ARMOUR Residential REIT, Inc. (ARR): Business Model Canvas [Dec-2025 Updated]

You're looking to really understand how a mortgage REIT like ARMOUR Residential REIT, Inc. (ARR) actually makes money, beyond just the headline yield. Honestly, for me, after two decades analyzing these structures, it always boils down to managing the spread on a massive, leveraged balance sheet. ARR is sitting on an $\mathbf{\$18.2 \text{ billion}}$ portfolio of Agency MBS as of Q3 2025, but the real story is how they finance that-nearly $\mathbf{\$16.6 \text{ billion}}$ in short-term repurchase agreements-to deliver that eye-popping $\mathbf{17.54\%}$ monthly dividend yield. I've mapped out the nine essential blocks below, showing you exactly where the risks and the income streams lie in their model, so you can see the mechanics behind that high payout.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships that keep ARMOUR Residential REIT, Inc. (ARR) running, which is essential for a leveraged mortgage REIT. These aren't just vendors; they are the plumbing for their entire investment strategy.

ARMOUR Capital Management LP acts as the external manager, providing the core expertise for investment strategy, portfolio selection, and risk management. While the exact management fee structure for late 2025 isn't explicitly detailed in recent filings, we know the relationship involves financial alignment; for instance, during Q2 2025, ARMOUR Capital Management LP waived $1.65 million of their management fees to offset operating expenses. This partnership is key because the management team's experience is relied upon for access to attractive financing terms and hedging strategies.

The reliance on Government-Sponsored Entities (GSEs) is absolute, as ARMOUR Residential REIT, Inc. invests primarily in securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. As of the November 2025 update, the Agency Portfolio value was $18,520 million, representing 98.7% of the total portfolio value.

Financing is dominated by the relationship with BUCKLER Securities LLC, which is the majority-owned affiliate and the largest provider of repurchase financing. This concentration is a defining feature of the funding structure. The company also spreads its funding needs across other Repurchase Agreement Counterparties, which are typically banks and dealers, to secure competitive rates.

Here's a breakdown of the funding structure as of late 2025, based on the most recent data available:

Counterparty Group	Metric	Amount (in millions)	Percentage of Total Repo
BUCKLER Securities LLC	Repurchase Financing Provided	$7,126	42.4%
All Other Counterparties	Repurchase Financing Provided	$9,668	57.6%
Total Repurchase Agreements (Net)	As of November 2025	$16,794	100.0%

The overall leverage profile is high, with the Debt to Equity ratio reported at 7.78:1 as of September 30, 2025. To manage this, ARMOUR Residential REIT, Inc. diversifies its repo funding, aiming for the best terms.

The core asset base partnership with GSEs is detailed below, showing the concentration in Agency MBS:

• Total Portfolio Value (November 2025): $18,769 million.
• Agency Portfolio Value (November 2025): $18,520 million.
• Agency CMBS as a percentage of the portfolio: 5.9%.
• 30 Year Fixed Rate Pools as a percentage of the portfolio: 92.8%.
• Ginnie Mae securities as a percentage of the portfolio: 4.4%.

For the non-affiliate repo funding, you should note the terms that ARMOUR Residential REIT, Inc. sought in Q2 2025, which gives you an idea of the market ARMOUR Capital Management LP negotiates within:

• Number of other repo counterparties: 15 to 20.
• Average gross haircut on repo funding: 2.75%.
• Repo funding rate range: around SOFR plus 15 to 17 basis points.

Finance: draft the sensitivity analysis on repo concentration risk by next Tuesday.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Key Activities

You're looking at the core engine of ARMOUR Residential REIT, Inc. (ARR), which is all about managing a large, leveraged portfolio of agency securities to generate spread income. Here's a breakdown of the specific activities that drive the business, grounded in the latest numbers from the third quarter of 2025.

Managing a leveraged portfolio of Agency MBS and U.S. Treasuries

The primary activity is holding and managing a substantial portfolio of fixed-income assets, overwhelmingly Agency mortgage-backed securities (MBS). This requires constant monitoring of interest rate risk and credit risk, though the credit risk on Agency MBS is minimal since they are issued or guaranteed by U.S. Government-sponsored enterprises.

