ARR 10-K & 10-Q changes, risk factors and insider trading

You should consider carefully all of the risks described below together with the other information contained in this Annual Report on Form 10-K, before making a decision to invest in our securities. This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties. The risks and uncertainties described herein should not be considered to be a complete list of all potential risks that may affect us. Additional risks and uncertainties not currently known to us, or not presently deemed material by us, may also impair our operations and performance. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected, the trading price of our securities could decline and you may lose all or part of your investment. Refer to the Glossary of Terms for definitions of capitalized terms and abbreviations used in this report. U.S. dollar and share amounts are presented in thousands, except per share amounts or as otherwise noted.

•Volatility in the relationships between the market prices and yields for our securities and certain benchmark prices and interest rates periodically will adversely affect our net income, earnings per share and stockholders' equity;

•We may issue stock when investment opportunities are relatively less attractive; and

•We may repurchase our common and preferred stock at prices below book value, to the potential disadvantage of selling stockholders; andstockholders.

•There are potential conflicts of interest with the allocation of investment opportunities by ACM.ACM;

•Members of our management team have competing duties to other entities, which could result in decisions that are not in the best interests of our stockholders.stockholders;

•ACM's management fees are calculated based on our gross equity raised and not on our performance. Gross equity raised substantially exceeds total stockholders' equity determined in accordance with GAAP and management fee expenses do not decline with reductions in our total stockholders' equity. As a result, ACM's annualized contractual management fee rate as of December 31, 20242025 equaled 3.03%2.11% of stockholders' equity.equity;

•The termination of the management agreement may be difficult and costly.costly;

•The management agreement with ACM will automatically renew for an additional 5-year term unless ARMOUR gives 180-day written notice of non-renewal.non-renewal; and

It can be difficult to predict the impact on interest rates of unexpected and uncertain global political and economic events, such as pandemics, epidemic disease, warfare (including the ongoing war between Russia and Ukraine and Middle East hostilities), economic and international trade conflicts or sanctions, the change in the political makeup of the U.S. Congress, or changes in the credit rating of the U.S. government, the United Kingdom, or one or more Eurozone nations; however, increased uncertainty or changes in the economic outlook for, or rating of, the creditworthiness of the U.S. government, the United Kingdom, or Eurozone and Asian nations may have adverse impacts on, among other things, the U.S. economy, financial markets, the cost of borrowing, the financial strength of counterparties we transact business with, and the value of assets we hold. Any such adverse impacts could negatively impact the availability to us of short-term debt financing, our cost of short-term debt financing, our business, and our financial results.

The market prices and yields for Agency Securities and interest rate derivatives like those we hold are generally negatively correlated over time to each other and to certain benchmark prices and interest rates, such as those for U.S. Treasury Securities. Those correlations are never perfect, and can vary widely on occasion, particularly in times of market stress. This variation in the “spread” relationship among the market yields, and therefore prices, of different instruments can result in our hedging positions being not as effective as normally would be expected, exposing us to the risk of unexpected volatility in our net income, earnings per share, and total stockholders’ equity. Our most recent significant experience of this phenomena occurred in the first half of 2020.

Changes in Fed policy affect our financial results because our cost of funds is largely dependent on short-term rates. An increase in our cost of funds without a corresponding increase in interest income earned on our investments in securities causes our net income to decline. We cannot predict the impact of any future actions by the Fed on the prices and liquidity of the securities in which we invest. Future Fed action could reduce the value of our assets, reduce the spread on our investments and/or decrease our book value. Changes by the Fed in its securities purchase programs or other monetary policy could materially adversely affect our business, financial condition and results of operations and our ability to pay distributions to our stockholders. See Item 7. Management's Discussion and Analysis, "Federal Reserve Actions" for further discussion.

If the markets do not respond favorably to any actions or if such actions do not function as intended, they could have adverse market implications and could negatively impact our consolidated financial statements. The actual or anticipated action or inaction on U.S. fiscal policy matters, including the U.S. debt ceiling, could result in a wide range of negative economic effects, including increased financial market and interest rate volatility and wider market spreads between mortgage assets and benchmark interest rates. New regulatory requirements, including more stringent capital rules, could adversely affect financing availability and/or terms from our counterparties, reduce market liquidity and mortgage loan origination and limit activities of significant organizations and entities that are important to our business.

