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Core Viewpoint - Invesco Mortgage Capital Inc. announced a cash dividend of $0.12 per share for February 2026, alongside a financial update as of January 31, 2026, highlighting key metrics such as debt-to-equity ratios and portfolio composition [1][2]. Financial Highlights - The company reported a debt-to-equity ratio of 6.1x and an economic debt-to-equity ratio of 7.1x as of January 31, 2026 [1]. - The estimated book value per common share was $8.91 [1]. - Total repurchase agreement borrowings amounted to $5.4 billion [1]. - Unrestricted cash and unencumbered investments totaled $510.7 million [1]. - The total investment portfolio, including TBAs, was valued at $7.1 billion [1]. Portfolio Composition - The investment portfolio as of January 31, 2026, included: - Agency RMBS with a total fair value of $5.16 billion, accounting for 72.7% of the portfolio, with a weighted average yield of 5.43% [1]. - Agency CMO valued at $68.5 million (1.0% of the portfolio) with a yield of 8.88% [1]. - Agency CMBS valued at $900.3 million (12.7% of the portfolio) with a yield of 4.62% [1]. - TBAs at an implied market value of $963.7 million, representing 13.6% of the total investment portfolio [1]. Borrowings and Interest Rate Swaps - The company had outstanding borrowings of $5.4 billion in repurchase agreements with a weighted average interest rate of 3.83% and a remaining maturity of 23 days as of January 31, 2026 [1]. - Interest rate swaps included notional amounts totaling $4.225 billion, with a weighted average fixed pay rate of 1.71% and a weighted average floating receive rate of 3.68% [1]. Company Overview - Invesco Mortgage Capital Inc. is a real estate investment trust focused on investing in, financing, and managing mortgage-backed securities and other mortgage-related assets [2]. - The company is externally managed by Invesco Advisers, Inc., a subsidiary of Invesco Ltd., a global investment management firm [2].

Financial Data and Key Metrics Changes - Financial conditions improved during the quarter, supported by two Federal Reserve rate cuts, solid corporate earnings, and strong economic growth [4] - Book value per common share increased by 3.7% to $8.72, resulting in an 8% economic return for the quarter [7] - The liquidity position remained robust with $453 million in unrestricted cash and unencumbered assets [8] Business Line Data and Key Metrics Changes - The Agency mortgage portfolio was valued at $5.4 billion, while the Agency CMBS portfolio was $900 million [8] - Agency RMBS investments increased by 11% quarter over quarter, focusing on 5% and 5.5% coupons [18] - Agency CMBS risk premiums remained largely unchanged, with no new purchases made during the quarter [21] Market Data and Key Metrics Changes - Interest rates were generally stable, with the 10-year Treasury yield ending the year at 4.17%, 40 basis points lower than the start of the year [10] - The yield curve steepened, benefiting longer-term investments such as Agency RMBS and Agency CMBS [11] - The TBA dollar roll market showed notable improvement, indicating strong demand for Agency mortgage collateral amid limited net supply [16] Company Strategy and Development Direction - The company remains positive on Agency mortgages, anticipating favorable conditions due to lower interest rate volatility and expectations for broadening demand [9] - The strategy includes focusing on specified pools with lower loan balances to enhance predictability of future cash flows [19] - The company plans to selectively access the ATM for capital raising when conditions are favorable [42] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term risks are balanced, the current environment of low volatility in interest rates and spreads is expected to provide a positive backdrop for Agency mortgages [26] - The conclusion of quantitative tightening and the announcement of T-bill purchases by the Fed are seen as tailwinds for the company's strategy [25] - Management expressed confidence in the liquidity position, providing a cushion for potential market stress [26] Other Important Information - The Federal Reserve ended its quantitative tightening program, which had reduced its Treasury and Agency mortgage holdings by over $2.2 trillion since mid-2022 [5] - The company modestly increased leverage to 7 times, consistent with the constructive investment environment [7] Q&A Session Summary Question: Can you talk about your approach to leverage level post the tightening and where you are finding value within the coupon stack? - The company increased leverage slightly in the fourth quarter due to a positive environment, and is comfortable with current levels despite tighter spreads [30] - Good value is being found primarily in the 3.5% to 5.5% coupon range [31] Question: Have you seen any surprises within prepay reports in the specified pool portfolio? - No significant surprises were noted; prepayment speeds increased in higher coupons but were less impacted due to prepayment protection [33] Question: Have you continued rotating down in coupon with new capital invested? - The company is focusing on lower coupons for future purchases, particularly in the belly of the coupon stack [36] Question: Can you talk about your capital structure and ability to raise capital going forward? - The company feels it is in a better place regarding capital structure and selectively accesses the ATM when beneficial to shareholders [42] Question: How should we think about book value sensitivity and overall upside to further spread tightening? - The magnitude of change in book value to spread changes remains the same, but expectations for further spread tightening are reduced [56]