As of September 30, 2025, the portfolio totaled $18.2 billion. You should know that the year-to-date expansion of the total trading securities portfolio reached 40%, growing to about $18.15 billion. The activity involves actively managing the mix to optimize the net interest spread, which stood at an economic 1.83% in Q3 2025.

Here is the asset allocation as of the end of Q3 2025:

Asset Class	Percentage of Portfolio	Notional Amount (Approximate)
Agency Mortgage-Backed Securities (MBS)	97.9%	$17.82 billion (based on $18.2B total)
U.S. Treasury Securities	1.4%	$254.8 million (based on $18.2B total)
To Be Announced (TBA) Securities	0.7%	$127.4 million (based on $18.2B total)

The REIT maintains significant leverage to boost returns on equity. The debt-to-equity ratio, based on repurchase agreements, was 7.78:1 on September 30, 2025. Honestly, implied leverage, which includes TBA securities and unsettled positions, was slightly lower at 7.73:1.

Executing interest rate hedging strategies using swaps and futures

To manage the interest rate risk inherent in holding long-duration assets funded by short-term liabilities, ARMOUR Residential REIT, Inc. (ARR) actively uses derivatives. This activity is crucial for protecting the net interest spread.

The hedge book employs a mix of instruments, including Treasury shorts, futures, OIS (Overnight Index Swap), and SOFR swaps. While the most recent specific notional amount for swaps was reported at $10.3 billion during Q2 2025, the activity continued into Q3 2025, where mark-to-market losses on derivative hedges partially offset gains on the agency portfolio.

The management dynamically adjusts duration, having increased hedges on longer-duration assets to manage the steepness of the yield curve.

Sourcing and securing repurchase financing (repo debt)

Securing short-term funding through the repurchase agreement (repo) market is a daily, high-volume activity. This is how the leveraged portfolio is financed.

As of September 30, 2025, the net repurchase agreements totaled $16.6 billion. A significant portion of this funding is sourced internally, as 43.3% of those repurchase agreements were with the ARMOUR affiliate, BUCKLER Securities LLC. The focus on repo financing is strategically beneficial when short-term interest rates are expected to decline, as the company anticipates lower financing costs moving into 2026.

Raising equity capital via at-the-market (ATM) share offerings

To fund the aggressive portfolio growth, ARMOUR Residential REIT, Inc. (ARR) regularly issues new common stock. This activity is essential for maintaining capital adequacy and covering preferred dividends.

In August 2025, the company closed a significant underwritten public offering of 18,500,000 shares for estimated gross proceeds of approximately $302,475,000. Separately, through its ATM program, ARMOUR raised $99.5 million in August 2025 by issuing 5,994,201 common shares. Even in Q2 2025, the company raised approximately $104.6 million via an ATM offering. The strategy involves continuing to issue shares into Q4 2025 to support the expanding securities portfolio.

Here's a look at recent capital activity:

Activity (2025)	Shares Issued/Repurchased	Proceeds/Cost (Millions USD)
Public Offering (August)	18,500,000 shares	Proceeds: approx. $302.5
ATM Issuance (August)	5,994,201 shares	Proceeds: $99.5
ATM Issuance (Q2)	6,303,710 shares	Proceeds: $104.6
Common Share Repurchase (September)	(684,102) shares	Cost: approx. $10.0 (Q2 figure used as September is not isolated)

Calculating and distributing monthly common share dividends

The final key activity is the calculation and distribution of monthly dividends to maintain REIT status and attract income-focused investors. The board determines these rates based on results and tax requirements.

For the third quarter of 2025, ARMOUR Residential REIT, Inc. (ARR) paid a common stock dividend of $0.24 per share per month, totaling $0.72 per share for the quarter. The dividend declared for October 2025 was $0.24, and the subsequent one for November 2025 was also set at $0.24 per share. This translates to an annualized dividend of $2.88 per share, supporting a reported trailing twelve-month (TTM) dividend yield of 16.89%.

The ability to cover this payout is key. Distributable Earnings available to common stockholders were $75.3 million, or $0.72 per share, for Q3 2025, meaning the common dividend was fully covered by distributable earnings.

