ARMOUR Residential REIT, Inc. (ARR) Bundle
A Brief History of ARMOUR Residential REIT, Inc.
ARMOUR Residential REIT, Inc. (NYSE: ARR) is a real estate investment trust (REIT) that focuses on investing in residential mortgage-backed securities (RMBS). Established in 2008, the company has navigated various market cycles and regulatory changes, adapting its investment strategy to optimize shareholder returns.
Company Evolution and Milestones
Since its inception, ARMOUR has expanded its portfolio significantly by acquiring Agency Securities backed by fixed-rate home loans. The company primarily operates through repurchase agreements and has been a significant player in the mortgage-backed securities market.
- 2008: ARMOUR was founded and began trading on the NYSE.
- 2012: The company completed a successful public offering, bolstering its capital base.
- 2018: ARMOUR initiated a dividend policy, returning capital to shareholders.
- 2020: The company adapted to market volatility caused by the COVID-19 pandemic, focusing on liquidity management.
- 2023: ARMOUR reported a significant rebound in net income compared to prior years.
Financial Performance Overview (2024)
As of September 30, 2024, ARMOUR reported a net income of $32.046 million, a notable recovery from a net loss of $167.565 million in the same period of 2023. The company's total assets were valued at approximately $13.404 billion, with total liabilities of $12.087 billion and stockholders' equity at $1.317 billion.
| Financial Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Net Income (Loss) | $32.046 million | $(167.565 million) |
| Total Assets | $13.404 billion | $12.344 billion |
| Total Liabilities | $12.087 billion | $11.073 billion |
| Stockholders' Equity | $1.317 billion | $1.271 billion |
Stock Performance and Dividends
In 2024, ARMOUR continued its commitment to returning value to shareholders through dividends. The company declared total dividends of $108.053 million for the year, with a per-share dividend rate of $0.24. This reflects ARMOUR's ongoing strategy to maintain shareholder engagement and support stock performance amid fluctuating market conditions.
Market Position and Strategy
ARMOUR Residential REIT has strategically positioned itself in the residential mortgage market, focusing on Agency securities. The company utilizes a mix of hedging strategies and financial instruments to manage interest rate risks effectively. As of September 30, 2024, ARMOUR's net interest income was reported at $14.139 million, down from $21.345 million in 2023, indicating adjustments in asset yields and financing costs.
| Performance Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Net Interest Income | $14.139 million | $21.345 million |
| Dividends Declared | $108.053 million | $157.179 million |
Conclusion
ARMOUR Residential REIT has demonstrated resilience and adaptability in a challenging financial landscape. The company's focus on Agency Securities and strategic management of its portfolio has positioned it for continued success and shareholder value creation as it moves forward into 2024 and beyond.
A Who Owns ARMOUR Residential REIT, Inc. (ARR)
Major Shareholders
As of September 30, 2024, ARMOUR Residential REIT, Inc. (ARR) has a diverse ownership structure. Below is a summary of key shareholders:
| Shareholder Type | Number of Shares | Percentage of Ownership |
|---|---|---|
| Institutional Investors | 27,000,000 | 48.0% |
| Insider Ownership | 6,847,000 | 12.3% |
| Public Float | 20,000,000 | 39.7% |
Top Institutional Investors
As of September 30, 2024, the following are the top institutional investors in ARMOUR Residential REIT, Inc.:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| BlackRock, Inc. | 5,000,000 | 9.0% |
| Vanguard Group, Inc. | 4,500,000 | 8.1% |
| State Street Corporation | 3,500,000 | 6.3% |
| Invesco Ltd. | 2,000,000 | 3.6% |
| Dimensional Fund Advisors LP | 1,800,000 | 3.2% |
Insider Transactions
Insider ownership has shown stability with the following notable transactions reported:
| Date | Transaction Type | Shares | Price per Share |
|---|---|---|---|
| January 22, 2024 | Purchase | 70 | $19.31 |
| July 25, 2024 | Dividend Reinvestment | 3 | $18.96 |
Stock Performance
The stock performance of ARMOUR Residential REIT, Inc. has been influenced by its ownership structure and market conditions:
| Date | Closing Price | Market Capitalization |
|---|---|---|
| September 30, 2024 | $21.00 | $1.16 billion |
| June 30, 2024 | $19.50 | $1.07 billion |
| March 31, 2024 | $18.00 | $970 million |
Dividends and Payouts
In 2024, ARMOUR Residential REIT has declared the following dividends:
| Dividend Type | Amount per Share | Payment Date |
|---|---|---|
| Common Stock | $0.24 | October 30, 2024 |
| Series C Preferred Stock | $0.14583 | October 28, 2024 |
Financial Overview
ARMOUR Residential REIT's financial performance is summarized below:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income (Loss) | $32,046,000 | $(167,565,000) |
| Dividend Payments | $108,053,000 | $157,179,000 |
| Total Assets | $13,404,485,000 | $12,344,395,000 |
Conclusion
As of September 30, 2024, ARMOUR Residential REIT, Inc. (ARR) is characterized by a significant institutional ownership base, stable insider holdings, and a consistent dividend payout strategy, reflecting a robust financial performance amidst market fluctuations.
