8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________

FORM 8-K

______________

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) July 27, 2022

ARMOUR Residential REIT, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	001-34766	26-1908763
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3001 Ocean Drive, Suite 201
Vero Beach,	Florida	32963
(Address of Principal Executive Offices)		(Zip Code)

(772) 617-4340

(Registrant’s Telephone Number, Including Area Code)

n/a

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading symbols	Name of Exchange on which registered
Preferred Stock, 7.00% Series C Cumulative Redeemable	ARR-PRC	New York Stock Exchange
Common Stock, $0.001 par value	ARR	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).        

Emerging growth company ☐

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Item 2.02.     Results of Operations and Financial Condition.

On July 27, 2022, ARMOUR Residential REIT, Inc. (the “Company”) issued a press release announcing its Q2 results and June 30, 2022 financial position. A copy of the press release is furnished as Exhibit 99.1 to this current report on Form 8-K.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.      Financial Statements and Exhibits.  

(d) Exhibits

Exhibit No.	Description
99.1	Press Release dated July 27, 2022
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 27, 2022

ARMOUR RESIDENTIAL REIT, INC.
By:	/s/ James R. Mountain
Name:	James R. Mountain
Title:	Chief Financial Officer

EX-99.1

ARMOUR RESIDENTIAL REIT, INC. ANNOUNCES

Q2 RESULTS AND JUNE 30, 2022 FINANCIAL POSITION

VERO BEACH, Florida -- July 27, 2022 -- ARMOUR Residential REIT, Inc. (NYSE: ARR and ARR PRC) (“ARMOUR” or the “Company”) today announced the Company's Q2 results and June 30, 2022 financial position.

ARMOUR's Q2 2022 Results

◦Comprehensive loss related to common stockholders of $(96.2) million or $(0.90) per common share, down (10.7)% from the beginning of the quarter.

◦Distributable Earnings available to common stockholders of $31.2 million, up 16.8% from Q1, which represents $0.29 per common share (see explanation of this non-GAAP measure on page 3).

◦Paid common stock dividends of $0.10 per share per month.

◦Raised $79.7 million of capital by issuing 10,424,858 shares of common stock at $7.65 net proceeds per share, after fees and expenses, through at the market offering program.

◦Repurchased 248,000 shares of common stock, at an average cost of $6.23 per share, pursuant to existing authorization.

◦Net interest income of $35.0 million and net interest margin of 2.22%, up 44 basis points from the prior quarter.

ARMOUR's June 30, 2022 Financial Position

◦Book value per common share of $7.25.

◦Liquidity, including cash and unencumbered agency and U.S. government securities, of $573.7 million.

◦Portfolio composition was 92% Agency mortgage-backed securities ("MBS"), including To Be Announced ("TBA") Securities and 8% U.S. Treasury Securities.

◦Debt to equity ratio of 6.9 to 1 (based on repurchase agreements divided by total stockholders’ equity). Leverage, including TBA Securities, was 7.6 to 1.

◦Interest Rate swap contracts totaled $6.9 billion of notional amount, representing 94% of total repurchase agreement and TBA Securities liabilities.

Book Value, March 31, 2021	$	8.48
Comprehensive loss per common share	(0.90)
Less: Common dividends per common share	(0.30)
Capital Raising Activities, net	(0.03)
Book Value, June 30, 2022	$	7.25

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Book value per common share consisted of:

	June 30, 2022
	(in millions except per share)
Common stock - 110,586,253 shares outstanding	$	0.1
Additional paid-in capital	3,537.6
Cumulative distributions to stockholders	(1,905.2)
Accumulated net loss	(653.6)
Accumulated other comprehensive loss	(6.2)
Total Stockholders' Equity	$	972.7
Less: liquidation preference - 7.00% Cumulative Redeemable Preferred C Stock - 6,846,978 shares outstanding	(171.2)
Equity Attributable to Common Stockholders	$	801.5
Book value per common share	$	7.25

The major drivers of the change in the Company's financial position during Q2 were:

	Q2 2022
	(in millions)
Total Stockholders' Equity – Beginning	$	1,021.9
Comprehensive Income (Loss)
Investment in securities (1)
Loss on MBS	$	(291.1)
Loss on U.S. Treasury Securities	(34.0)
Loss on TBA Securities	(17.9)
Interest rate swaps
Net interest income	1.5
Unrealized gain	220.5
Futures contracts	2.2
Net Interest Income	35.0
Total Expenses after fees waived (2)	(9.4)
Total Comprehensive Loss	$	(93.2)
Capital Activities
Issuance of common stock	80.7
Common stock repurchases	(1.5)
Dividends	(35.2)
Total Stockholders' Equity – Ending	$	972.7

(1)Includes both realized and unrealized gains and losses.

(2)The Company’s external manager has waived a portion of its contractual management fee at the rate of $0.65 million per month until further notice.

