ARMOUR Residential REIT Inc (NYSE:ARR) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 08:00 am ET

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ARMOUR Residential REIT Inc (NYSE:ARR) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the ARMOUR Residential REIT Incorporated Fiscal First Quarter 2018 Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder this conference is being recorded Thursday, April 26, 2018.

Now I'd like to turn the conference over to Jim Mountain, Chief Financial Officer. Please go ahead, sir.

Executive
Jim Mountain

Thank you, Tommy, and thank you all for joining our call to discuss ARMOUR's first quarter 2018 results. This morning, I'm joined by ARMOUR's co-CEOs, Scott Ulm and Jeff Zimmer; and our Chief Operating Officer, Mark Gruber. By now, everyone has access to ARMOUR's earnings release, and Form 10-Q which can be found on ARMOUR's website www.armourreit.com.

This conference call may contain statements that are not recitations of historical fact, and therefore, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protections provided by the Reform Act. Actual outcomes and results could differ materially from the outcomes and results expressed or implied by the forward-looking statements due to the impact of many factors beyond the control of ARMOUR.

Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the Risk Factor section of ARMOUR's periodic reports filed with the Securities and Exchange Commission. Copies are available on the SEC's website at www.sec.gov. All forward-looking statements included in this conference call are made only as of today's date, and are subject to change without notice. We disclaim any obligation to update our forward-looking statements unless required to do by law.

Also, our discussion today may include reference to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measure is included in our earnings release, which can be found on ARMOUR's website. An online replay of this conference call will be available on ARMOUR's website shortly, and will continue for one year.

ARMOUR's first quarter GAAP net income was $44.7 million, or $0.96 per common share. Core earnings were $32 million or $0.66 per common share, which comfortably exceeded our dividends paid. Based on stockholders' equity at the beginning of the year, core earnings represent a 9.7% ROE annualized. Differences between GAAP and core income are mostly due to the treatment of TBA drop income and unrealized gains on our interest rate contracts.

We paid dividends of $0.19 per common share for the first quarter of 2018 for a total of $24.1 million or $0.57 per common share for the quarter. We've announced April and May common dividends of $0.19 per share to shareholders of record on April 13, 2018 and May 15, 2018 payable on April 27 and May 30 respectively. Quarter-end book value was $24.61 per common share, down $2.01 for the quarter, due primarily to rate increases and a lesser extent to the spread widening.