Financial Data and Key Metrics Changes - Financial conditions improved during the quarter, supported by two Federal Reserve rate cuts, solid corporate earnings, and strong economic growth [4] - Book value per common share increased by 3.7% to $8.72, resulting in an 8% economic return for the quarter [7] - The liquidity position remained robust with $453 million in unrestricted cash and unencumbered assets [8] Business Line Data and Key Metrics Changes - The agency mortgage portfolio was valued at $5.4 billion, while the agency CMBS portfolio was $900 million [8] - Agency RMBS investments increased by 11% quarter over quarter, focusing on 5% and 5.5% coupons [18] - The agency CMBS allocation declined modestly due to growth in the overall portfolio, despite no new purchases [21] Market Data and Key Metrics Changes - Interest rates were generally stable, with the 10-year Treasury yield ending the year at 4.17%, 40 basis points lower than the start of the year [10] - The yield curve steepened, benefiting longer-term investments such as agency RMBS and agency CMBS [11] - Agency mortgages delivered strong performance, driven by reduced interest rate volatility and robust demand from money managers [13] Company Strategy and Development Direction - The company remains positive on agency mortgages, anticipating favorable conditions due to lower interest rate volatility and expectations for broadening demand [9] - The strategy includes a focus on specified pools with lower loan balances to enhance predictability of cash flows [19] - The company plans to selectively access the ATM for capital raising when conditions are favorable [42] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic environment is supportive, with expectations for additional Federal Reserve rate cuts through 2026 [6] - The company views near-term risks as balanced, with a positive outlook for agency mortgages due to favorable supply and demand technicals [26] - Management highlighted that the current environment reflects a more normalized investment landscape, providing attractive levered returns [25] Other Important Information - The Federal Reserve ended its quantitative tightening program, which alleviated funding pressures and improved repo spreads [12] - The company reported a 4.5% increase in book value since year-end through the week of the call [25] Q&A Session Summary Question: Can you talk about your approach to leverage levels post the tightening and where you find value within the coupon stack? - Management indicated that leverage was modestly increased in Q4, reflecting a positive environment, and they are comfortable with current levels despite tighter spreads [30] Question: Have you seen any surprises in prepayment reports within the specified pool portfolio? - Management noted no significant surprises, with prepayment speeds in higher coupons increasing but less impacted due to prepayment protection [33] Question: Have you continued rotating down in coupon with new capital invested? - Management confirmed a focus on lower coupons, particularly in the 3.5-5.5 range, due to attractive conditions in the TBA dollar roll market [36] Question: Can you discuss your capital structure and ability to raise capital going forward? - Management expressed confidence in their capital structure, indicating selective access to the ATM when beneficial to shareholders [42] Question: How should we think about book value sensitivity and overall upside to further spread tightening? - Management stated that while the magnitude of change in book value to spread changes remains the same, expectations for further spread tightening are reduced [56]