Agency Securities backed by single-family residential loans allow the underlying borrowers to prepay their loans without premium or penalty. When borrowers default on their loans, the GSE or government entity that issued or guaranteed the Agency Securities (including Agency Securities backed by multi-family loans) pay off the remaining loan balance. Those prepayments, including default payoffs, are passed through to us, reducing the balance of the Agency Security. We generallypurchase purchasesome of our Agency Securities at premium prices, and the premium amortization associated with prepayments reduces our interest income.

We have issued and may in the future issue shares of our common stock in “at the market” offerings or underwritten “block” offerings, which may adversely impact the market price of our stock and result in dilution to existing stockholders.stockholders

The market trading price of our common stock tends to be positively correlated with the general price levels of the MBS that represent our target investments. Therefore, opportunities to raise capital at attractive prices may occur when potential investment opportunities are relatively less attractive. Accordingly, we may temporarily invest the proceeds of stock issuances by reducing our repo borrowings on our existing portfolio or purchasing US Treasuries or other assets in anticipation of more attractive MBS investment opportunities in the future.

Pursuant to the management agreement, ACM will not assume any responsibility other than to render the services called for thereunder and will not be responsible for any action of our Board in following or declining to follow its advice or recommendations. ACM and its affiliates, directors, officers, stockholders, equity holders, employees, representatives and agents and any affiliates thereof, will not be liable to us, our stockholders, any subsidiary of ours, the stockholders of any subsidiary of ours, our Board, any issuer of mortgage securities, any credit-party, any counterparty under any agreement, or any other person for any acts or omissions, errors of judgment or mistakes of law by ACM or its affiliates, directors, officers, stockholders, equity holders, employees, representatives or agents, or any affiliates thereof, under or in connection with the management agreement, except if ACM was grossly negligent, acted with reckless disregard or engaged in willful misconduct or fraud while discharging its duties under the management agreement. We have agreed to indemnify ACM and its affiliates, directors, officers, stockholders, equity holders, employees, representatives and agents and any affiliates thereof, with respect to all expenses, losses, costs, damages, liabilities, demands, charges and claims of any nature, actual or threatened (including reasonable attorneys’ fees), arising from or in respect of any acts or omissions, errors of judgment or mistakes of law (or any alleged acts or omissions, errors of judgment or mistakes of law) performed or made while acting in any capacity contemplated under the management agreement or pursuant to any underwriting or similar agreement to which ACM is a party that is related to our activities, unless ACM was grossly negligent, acted with reckless disregard or engaged in willful misconduct or fraud while discharging its duties under the management agreement. As a result, we could experience poor performance or losses for which ACM would not be liable.

The management agreement entitles ACM to receive a management fee payable monthly in arrears calculated based on gross equity raised (see Note 98 and Note 1514 to the consolidated financial statements). The annualized management fee rate is (a) 1.5% of gross equity raised up to $1.0 billion plus (b) 0.75% of gross equity raised in excess of $1.0 billion. Gross equity raised includes the total amounts of paid in capital relating to both our common and preferred stock, before deduction of brokerage commissions and other costs of capital raising. Amounts paid to stockholders to repurchase common and preferred stock, before deduction of brokerage commissions and costs, reduce gross equity raised. Dividends specifically designated by the Board as liquidation dividends reduce the amount of gross equity raised. To date the Board has made no such specific designation of any of the dividends paid by the Company. Pursuant to prior versions of the management agreement, gross equity raised was reduced by $123,199 to reflect dividends paid in in excess of taxable income prior to January 1, 2016. Regular dividends (including those treated as a return of capital for tax purposes on or after January 1, 2016) and investment losses do not reduce gross equity raised. Investment gains and net income do not increase gross equity raised. Accordingly, we have experienced and may continue to experience reductions in our total stockholders’ equity without a commensurate reduction in management fee expense.

