ARMOUR Residential REIT, Inc. Sees Core Income Decline to $0.15 Per Share

ARMOUR Residential REIT, Inc. watches its core income fall 30% in Q4 as it reduces its core leverage ratio.

Feb 27, 2014 at 10:52AM

ARMOUR Residential REIT (NYSE:ARR) reported core income of $0.15 per share, or $59.3 million, in the fourth quarter of 2013 after the market closed yesterday, a decline of $0.07 per share relative to the core income of $0.22 per share seen in the fourth quarter of 2012. That's a drop of almost 32%.

In the fourth quarter, as a result of capital losses and reduction in the value of its agency securities, ARMOUR Residential reported a net loss of $541 million, or $1.47 per share. In the fourth quarter of 2012 it reported a net income of $115 million, or $0.37 per share. For the full year in 2013 it had a net loss of $187 million, or $0.55 per share, compared to a net income of $222 million, or $0.99 per share in 2012.

"The main factors for the 2013 declines over 2012 were the declines in security purchases and our reduction in leverage which generated capital losses and an other than temporary impairment on our Agency Securities, as well as our capital raising that increased preferred and common shares outstanding," the company highlighted in its annual report filed with the SEC today. Agency securities are the mortgage bonds issued by Fannie Mae and Freddie Mac which Armour principally invests in.

ARMOUR Residential noted it has continued to reduce its debt to equity, or leverage ratio, which stood at 6.92 to 1 at the end of 2013, versus 7:96 to 1 at the end of the 2012. The company concluded its press release by highlighting its average yield on assets stood at 2.98% in the fourth quarter of 2013, an improvement of 51 basis points over the 2.47% seen during the fourth quarter of 2012. In addition its net interest margin expanded from 1.55% at the end of last year to 1.60% at the end of 2013.


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