ARMOUR Residential REIT, Inc. (ARR) Earnings Call Transcript & Summary

Good morning. We're delighted to welcome you to this virtual-only annual meeting of stockholders of ARMOUR Residential REIT. We look forward to resume in-person annual meetings with our stockholders beginning in 2021. My name is Scott Ulm, and I'm the Co-Chief Executive Officer, Co-Vice Chairman and Chief Risk Officer of ARMOUR Residential REIT. I would also like to introduce Jeff Zimmer, the Co-Chief Executive Officer, Co-Vice Chairman and President of ARMOUR; James Mountain, the Chief Financial Officer and Secretary of ARMOUR; Mark Gruber, Chief Investment Officer; and Gordon Harper, the Vice President of Finance, Controller and Treasurer of ARMOUR. We are also joined this morning by following ARMOUR directors: Dan Staton, Chairman; Tom Guba, Lead Independent Director; Rob Hain, Chair of the Nominating and Governance Committee; Jack Hollihan, Chairman of the Compensation Committee; Jamie Behar; Marc Bell; and Carolyn Downey. In addition, Ms. Beth Goldstein of Deloitte & Touche, ARMOUR's independent registered certified public accountants, is participating and will be available to answer appropriate questions you may have later in the meeting. Upon entering the meeting, each of you was presented with rules of procedure for the meeting. To conduct an orderly meeting, we ask the participants abide by these rules. Should you desire to ask a question or make a statement, please submit your question or statement via the "submit a question" box. As stated in the rules of procedure, we ask that you restrict your questions and remarks to those relevant to the company or the proposals being considered. The meeting will now officially come to order. We will proceed with the formal business of the meeting as set forth in your notice of annual meeting and accompanying proxy statement. Let me now appoint James Mountain to serve as Secretary at this meeting. Mr. Mountain, please report on the mailing of the notice of the meeting and the stockholders' list.

Thank you. I have at this meeting a complete list of the stockholders of record of ARMOUR's common stock at the close of business on March 30, 2020, the record date for this meeting. I also have an Affidavit dated May 13, 2020, of [ Sharon Alexander ], Vice President of Continental Stock Transfer & Trust Company, certifying that on April 14, 2020, she caused to be commenced the mailing of the 2020 annual meeting proxy materials via the United States Mail to all stockholders of record at the close of business on March 30, 2020.

At this time, I'd like to appoint James R. Mountain to act as the inspector of election at this meeting. Mr. Mountain has taken and subscribed the customary oath of office to execute his duties with strict impartiality. We will file this oath with the record of the meeting. His function is to decide upon the qualifications of voters, accept their votes and once submission of votes on all matters is completed to tally the final votes. Mr. Mountain, please report at this time with respect to the existence of a quorum.

Certainly. Proxies have been received for over 52,832,400 of the 58,877,098 shares of common stock outstanding at the close of business on the record date. This represents approximately 89.7% of the total number of outstanding shares. This also constitutes a quorum for the meeting today, and we may now carry out the official business of the meeting. If there are any additional proxies to be submitted to the inspector of elections, they should do so now. If yes, please go to the voting link on the virtual meeting website and enter your control number to vote. Stockholders who have sent in proxies do not need to take any further action at this time.

We will now proceed with the formal business of this meeting. There are 4 proposals to be considered by the stockholders at this meeting. Mr. Mountain, may we open the polls?

Certainly, the time is now 8:03 a.m. on May 20, 2020, and the polls are now open for voting on all matters to be presented. Voting at this annual meeting will be conducted through exclusively the means of the virtual meeting website. The polls will be closed to voting after we go through the matters to be voted on.

The first item of business to be consider and vote upon a proposal to reelect 10 directors to the ARMOUR Board of Directors as listed in the proxy statement, to serve until ARMOUR's next annual meeting. Is there any discussion regarding the proposal regarding the election of directors? If yes, please submit your question or comment using the "submit a question" box.

I see no questions.

The second item of business is to consider and vote upon a proposal to ratify the appointment of Deloitte & Touche as ARMOUR's independent registered certified public accountants for fiscal year 2020. Is there any discussion regarding the proposal to ratify the appointment of Deloitte and Touche? If yes, please submit your question or comment using the "submit a question" box.

There are no questions.

The third item of business is to consider and vote upon a proposal to approve by nonbinding advisory vote the 2019 compensation of ARMOUR's named executive Officers. Is there any discussion regarding the nonbinding advisory vote on ARMOUR's 2019 executive compensation? If yes, please submit your question or comment using the "submit a question" box.

There are no questions at this time.

The fourth item of business is to consider and vote upon a proposal to approve by nonbinding advisory vote the frequency of shareholder advisory votes relating to the compensation of ARMOUR's named executive officers, which is presented as being offered either every 1, 2 or 3 years. Is there any discussion regarding the nonbinding advisory vote on the frequency of stockholder advisory votes relating to ARMOUR's executive compensation? If yes, please submit your question or comment using the "submit a question" box.

Seeing no questions, we'll continue voting. Voting is by proxy through the Internet site provided or on the proxy card or voting instruction form by telephone or through the virtual meeting website. Each share of common stock is entitled to 1 vote. You do not need to vote at this meeting if you've already sent in your signed proxy or have previously voted online or via telephone. Is there anyone participating, whether or not you've already previously voted online or through the telephone or submitted a proxy, who now wants to vote using the virtual meeting site? If yes, please go to the voting link on the virtual meeting site and enter your control number to vote. If there is anyone still working on voting and has not yet been able to complete their vote, please indicate so using the "submit a question" box. I see none. The time is now 8:07 a.m., and the polls are closed for voting.

May we have the results of the voting?

The report of the inspector of election covering the proposals presented at this meeting is as follows: The proposal to reelect 10 nominees for Director, as listed in the proxy statement, each of them having received the affirmative votes of a majority of the votes cast by stockholders participating in or represented by proxy at this meeting is carried. The proposal to approve the ratification of the appointment of Deloitte & Touche LLP as ARMOUR's independent registered certified public accountants for fiscal year 2020, having received the affirmative vote of a majority of votes cast by stockholders participating in or represented by proxy at this meeting, is also carried. The proposal to approve by advisory nonbinding vote, ARMOUR's 2019 compensation of its named executive officers, having received the affirmative vote of a majority of those votes cast by stockholders participating in or represented by proxy at this meeting, is also carried. And the selection for 1 year as the frequency of stockholder advisory votes relating to the compensation of ARMOUR's named executive officers, having received the greatest number of votes cast by stockholders participating in or represented by proxy at this meeting, is carried as well. A full and final tally of the votes will be published in a current report on Form 8-K, which will be filed with the Securities and Exchange Commission in the ordinary course of business.

Thank you, Jim. I declare the 10 nominees for Director elected, the ratification of the appointment of Deloitte & Touche approved, the 2019 compensation of named executive officers approved by advisory nonbinding vote, and the selection of 1 year as the frequency of stockholder advisory votes relating to the compensation of ARMOUR's named executive officers, as recommended by advisory nonbinding vote. We will now entertain questions and comments from stockholders. Stockholders are limited to no more than 3 questions or comments each. Questions and comments should be written clearly and be brief in length. Please submit any questions or comments using the "submit a question" box on the virtual meeting website. Questions and comments should be relevant to matters of concern to stockholders generally. Are there any questions or comments?

I don't see any questions or comments on the website.

Very good. I want to thank all of you for participating in today's virtual-only annual meeting and for the interest you have shown in ARMOUR. As we've completed the business of this meeting, and there is nothing further to come before the meeting, we stand adjourned.