ACM is entitled to receive monthly management fees that are based on gross equity raised regardless of our performance. Accordingly, ARMOUR has paid, and may in the future pay, significant management fees to ACM for a given month in which we experience a total comprehensive loss. ACM’s entitlement to such significant nonperformance-based compensation may not provide sufficient incentive to ACM to devote its time and effort to source and maximize risk adjusted returns on our investment portfolio, which could, in turn, adversely affect our ability to pay dividends to our stockholders and the market price of our stock. Further, the management fee structure gives ACM the incentive to maximize gross equity raised by the issuance of new equity securities or the retention of existing equity, regardless of the effect of these actions on existing stockholders. In other words, the management fee structure will reward ACM primarily based on the size of our equity raised and not on our current common equity capital or financial returns to common stockholders.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. All per share amounts, common shares outstanding and stock-based compensation amounts for all periods reflect the effect of our Reverse Stock Split. U.S. dollar and share amounts are presented in thousands, except per share amounts or as otherwise noted.

At December 31, 20242025, andour December 31, 2023, we investedinvestments in securities included MBS, issued or guaranteed by a U.S. GSE, such as Fannie Mae, Freddie Mac, or a government agency such as Ginnie Mae (collectively, Agency Securities). and U.S. Treasury Securities. At December 31, 2024, we invested solely in MBS. Our Agencyinvestment Securitiesin securities consist primarily of fixed rate loans. FromOur timecharter permits us to time we have also investedinvest in MBS backed by fixed rate, hybrid adjustable rate and adjustable rate home loans as well as unsecured notes and bonds issued by GSEs, U.S. Treasury Securities and money market instruments.

On September 18, 2024, the Fed lowered the target range forAt the Federal FundsReserve RateOpen byMarket 0.5%Committee to 4.75% to 5.00%, which it had kept unchanged since July 26, 2023. On November 7, 2024, the Fed further lowered the target range for the Federal Funds Rate by 0.25% to 4.50% to 4.75% andmeeting on DecemberOctober 18,29, 2024,2025, the Fed lowered the target range for the Federal Funds Rate by 0.25% to 4.25%3.75% from 4.00%. At the December 10, 2025 meeting of the Federal Reserve Open Market Committee, the Fed further lowered the target range by 0.25% to 4.50%.3.50% from 3.75%. The Fed saidnoted that inflation has mademoved progressup towardsince itsearlier 2%in objectivethe butyear and remains somewhat elevated, andwhile theeconomic risksactivity tohas achievingbeen itsexpanding employmentat anda inflationmoderate goals are roughly in balance.pace. The Fed furtheralso stated that uncertainty about the economic outlook remains elevated, and in considering the extent and timing of additional adjustments to the target range for the Federal Funds Rate, it will carefully assess incoming data, the evolving outlook, and the balance of risks.

TheAt the October 29, 2025 meeting, the Fed saidannounced that it will continueconclude reducingthe reduction of its holdings of Treasuryaggregate securities andholdings agencyeffective debtDecember and1, agency2025. mortgageBeginning backedon securities,that accordingdate, to its previously announced plans. Thethe Fed will roll over at auction the amount ofall principal payments from its holdings of Treasury securities maturingholdings in each calendar month that exceeds a cap of $25 billion per month. The Fedand will also reinvest the amount ofall principal payments from its agency securities holdings of (agency debt and agency mortgage backedmortgage-backed securities received in each calendar month that exceeds a cap of $35 billion per month) into Treasury securities.bills.

Our borrowings in the repurchase market have closely tracked the Federal Funds Rate,Rate and SOFR. Traditionally, a lower Federal Funds Rate has indicated a time of increased net interest spread and higher asset values. Volatility in these rates and divergence from the historical relationship among these rates could negatively impact our ability to manage our securities portfolio. If rates were to increase as a result,increase, our net interest spread and the value of our securities portfolio might suffer as a result. Our derivatives are either Federal Funds Rate or SOFR-based interest rate swap contracts (see Note 87 to the consolidated financial statements).

We may reduce our mortgage spread exposure by entering in tointo certain TBA Agency Securities short positions. The TBA short positions may represent different securities and maturities than our MBS and TBA Agency Security long positions, and accordingly, may perform somewhat differently. While we expect our TBA Agency Securities short positions to perform well compared to our related mortgage securities, there can be no assurance as to their relative performance.

•Gain (Loss) on Agency Securities, trading, net includes mark to market changes in the fair value of our securities as well as the gain (loss) on sales.

