Core Viewpoint - Invesco Mortgage Capital Inc. is set to announce its second quarter 2025 results on July 24, 2025, with a subsequent conference call scheduled for July 25, 2025, at 9:00 a.m. ET [1] Company Information - Invesco Mortgage Capital Inc. is a real estate investment trust that focuses on investing in, financing, and managing mortgage-backed securities and other mortgage-related assets [3] - The company is externally managed and advised by Invesco Advisers, Inc., a wholly-owned subsidiary of Invesco Ltd., which is a leading independent global investment management firm [3] Conference Call Details - A presentation will be available on the company's website prior to the conference call [2] - Participants can join the call using the North America Toll-Free number 888-982-7409 or the International Toll number 1-212-287-1625, with the passcode "Invesco" [2] - An audio replay of the call will be available until August 8, 2025 [2]

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Group 1: Invesco Mortgage Capital (IVR) - Invesco Mortgage Capital is a real estate investment trust focusing on financing and managing residential and commercial mortgage-backed securities and mortgage loans [1] - The Zacks Consensus Estimate for its current year earnings has increased by 6.1% over the last 60 days [1] - The company has a dividend yield of 18.5%, significantly higher than the industry average of 12.4% [2] Group 2: JAKKS Pacific (JAKK) - JAKKS Pacific is a multi-brand company that designs and markets a broad range of toys and consumer products [2] - The Zacks Consensus Estimate for its current year earnings has increased nearly 3.1% over the last 60 days [2] - The company has a dividend yield of 5%, compared to the industry average of 0.0% [2] Group 3: PCB Bancorp (PCB) - PCB Bancorp is a bank holding company offering various financial services including savings accounts, loans, and wealth management [3] - The Zacks Consensus Estimate for its current year earnings has increased nearly 10.4% over the last 60 days [3] - The company has a dividend yield of 4.1%, which is higher than the industry average of 1.3% [3]

Financial Data and Key Metrics Changes - The company reported a positive economic return of 2.6% for the quarter, consisting of a $0.34 dividend and a modest $0.11 decline in book value to $8.81 [9][10] - The estimated book value per common share as of April 30 is between $7.74 and $8.06, reflecting a decline in April due to market volatility [10][26] - The leverage ratio was reduced from 7.1x to the mid-6s, indicating a cautious approach in response to market conditions [24][26] Business Line Data and Key Metrics Changes - The agency RMBS portfolio increased by 9.5% quarter over quarter, with investments focused on higher coupon securities [19] - The company rotated its allocations from lower coupons to higher coupons, capitalizing on attractive valuations [20] - Agency CMBS exposure remained at approximately 15% of the total investment portfolio, with new purchases yielding low double-digit ROEs [21] Market Data and Key Metrics Changes - U.S. Treasury yields declined by 20 to 40 basis points across the yield curve during the first quarter, driven by concerns over economic growth [12][13] - The Fed funds futures market is now pricing in deeper cuts, with expectations for the target rate to be reduced three to four times in 2025 [14] - Agency mortgages underperformed treasuries in April due to increased interest rate volatility and market sell-offs [9][23] Company Strategy and Development Direction - The company remains focused on higher coupon Agency RMBS, anticipating improved demand from banks and overseas investors as interest rate volatility declines [20][26] - The strategy includes increasing allocations to specified pools with predictable prepayment characteristics, particularly those with low credit score borrowers [20] - The company is cautious on agency mortgages in the near term but maintains a favorable long-term outlook due to expected improvements in investor demand [10][26] Management's Comments on Operating Environment and Future Outlook - Management noted tightening financial conditions and increased uncertainty regarding monetary and fiscal policies, impacting market sentiment [6][10] - The outlook for the second half of the year is cautiously optimistic, with expectations for improved demand for Agency RMBS as the economic environment stabilizes [16][26] - Management emphasized the importance of maintaining liquidity and reducing leverage to navigate