 31, 2026 compared to Net Income for the three months ended March 31, 2025 reflected unrealized losses on our trading securities, net, due to market movements in the latter part of the quarter and interest expense on a larger average balance of repurchase agreements. These were partially offset by interest income from a larger average securities portfolio and gains on derivatives, net, compared to the three months ended March 31, 2025.
Previous wording
Net interest income is a function of the size of and yield earned from our investment portfolio and the size of and cost of our repurchase and other financing costs.
Current wording
Net interest income is a function of the size of and yield earned from our investment portfolio and the size and cost of our repurchase and other financing costs.
Previous wording
The following tables detail the factors impacting our net interest income for three and nine months ended September 30, 2025 and September 30, 2024.
Current wording
The following tables detail the factors impacting our net interest income for three months ended March 31, 2026 and March 31, 2025.
Previous wording
Three and Nine Months Ended September 30, 2025 vs. Three and Nine Months Ended September 30, 2024
Current wording
Three Months Ended March 31, 2026 vs. Three Months Ended March 31, 2025
Previous wording
◦The change in fair value of the securities was $174,573 and $414,683 for the three and nine months ended September 30, 2025 compared to $306,043 and $155,931 for the three and nine months ended September 30, 2024.
Current wording
◦The change in fair value of the securities was $(191,934) for the three months ended March 31, 2026 compared to $211,430 for the three months ended March 31, 2025.
Previous wording
◦Sales of our Agency Securities, trading resulted in realized gains (losses) of $2,535 and $(12,773) and $98 and $(100,409) for the three and nine months ended September 30, 2025 and September 30, 2024, respectively.
Current wording
◦Sales of our Agency Securities, trading resulted in realized gains (losses) of $9,339 and $(3,173) for the three months ended March 31, 2026 and March 31, 2025, respectively.
Previous wording
◦During the three and nine months ended September 30, 2025, and September 30, 2024, we sold $412,008 and $1,638,221 (includes $296,523 of unsettled sales) and $484,464 and $4,022,334, respectively, of Agency Securities, trading.
Current wording
◦During the three months ended March 31, 2026, and March 31, 2025, we sold $891,124 and $234,204, respectively, of Agency Securities, trading.
Previous wording
•Gain (Loss) on U.S. Treasury Securities, net resulted from the change in fair value of the securities as well as the gain (loss) on sales.
Current wording
•Loss on U.S. Treasury Securities, net resulted from the change in fair value of the securities as well as the gain (loss) on sales.
Previous wording
◦During the three months ended September 30, 2025, we sold short $504,277 and sold $351,608 of U.S. Treasury Securities, resulting in a realized loss of $(57) and a gain of $457, respectively. During the nine months ended September 30, 2024, we sold short $869,257 of U.S. Treasury Securities, resulting in a realized gain of $2,462.
Current wording
◦During the three months ended March 31, 2026, we sold $99,668 of U.S. Treasury Securities, resulting in a realized loss of $(458).
Previous wording
◦Interest rate swap contracts' aggregate notional balance was $10,402,000 at September 30, 2025 and $7,232,000 at December 31, 2024.
Current wording
◦Interest rate swap contracts' aggregate notional balance was $12,899,000 at March 31, 2026 and $12,327,000 at December 31, 2025.
Previous wording
◦Our TBA Agency Securities aggregate notional balance was $125,000 at September 30, 2025 and $0 at December 31, 2024.
Current wording
◦Our TBA Agency Securities aggregate notional balance was $600,000 at March 31, 2026.
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 September 30, 2025 and September 30, 2024, the effective management fee, prior to management fees waived, was 0.89% and 0.92% based on gross equity raised of $5,362,440 and $4,361,496, respectively. During each of the three and nine months ended September 30, 2025 and September 30, 2024 ACM voluntarily waived management fees of $1,650 and $4,950, respectively (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 March 31, 2026 and March 31, 2025, the effective management fee was 0.88% and 0.90% (prior to management fees waived) based on gross equity raised of $5,588,129 and $4,873,845, respectively. During the three months ended March 31, 2025 ACM voluntarily waived management fees of $1,650 (see Note 13 - Related Party Transactions).