• Common Stock Outstanding (as of October 21, 2025): 111,898,236 shares.
• Series C Preferred Stock Dividend (Monthly): $0.14583 per share.
• Preferred Dividend Coverage (Q3 2025): Improved to 26.1x.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Key Resources

You're looking at the core assets that ARMOUR Residential REIT, Inc. (ARR) uses to generate returns in the mortgage REIT space. These aren't just line items on a balance sheet; they are the engine and the protective gear for the whole operation.

The foundation of ARR's resource base is its Investment Portfolio. As of the September 30, 2025 financial position, this portfolio totaled approximately $18.2 billion. This asset base is heavily concentrated in Agency mortgage-backed securities (MBS), which carry the implicit or explicit guarantee of U.S. Government-sponsored enterprises. This focus on agency paper is a deliberate choice to manage credit risk, though it exposes the firm to interest rate and prepayment risk, which must be managed through other resources.

To support this large, leveraged portfolio, ARR maintains a strong Liquidity position. For Q3 2025, liquidity, which includes cash and unencumbered securities, was approximately $1.1 billion. This level of ready capital is crucial for meeting margin calls, funding new investments, and managing day-to-day operations without being forced to sell assets at inopportune times. To be fair, this figure excludes about $250.0 million in MBS principal and interest receivable due in October 2025, so the true near-term cash availability is even higher.

The expertise of the Management Team, provided by the external manager ARMOUR Capital Management LP (ACM), is a non-physical but critical resource. This team relies on decades of experience to manage the inherent risks of this business. They focus on three key areas: MBS securities portfolio analysis and selection, securing financing, and implementing hedging and liquidity strategies to moderate interest rate and MBS price risk. For instance, Co-Chief Investment Officer Desmond Macauley brings 25 years of experience in the mortgage-backed securities market and serves as the Head of Risk Management.

The ability to tap the markets for funding is another essential resource, falling under Access to Capital Markets. ARR actively issues both common and preferred stock to grow its asset base and replace capital. This isn't just theoretical; the company executed significant capital raises in 2025 to fund portfolio growth. For example, in August 2025, ARR closed an underwritten public offering of 18,500,000 shares of common stock, generating estimated gross proceeds of approximately $302,475,000. Also, through an at-the-market program, they raised approximately $99.5 million by issuing common stock, plus another $0.3 million via preferred stock issuance through early October 2025.

Here's a quick look at the portfolio composition as of the end of Q3 2025:

Asset Class	Percentage of Portfolio	Approximate Value (if $18.2B total)
Agency Mortgage-Backed Securities (MBS)	97.9%	$17,817.8 million
U.S. Treasury Securities	1.4%	$254.8 million
To Be Announced (TBA) Securities	0.7%	$127.4 million

The management team's specific capabilities are centered around deep analysis and risk mitigation:

• MBS securities portfolio analysis and selection.
• Hedging and liquidity strategies to moderate interest rate risk.
• Co-CIO Desmond Macauley cited among top Structured MBS Securities analysts.
• Co-CIO Sergey Losyev previously co-managed over $25 billion of Agency MBS assets.
• Active management relies on focused qualitative and quantitative analysis.

The firm's capital market activities show a clear intent to deploy capital strategically:

• August 2025 common stock offering gross proceeds: approximately $302.5 million.
• Common stock raised via ATM program (YTD through Oct 10): approximately $99.5 million.
• Preferred stock raised via ATM program (YTD through Oct 10): approximately $0.3 million.
• Shares of common stock outstanding as of Q3 2025: 111,898,236 shares.

Finance: draft 13-week cash view by Friday.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Value Propositions

You're looking at the core reasons why an investor would choose ARMOUR Residential REIT, Inc. (ARR) over other options in the market right now. It boils down to yield, safety, and consistency, all backed by hard numbers from late 2025 filings.

High-Yield Income: Attractive current dividend yield of around 17.54% (November 2025)

The income proposition is front and center for ARMOUR Residential REIT, Inc. (ARR). The actual reported yields hover near that target, making it a significant draw for income-focused portfolios. The commitment is to a high payout, supported by the underlying asset performance.

• Monthly Common Dividend Declared: $0.24 per share.
• Reported Current Dividend Yield (as of November 2025 data): 17.8%.
• Trailing Twelve Month (TTM) Dividend Yield (as of late 2025): 16.89%.
• Expected Hedged Return on Equity (ROE) range: 16% to 18%.

