Ladies and gentlemen, thank you for standing by. Welcome to the ARMOUR Residential REIT Inc. Fourth Quarter 2014 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 Wednesday, February 25, 2015. For today's disclaimer, by now, everyone should have access to ARMOUR's earnings release and Form 10-K which can be found on ARMOUR's website. Before we begin, I would like to remind everyone that this conference call may contain statements that to the extent they are not recitations of historical fact, 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 protection 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 of the control of ARMOUR. Certain factors that could actual results to differ materially from these contained in the forward-looking statements are included in the risk factors section of ARMOUR’s periodic reports filed with these Securities and Exchange Commission. Copies are available on the SEC’s website at www.sec.gov. All forward-looking statements that are included in the 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 by law. Also our discussion today may include references to certain non-GAAP measures; a reconciliation of these measures to the most comparable GAAP measures is included in our earnings release which can be found on ARMOUR’s website. An online replay on this conference call will be available on ARMOUR’s website and continued for one year. I would not like to turn the conference over to Jim Mountain, Chief Financial Officer. Please go ahead, sir.

Thank you, Benjamin, and good morning everyone. ARMOUR’s Q4 earnings and estimated taxable income were a positive $0.10 per share. GAAP results were $0.41 per share loss which reflect our defensive positioning on interest rates and the attendance substantial overall negative duration we carried going in the year-end. ARMOUR does not use hedge accounting for its GAAP reporting, so quarterly results were allowed to be influenced or in this case even dominated by fluctuations in the fair value of our open interest rate flops. This quarter, we had a $185 million of those unrealized declines in value. On the other hand, the quarter is a $130 million positive mark-to-market on our Agency Securities flows directly into stockholders’ equity rather than GAAP P&L. ARMOUR paid common stock monthly dividends of $0.05 per share in the fourth quarter. For all of 2014, ARMOUR’s common stock dividends included about $0.09 per share of capital distributions or nearly 15% which are not taxable to the common shareholders. At December 31st, 2014, ARMOUR’s book value with $4.39 per share or over 19% above the New York Stock Exchange causing trade price that day. First quarter 2015 monthly dividends have been declared at $0.04 per share or an annualized yield of 10.9% plus on year-end book value. Quarter-end leverage was 7.91 and our interest rate hedges covered 93.9% of our debt. Repo haircuts and interest rates are holding steady. Availability remained strong and we continue to signup new repo counterparties. Year-end liquidity consisting cash and unpledged securities totaled $1 billion. Now, let me turn the call over to our Chief Executive Officers Jeff Zimmer and Scott Ulm to discuss ARMOUR’s portfolio position and current strategy.

Good morning. It’s Jeff. We’d also like to note that in addition to the customary SEC filings, we also provide a monthly company update which is furnished to the SEC and available on our website, www.armourreit.com as well as EDGAR. Company update contains considerable mode of information about our portfolio hedging, financing on the timely basis. We are now a year and half passed extreme bond market volatility of December and early fall 2013. We noted in our last conference call that we believe that the quick and dramatic rise in rates mark the beginning of an inflection point in the markets. Over the course of 2014, we positioned ARMOUR’s balance to reflect that opinion to rotation out of 30-year MBS into shorter paper and the maintenance of large swap book. As you have seen in our monthly company update since January, 2014 through the present, our net balance sheet duration has ranged from a negative 0.46 to a positive 1.15 and is now a slightly positive 0.3. Our rates DDO1 or dollar value of a basis point shift in the entire group is not approximately $0.5 million and our spread duration of an O1 in OAS move is approximately 7.5 million which is not incorporate the fact that swap with mortgages making that number considerably smaller. However, this very defensive pasture did not produce outstanding income and outstanding book value enhancement in 2014 nor during the early part of 2015. The 10-year started 2014 as we know at over 3% worked as way done 2.17 at year-end. Since then the 10-year note has been as low as 1.64% and looks to be about 1.98 this morning, notable down since Federal Reserve Share woman Ellen comment yesterday. We witnessed a bull market bonds at last few months during a period…

Thanks, Jeff. As you can see in our recent monthly company update, we have almost zero balance sheet duration. Our portfolio is composed primarily of 15 and 20 year pass through and finding a multi-family bonds or DUS, Delegated Underwriting and Servicing bonds. Approximately 57% of ARMOUR’s assets have prepayment projection through low loan balances, high loan value rations 60 months or [ph] more and prepayment lockouts like in the case of the DUS bonds. We also have 1.3 billion position in 30-year of pass through assets representing 8.7% of the portfolio consisting generally of high coupon or season high coupon mortgages. We’re by design now currently earnings a less for their monthly dividend rate, all as a result of our large hedge position and our lower yielding lower duration assets. In 2014, approximately 16% of our dividend was return of capital. This return of capital was generally in a period where ARMOUR’s stock price was trading well under book value. As such, the return of the capital was and is a non-taxable distribution at par value of our book providing some benefit for shareholders. Over the course of the next few months, we will modestly add higher yielding assets and slightly restructure the hedge book to increase our earnings. However, we will remain somewhat defensive until the pass through from the Federal Reserve becomes clear. We continue to fee that the U.S. economy is recovering and then prudent will be reflected in the rest rates, despite to the similar environment overseas. We have a positive view on the U.S. economic environment but will remain mindful, the multiple factors in feeding more rapid economic expansion. At the same time, we think the ultimate scale of rate changes is likely to be measured. We believe that the rapid sustain increases in…