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Condensed balance sheet information:	June 30, 2022
	(in millions)
Assets
Cash	$	209.1
Cash collateral posted to counterparties	24.6
Investments in securities, at fair value:
Agency Securities	6,697.4
U.S. Treasury Securities	596.5
Receivable for unsettled sales	427.2
Derivatives, at fair value	772.5
Accrued interest receivable	21.6
Prepaid and other	3.1
Subordinated loan to BUCKLER	105.0
Total Assets	$	8,857.0
Liabilities:
Repurchase agreements	$	6,692.5
Cash collateral posted by counterparties	818.8
Payable for unsettled purchases	358.8
Derivatives, at fair value	3.8
Accrued interest payable- repurchase agreements	5.4
Accounts payable and other accrued expenses	5.0
Total Liabilities	7,884.3
Stockholders’ Equity:
7.00% Cumulative Redeemable Preferred C Stock ($0.001 par value per share, $25.00 per share liquidation preference) - 6,846,978 shares outstanding	$	—
Common stock ($0.001 par value per share) - 110,586,253 shares outstanding:	0.1
Additional paid-in capital	3,537.6
Cumulative distributions to stockholders	(1,905.2)
Accumulated net loss	(653.6)
Accumulated other comprehensive loss	(6.2)
Total Stockholders’ Equity	972.7
Total Liabilities and Stockholders’ Equity	$	8,857.0

Distributable Earnings, Including TBA Drop Income

Distributable Earnings (defined in more detail below) is a non-GAAP measure defined as net interest income plus TBA Drop Income minus hedging costs and net operating expenses. Distributable Earnings differs from GAAP total comprehensive loss, which include gains and losses and market value adjustments as described below.

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For a portion of its Agency Securities the Company may enter into TBA forward contracts for the purchase or sale of Agency Securities at a predetermined price, face amount, issuer, coupon and stated maturity on an agreed-upon future date, but the particular Agency Securities to be delivered are not identified until shortly before the TBA settlement date. The Company accounts for TBA Agency Securities as derivative instruments if it is reasonably possible that it will not take or make physical delivery of the Agency Securities upon settlement of the contract. The Company may choose, prior to settlement, to move the settlement of these securities out to a later date by entering into an offsetting short or long position (referred to as a “pair off”), net settling the paired off positions for cash, and simultaneously purchasing or selling a similar TBA Agency Security for a later settlement date. This transaction is commonly referred to as a “dollar roll.” The Company accounts for TBA dollar roll transactions as a series of derivative transactions.

Forward settling TBA contracts typically trade at a discount, or “Drop,” to the regular settled TBA contract to reflect the expected interest income on the underlying deliverable Agency Securities, net of an implied financing cost, which would have been earned by the buyer if the contract settled on the next regular settlement date. When the Company enters into TBA contracts to buy Agency Securities for forward settlement, it earns this “TBA Drop Income,” because the TBA contract is essentially a leveraged investment in the underlying Agency Securities. The amount of TBA Drop Income is calculated as the difference between the spot price of similar TBA contracts for regular settlement and the forward settlement price on the trade date. The Company generally accounts for TBA contracts as derivatives and TBA Drop Income is included as part of the periodic changes in fair value of the TBA contracts that the Company recognizes currently in the Other Income (Loss) section of its Consolidated Statement of Operations.

Regulation G Reconciliation

Distributable Earnings, including TBA Drop income, excludes gains or losses from securities sales and early termination of derivatives, market value adjustments (including impairments) and certain non-recurring expenses. The Company believes that Distributable Earnings and Distributable Earnings per common share are useful to investors because our Board of Directors considers Distributable Earnings and Distributable Earnings per common share when determining the level of dividends on our common stock. Distributable Earnings and Distributable Earnings per common share tend to be more stable over time and this practice is designed to increase the stability of our common stock dividend from month to month. However, because Distributable Earnings is an incomplete measure of the Company’s financial performance and involves differences from total comprehensive income (loss) computed in accordance with GAAP, Distributable Earnings should be considered as supplementary to, and not as a substitute for, the Company’s total comprehensive income (loss) computed in accordance with GAAP as a measure of the Company’s financial performance.

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The elements of ARMOUR’s Distributable Earnings and Distributable Earnings per common share and a reconciliation of those amounts to the Company’s Total Comprehensive Loss and Comprehensive loss per common share appear below:

	Q2 2022 (unaudited)
	(in millions)
Net Interest Income	$	35.0
TBA Drop Income	7.1
Net interest income on interest rate swaps	1.5
Total Expenses after fees waived	(9.4)
Distributable Earnings	$	34.2
Dividends on Preferred Stock	$	(3.0)
Distributable Earnings available to common stockholders	$	31.2
Distributable Earnings per common share	$	0.29
Distributable Earnings	$	34.2
Loss on MBS	(291.1)
Loss on U.S. Treasury Securities	(34.0)
Loss on TBA Securities, less TBA Drop Income	(25.0)
Unrealized gain on interest rate swaps	220.5
Futures contracts	2.2
Total Comprehensive Loss	$	(93.2)
Dividends on Preferred Stock	$	(3.0)
Comprehensive loss related to common stockholders	$	(96.2)
Comprehensive loss per common share	$	(0.90)
Weighted average common shares outstanding - 106,513,672

Company Update

At the close of business on July 26, 2022:

◦Common stock outstanding of 114,634,561 shares.