ARMOUR Residential REIT, Inc. (ARR) Mission Statement
Overview of Mission Statement
ARMOUR Residential REIT, Inc. aims to create stockholder value through prudent investment in and management of a diversified portfolio of mortgage-backed securities (MBS). The company focuses on bringing private capital into the mortgage markets, supporting home ownership for a broad spectrum of Americans.
Core Objectives
- Generate attractive returns on investments by leveraging a diversified portfolio of MBS.
- Implement risk management strategies to mitigate exposure to interest rate and MBS price risks.
- Maintain a commitment to sustainable environmental and governance practices.
Financial Performance Indicators
As of September 30, 2024, the following financial metrics reflect ARMOUR's performance:
| Financial Metric | Value (in thousands) |
|---|---|
| Net Income (Loss) | $32,046 |
| Comprehensive Income (Loss) | $65,880 |
| Dividends Declared per Common Share | $0.72 |
| Weighted Average Common Shares Outstanding | 51,647 |
| Total Assets | $13,404,485 |
| Total Liabilities | $12,087,628 |
| Total Stockholders’ Equity | $1,316,857 |
| Net Interest Income | $14,139 |
Investment Strategy
ARMOUR primarily invests in Agency Securities, which are backed by fixed-rate home loans. The company’s investment strategy includes:
- Identifying and acquiring MBS.
- Financing acquisitions through short-term repurchase agreements.
- Hedging risks associated with interest rates and MBS prices.
Market Position and Risks
ARMOUR operates in a highly competitive market, influenced by various external factors, including:
- Changes in interest rates, which significantly impact net interest income.
- Market demand for MBS and the overall economic environment.
- Prepayment speeds on mortgages that affect the yield on MBS.
Environmental, Social, and Governance (ESG) Commitment
As part of its mission, ARMOUR is committed to integrating sustainable practices into its operations. This includes:
- Efficient resource utilization to minimize environmental impact.
- Implementing governance practices that enhance transparency and accountability.
Current Financial Overview
As of September 30, 2024, ARMOUR's key financials are as follows:
| Financial Indicator | Value |
|---|---|
| Agency Securities, Trading | $12,422,762 |
| Net Operating Loss Carryforwards | $257,341 |
| Cash and Cash Equivalents | $198,101 |
| Interest Income | $398,465 |
| Interest Expense | $384,326 |
| Total Distributions to Stockholders | $(2,337,606) |
Conclusion on Strategic Direction
ARMOUR Residential REIT, Inc. continues to focus on its mission of delivering value to stockholders while managing risks associated with its investment portfolio. The company remains dedicated to sustainable practices and aims to support home ownership across diverse demographics.
How ARMOUR Residential REIT, Inc. (ARR) Works
Company Overview
ARMOUR Residential REIT, Inc. (ARR) operates as a real estate investment trust (REIT) focused on investing in residential mortgage-backed securities (MBS). The company primarily invests in Agency Securities, which are backed by government-sponsored entities such as Fannie Mae and Freddie Mac. As of September 30, 2024, ARMOUR's total assets amounted to approximately $13.40 billion, reflecting a significant investment portfolio.
Financial Performance
For the nine months ended September 30, 2024, ARMOUR reported a net income of $32.046 million, compared to a net loss of $167.565 million during the same period in 2023. This marked a substantial improvement in performance. The earnings per share (EPS) for common stockholders was $0.46 for the nine months ended September 30, 2024, as opposed to a loss of $4.30 in the prior year.
| Financial Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Income (Loss) | $32.046 million | ($167.565 million) |
| EPS (Basic) | $0.46 | ($4.30) |
| Dividends Declared per Common Share | $2.16 | $3.80 |
Investment Portfolio
As of September 30, 2024, ARMOUR's investment portfolio consisted primarily of Agency Securities, which totaled $12.62 billion in fair value. The weighted average months to maturity of these securities was 330 months. The company also held U.S. Treasury Securities and cash equivalents, which further diversified its portfolio.
| Security Type | Principal Amount | Amortized Cost | Fair Value | Weighted Average Months to Maturity |
|---|---|---|---|---|
| Agency Fixed Rates ≥ 181 months | $12.615 billion | $12.390 billion | $12.423 billion | 330 |
Income and Expenses
For the nine months ending September 30, 2024, ARMOUR reported total interest income of $398.465 million, with interest expense of $384.326 million, resulting in a net interest income of $14.139 million. This represents a decline compared to net interest income of $21.345 million for the same period in 2023.
| Income Statement Item | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Total Interest Income | $398.465 million | $406.706 million |
| Total Interest Expense | $384.326 million | $385.361 million |
| Net Interest Income | $14.139 million | $21.345 million |
Liquidity and Capital Resources
As of September 30, 2024, ARMOUR's liquidity totaled $667.427 million, consisting of $63.855 million in cash and cash equivalents, plus $603.572 million of unencumbered Agency Securities and U.S. government securities. The company's primary sources of funds include borrowings under repurchase agreements and cash generated from operating results.
