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ARMOUR Residential REIT(ARR) - 2024 Q4 - Annual Report
ARRARMOUR Residential REIT(ARR)2025-02-12 21:20
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Financial Performance - Net interest income for the year ended December 31, 2024, was 26,800,000,adecreasefrom26,800,000, a decrease from 27,109,000 in 2023[312] - Total other income for 2024 was 12,456,000,comparedtoalossof12,456,000, compared to a loss of 51,481,000 in 2023[312] - The net loss for the year ended December 31, 2024, was 14,394,000,significantlyimprovedfromanetlossof14,394,000, significantly improved from a net loss of 67,923,000 in 2023[312] - The company reported a comprehensive loss of 14,394,000for2024,comparedtoacomprehensivelossof14,394,000 for 2024, compared to a comprehensive loss of 56,396,000 in 2023[312] - Total expenses after fees waived increased to 53,650,000in2024from53,650,000 in 2024 from 43,551,000 in 2023[312] - The company reported a net loss per share related to common stockholders of (0.51)in2024,animprovementfrom(0.51) in 2024, an improvement from (1.86) in 2023[463] - The total comprehensive loss for 2024 was 14,394thousand,adecreasefrom14,394 thousand, a decrease from 67,923 thousand in 2023 and 348,430thousandin2022[469]IncomeandExpenses−Totalinterestincomefor2024was348,430 thousand in 2022[469] Income and Expenses - Total interest income for 2024 was 550,946, slightly down from 552,903in2023,withanaverageyieldof4.90552,903 in 2023, with an average yield of 4.90%[316] - Total interest expense decreased to 524,146 in 2024 from 525,794in2023,resultinginanetinterestspreadof(0.43)525,794 in 2023, resulting in a net interest spread of (0.43)%[316] - Management fees increased to 39,734 in 2024 from 38,188in2023,whiletotalexpensesroseto38,188 in 2023, while total expenses rose to 60,250 from 50,151[326]−Theeffectivemanagementfeeratewas0.9250,151[326] - The effective management fee rate was 0.92% for 2024, down from 0.93% in 2023, after waiving management fees of 6,600 in both years[329] - Total management fee expense for 2024 was 33.126million,up5.133.126 million, up 5.1% from 31.521 million in 2023[384] Investments and Securities - ARMOUR's investments primarily consist of Agency Securities, which are subject to risks from prepayments and changing mortgage spreads[291][287] - The company purchased 7,271,101intradingsecuritiesduringtheyearendingDecember31,2024,whileproceedsfromsaleswere7,271,101 in trading securities during the year ending December 31, 2024, while proceeds from sales were 4,589,515[351] - Total investments in securities as of December 31, 2024, amounted to 12,957,039,withanamortizedcostof12,957,039, with an amortized cost of 12,806,504 and an unrealized loss of 367,090[343]−ThecompanyreportedarealizedlossonAgencySecuritiestradingof367,090[343] - The company reported a realized loss on Agency Securities trading of (348,646) for 2024, compared to a loss of (52,665)in2023[322]−Thecompanyexperiencedagainof(52,665) in 2023[322] - The company experienced a gain of 37,602 from trading securities during the year ending December 31, 2024[351] Liquidity and Capital Resources - The company had liquidity totaling 608,026asofDecember31,2024,consistingof608,026 as of December 31, 2024, consisting of 67,970 in cash and cash equivalents and 540,056inunencumberedAgencySecuritiesandU.S.governmentsecurities[370]−Thecompanyhassufficientliquidityandcapitalresourcesforacquiringadditionalinvestmentsandmeetingfinancingobligations[387]−Thecompanyrecognizednetgainsrelatedtoderivativesof540,056 in unencumbered Agency Securities and U.S. government securities[370] - The company has sufficient liquidity and capital resources for acquiring additional investments and meeting financing obligations[387] - The company recognized net gains related to derivatives of 323,500 for the year ended December 31, 2024, compared to 51,748fortheyearendedDecember31,2023[362]MarketandInterestRateRisks−InterestrateriskistheprimarymarketriskforARMOUR,affectingnetinterestincomeandthevalueofmortgage−backedsecurities(MBS)[416]−Changesininterestratescouldleadtoamismatchbetweentheinterestratesonmortgageassetsandfundingsources,impactingnetinterestincomeanddividendyield[418]−AsofDecember31,2024,a1.0051,748 for the year ended December 31, 2023[362] Market and Interest Rate Risks - Interest rate risk is the primary market risk for ARMOUR, affecting net interest income and the value of mortgage-backed securities (MBS)[416] - Changes in interest rates could lead to a mismatch between the interest rates on mortgage assets and funding sources, impacting net interest income and dividend yield[418] - As of December 31, 2024, a 1.00% increase in interest rates is projected to decrease net interest income by 4.92%, portfolio value by 0.98%, and stockholders' equity by 9.16%[425] - The primary liquidity risk arises from financing long-maturity MBS with short-term debt, which may lead to increased borrowing costs in a rising interest rate environment[433] Company Structure and Compliance - ARMOUR is organized as a real estate investment trust (REIT) and aims to meet the requirements for qualification under the Internal Revenue Code[475] - The company primarily invests in mortgage-backed securities (MBS) issued or guaranteed by U.S. Government-sponsored entities[476] - The company maintains effective internal control over financial reporting as of December 31, 2024, based on PCAOB standards[452] Shareholder Information - Dividends declared per common share decreased to 2.88 in 2024 from $5.00 in 2023, a reduction of 42.4%[463] - The total common stock increased to 62,412 thousand shares by December 31, 2024, up from 48,799 thousand shares in 2023 and 32,582 thousand shares in 2022[466]