Financial Data and Key Metrics Changes - Financial conditions improved during Q4 2025, supported by two Federal Reserve rate cuts and strong economic growth, leading to an 8% economic return for the quarter and a 3.7% increase in book value per common share to $8.72 [3][5][19] - The company's portfolio at year-end was valued at $6.3 billion, with $5.4 billion in Agency mortgages and $900 million in Agency CMBS [6][18] Business Line Data and Key Metrics Changes - The Agency RMBS portfolio increased by 11% quarter over quarter, focusing on 5% and 5.5% coupons, while the allocation in 6% and 6.5% coupons declined due to paydowns [14][15] - Agency CMBS risk premiums remained largely unchanged, with no new purchases made during the quarter, but the sector continues to provide benefits through prepayment protection and fixed maturities [16][17] Market Data and Key Metrics Changes - The 10-year Treasury yield ended the year at 4.17%, with a steepening yield curve benefiting longer-term investments [8][9] - Agency mortgages delivered strong performance in 2025, driven by reduced interest rate volatility and increased demand from GSEs [11][12] Company Strategy and Development Direction - The company remains positive on Agency mortgages, viewing conditions as favorable due to lower interest rate volatility and expectations for broadening demand [6][21] - The strategy includes selectively accessing the ATM for capital raising when conditions are favorable, with a focus on maintaining a robust capital structure [36][40] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term risks are balanced, the current environment of low volatility in interest rates and spreads is expected to provide a positive backdrop for agency mortgages over the long term [21] - The conclusion of quantitative tightening and the announcement of T-bill purchases by the Fed have solidified funding markets, serving as a tailwind for the company's strategy [20][21] Other Important Information - The liquidity position remains strong, with $453 million in unrestricted cash and unencumbered assets [6] - The company modestly increased leverage to 7 times, consistent with the constructive investment environment [5][6] Q&A Session Summary Question: How is the company approaching leverage levels post the tightening? - The company increased leverage slightly in Q4, reflecting a positive environment, and remains comfortable with current levels despite tighter spreads [25] Question: Have there been any surprises in prepayment reports for higher coupons? - No significant surprises were noted; prepayment speeds increased in higher coupons but were less impacted due to prepayment protection [27] Question: Is the decision on the ATM solely based on stock price? - The decision is based on a combination of price to book and the availability of accretive investment opportunities [40] Question: What would trigger a tighter spread range for MBS? - An increase in the GSEs' caps or a notable increase in the pace of purchases could signal a tighter spread range [46] Question: How should investors think about book value sensitivity to spread changes? - The magnitude of change in book value to spread changes remains consistent, but expectations for further spread tightening are reduced [50]

Group 1 - Invesco Mortgage Capital Inc. (NYSE:IVR) is considered one of the most undervalued REIT stocks currently available for investment [1] - Compass Point raised its price target for Invesco Mortgage Capital from $9 to $9.50, maintaining a Buy rating, citing wider-than-average mortgage spreads as a potential driver for an increase in book value per share [1] - The firm forecasts that mortgage margins will narrow as fixed-income fluctuations decrease and the yield curve becomes steeper [1] Group 2 - Invesco Mortgage Capital announced a monthly dividend of $0.12 for January 2026, which is consistent with its previous quarterly dividend of $0.36 from Q4 2025 [2] - Preliminary financial indicators suggest an expected book value per share ranging from $8.94 to $9.30 as of January 12, 2026, with a midpoint of $9.12, slightly lower than Compass Point's forecast of $9.24 [2] Group 3 - Invesco Mortgage Capital Inc. is a Georgia-based real estate investment trust that focuses on investing, financing, and managing mortgage-backed securities and related assets [3]

Fourth Quarter 2025 Earnings Call Invesco Mortgage Capital Inc. January 30, 2026 John Anzalone Kevin Collins Mark Gregson David Lyle Brian Norris Chief Executive Officer President Chief Financial Officer Chief Operating Officer Chief Investment Officer Cautionary Notice Regarding Forward-Looking Statements This presentation and comments made in the associated conference call, may include statements and information that constitute "forward-looking statements" within the meaning of the U.S. securities laws as ...

