ARMOUR Residential REIT, Inc. recently released its 10-K report, providing insights into its financial performance and operations. The company primarily invests in residential mortgage-backed securities (MBS) in the United States, focusing on securities issued or guaranteed by government-sponsored entities and the Government National Mortgage Administration. ARMOUR has elected to be taxed as a real estate investment trust (REIT), allowing it to avoid corporate income tax on distributed net income. The company, incorporated in 2008 and based in Vero Beach, Florida, aims to create stockholder value through investment and risk management of a leveraged and diversified portfolio of MBS.
In the 10-K report, ARMOUR discussed the factors affecting its results of operations and financial condition. The company emphasized that its net interest income is influenced by changes in interest rates, borrowing costs, and prepayment speeds, with a focus on managing interest rate risks effectively. ARMOUR's investment portfolio mainly consists of Agency Securities, U.S. Treasury Securities, and money market instruments, with the company earning returns on the spread between the yield on its assets and its costs, including interest costs of funds borrowed, after considering its hedging strategies.
The report highlighted the impact of interest rate changes on ARMOUR's net interest income and the market value of its assets, emphasizing the importance of managing interest rate risks while maintaining its REIT status. Additionally, the company addressed the potential effects of prepayment rates on its anticipated yield, particularly in periods of declining interest rates.
Furthermore, ARMOUR discussed the influence of Federal Reserve actions, developments at Fannie Mae and Freddie Mac, and short-term interest rates on its financial results. The company emphasized the significance of managing its securities portfolio within the scope of its business plan and mitigating risk while maximizing liquidity.
The report also provided a detailed analysis of ARMOUR's results of operations for the years ended December 31, 2023, 2022, and 2021. It highlighted the net interest income, total other loss, total expenses after fees waived, net income (loss), and comprehensive loss for each year, offering insights into the company's financial performance over the three-year period.
Check out the company's full 10-K submission here.