current market volatility [24][26] Other Important Information - The company has been disciplined in adding exposure to Agency CMBS, focusing on relative value and risk diversification [21] - The funding market for assets has remained stable, with repo spreads consistent and haircuts unchanged [15] - The company has sold remaining credit investments, focusing entirely on agency assets [65] Q&A Session Summary Question: Can you discuss the decision to take down leverage? - The company reduced leverage by about 0.5 turns due to increased uncertainty regarding monetary, fiscal, and trade policy, which could impact mortgage demand [29][30] Question: What are the current returns on an incremental basis? - Levered ROEs are in the low 20s on higher coupons, indicating attractive spreads [32] Question: Can you comment on changes to the hedge portfolio in April? - The hedge ratio was increased due to uncertainty about near-term monetary policy, maintaining a mix of swaps and treasuries [35][36] Question: How does the smaller portfolio size impact the dividend level? - The company is comfortably covering the dividend despite the portfolio size reduction, with supportive ROEs from reinvestments [38] Question: How do current opportunities in agency compare to previous peaks? - The opportunity in mortgages is attractive, but there is caution regarding potential inflation and its impact on monetary policy adjustments [41][42] Question: What is the outlook for forward rates and the hedge portfolio? - There is uncertainty about future cuts, with a conservative approach to managing the hedge portfolio and leverage [50][52] Question: Are there opportunities in commercial credit? - The company has been hesitant to add credit exposure and has sold remaining credit investments, focusing solely on agency assets [64][65]

Financial Data and Key Metrics Changes - The company reported a positive economic return of 2.6% for the quarter, consisting of a $0.34 dividend and a modest $0.11 decline in book value to $8.81 [7][22] - The estimated book value per common share as of April 30 is between $7.74 and $8.06, reflecting a decline in April due to market volatility [8][21] - The leverage ratio was reduced from 7.1x to the mid-6s during the quarter, indicating a cautious approach in response to market conditions [21][23] Business Line Data and Key Metrics Changes - The agency RMBS portfolio increased by 9.5% quarter over quarter, with investments focused on higher coupon securities [17] - The company rotated its allocations from lower coupons to higher coupons, capitalizing on attractive valuations [18] - Agency CMBS exposure remained at approximately 15% of the total investment portfolio, with new purchases yielding low double-digit ROEs [19] Market Data and Key Metrics Changes - U.S. Treasury yields declined by 20 to 40 basis points across the yield curve during the first quarter, driven by concerns over economic growth [10][11] - The Fed funds futures market is now pricing in deeper cuts, with expectations for the target rate to be reduced three to four times in 2025 [12] - Agency mortgages underperformed treasuries in April due to increased interest rate volatility and market sell-offs [21][23] Company Strategy and Development Direction - The company remains focused on higher coupon Agency RMBS, anticipating improved demand as interest rate volatility declines [18][23] - The strategy includes increasing allocations to specified pools with predictable prepayment characteristics, particularly in a slowing economic environment [18] - The company is cautious about agency mortgages in the near term but maintains a favorable long-term outlook due to expected improvements in investor demand [8][23] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about tightening financial conditions and the potential impact of U.S. trade policies on economic growth [5][6] - The outlook remains cautious due to elevated interest rate volatility and policy uncertainty, but there is optimism for a steeper yield curve and improved demand in the long term [23] - Management highlighted the importance of maintaining liquidity to navigate potential market stress while capitalizing on investment opportunities as conditions improve [23] Other Important Information - The company noted that prepayment speeds remained low due to limited purchase and refinancing activity, but a decline in mortgage rates is expected to increase prepayment speeds in the coming months [6][7] - The funding market for the company's assets has been stable, with repo