[Operator Instructions] Our first question comes from the line of Trevor Cranston. Please proceed with your question.

Alright, thanks. I guess first thing, I want to follow-up on the comment towards the end of the call that you are planning to take steps to increase earnings going forward. Can you elaborate on that a little talk about if the intention is to do that maybe through increasing leverage a little bit or changing hedge books? Thanks.

Hey good morning, Trevor, it’s Jeff.

Good morning.

Don’t - you wouldn’t expect this to increase the leverage much at all, it’ll be by adjusting the hedge book a little bit which we’ve already perform it this and when we get more comfortable, we can do it very simply without great long term effect to the capital position and we might increase as we become available finding some of the season to higher coupon 30-year paper which yields quite a bit more than the 15-year paper and has a really good OAS. So it’s a combination of a number of things and it have to happen on a kind of yearly basis over a period of time.

Okay, got it. And within the portfolio construction, your agency multifamily bucket have been growing a little bit recently, can you talk about kind of how you view the returns on that those securities versus 15s and 30s and kind of why you finding attractive?

Sure, the yield, two thirds of the way between 15 and 30-year securities and at some points in time, they can almost yield equal to 3o-year pass through which great about that asset class because you have a define maturity using six month window at the end, it rolls down the curve like a government bond or even a corporate bond. And so overtime, it will trade at a tighter Z curve and so you can actually book value accretion out of that asset class and it becomes easy to hedge because it’s normalize rolled on the curve rather than the mortgage bond which is quite elastic and it’s prepayments capacities.

Okay, so when you are kind of looking at the environments today, would you expect that bucket to continue growing versus the 15s and 30s?

I wouldn’t expect that bucket to grow more than 2% or 3% max and that’s something we’ve been discussing over the last couple of months. It’s opportunistic as well when the sector widens up, it can be in the middle of 50 kind of Z spreads as perhaps an opportunity, I want to get those, we don’t have an interest. Mark, anymore comments on that.

Swaps rate.

Swaps rate versus swaps, 52 versus swaps.

Okay. Thanks for the comments.

Thanks, Trevor.

Our next question comes from the line of Mike Widner. Please proceed with your question.

Hey good morning, guys and thanks for the good disclosures as always and definitely I appreciate you guys given the update on book value quarter-to-date, I mean it seems like it’s seems around a bit, we’ve had a pretty volatile environment, so first I was want to say thanks for all the very clear disclosures. I guess my question is, you guys laid out sort of I think the postmortem of what’s happened pretty well and it’s been, you know I think you highlighted why these swaps at the longer end to the curve has seen pretty substantial declines in value, as a curve is sort of flat and that really is the longer ends come down and quarter-to-date it’s been a little bit - we’ve had a continuation of that sort of rollercoaster. So I mean who do you guys think about and then I mean I guess my real question is, you are positioned basically benefiting, correct me if I am wrong here, but I mean your book value is positioned to basically benefit of the curves deepens up or if the long and rising but that’s where your exposure is if the curves sort of flattens out further. I mean is that sort of intentional, is that where you want to be or is that something you might see to adjust, Jeff I think you talked about adjusting the portfolio going forward?

Good morning, Michael. First of all, I through your report that you put out this morning was very thoughtful with a very clear understanding of where we are, where we stand, so I appreciate that very much. Regarding your question, I think the answer I gave to Trevor is probably the same answer that I would give to you. We do believe we would get a deeper curve despite what is going on over in Europe which creates a little bit of anchor for the 10-year note, part of that was because we do believe there is a lot of inherent leverage in the system. And then at the first sign, some disruption in the short and you might have a round or two rounds of selling maybe not similar to the June, July period in 2013, but some part of that regard is our intention as the longer time goes on if that does not occur two ones again as I said modestly move the swap book around and get the asset class that we yield a little bit more but also doesn’t have a lot of duration to it. And when you get into the seasoned higher coupon 30-year pass through, there is higher end what we call the mortgage S curve, you got to have a big moving rates for the prices on those end - the quality of the duration playing on those to change. I hope that’s helpful.