•Gain (Loss) on U.S. Treasury Securities, net resulted from the change in fair value of the securities as well as the gain (loss) on sales ◦The change in fair value of the securities was $35,140 for the year ended December 31, 2024 compared to $(16,496) for the year ended December 31, 2023.

◦For the years ended December 31, 2024 and December 31, 2023,2023 we sold short $1,050,019 and $651,621, respectively,$651,621 of U.S. Treasury Securities.Securities, respectively.

The Company is managed by ACM, pursuant to a management agreement. The management fees are determined based on gross equity raised. Therefore, management fees increase when we raise capital and decline when we repurchase previously issued stock and distributemake liquidation distributions as approved and so designated by a majority of the Board. However, because the management fee rate decreases to 0.75% per annum for gross equity raised in excess of $1.0 billion pursuant to the management agreement, the effective management fee rate declines as equity is raised. The cost of repurchased stock and any dividends specifically designated by the Board as liquidation distributions will reduce the amount of gross equity raised used to calculate the monthly management fee. Realized and unrealized gains and losses do not affect the amount of gross equity raised. At December 31, 2024,2025, December 31, 20232024 and December 31, 2022,2023, the effective management fee was 0.92%,0.89%, 0.93%0.92% and 0.95%0.93% prior to management fees waived, and 0.77%, 0.77% and 0.74%,0.77%, after management fees waived, based on gross equity raised of $4,498,880,$5,366,343, $4,231,965$4,498,880 and $3,787,042,$4,231,965, respectively. During each of the years ended December 31, 2024,2025, December 31, 20232024 and December 31, 20222023 ACM voluntarily waived management fees of $6,600, $6,600 and $7,800 respectively (see Note 98 to the consolidated financial statements).

Agency Security purchase and sale transactions, including purchases and sales for forward settlement, are recorded on the trade date, based on the specific identification method, to the extent it is probable that we will take or make timely physical delivery of the related securities. Premiums and discounts associated with the purchase of Multi-Family MBS, which are generally not subject to prepayment, are amortized or accreted into interest income over the contractual lives of the securities using a level yield method. Premiums and discounts associated with the purchase of other Agency Securities are amortized or accreted into interest income over the actual lives of the securities, reflecting actual prepayments as they occur. Gains or losses realized from the sale of securities are included in income and are determined using the specific identification method. We typicallypurchase purchasesome of our Agency Securities at premium prices. The lower the prepayment rate, the lower the amount of amortization expense for a particular period. Accordingly, the yield on an asset and earnings are higher. If prepayment rates increase, the amount of amortization expense for a particular period will go up. These increased prepayment rates would act to decrease the yield on an asset and would decrease earnings.

We account for TBA Agency Securities as derivative instruments if it is reasonably possible that we will not take or make physical delivery of the Agency Security upon settlement of the contract. TBA Agency Securities are forward contracts for the purchase (“long position”) or sale (“short position”) of Agency Securities at a predetermined price, face amount, issuer, coupon and stated maturity on an agreed-upon future date. The specific Agency Securities delivered pursuant to the contract upon the settlement date, published each month by the Securities Industry and Financial Markets Association, are not known at the time of the transaction. We estimate the fair value of TBA Agency Securities based on similar methods used to value our Agency Securities. TBA Agency Securities are included in the table below on a gross basis, as applicable, since they can be used to establish and finance portfolio positions in Agency Securities.

At MarchJune 31,30, 2026 and December 31, 2025, our investments in securities included MBS, issued or guaranteed by a U.S. GSE, such as Fannie Mae, Freddie Mac, or a government agency such as Ginnie Mae (collectively, Agency Securities) and U.S. Treasury Securities. Our investment in securities consist primarily of fixed rate loans. Our charter permits us to invest in MBS backed by fixed rate, hybrid adjustable rate and adjustable rate home loans as well as unsecured notes and bonds issued by GSEs, U.S. Treasuries and money market instruments.

