Armour Residential REIT Posts $324 Million GAAP Net Loss

The Tip Desk · October 27, 2026 · 2 min read

A $1.17 billion mark-to-market loss on mortgage-backed securities flipped the quarter to a $2.26 a share deficit as book value fell to $14.55.

Armour Residential REIT, Inc. (ARR), the externally managed mortgage-backed securities REIT, reported a GAAP net loss related to common stockholders of $327.0 million, or $2.26 a share, for the third quarter of 2026, reversing net income of $111.5 million, or $0.86 a share, in the second quarter.

The swing was driven by a $1,165.1 million loss on MBS, compared with a $42.6 million loss in the prior quarter. Gains on interest-rate swaps of $515.1 million and on futures contracts of $311.7 million offset part of the mark, versus $110.8 million and a $4.5 million futures loss in the second quarter. Chief Executive Officer Scott Ulm said mortgage spreads widened late in the third quarter as interest rates rose and markets reacted to a more hawkish Federal Reserve.

Book value per common share fell to $14.55 from $17.53 at June 30. Total economic return, defined as the change in book value plus common dividends paid, was (12.9)%, versus 4.8% in the second quarter. Common stock outstanding rose to 148,415,420 shares from 141,553,046.

Net interest income rose to $83.7 million from $76.8 million. Average interest income on interest-earning assets was 4.99% and interest cost on average interest-bearing liabilities was 3.89%. Economic net interest spread widened slightly to 1.83% from 1.82%.

Distributable Earnings available to common stockholders increased to $102.3 million, or $0.71 a share, from $93.2 million, or $0.72 a share. The company raised $205.7 million by issuing 12,366,481 common shares and $2.5 million by issuing 123,374 preferred shares, and repurchased 363,700 common shares.

The portfolio totaled $21.3 billion at September 30, down from $21.8 billion at June 30, with Agency MBS at 94.0%, U.S. Treasury Securities at 2.2%, and TBA Agency Securities at 3.8%. Repurchase agreements, net, were $19.4 billion, with 49.8% with affiliate BUCKLER Securities LLC. Debt-to-equity rose to 8.24:1 from 7.54:1, and implied leverage rose to 8.41:1 from 7.73:1. Interest-rate swap notional increased to $17.0 billion from $15.9 billion. Liquidity, including cash and unencumbered securities, declined to $1.0 billion from $1.2 billion.

The company paid monthly common dividends of $0.24 a share in the third quarter, or $0.72 for the quarter, and declared $0.24 dividends payable October 29 and November 27, 2026. Ulm said the company remains constructive on the MBS market and that its approach is to stress-test liquidity, employ systematic hedging, and deploy capital opportunistically.