Yeah, it is, it is, I appreciate that. I guess one other thing, thinking about those kind of the swaps that are sitting sort of I guess eight to 10 year bucket right now, I mean they line up pretty well with the multifamily loans you’ve got which I think you talked about a little bit. I see you increase the position in there a little bit. I just - I mean there was - I don’t know that market there well, I mean are those liquid enough to sort of put more on when you want to reduce sensitivity if you will thinking about using those and basically balancing out the hedges then potentially taking them off, is there uncertainty?

Right, are you asking of these swaps to liquid or DUS to liquid?

Well, no, no more the DUS, yeah.

Yes, the DUS - yeah the DUS are actually quite liquid. Fannie Mae has a large program, so as Freddie Mac where they actually take these and they put them into CMOs. There are periods where they are more aggressive wanting to buy these assets and proved where they are less aggressive. Another way we get liquidity in these, quite frankly is to put them in a CMO ourselves and so some of the cash flows and retain some of the other cash flows which we modeled out as well. Yeah, we feel very good about that asset class and what we would do. However, I can’t make one phone and sell, it’s a couple of days work unlike 30 or pass through three, I could sell right away.

Yeah, I appreciate the comments as always guys and good luck, it’s a tough interest rate environment out there.

Thank you, Michael.

Our next question comes from the line of Douglas Harter. Please proceed with your question.

Thanks. I was wondering if you guys - again I appreciate the candor on kind of what happened last year. You know I guess as you guys are kind of reviewing that and kind of planning for 2015, if you’ve kind of changed any of kind of the risk tolerances around, rate moves, rate sensitivities as you look to make some of the portfolio changes that you guys are looking at kind of narrow the band of outcomes?

Yeah, you know consistent with what I said to the last two analyst that was we will be making some modest changes, they won’t happen in a fore night, it is going to take another month or so. We’re being very conscious that what’s coming out of the fed and how the markets are reacting. But more of all as I said, they will iterative, so we move a little bit of the 10-year swaps into the 5-year sector, we got a little whole in the 7-year sector. And these can be done overtime and without much subsequence to how the balance sheet looks and we can move out of some of the 15 year assets which are actually yielding quite a bit on a OAS basis, they are kind of cheap at 30-years right now. So we’re not really pumped about selling those to go into some of the seasonal 30-year payment. So this will happen as spreads more and the opportunities exist themselves, but we will not maintain a former the negative duration large duration balance sheet that you saw during parts of 2014, that strategy didn’t payoff but will be flat end up, so that as interest rates move and then usually in that case, we get tightening OAS, you can actually get book value performance and that’s who we look at it. I hope that’s helpful.

Great, I appreciate it, thanks.

Great, have a good day.

Our next question comes from the line of David Walrod. Please proceed with your question.

Hello. Good morning, guys, just wanted to - I know we’ve talked about the swap book and about tracking with it, the amount that you have hedged has declined from the end of the fourth quarter through your most recent update, would you view that the absolute amount that you are hedging would go down as well or just more tinkering with the composition of the book?

You might see the absolute amount go down a little bit particularly if we decide to reenter the hybrid market. As we’ve been watching that, it’s actually cheapened up a little bit. I know you’ve heard this from some other people, we haven’t position ourselves to enter right now, but if we do get into some of the short asset class that doesn’t requires much hedging that would bring it down. Additionally, when we look at the season 30-year paper David, the duration on the asset is very low even though as at this point some of the fixed we buying through 25-year finals and it does have extension risk of 75 to 100 basis points. But between here and then, it doesn’t, so that might require a little bit of a shorter book or a little bit less hedging. But you wouldn’t look for a 10% or 12% move in the amount of hedge.

Okay, that’s helpful. And then Jeff, you’ve commented about the buyback, you did some in ’14, sounds like you are not, now you’ve had something you would do at ’15, is that - I mean is there periodically I guess price level where you would say we just have to do it because it’s so accretive to brokerage for some of the other reason that you outlined to just have something you really considering?

Yeah David, it’s Scott. Look, we always at buybacks, we have extent authorization of some size here, so we continually look at - it does, it’s a straightforward question of accretion in book value that’s available of function of the discount that we realized versus reducing the size of the company, our financial flexibility and our liquidity. And I think I can’t establish precise a bounce of what those numbers mean but that’s clearly the tradeoff. Frankly the disappointment has been that we’ve really have not seen the treating performance improve as a result of a buyback execution per say, that leaves really just the accretion to be compared flat up against the other sort of broader corporate finance factors. And look we get a sense from a lot of market participants that they are not are particularly enthused about us getting significantly smaller. By that I mean not only people on the common side, but includes credit counterparties and others as well. So look we balance it, we look at it continuously, we have executed over the last years but it’s all going to wait again us two factors.

Okay, thank you.