spreads remaining attractive [14] Q&A Session Summary Question: Discussion on leverage management during volatile periods - Management indicated that leverage was reduced by about 0.5 turns in April due to increased uncertainty regarding monetary and fiscal policy [26][28] Question: Comments on returns and spreads - Management noted that levered ROEs are in the low 20s on higher coupons, indicating attractive spreads [30] Question: Changes to the hedge portfolio - The hedge ratio was increased in response to uncertainty about near-term monetary policy, maintaining a mix of swaps and treasuries [34] Question: Impact of portfolio size on dividend levels - Management confirmed that the recent dividend reduction is still comfortably covered by current earnings [36] Question: Opportunity set in agency compared to previous peaks - Management expressed that the current opportunity in mortgages is attractive, but there is caution due to potential inflation and its impact on monetary policy [40][41] Question: Relative value of loan balance pools - Management discussed the rotation from low loan balance pools to more credit-constrained pools, driven by economic uncertainty and pricing dynamics [42][44] Question: Forward rate outlook and hedge portfolio development - Management emphasized a conservative approach to hedging and leverage, given the uncertainty in interest rate cuts [50][52] Question: Opportunities in commercial credit - Management stated that they are currently not looking to add credit exposure and have sold remaining credit investments, focusing solely on agency assets [61][62]

Financial Performance (Q1 2025) - Net income per common share was $0.26, a recovery from the $(0.09) loss in Q4 2024[8] - Earnings available for distribution per common share increased to $0.64 from $0.53 in the previous quarter[8] - The company declared a common stock dividend of $0.34 per share, down from $0.40 in Q4 2024[8] - Book value per common share slightly decreased to $8.81 from $8.92[8] - Economic return was 2.6%, compared to (0.5)% in the prior quarter[8] - The debt-to-equity ratio increased to 7.1x from 6.7x at the end of the previous quarter[8] Portfolio Allocation and Activity - Agency RMBS represented 83.7% of the investment allocation[8] - Agency CMBS accounted for 15.0% of the investment allocation[8] - Non-Agency RMBS made up 0.1% of the investment allocation, totaling $5.9 billion[8] - Agency CMOs comprised 1.2% of the investment allocation[8] - The company issued $36.0 million of common stock under the at-the-market program[10] - The company repurchased Series C Preferred Stock with a carrying value of $2.2 million[10] - The company held $372 million of unrestricted cash and unencumbered investments at quarter end[10] Portfolio Update (as of April 30) - Estimated book value per common share ranged from $7.74 to $8.06, a decrease from $8.81 at the end of Q1 2025[47] - The company reduced portfolio size by selling higher coupon Agency RMBS to lower risk in a volatile environment[47] - Estimated debt-to-equity ratio decreased to 6.4x from 7.1x at the end of Q1 2025[47] - The company held $336 million in cash and unencumbered investments[47]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Invesco Mortgage Capital Inc.'s unaudited condensed consolidated financial statements and detailed notes on accounting policies, investments, and equity changes [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) | Metric ($ in thousands) | March 31, 2025 | December 31, 2024 | Change | | :---------------------- | :------------- | :---------------- | :----- | | Total Assets | 6,158,764 | 5,688,034 | +470,730 | | Mortgage-backed securities, at fair value | 5,945,789 | 5,445,508 | +500,281 | | Total Liabilities | 5,399,598 | 4,957,305 | +442,293 | | Repurchase agreements | 5,354,561 | 4,893,958 | +460,603 | | Total Stockholders' Equity | 759,166 | 730,729 | +28,437 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) | Metric ($ in thousands, except EPS) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :---------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Interest income | 73,846 | 68,583 | +5,263 | | Interest expense | 55,025 | 61,580 | -6,555 | | Net interest income | 18,821 | 7,003 | +11,818 | | Gain (loss) on investments, net | 82,158 | (66,153) | +148,311 | | Gain (loss) on derivative instruments, net | (76,679) | 93,161 | -169,840 | | Total other income (loss) | 5,479 | 26,776 | -21,297 | | Total expenses | 4,659 | 4,657 | +2 | | Net income (loss) | 19,641 | 29,122 | -9,481 | | Net income (loss) attributable to common stockholders | 16,289 | 23,730 | -7,441 | | Basic EPS | 0.26 | 0.49 | -0.23 | | Diluted EPS | 0.26 | 0.49 | -0.23 | [Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric ($ in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :---------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net income (loss) | 19,641 | 29,122 | -9,481 | | Other comprehensive income (loss) | 616 | (163) | +779 | | Comprehensive income (loss) | 20,257 | 28,959 | -8,702 | | Comprehensive income (loss) attributable to common stockholders | 16,905 | 23,567 | -6,662 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) | Metric ($ in thousands) | As of March 31, 2025 | As of December 31, 2024 | Change | | :---------------------- | :------------------- | :---------------------- | :----- | | Total Stockholders' Equity | 759,166 | 730,729 | +28,437 | | Net income (loss) | 19,641 | N/A | N/A | | Other comprehensive income (loss) | 616 | N/A | N/A | | Proceeds from issuance of common stock, net | 35,956 | N/A | N/A | | Common stock dividends | (22,420) | N/A | N/A | | Preferred stock dividends | (3,341) | N/A | N/A | [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric ($ in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :---------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Net cash provided by (used in) operating activities | 19,346 | 57,499 | -38,153 | | Net cash provided by (used in) investing activities | (516,499) | 37,111 | -553,610 | | Net cash provided by (used in) financing activities | 467,777 | (92,742) | +560,519 | | Net change in cash, cash equivalents and restricted cash | (29,376) | 1,868 | -31,244 | | Cash, cash equivalents and restricted cash, end of period | 181,505 | 200,505 | -19,000 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - Invesco Mortgage Capital Inc. primarily invests in, finances, and manages mortgage-backed securities (MBS) and other mortgage-related assets, including Agency RMBS, Agency CMBS, and non-Agency RMBS, operating as a REIT and externally managed by Invesco Advisers, Inc[21](index=21&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - As of March 31, 2025, the total MBS portfolio fair value was **$5,945,789 thousand**, up from **$5,445,508 thousand** at December 31, 2024, with approximately **99.9%** of MBS accounted for under the fair value option, and the company sold its remaining non-Agency CMBS investment during Q1 2025[31](index=31&type=chunk)[32](index=32&type=chunk)[35](index=35&type=chunk) - Repurchase agreements increased to **$5,354,561 thousand** as of March 31, 2025, from **$4,893,958 thousand** as of December 31, 2024, with a weighted average interest rate of **4.47%** (down from 4.80%)[55](index=55&type=chunk)[57](index=57&type=chunk) - Total collateral pledged increased to **$5,755,736 thousand** as of March 31, 2025, from **$5,267,544 thousand** as of December 31, 2024, maintaining a ratio of total repurchase agreements collateral pledged to total repurchase agreements outstanding at **105%** for both periods[58](index=58&type=chunk)[60](index=60&type=chunk)[62](index=62&type=chunk) - The notional amount of interest rate swaps increased to **$3,640,000 thousand** (from $3,265,000 thousand), while futures contracts decreased to **$902,500 thousand** (from $1,402,000 thousand) as of March 31, 2025, resulting in a net loss of **$(76,679) thousand** on derivative instruments in Q1 2025, compared to a net gain of **$93,161 thousand** in Q1 2024[67](index=67&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) - Management fees paid to Invesco Advisers, Inc. were **$2,996 thousand** for Q1 2025, up from **$2,861 thousand** in Q1 2024[93](index=93&type=chunk)[94](index=94&type=chunk) - The company repurchased and retired **90,146 shares** of Series C Preferred Stock in Q1 2025, and common stock sales under equity distribution agreements generated net proceeds of **$35,956 thousand** from **4,212,057 shares** sold in Q1 2025, significantly up from **$3,318 thousand** from **365,838 shares** in Q1 2024[98](index=98&type=chunk)[103](index=103&type=chunk) - Basic and diluted EPS were **$0.26** for Q1 2025, down from **$0.49** for Q1 2024[108](index=108&type=chunk) - On May 6, 2025, a Series C Preferred Stock dividend of **$0.46875 per share** was declared, payable on June 27, 2025[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and Q1 2025 results, covering macroeconomic factors, investment portfolio, financing, capital, and risk exposures [Executive