Low Credit Risk: Portfolio is 97.9% Agency mortgage-backed securities (MBS)

The credit risk profile is intentionally low because the assets are overwhelmingly guaranteed by U.S. Government-sponsored enterprises. This means the risk of borrower default is minimal, shifting the focus to interest rate risk management instead.

Here's a snapshot of the investment portfolio composition as of September 30, 2025, which shows the concentration in agency assets:

Asset Class	Percentage of Portfolio	Value (millions)
Agency Portfolio (Total)	98.7%	$18,520
Agency MBS (Total)	97.9%	N/A
30 Year Fixed Rate Pools (Sub-component)	92.8%	$17,415
U.S. Treasury Securities	1.3%	$249

Monthly Cash Flow: Consistent monthly dividend payments for investors

ARMOUR Residential REIT, Inc. (ARR) adheres to the REIT requirement of distributing taxable income, which translates directly into a predictable monthly cash distribution schedule for shareholders. This frequency is a key feature for investors relying on regular income streams.

• Dividend Payment Frequency: Monthly.
• Distributable Earnings per common share (Q3 2025): $0.72.
• Total Dividends Paid Through October 2025 (Since Inception): $2.5 billion.

Capital Preservation: Active hedging to moderate interest rate and price risk

Since the assets are long-duration fixed-rate securities, the primary risk is interest rate movement. ARMOUR Residential REIT, Inc. (ARR) actively uses derivatives to manage this exposure, aiming to keep the net duration tight to limit volatility in book value.

The hedging strategy details from Q3 2025 show a clear focus on managing rate exposure:

• Net Duration Maintained: Short at approximately 0.2 years.
• Notional Allocation to SOFR/OIS Swaps: Approximately 87%.
• Use of Derivatives: Interest rate swaps and futures contracts are used to hedge against potential fluctuations in interest rates.
• Liquidity Position (as of September 30, 2025): Approximately $1.1 billion.

Finance: draft 13-week cash view by Friday.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Customer Relationships

You're looking at how ARMOUR Residential REIT, Inc. (ARR) manages the relationship with its equity holders, which is fundamentally different from a typical operating company. For ARR, the primary customer relationship is transactional, centered on the public market where shares are bought and sold.

Transactional: Primarily through public stock trading on the NYSE

The direct, moment-to-moment relationship with the shareholder happens on the New York Stock Exchange (NYSE). This is where liquidity is found, and where the market sets the price you see every second. As of the third quarter of 2025, the company carried a market capitalization of approximately $1.78 billion. This market value dictates the entry and exit point for most investors, making the stock's trading performance a key, albeit indirect, measure of customer satisfaction.

Investor Relations: Regular quarterly calls and monthly portfolio updates

To maintain a deeper connection beyond the ticker price, ARMOUR Residential REIT, Inc. relies on structured communication. You can see this commitment clearly in their reporting cadence. For instance, the Q3 2025 earnings release was on October 22, 2025, followed by a live conference call on October 23, 2025, at 8:00 a.m. Eastern Time to discuss results with analysts and investors. They make replays available for one year, showing a defintely structured approach to ongoing dialogue.

These interactions are crucial for explaining the complex portfolio, which as of September 30, 2025, totaled $18.2 billion, comprised of 97.9% Agency mortgage-backed securities.

Here's a quick look at some of the key figures shared with investors following the Q3 2025 reporting period:

Metric	Value (Q3 2025)	Unit/Context
Distributable Earnings (Common Stockholders)	$75.3 million	Q3 2025
Distributable Earnings Per Share	$0.72	Q3 2025
GAAP Net Income (Common Stockholders)	$156.3 million	Q3 2025
Book Value Per Common Share	$17.49	As of September 30, 2025
Total Economic Return	7.75%	Q3 2025

Dividend Focus: Relationship is maintained via the monthly distribution of income

For an income-focused investor, the monthly dividend is the most tangible element of the relationship. ARMOUR Residential REIT, Inc. maintains this connection by consistently declaring and paying distributions. For example, the common stock dividend for November 2025 was declared at $0.24 per share, payable on November 28, 2025, to holders of record on November 17, 2025. This monthly cadence is the bedrock of the income investor relationship. This consistent payout translates to an annualized dividend of $2.88 per share, supporting a trailing twelve months (TTM) dividend yield of 16.89% as of late 2025.