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 September 30, 2025 and December 31, 2024, we had approximately $(281,360) and $(189,450), respectively, of net deductible expense relating to previously terminated interest rate swap and treasury futures/shorts contracts amortizing through the years 2040 and 2034, respectively. At September 30, 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 March 31, 2026 and December 31, 2025, we had approximately $(322,341) and $(313,284), respectively, of net deductible expense relating to previously terminated interest rate swap and treasury futures/shorts contracts amortizing through the years 2040. At March 31, 2026, we had $257,341 of net operating loss carryforwards available for use indefinitely.
Previous wording
Agency Security purchase and sale transactions, including purchases and sales for forward settlement, are recorded on the trade date, based on the specific identification method, to the extent it is probable that we will take or make timely physical delivery of the related securities. Premiums and discounts associated with the purchase of Multi-Family MBS, which are generally not subject to prepayment, are amortized or accreted into interest income over the contractual lives of the securities using a level yield method. Premiums and discounts associated with the purchase of other Agency Securities are amortized or accreted into interest income over the actual lives of the securities, reflecting actual prepayments as they occur. Gains or losses realized from the sale of securities are included in income and are determined using the specific identification method. We typically purchase Agency Securities at premium prices. The lower the prepayment rate, the lower the amount of amortization expense for a particular period. Accordingly, the yield on an asset and earnings are higher. If prepayment rates increase, the amount of amortization expense for a particular period will go up. These increased prepayment rates would act to decrease the yield on an asset and would decrease earnings.
Current wording
Agency Security purchase and sale transactions, including purchases and sales for forward settlement, are recorded on the trade date, based on the specific identification method, to the extent it is probable that we will take or make timely physical delivery of the related securities. Premiums and discounts associated with the purchase of Multi-Family MBS, which are generally not subject to prepayment, are amortized or accreted into interest income over the contractual lives of the securities using a level yield method. Premiums and discounts associated with the purchase of other Agency Securities are amortized or accreted into interest income over the actual lives of the securities, reflecting actual prepayments as they occur. Gains or losses realized from the sale of securities are included in income and are determined using the specific identification method. We purchase some of our Agency Securities at premium prices. The lower the prepayment rate, the lower the amount of amortization expense for a particular period. Accordingly, the yield on an asset and earnings are higher. If prepayment rates increase, the amount of amortization expense for a particular period will go up. These increased prepayment rates would act to decrease the yield on an asset and would decrease earnings.
Previous wording
From time to time, we may purchase U.S. Treasury Securities to tailor the overall risk characteristics of our investment securities portfolio. While U.S. Treasury Securities provide overall interest rate exposure, they are generally not sensitive to the other risks inherent in MBS. We did not have any U.S. Treasury Securities at December 31, 2024.
Current wording
From time to time, we may purchase U.S. Treasury Securities to tailor the overall risk characteristics of our investment securities portfolio. While U.S. Treasury Securities provide overall interest rate exposure, they are generally not sensitive to the other risks inherent in MBS.
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 $273, at September 30, 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 a net carrying value of $(6,392), at March 31, 2026 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, 20 and 17 of which had open repurchase agreements with us at September 30, 2025 and December 31, 2024, respectively. We had outstanding balances under our repurchase agreements, net at September 30, 2025 and December 31, 2024 of $16,557,426 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 at September 30, 2025 and December 31, 2024 of $0 and $493,433, respectively. At September 30, 2025 and December 31, 2024, BUCKLER accounted for 43.3% and 45.7% of our aggregate borrowings and had an amount at risk of 6.7% and 8.0%, respectively, of our total stockholders' equity with a weighted average maturity of 12 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, 24 and 22 of which had open repurchase agreements with us at March 31, 2026 and December 31, 2025, respectively. We had outstanding balances under our repurchase agreements, net at March 31, 2026 and December 31, 2025 of $18,463,834 and $17,941,796, respectively. At March 31, 2026 and December 31, 2025, BUCKLER accounted for 43.4% and 47.0% of our aggregate borrowings and had an amount at risk of 6.3% and 7.1%, respectively, of our total stockholders' equity with a weighted average maturity of 20 days and 13 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 September 30, 2025, the average gross haircut percentage was 2.75% compared to 2.77% at December 31, 2024.
Current wording
Our repurchase agreements require excess collateral, known as a “haircut.” At March 31, 2026, the average haircut percentage was 2.61% compared to 2.63% at December 31, 2025.
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 September 30, 2025 and December 31, 2024. At September 30, 2025 and December 31, 2024, we had derivatives with a net fair value of $539,362 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 March 31, 2026 and December 31, 2025. At March 31, 2026 and December 31, 2025, we had derivatives with a net fair value of $646,570 and $592,241, respectively (see Note 7 to the consolidated financial statements).