FirstSecond Quarter 2026 Trends

The Middle East conflict that began in late February 2026 materiallysignificantly increased U.S. interest rate volatility, primarily through its effectimpact on energy markets. As oil prices rose sharply amid concerns about potential supply disruptions, particularly through the Strait of Hormuz, market participants reassessed the inflation outlook and the likely path of monetary policy. Expectations regarding futures pricing shifted towardfrom aat moreleast prolongedtwo “higher25 forbasis longer”point Federal Reserve stance,cuts withby year-end 2026 immediately before the anticipated number of rate cuts for 2026 falling closeconflict to zero and futures markets at timesleast assigningone a25 meaningfulbasis probabilitypoint tohike, additional rate hikes. The conflict also contributedcontributing to a pronounced bear flattening of the U.S. Treasury curve and a more challenging technical environmentbackdrop for Agency MBS, resulting in greater mortgage spread volatility.MBS. Although the April ceasefire announcedand onmid-June Aprilmemorandum 8,of 2026understanding hasbetween the U.S. and Iran partially reversed the most severe effectsmoves onin interestrates, ratesvolatility, and mortgage spreads, ARMOUR expects a return of bouts of volatility to remain elevated until the conflict is more definitively resolved and, accordingly, intends to continue prioritizing risk management during this period of heightened uncertainty.

In 2025, the U.S. administration imposed tariffs on imports from a broad range of countries,trading partners, including Canada, Mexico, member states of the European Union, Japan, and China. In response, several trading partners imposed, and others may yet impose, retaliatory tariffs. In February 2026, the U.S. Supreme Court held that the administration may not rely on the International Emergency Economic Powers Act,Act or(IEEPA) IEEPA,does not authorize the President to impose tariffs, invalidating the broad-based tariffs.tariffs the administration had imposed under that statute. The administration hassubsequently since turnedshifted to alternative authorities, including a temporary statutorysurcharge authoritiesunder toSection maintain122 certainof surchargesthe andTrade hasAct indicatedof that1974, itwhile intendsalso signaling its intent to preserve a broader tariff regime through other trade rulesstatutes and legal authorities.mechanisms. The Section 122 tariffs are set to expire on July 24, 2026 unless extended by Congress and have since faced legal challenges, adding further uncertainty to the tariff outlook. These U.S. tariffs, together with actual and potential retaliatory measures, contributed to increased volatility in financial markets and interest rates in the prior year and could continue to do so again.so. Accordingly, ARMOUR expects to continue prioritizing liquidity considering the potential for renewed market volatility and related financial risks. The Company has met all its obligations to repurchase agreement counterparties in a timely manner, while managing the risk of its assets and hedging portfolios.

The following graph shows the effective Federal Funds Rate as compared to SOFR on a monthly basis from MarchJune 31,30, 2024 to MarchJune 31,30, 2026.

The following tables detail the factors impacting our net interest income for three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

Three Months Ended MarchJune 31,30, 2026 vs. Three Months Ended MarchJune 31,30, 2025

◦The change in fair value of the securities was $(191,93440,015) and $(231,949) for the three and six months ended MarchJune 31,30, 2026 compared to $211,430$28,680 and $240,110 for the three and six months ended MarchJune 31,30, 2025.

◦Sales of our Agency Securities, trading resulted in realized gains (losses) of $9,339$(2,609) and $6,730 and $(3,17312,135) and $(15,308) for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

◦During the three and six months ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025, we sold $891,124$865,173 and $234,204,$1,756,297 (inclusive of $344,372 of unsettled sales) and $992,009 and $1,226,213, respectively, of Agency Securities, trading.

◦The change in fair value of the securities was $(10,1901,131) and $(12,90611,321) and $(2,887) and $(15,793), for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

◦During the three and six months ended MarchJune 31,30, 2026, we sold $99,668$391,734 and $491,402 of U.S. Treasury Securities, resulting in a realized loss of $(4589,323). and $(9,781), respectively.

◦Interest rate swap contracts' aggregate notional balance was $12,899,000$15,889,000 at MarchJune 31,30, 2026 and $12,327,000 at December 31, 2025.

◦Our TBA Agency Securities aggregate notional balance was $600,000 at MarchJune 31,30, 2026.