The relationship is also segmented by security type, as the Series C Preferred Stock holders receive a different, fixed monthly payment. For Q3 2025, the Series C Preferred Stock dividend was confirmed at $0.14583 per share monthly.

You should note the context of these payments:

• Monthly Common Dividend Amount: $0.24 per share (e.g., November 2025)
• Annualized Common Dividend: $2.88 per share
• Reported TTM Dividend Yield: 16.89%
• Reported TTM Payout Ratio: 380.5323%
• Series C Preferred Monthly Dividend: $0.14583 per share
• Capital Raised via ATM in Q3 2025: $99.5 million (from approx. 6 million shares)

Finance: draft 13-week cash view by Friday.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Channels

The channels ARMOUR Residential REIT, Inc. (ARR) uses to reach and serve its investor customer segments are centered around public market access and direct corporate communication.

New York Stock Exchange (NYSE: ARR): Primary trading venue for common stock

The common stock of ARMOUR Residential REIT, Inc. trades on the New York Stock Exchange under the ticker symbol ARR. The Series C Cumulative Redeemable Preferred Stock trades under the ticker ARR-PRC on the same exchange. This venue is the primary point of liquidity and price discovery for the equity base.

Here are some key trading metrics as of late 2025:

Metric	Value	Date/Context
Closing Price	$17.05	End of day November 25, 2025
Market Capitalization	$1,521,376,373	Recent data
Outstanding Common Shares	111,898,236	Recent data
52-Week High	$19.64	Recent data
52-Week Low	$13.18	Recent data
Recent Daily Share Volume	2,884,608	Recent data
April 2025 Common Dividend	$0.24 per share	April 2025 distribution

The common shares were trading at a circa 6% discount to the Q3 2025 book value of $17.49/share. This exchange is where retail and institutional investors execute trades to gain or adjust exposure to the ARMOUR Residential REIT, Inc. portfolio, which primarily consists of Agency Securities.

Investor Relations Website: Dissemination of SEC filings and portfolio data

The official Investor Relations website, www.armourreit.com, serves as the direct communication channel for corporate and financial transparency. This is where ARMOUR Residential REIT, Inc. provides the necessary documentation for due diligence.

The Investor Relations section offers access to:

• Latest 10-K, 10-Q, and Proxy Statements.
• News Releases, including the announcement of Q3 2025 Results on October 22, 2025.
• Monthly Company Updates.
• Presentations, such as the one dated November 14, 2025, detailing financial position and operations.
• Details on the portfolio, which invests primarily in residential mortgage-backed securities issued or guaranteed by U.S. Government-sponsored entities.

The company is managed by ARMOUR Capital Management LP, an investment advisor registered with the SEC, which oversees the investment and risk management strategies communicated through these channels.

Brokerage Platforms: Access for retail and institutional investors

ARMOUR Residential REIT, Inc. stock is accessible via virtually all standard brokerage firms, including online services. This broad accessibility through third-party platforms is key for reaching the diverse investor base.

For investors, these platforms facilitate:

• Execution of buy and sell orders for ARR common stock and ARR-PRC preferred stock.
• Access to real-time and delayed quotes, historical pricing, and charting tools.
• Integration with various order types, such as limit or market orders, to manage execution price.

For example, on November 25, 2025, the bid was $17.00 (X 619 shares) and the ask was $18.49 (X 219 shares) on one data feed, illustrating the mechanism of price negotiation on these platforms. This decentralized access helps maintain the stock's liquidity, supported by a recent daily volume of 2,884,608 shares.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Customer Segments

You're looking at the core groups ARMOUR Residential REIT, Inc. (ARR) serves with its structure, primarily focused on delivering consistent, high-yield income from its portfolio of residential mortgage-backed securities. These segments are defined by their risk tolerance and income needs, which directly influence their investment choice between common stock and preferred shares.

Income-Seeking Investors: Individuals and funds prioritizing high dividend yield

This group chases the high cash distribution that mortgage REITs are known for. They are focused on the current return on investment, often comparing ARR's yield against other real estate investment trusts (REITs) and fixed-income alternatives. ARMOUR Residential REIT, Inc. has definitely made this a central part of its appeal, maintaining a strong distribution schedule.