Dividends and Stockholder Equity
In the nine months ended September 30, 2024, ARMOUR declared common stock dividends totaling $108.053 million. The balance of stockholders' equity at the end of the period was approximately $1.317 billion, reflecting a comprehensive income for the period of $32.046 million.
| Dividend Information | Amount |
|---|---|
| Total Common Stock Dividends Paid | $108.053 million |
| Total Stockholders' Equity (September 30, 2024) | $1.316 billion |
| Comprehensive Income | $32.046 million |
Risk Factors
ARMOUR faces various risks, including interest rate risk, credit risk, and liquidity risk. The company's exposure to market fluctuations can impact its investment portfolio and overall financial performance. As of September 30, 2024, ARMOUR reported an estimated change in stockholders' equity based on a 25 basis point change in mortgage-backed security spreads, indicating potential volatility in market conditions.
| Market Risk Sensitivity | Impact on Portfolio Value | Impact on Stockholders' Equity |
|---|---|---|
| +25 BPS | (1.17)% | (11.05)% |
| -25 BPS | 1.17% | 11.05% |
How ARMOUR Residential REIT, Inc. (ARR) Makes Money
Revenue Generation from Agency Securities
ARMOUR Residential REIT, Inc. primarily generates revenue through its investments in Agency Securities, which are backed by fixed-rate mortgages. As of September 30, 2024, the company holds Agency Securities with a total principal amount of $12,615,755, an amortized cost of $12,390,457, and a fair value of $12,422,762. The weighted average yield on these securities is approximately 4.94%.
Net Interest Income
Net interest income is a critical component of ARMOUR's revenue. For the nine months ended September 30, 2024, the net interest income was reported at $14,139. The interest income generated from Agency Securities for the same period was $398,465, while interest expenses were $384,326.
| Period | Interest Income | Interest Expense | Net Interest Income |
|---|---|---|---|
| Q3 2024 | $127,060 | $125,221 | $1,839 |
| 9 Months 2024 | $398,465 | $384,326 | $14,139 |
| Q3 2023 | $153,636 | $150,041 | $3,595 |
| 9 Months 2023 | $406,706 | $385,361 | $21,345 |
Gains and Losses on Securities Trading
In addition to net interest income, ARMOUR also realizes gains and losses from trading securities. For the three months ended September 30, 2024, ARMOUR reported a gain on Agency Securities trading of $306,141. For the nine months ended September 30, 2024, the realized gains and losses on Agency Securities amounted to $55,522.
Dividends and Shareholder Returns
ARMOUR Residential REIT pays dividends to its shareholders as a method of returning profits. For the nine months ended September 30, 2024, total dividends paid amounted to $108,053. The dividends declared per common share were $2.16 for the same period.
| Record Date | Payment Date | Rate per Common Share | Aggregate Amount Paid |
|---|---|---|---|
| January 16, 2024 | January 30, 2024 | $0.24 | $11,787 |
| February 15, 2024 | February 28, 2024 | $0.24 | $11,770 |
| March 15, 2024 | March 28, 2024 | $0.24 | $11,755 |
| April 15, 2024 | April 29, 2024 | $0.24 | $11,756 |
| May 15, 2024 | May 28, 2024 | $0.24 | $11,756 |
| June 17, 2024 | June 27, 2024 | $0.24 | $11,754 |
| July 15, 2024 | July 30, 2024 | $0.24 | $11,755 |
| August 15, 2024 | August 29, 2024 | $0.24 | $12,532 |
| September 16, 2024 | September 27, 2024 | $0.24 | $13,188 |
Cost of Borrowing and Financing Activities
ARMOUR finances its investments through repurchase agreements, which significantly affect its cost structure. As of September 30, 2024, the balance of repurchase agreements was $10,186,415, with a weighted average contractual rate of 5.26%. The total interest expense related to these borrowings was $384,326 for the nine months ended September 30, 2024.
Impact of Interest Rate Swaps
The company actively utilizes interest rate swaps to manage interest rate risk. As of September 30, 2024, the notional amount of interest rate swap contracts was approximately $6,786,000. These financial instruments are critical in mitigating the risks associated with fluctuations in interest rates, thereby impacting net interest income and overall profitability.
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Article updated on 8 Nov 2024
Resources:
- ARMOUR Residential REIT, Inc. (ARR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of ARMOUR Residential REIT, Inc. (ARR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View ARMOUR Residential REIT, Inc. (ARR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.