The Company is managed by ACM, pursuant to a management agreement. The management fees are determined based on gross equity raised. Therefore, management fees increase when we raise capital and decline when we repurchase previously issued stock and make liquidation distributions as approved and so designated by a majority of the Board. However, because the management fee rate decreases to 0.75% per annum for gross equity raised in excess of $1.0 billion pursuant to the management agreement, the effective management fee rate declines as equity is raised. The cost of repurchased stock and any dividends specifically designated by the Board as liquidation distributions will reduce the amount of gross equity raised used to calculate the monthly management fee. Realized and unrealized gains and losses do not affect the amount of gross equity raised. At MarchJune 31,30, 2026 and MarchJune 31,30, 2025, the effective management fee was 0.88% and 0.90% (prior to management fees waived) based on gross equity raised of $5,588,129$5,812,714 and $4,873,845,$4,969,351, respectively. During the three and six months ended MarchJune 31,30, 2025 ACM voluntarily waived management fees of $1,650 and $3,300, respectively, (see Note 13 - Related Party Transactions).

Realized gains and losses on interest rate contracts and treasury futures terminated before their maturity are deferred and amortized over the remainder of the original term of the contract for REIT taxable income. At MarchJune 31,30, 2026 and December 31, 2025, we had approximately $(322,341190,650) and $(313,284), respectively, of net deductible expense relating to previously terminated interest rate swap and treasury futures/shorts contracts amortizing through the yearsyear 2040. At MarchJune 31,30, 2026, we had $257,341 of net operating loss carryforwards available for use indefinitely.

The tables below summarize certain characteristics of our investments in securities at MarchJune 31,30, 2026 and December 31, 2025.

(1)Weighted average CPR during the quarter for the securities owned at MarchJune 31,30, 2026. Negative CPR can occur if payments are not made on the first of the month and the scheduled principal amount is not received.

(2)Our TBA Agency Securities were recorded as derivative instruments in our accompanying consolidated financial statements. Our TBA Agency Securities were reported at a net carrying value of $(6,392),$1,791, at MarchJune 31,30, 2026 and were reported in Derivatives, at fair value on our consolidated balance sheets (see Note 7 to the consolidated financial statements).

The following tables summarize changes in our investments in securities as of MarchJune 31,30, 2026 and December 31, 2025, excluding TBA Agency Securities (see Note 7 to the consolidated financial statements).

We have entered into repurchase agreements to finance the majority of our MBS. Our repurchase agreements are secured by our MBS and bear interest at rates that have moved in close relationship to the Federal Funds Rate and SOFR. We have established borrowing relationships with numerous investment banking firms and other lenders, 2425 and 22 of which had open repurchase agreements with us at MarchJune 31,30, 2026 and December 31, 2025, respectively. We had outstanding balances under our repurchase agreements, net at MarchJune 31,30, 2026 and December 31, 2025 of $18,463,834$19,441,457 and $17,941,796, respectively. At MarchJune 31,30, 2026 and December 31, 2025, BUCKLER accounted for 43.4%46.8% and 47.0% of our aggregate borrowings and had an amount at risk of 6.3%6.8% and 7.1%, respectively, of our total stockholders' equity with a weighted average maturity of 2027 days and 13 days, respectively, on repurchase agreements (see Note 6 to the consolidated financial statements).

Our repurchase agreements require excess collateral, known as a “haircut.” At MarchJune 31,30, 2026, the average haircut percentage was 2.61%2.51% compared to 2.63% at December 31, 2025.

We use various contracts to manage our interest rate risk as we deem prudent in light of market conditions and the associated costs with counterparties that have a high-quality credit rating and with futures exchanges. We generally pay a fixed rate and receive a floating rate with the objective of fixing a portion of our borrowing costs and hedging the change in our book value to some degree. The floating rate we receive is generally the Federal Funds Rate or SOFR. We had contractual commitments under derivatives at MarchJune 31,30, 2026 and December 31, 2025. At MarchJune 31,30, 2026 and December 31, 2025, we had derivatives with a net fair value of $646,570$592,888 and $592,241, respectively (see Note 7 to the consolidated financial statements).

At MarchJune 31,30, 2026, we had interest rate swap contracts with an aggregate notional balance of $12,899,000,$15,889,000, a weighted average swap rate of 2.52%2.78% and a weighted average term of 5052 months. At December 31, 2025, we had interest rate swap contracts with an aggregate notional balance of $12,327,000, a weighted average swap rate of 2.44% and a weighted average term of 51 months. We also had TBA Agency Securities with an aggregate notional balance of $600,000 at MarchJune 31,30, 2026. We did not have TBA Agency Securities at December 31, 2025 (see Note 7 to the consolidated financial statements).