Here's the quick math on the common stock appeal as of late 2025:

• Monthly common stock dividend confirmed at $0.240 per share for October 2025.
• This translates to an annualized common dividend of $2.88 per share.
• The Trailing Twelve Months (TTM) dividend yield stands at a notable 16.89%.
• Since inception through October 2025, ARMOUR Residential REIT, Inc. has paid out $2.5 billion in dividends.

Institutional Investors: Funds holding a significant stake (over 40.58% in late 2025)

Institutions, which include mutual funds, ETFs, and other large asset managers, represent the largest block of control. Their presence signals a level of professional vetting, but it also means their trading activity can create significant near-term price volatility. As of September 30, 2025 filings, institutional holders commanded a substantial portion of the equity.

The ownership structure shows a clear reliance on these large players:

Shareholder Group (As of 9/30/25)	Percentage of Shares Outstanding	Total Shares Held
Institution	60.21%	67,374,226
Mutual Fund	15.43%	16,836,124
Insider	0.23%	261,851

The top three institutional holders as of September 29, 2025, were BlackRock Institutional Trust Company, N.A., The Vanguard Group, Inc., and State Street Investment Management (US), holding 14.63%, 10.69%, and 3.46% of the outstanding shares, respectively.

Preferred Stock Investors: Conservative investors seeking fixed-rate income (ARR.PR.C)

This segment is looking for predictability, which is why they opt for the Series C Cumulative Redeemable Preferred Stock, ticker ARR.PR.C. These investors prioritize the fixed payment over potential common stock appreciation. The fact that the call date was 1/28/2025 means the shares are now trading post-call, but they remain perpetual.

The income stream for ARR.PR.C is clearly defined:

• Stated coupon rate is 7.00% on the $25.00 liquidation preference.
• This equates to a fixed annual dividend of $1.75 per share.
• The confirmed monthly dividend payment was $0.14583 per share for October 2025.
• The current yield for this preferred class is reported at 8.24%.

Retail Investors: Individual stockholders seeking monthly cash flow

Retail investors are the individual shareholders who often value the monthly payout schedule for budgeting purposes. They are the counterpart to the large institutions, representing the remaining ownership not held by funds or insiders. Based on the latest ownership data, this group holds a significant, though minority, position.

We can infer the retail segment's size from the institutional data; for example, one report from May 22, 2025, suggested the general public owned a 48% stake, while another from late 2025 indicated Public Companies & Retail Investors held 41.71% of the common stock.

You should definitely track the common dividend consistency, as that is the primary driver for this segment.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive down the profitability of ARMOUR Residential REIT, Inc. (ARR) as of its Q3 2025 filings. For a mortgage REIT, the cost of money and managing interest rate risk are the biggest drains on the bottom line, so you need to watch these line items closely.

The financing structure relies heavily on short-term borrowing, specifically repurchase agreements (repos). As of September 30, 2025, the net amount outstanding for these repurchase agreements was $16.6 billion. This massive funding base means even small changes in short-term rates hit the income statement hard.

Here is a breakdown of the key cost elements based on the Q3 2025 figures:

Cost Component	Financial Metric/Data Point	Amount/Rate (Q3 2025)
Interest Expense: Cost of Financing	Average Interest Cost on Average Interest Bearing Liabilities	4.63%
Interest Expense: Financing Leverage	Net Repurchase Agreements Outstanding	$16.6 billion
Hedging Costs: Derivatives Loss	Loss on Derivatives (GAAP)	$(49.3) million
Hedging Costs: Swap Notional	Interest Rate Swap Contracts Notional Amount	$10.4 billion
Management Fees: Waiver Amount	Contractual Management Fee Waived per Quarter	$1.65 million

The cost of financing is further illustrated by the economic metrics. The economic interest cost on average interest bearing liabilities was 3.17% for the quarter. This contrasts with the economic interest income of 5.00%, resulting in an economic net interest spread of 1.83%.

You should note the management fee structure. ARMOUR Capital Management LP, the external manager, actually waived a portion of its contractual fee for Q3 2025, amounting to $1.65 million for that quarter, the same amount waived in Q2 2025. This waiver directly reduced the operating expenses ARMOUR Residential REIT, Inc. had to bear.