Financial Performance - Net income per common share was $0.68, a decrease from $0.74 in Q3 2025, while earnings available for distribution per common share was $0.56, down from $0.58[9][12] - Net income attributable to common stockholders for the year ended December 31, 2025, was $88,173,000, a substantial increase from $34,763,000 in 2024[30] - Net income attributable to common stockholders for Q4 2025 was $48,243,000, compared to a loss of $5,472,000 in Q4 2024, representing a significant recovery[45] - Comprehensive income for the year ended December 31, 2025, was $101,106,000, compared to $59,357,000 in 2024, indicating a significant improvement[32] Investment Portfolio - The company's investment portfolio totaled $6.3 billion, consisting of $5.4 billion in Agency RMBS and $0.9 billion in Agency CMBS[4] - The company’s mortgage-backed securities at fair value increased to $6,276,609,000 as of December 31, 2025, from $5,445,508,000 in 2024[35] Dividends - The company declared a common stock dividend of $0.36 per share, an increase from $0.34 in Q3 2025, and announced a shift to monthly dividend payments[21] - Earnings available for distribution increased to $39,868,000 in Q4 2025 from $32,253,000 in Q4 2024, reflecting a year-over-year growth of 23.5%[48] Interest Income and Expenses - Total interest income for Q4 2025 was $77.9 million, an increase of $5.0 million from Q3 2025, while total interest expense rose to $56.6 million[12] - Interest income for Q4 2025 was $77,901,000, an increase from $72,916,000 in Q3 2025 and $76,110,000 in Q4 2024[30] - Total interest expense for Q4 2025 was $56,643,000, with an effective interest expense of $30,247,000, resulting in an effective cost of funds of 2.24%[52] - Average cost of funds decreased to 4.20% in Q4 2025 from 5.13% in Q4 2024, reflecting improved funding efficiency[61] Assets and Liabilities - Total assets as of December 31, 2025, were $6,475,894,000, compared to $5,688,034,000 as of December 31, 2024, reflecting a growth of approximately 13.9%[35] - Total liabilities as of December 31, 2025, were $5,678,350,000, up from $4,957,305,000 in 2024, reflecting an increase of approximately 14.5%[35] Ratios - The debt-to-equity ratio increased to 7.0x from 6.7x as of September 30, 2025, reflecting an improved investment environment[4][12] - The debt-to-equity ratio as of December 31, 2025, was 7.0, up from 6.7 as of September 30, 2025[58] Earnings and Margins - The average net interest rate margin improved to 1.11% in Q4 2025, up from 0.90% in Q3 2025[12] - Basic income per common share for Q4 2025 was $0.68, up from a loss of $0.09 per share in Q4 2024[45] - Effective net interest income for Q4 2025 was $47,654,000, with an effective interest rate margin of 3.07%[54] - Average earning assets rose to $5,868,897,000 in Q4 2025, compared to $5,440,662,000 in Q4 2024, indicating a growth of 7.9%[61] Shareholder Actions - The company issued 849,987 shares of common stock for net cash proceeds of $7.2 million during Q4 2025[22] - The company repurchased and retired 76,356 shares of Series C Preferred Stock with a carrying value of $1.8 million during Q4 2025[23] Derivative Instruments - The company reported a realized loss on derivative instruments of $18,863,000 in Q4 2025, compared to a gain of $157,864,000 in Q4 2024[46] - The company did not report any TBA dollar roll income in Q4 2025, compared to $249,000 in Q4 2024[48]

Core Viewpoint - Invesco Mortgage Capital Inc. reported improved financial results for Q4 2025, driven by favorable economic conditions, including interest rate cuts and strong corporate earnings, leading to an 8.0% economic return for the quarter [2][9]. Financial Performance - Book value per common share increased by 3.7% to $8.72 at the end of Q4 2025, compared to $8.41 at the end of Q3 2025 [2][9]. - Net income per common share was $0.68, down from $0.74 in Q3 2025 [9]. - Earnings available for distribution per common share decreased to $0.56 from $0.58 in Q3 2025 [9]. Investment Portfolio - The investment portfolio totaled $6.3 billion, comprising $5.4 billion in Agency RMBS and $0.9 billion in Agency CMBS [3]. - The average earning assets increased to $5,868.9 million from $5,382.2 million in Q3 2025 [8]. - The debt-to-equity ratio rose to 7.0x from 6.7x, reflecting a more favorable investment environment [3]. Economic Environment - The company remains optimistic about Agency RMBS due to reduced interest rate volatility and increased investor demand, with Fannie Mae and Freddie Mac planning to purchase $200 billion in Agency RMBS [4]. - Agency CMBS is noted for its attractive risk-adjusted yields and stable cash flow profile [4]. Capital Activities - A common stock dividend of $0.36 per share was declared, with a shift from quarterly to monthly dividend payments starting at $0.12 per share [20]. - The company issued 849,987 shares of common stock for net cash proceeds of $7.2 million during the quarter [21]. - The company repurchased 76,356 shares of Series C Preferred Stock with a carrying value of $1.8 million [22].

Key Takeaways IVR to report 4Q25 earnings on Jan. 29, after market close, with earnings expected to rise y/y.Lower rate volatility and Fed cuts in Q4 likely tightened mortgage spreads and improved IVR's book value.Falling mortgage rates boosted refinancing and origination, raising servicing amortization for IVR.Invesco Mortgage Capital Inc. (IVR) is scheduled to report fourth-quarter 2025 results on Jan. 29, 2026, after market close. The company’s quarterly earnings available for distribution per common sha ...