Summary](index=24&type=section&id=Executive%20Summary) - Invesco Mortgage Capital Inc. primarily invests in, finances, and manages mortgage-backed securities (MBS) and other mortgage-related assets, aiming for attractive risk-adjusted returns primarily through dividends[114](index=114&type=chunk) - As of March 31, 2025, the company's investments included Agency RMBS, Agency CMBS, and non-Agency RMBS[114](index=114&type=chunk)[117](index=117&type=chunk) - The company operates as a REIT for U.S. federal income tax purposes, requiring distribution of at least **90%** of REIT taxable income annually[116](index=116&type=chunk) [Market Conditions and Impacts](index=25&type=section&id=Market%20Conditions%20and%20Impacts) - Financial conditions tightened in Q1 2025 due to potential U.S. fiscal and trade policy changes, leading to a **4.6%** decline in the S&P 500 and a **10.4%** fall in NASDAQ[119](index=119&type=chunk) - Inflation remained above the Federal Reserve's **2%** target, with headline CPI at **2.4%** year-over-year, while employment data showed a slowing labor market (**152,000 jobs/month** in Q1 vs. **209,000** in Q4)[120](index=120&type=chunk) - Interest rates dropped across the maturity spectrum in Q1 2025 (e.g., 10-year Treasury yield decreased **34 basis points** to **4.24%**), while short-dated interest rate volatility increased[122](index=122&type=chunk)[124](index=124&type=chunk) - Agency RMBS performance was consistent with Treasuries, with higher coupons outperforming, supported by subdued originations and net additions by market participants[123](index=123&type=chunk) [Outlook](index=27&type=section&id=Outlook) - The company remains cautious on the near-term outlook for Agency RMBS due to proposed U.S. fiscal and trade policy changes, which could lead to slower economic growth, higher inflation, and market volatility[126](index=126&type=chunk) - The long-term outlook for Agency RMBS is favorable, anticipating improved demand for higher coupons, eventual decline in interest rate volatility, and a steeper yield curve[126](index=126&type=chunk) - Agency CMBS risk premiums may stay elevated, but limited issuance, strong fundamentals, and stable cash flows are expected to provide support[126](index=126&type=chunk) [Investment Activities](index=27&type=section&id=Investment%20Activities) | Investment Type ($ in thousands) | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------- | :------------- | :---------------- | :------------- | | Agency RMBS: 30 year fixed-rate pass-through | 4,974,663 | 4,541,525 | 4,649,052 | | Agency CMO | 73,539 | 70,776 | 74,701 | | Agency CMBS | 890,372 | 816,147 | 265,512 | | Non-Agency CMBS | — | 9,836 | 10,188 | | Non-Agency RMBS | 7,215 | 7,224 | 7,651 | | Total investment portfolio | 5,945,789 | 5,445,508 | 5,007,104 | - Total investment portfolio increased to **$5,945,789 thousand** as of March 31, 2025, from **$5,445,508 thousand** as of December 31, 2024[127](index=127&type=chunk)[128](index=128&type=chunk) - Holdings of 30-year fixed-rate Agency RMBS constituted approximately **84%** of the total portfolio as of March 31, 2025, up from **83%** at December 31, 2024[128](index=128&type=chunk) - The company sold its remaining non-Agency CMBS investment in Q1 2025, reducing non-Agency securities to less than **1%** of the portfolio[132](index=132&type=chunk) [Financing and Other Liabilities](index=28&type=section&id=Financing%20and%20Other%20Liabilities) - Collateralized borrowings under repurchase agreements increased to **$5,354,561 thousand** as of March 31, 2025, from **$4,893,958 thousand** as of December 31, 2024[134](index=134&type=chunk)[135](index=135&type=chunk) - The average quarterly balance of repurchase agreements for Q1 2025 was **$4,930,237 thousand**, up from **$4,865,582 thousand** in Q4 2024[135](index=135&type=chunk) [Hedging Instruments](index=28&type=section&id=Hedging%20Instruments) - The company uses interest rate swap agreements to mitigate interest rate changes, paying fixed rates and receiving floating rates indexed to SOFR[137](index=137&type=chunk) - In Q1 2025, the company entered into **$725.0 million** in new interest rate swaps and terminated **$350.0 million**, increasing the notional amount[138](index=138&type=chunk) - Futures contracts are also used for interest rate mitigation; in Q1 2025, **$1.4 billion** in new contracts were entered, and **$1.9 billion** were terminated[139](index=139&type=chunk) [Capital Activities](index=29&type=section&id=Capital%20Activities) - Net proceeds from common stock sales under equity distribution