For hedging, the losses on derivatives were significant in GAAP terms for the quarter, recorded as a $(49.3) million loss. This is the premium and loss side of managing the interest rate risk associated with the portfolio, which is heavily concentrated in Agency MBS.

The General and Administrative Expenses (G&A) are captured within the calculation for Distributable Earnings, which subtracts 'net operating expenses' from net interest income plus TBA Drop Income adjusted for swaps/futures. However, the specific dollar amount for G&A alone is not explicitly itemized in the provided summary data for Q3 2025.

• The GAAP Net Interest Income for Q3 2025 was $38.5 million.
• The total portfolio size supporting this cost structure was $18.2 billion.
• The debt-to-equity ratio, based on repurchase agreements to total stockholders' equity, stood at 7.78:1 as of September 30, 2025.

Finance: draft the full Q3 2025 GAAP Statement of Income breakdown for Interest Expense vs. Interest Income by Friday.

ARMOUR Residential REIT, Inc. (ARR) - Canvas Business Model: Revenue Streams

You're looking at how ARMOUR Residential REIT, Inc. (ARR) actually brings in the money to pay those attractive monthly dividends. For a mortgage REIT, the revenue streams are tightly linked to the interest rate environment and the value of the assets on the balance sheet, which are primarily Agency MBS (Mortgage-Backed Securities). Honestly, it's a game of managing the spread between what you earn and what you pay to finance those assets.

The core of the business is definitely Net Interest Income. This is the interest earned on the Agency MBS portfolio minus the financing costs, which are largely driven by repurchase agreements and interest rate swaps. For example, in the second quarter of 2025, ARMOUR Residential REIT, Inc. reported Net Interest Income of $33.1 million. By the third quarter of 2025, that number had improved to $38.5 million. To give you a bit more color on that, the economic net interest spread-that's the economic interest income minus the economic interest expense-was 1.82% in Q2 2025, moving slightly wider to 1.83% in Q3 2025.

Here's a quick look at how those key interest metrics shifted between the second and third quarters of 2025:

Metric	Q2 2025 Value	Q3 2025 Value
Net Interest Income	$33.1 million	$38.5 million
Distributable Earnings (Total)	$64.9 million	$75.3 million
Book Value Per Share (End of Period)	$16.90	$17.49
Total Economic Return (Quarterly)	(5.22)%	7.75%

Next up, you've got Mark-to-Market Gains, which are the unrealized changes in the value of the Agency MBS portfolio, often heavily influenced by derivatives like swaps. These gains or losses hit the GAAP net income line hard. For instance, Q3 2025 saw strong GAAP performance, with GAAP net income available to common stockholders hitting $156.3 million or $1.49 per share, largely driven by favorable market value adjustments on the Agency MBS. This was a big swing from Q2 2025, which recorded a GAAP net loss related to common stockholders of $(78.6) million or $(0.94) per share, primarily due to losses on derivative marks. One analyst noted that the Q3 revenue beat was helped by MBS gains of $177.1 million.

The measure you really want to watch for dividend sustainability is Distributable Earnings. This is the core income figure ARMOUR Residential REIT, Inc. uses to gauge its ability to cover the common dividends. In Q3 2025, Distributable Earnings available to common stockholders were $75.3 million, translating to $0.72 per common share. This was enough to cover the monthly common dividend of $0.24 per share for the quarter. In the prior quarter, Q2 2025, Distributable Earnings were $64.9 million, or $0.77 per share. Distributable earnings before preferred dividends in Q3 2025 were $78.3 million.

Finally, there's income derived from TBA Securities Income, which comes from To Be Announced forward contracts. These are commitments to buy or sell MBS in the future, and gains or losses on these contracts factor into the Distributable Earnings calculation. While we don't have a specific dollar amount for TBA income alone, we know the portfolio composition. As of the end of Q2 2025, TBA Securities made up 2.0% of the total portfolio, and that percentage decreased to 0.7% by the end of Q3 2025.

You can see the sources of income flow through these key components:

• Net Interest Income, which improved sequentially from Q2 to Q3 2025.
• Mark-to-Market adjustments, which can cause significant swings in GAAP results.
• TBA Securities activity, which is part of the overall derivative management.
• The resulting Distributable Earnings, which must cover the common dividend of $0.24 per share monthly.

Finance: draft 13-week cash view by Friday.