◦7.00% Cumulative Redeemable Preferred C Stock ("Series C Preferred Stock") with liquidation preference totaling approximately $171.2 million.

◦Estimated Book value per common share was approximately $7.30.

◦Liquidity, including cash and unencumbered securities, exceeded $656 million.

◦Securities portfolio included approximately $8.1 billion of Agency MBS (including TBA Securities) and U.S. Treasury Securities.

◦Debt to equity ratio (based on repurchase agreements divided by total stockholders' equity) was approximately 7.4 to 1. Leverage, including TBA Securities was approximately 7.7 to 1.

Through July 26, 2022, we issued 4,048 shares under our 2021 Common stock ATM Sales Agreement for proceeds of $28,488 net of issuance costs and commissions of $295.

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Dividends

ARMOUR paid monthly cash dividends of $0.10 per share of the Company’s common stock for each month in Q2 2022. ARMOUR will pay common stock dividends of $0.10 per share on July 29, 2022 to holders of record on July 15, 2022. ARMOUR previously announced the August common stock dividends of $0.10 per share to be paid on August 29, 2022 to holders of record on August 15, 2022. ARMOUR’s Board of Directors will determine future common dividend rates based on an evaluation of the Company’s results, financial position, real estate investment trust (“REIT”) tax requirements, and overall market conditions as the quarter progresses. In order to maintain ARMOUR’s tax status as a REIT, the Company is required to timely distribute substantially all of its ordinary REIT taxable income for the tax year.

ARMOUR paid monthly cash dividends of $0.14583 per share of the Company’s Series C Preferred Stock for each month in Q2 2022. ARMOUR paid Series C Preferred Stock dividends of $0.14583 per share on July 27, 2022 to holders of record on July 15, 2022. ARMOUR previously announced the August and September Series C Preferred Stock dividends of $0.14583 per share to be paid on August 29, 2022 and September 27, 2022 to holders of record on August 15, 2022 and September 15, 2022, respectively.

Conference Call

As previously announced, the Company will provide an online, real-time webcast of its conference call with equity analysts covering Q2 2022 operating results on Thursday, July 28, 2022, at 8:00 a.m. (Eastern Time). The live broadcast will be available online and can be accessed at https://event.choruscall.com/mediaframe/webcast.html?webcastid=j5YZf1iA. To monitor the live webcast, please visit the website at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. An online replay of the event will be available on the Company’s website at www.armourreit.com and continue for one year.

ARMOUR Residential REIT, Inc.

ARMOUR invests primarily in fixed rate residential, adjustable rate and hybrid adjustable rate residential mortgage-backed securities issued or guaranteed by U.S. Government-sponsored enterprises or guaranteed by the Government National Mortgage Association. ARMOUR is externally managed and advised by ARMOUR Capital Management LP, an investment advisor registered with the Securities and Exchange Commission (“SEC”).

Safe Harbor

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Additional information concerning these, the impact of the COVID-19 pandemic on the Company's operational and financial performance and other risk factors are contained in the Company’s most recent filings with the SEC. All subsequent written and oral forward-looking statements concerning the Company are expressly qualified in their entirety by the cautionary statements above. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

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Additional Information and Where to Find It

Investors, security holders and other interested persons may find ARMOUR's most recent Company Update and additional information regarding the Company at the SEC’s internet site at www.sec.gov, or the Company website at www.armourreit.com or by directing requests to: ARMOUR Residential REIT, Inc., 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963, Attention: Investor Relations.

CONTACT:     investors@armourreit.com

James R. Mountain

Chief Financial Officer

ARMOUR Residential REIT, Inc.

(772) 617-4340

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XML

Cover	Jul. 27, 2022
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Jul. 27, 2022
Entity Registrant Name	ARMOUR Residential REIT, Inc.
Entity Incorporation, State or Country Code	MD
Entity File Number	001-34766
Entity Tax Identification Number	26-1908763
Entity Address, Address Line One	3001 Ocean Drive, Suite 201
Entity Address, City or Town	Vero Beach,
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32963
City Area Code	772
Local Phone Number	617-4340
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001428205
Amendment Flag	false
Preferred Class C
Document Information [Line Items]
Title of 12(b) Security	Preferred Stock, 7.00% Series C Cumulative Redeemable
Trading Symbol	ARR-PRC
Security Exchange Name	NYSE
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	ARR
Security Exchange Name	NYSE