The following table details the changes in the fair value of our interest rate swap contracts for the threesix months ended MarchJune 31,30, 2026 and for the year ended December 31, 2025.

Although we attempt to structure our derivatives to offset the changes in asset prices, the complexity of the actual and expected prepayment characteristics of the underlying mortgages as well as the volatility in mortgage interest rates relative to U.S. Treasury and interest rate swap contract rates makes achieving high levels of offset difficult. We recognized net (losses) gains related to our derivatives of $83,025$108,235 and $191,260 and $(191,218108,022) and $(299,240), for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

As required by the Dodd-Frank Act, the Commodity Futures Trading Commission has adopted rules requiring certain interest rate swap contracts to be cleared through a derivatives clearing organization. We are required to clear certain new interest rate swap contracts. Centrally-cleared interest rate swaps may have higher margin requirements than bilateral interest rate swaps. We have established an account with a futures commission merchant for this purpose. At MarchJune 31,30, 2026 and December 31, 2025, we had $7,818,000$10,808,000 and $7,193,000, respectively, of notional amount of centrally-cleared interest rate swap contracts.

At MarchJune 31,30, 2026, our liquidity totaled $1,119,156,$1,222,244, consisting of $66,471$83,679 of cash and cash equivalents plus $1,052,685$1,138,565 of unencumbered Agency Securities and U.S. Treasury Securities (including securities received as reverse margin collateral). Our primary sources of funds are borrowings under repurchase arrangements, monthly principal and interest payments on our MBS and cash generated from our operating results.

Our primary uses of cash are to purchase MBS, pay interest and principal on our borrowings, fund our operations and pay dividends. From time to time, we purchase or sell assets for forward settlement up to 90 days in the future to lock in purchase prices or sales proceeds. At MarchJune 31,30, 2026 and December 31, 2025, we financed our securities portfolio with $18,463,834$19,441,457 and $17,941,796 of borrowings under repurchase agreements, respectively.

We generally seek to borrow (on a recourse basis) between six and ten times the amount of our total stockholders’ equity. Our debt to equity ratios at MarchJune 31,30, 2026 and December 31, 2025, were 7.907.54:1 and 7.94:1, respectively. Our leverage ratios, including our TBA Agency Securities, were 8.157.77:1 and 7.94:1 at MarchJune 31,30, 2026 and December 31, 2025, respectively. Implied leverage, including TBA Securities and forward settling sales and unsettled purchases was 8.217.73:1 and 8.07:1 at MarchJune 31,30, 2026 and December 31, 2025, respectively.

The following tables present our equity transactions for the threesix months ended MarchJune 31,30, 2026 and for the year ended December 31, 2025 (see Note 10 and Note 13 to the consolidated financial statements).

The following table reconciles the fees incurred in accordance with the management agreement for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 (see Note 8 to the consolidated financial statements).

We adopted the 2009 Stock Incentive Plan (as amended, the “Plan”) to attract, retain and reward directors and other persons who provide services to us in the course of operations. The Plan authorizes the Board to grant awards including common stock, restricted shares of common stock (“RSUs”), stock options, performance shares, performance units, stock appreciation rights and other equity and cash-based awards (collectively, “Awards”), subject to terms as provided in the Plan. At MarchJune 31,30, 2026, there were 3383 shares available for future issuance under the Plan.

At MarchJune 31,30, 2026, there was approximately $6,969$16,724 of unvested stock based compensation related to the Awards (based on a weighted grant date price of $23.04$18.71 per share), which we expect to recognize as an expense as follows: for the remainder of 2026 an expense of $1,892,$2,182, in 2027 an expense of $2,062,$3,699, and thereafter an expense of $3,015.$10,843. Our policy is to account for forfeitures as they occur. We also pay each of our non-executive Board members quarterly fees, which are payable in cash, common stock, RSUs or a combination of common stock, RSUs and cash at the option of the director. Compensation to be paid to our non-executive Board in the form of cash and common equity is $1,219 annually (see Note 9 to the consolidated financial statements).