Previous wording
At September 30, 2025, we had interest rate swap contracts with an aggregate notional balance of $10,402,000, a weighted average swap rate of 2.29% and a weighted average term of 52 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 $125,000 at September 30, 2025. We did not have TBA Agency Securities at December 31, 2024 (see Note 7 to the consolidated financial statements).
Current wording
At March 31, 2026, we had interest rate swap contracts with an aggregate notional balance of $12,899,000, a weighted average swap rate of 2.52% and a weighted average term of 50 months. At December 31, 2025, we had interest rate swap contracts with an aggregate notional balance of $12,327,000, a weighted average swap rate of 2.44% and a weighted average term of 51 months. We also had TBA Agency Securities with an aggregate notional balance of $600,000 at March 31, 2026. We did not have TBA Agency Securities at December 31, 2025 (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 nine months ended September 30, 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 three months ended March 31, 2026 and for the year ended December 31, 2025.
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 $(49,287) and $(348,527) and $(209,959) and $(3,829), for the three and nine months ended September 30, 2025 and September 30, 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 $83,025 and $(191,218), for the three months ended March 31, 2026 and March 31, 2025, 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 September 30, 2025 and December 31, 2024, we had $5,268,000 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 March 31, 2026 and December 31, 2025, we had $7,818,000 and $7,193,000, respectively, of notional amount of centrally-cleared interest rate swap contracts.
Previous wording
At September 30, 2025, our liquidity totaled $1,141,390, consisting of $44,238 of cash and cash equivalents plus $1,097,152 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.
Current wording
At March 31, 2026, our liquidity totaled $1,119,156, consisting of $66,471 of cash and cash equivalents plus $1,052,685 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 September 30, 2025 and December 31, 2024, we financed our securities portfolio with $16,557,426 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 September 30, 2025 and December 31, 2024, we had obligations to return securities received as collateral associated with our reverse repurchase agreements of $0 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 March 31, 2026 and December 31, 2025, we financed our securities portfolio with $18,463,834 and $17,941,796 of borrowings under repurchase agreements, 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 September 30, 2025 and December 31, 2024, were 7.78:1 and 7.87:1, respectively. Our leverage ratios, including our TBA Agency Securities, were 7.84:1 and 7.87:1 at September 30, 2025 and December 31, 2024, respectively. Implied leverage, including TBA Securities and forward settling sales and unsettled purchases was 7.73:1 and 7.95:1 at September 30, 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 March 31, 2026 and December 31, 2025, were 7.90:1 and 7.94:1, respectively. Our leverage ratios, including our TBA Agency Securities, were 8.15:1 and 7.94:1 at March 31, 2026 and December 31, 2025, respectively. Implied leverage, including TBA Securities and forward settling sales and unsettled purchases was 8.21:1 and 8.07:1 at March 31, 2026 and December 31, 2025, respectively.
Previous wording
The following tables present our equity transactions for the nine months ended September 30, 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 three months ended March 31, 2026 and for the year ended December 31, 2025 (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 and nine months ended September 30, 2025 and September 30, 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 months ended March 31, 2026 and March 31, 2025 (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 September 30, 2025, there were 93 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 March 31, 2026, there were 3 shares available for future issuance under the Plan.
Previous wording
At September 30, 2025, there was approximately $6,699 of unvested stock based compensation related to the Awards (based on a weighted grant date price of $26.32 per share), which we expect to recognize as an expense as follows: for the remainder of 2025 an expense of $608, in 2026 an expense of $2,236, and thereafter an expense of $3,855. 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 March 31, 2026, there was approximately $6,969 of unvested stock based compensation related to the Awards (based on a weighted grant date price of $23.04 per share), which we expect to recognize as an expense as follows: for the remainder of 2026 an expense of $1,892, in 2027 an expense of $2,062, and thereafter an expense of $3,015. 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 3,122 shares of 7.00% Series C Cumulative Redeemable Preferred Stock available under the Preferred C ATM Sales Agreement and 15,262 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 2,637 shares of 7.00% Series C Cumulative Redeemable Preferred Stock available under the Preferred C ATM Sales Agreement and 18,025 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
See Note 10, Note 13 and Note 15 to the consolidated financial statements.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
See Note 10 and Note 15 to the consolidated financial statements.