Thanks, David.

Our next question comes from the line of [indiscernible]. Please proceed with your question.

Great, thanks for taking my question. Let’s see if you could just talk about your basis risk or mortgage spread expectation for the 15 and 30 year products? And then I had a follow-up.

So on a OAS basis, as I indicated one or two call ago, 15 years still look fairly cheap versus 30 years, I apologize. They had cheapened up versus 30 years. we are not as a result not wanting sell 15 years right now, there will be a point of which those OASs change their speak relationship and we would sell some 15 years to buy some 30 years. On an actual price performance basis, they have of course done well because the market rallied here. Okay, so that’s number one. By the way, number two. Thank you very for initiating come join us last month, we appreciate it. In terms of where we would next is I think then fully discussed with the four or five other calls that we’ve had, the amount of our book that is covered in terms of prepayment protection is closer to 60% there not we’ll continue to buy those kind of asset. We’ll continue to watch OAS and see what are the values are and we’ll continue to monitor and work on our hedge position which we’ve had indicated a couple of time, we’re going to do some slow but irretentive remodeling up to keep our duration flat to positive but also so we could benefit if we get a spread tightening. Now two or three times, we’ve ran back 210, 215 on the 10-year note, mortgage present than very well and tightened. We’re already through five months passed the fed including buying and mortgages right actually as a pure OAS basis look fair value. I would expect that rates go up, our opinion is that we actually seen some tightening. Unless you get a major rate move and a vastly negative reaction to fed comments which mean you could have an unlevering situation where and those selloffs like a little bit like summer 2013, you have a temporary lost couple of weeks or month kind of a broad widening. So those are kind of your two outcomes on a normalized basis though we will exploit in a slow move up rates bridge to tighten a little bit. However, ones again if you an awkward thing like summer 2013, you are going to have some spread widening and it could be care thing. Is that answer your - kind of approach your question.

Yeah, that’s great, especially the forward-look there. If you could also just talk about spread level, I believe it was 127 for the quarter, what should we be looking for here going forward?

Well, our NIM work increased by two ways, virtually our financing rates not going to change for a while, we have forward guidance unless LIBOR goes up or fed funds go up. Let’s assume the financing states are same, let’s assume to some extent we reengineer our hedge book slightly which should mean the cost of hedges could come down modestly. And let’s assume that we take some of our higher yield - lower yielding paper and swap that in some slightly high yielding paper overtime, you would have that NIM expand, I can’t give you exactly what number that will be. But our goal is to be earning the $0.04 a month that we want to generate. So you would be generating half of the $4.40 book value and ROE of 10.0 give or take.

Okay, thank you.

Okay, thanks.

Our next question comes from the line of [indiscernible]. Please proceed with your question.

Yeah, thanks. I have a follow-up question on capital returns here. I think Scott as you pointed out the dividend here is above the core earnings run rate, can you just talk about how you are thinking about that, the logic of keeping it there especially when the market doesn’t seem to be rewarding your stock for that dividend level?

One of the things Jim Mountain briefly discussed in his comments Mark is the fact that if we return - if we’re - saying you are earning $0.03 and you are earning exactly that I can’t comment on that but whatever we’re earning and we’re paying out a little bit more that actually depending yourself comes back to shareholders in theory of book value. So if you were trading a stock trading a bump of value that would not be a very good strategy but if you are trading below book value and we’re generating free cash to them that’s non-taxable back at book value, honestly it’s pretty good thing to shareholder, we’ve been on the road two of the last few weeks meeting with some of our different bankers and we all agree mathematically that’s a - that sound analysis what’s going there. However, we also agree with the stock market is not rewarding us for our underperformance in earnings and they did not reward us for underperformance in book value last. So we’re very confident and that’s why the changes that we just have discussed the last 30 minutes, we take effect, it is not been brought up in a recent board meeting about cutting the dividend however, we do have board call every month and then another formal meeting in April and we’ll take a good look at it.

Got it, thanks, that’s it from me.

Okay, great, thank you very much.

[Operator Instruction] Our next question comes from the line of Lucy Webster. Please proceed with your question.

Hey thanks, my question were asked and answered. Thanks.

Thank you.

Our next question comes from the line of Richard Hector [ph]. Please proceed with your question.

Actually the first caller addressed all of my questions. Thank you.

Thank you, Richard.

We have no further questions from the phone lines at this time.

We look forward to speaking with all of you at the - when the result of the first quarter released. However, we always open the call, we’re travelling in New York quite a bit, wherever you may be stationed and likely that wherever you are perhaps there couple of times a year, so please reach out questions before you issue any reports, if you have any concerns that you just want us understand or give some thoughts out, please call any of us, we’ll help you the best we can. Once again operator, thank you very much and we’re done.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask you please disconnect your lines.