agreements were **$35,956 thousand** in Q1 2025 (**4,212,057 shares**), a significant increase from **$3,318 thousand** in Q1 2024 (**365,838 shares**)[141](index=141&type=chunk)[142](index=142&type=chunk) - The company repurchased and retired **90,146 shares** of Series C Preferred Stock in Q1 2025[144](index=144&type=chunk) Capital Metrics | Metric ($ in thousands, except per share) | March 31, 2025 | December 31, 2024 | Change | | :---------------------------------------- | :------------- | :---------------- | :----- | | Total equity | 759,166 | 730,729 | +28,437 | | Liquidation preference of Series C Preferred Stock | (177,913) | (180,166) | +2,253 | | Total adjusted equity | 581,253 | 550,563 | +30,690 | | Common stock outstanding (shares) | 65,942 | 61,730 | +4,212 | | Book value per common share | 8.81 | 8.92 | -0.11 | - Book value per common share decreased by **1.2%** to **$8.81** as of March 31, 2025, from **$8.92** as of December 31, 2024, primarily due to losses on derivative instruments, dividends, and expenses, partially offset by net interest income and investment gains[146](index=146&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) - Total average earning assets increased by **$450.3 million** (YoY) to **$5,422,552 thousand** in Q1 2025, with average earning asset yields decreasing by **7 basis points** to **5.45%** (YoY), leading to interest income increasing to **$73,846 thousand** in Q1 2025 from **$68,583 thousand** in Q1 2024 due to higher average earning assets[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - Net discount accretion decreased in Q1 2025 compared to Q1 2024, as the portfolio shifted to higher coupon securities that have higher amortized costs relative to principal value[157](index=157&type=chunk) - Total average borrowings increased by **$510.5 million** (YoY) to **$4,930,237 thousand** in Q1 2025, with the average cost of funds decreasing by **111 basis points** to **4.46%** (YoY) due to a lower Federal Funds target rate, resulting in interest expense decreasing to **$55,025 thousand** in Q1 2025 from **$61,580 thousand** in Q1 2024[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - Net interest income increased to **$18,821 thousand** in Q1 2025 from **$7,003 thousand** in Q1 2024, and net interest rate margin improved to **0.99%** from **(0.05)%**, primarily due to a lower cost of funds[164](index=164&type=chunk)[165](index=165&type=chunk) - The company reported net unrealized gains on MBS of **$87.6 million** in Q1 2025, a significant reversal from net unrealized losses of **$62.5 million** in Q1 2024, driven by a sharp decline in interest rates, with total gain on investments, net being **$82,158 thousand** in Q1 2025, compared to a loss of **$(66,153) thousand** in Q1 2024[166](index=166&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk) - Net losses on derivative instruments were **$(76,679) thousand** in Q1 2025, a substantial shift from net gains of **$93,161 thousand** in Q1 2024, primarily due to changes in interest rate expectations[173](index=173&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Net income attributable to common stockholders decreased to **$16.3 million** (**$0.26 EPS**) in Q1 2025 from **$23.7 million** (**$0.49 EPS**) in Q1 2024, influenced by the interplay of investment gains and derivative losses[184](index=184&type=chunk) [Non-GAAP Financial Measures](index=36&type=section&id=Non-GAAP%20Financial%20Measures) - Earnings Available for Distribution (EAD) decreased to **$40,047 thousand** (**$0.64 per common share**) in Q1 2025 from **$41,816 thousand** (**$0.86 per common share**) in Q1 2024, primarily due to lower effective net interest income, partially offset by increased TBA dollar roll income and lower preferred dividends[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Effective interest expense increased in Q1 2025 due to a decrease in contractual net interest income on interest rate swaps and higher average borrowings, partially offset by a lower Federal Funds target rate[201](index=201&type=chunk)[202](index=202&type=chunk) - Effective net interest income decreased in Q1 2025 compared to Q1 2024 due to a decrease in contractual net interest income on interest rate swaps, partially offset by a lower Federal Funds target rate[204](index=204&type=chunk)[205](index=205&type=chunk) Non-GAAP Financial Metrics | Metric ($ in thousands, except per share) | March 31, 2025 | December 31, 2024 | Change | | :---------------------------------------- | :------------- | :---------------- | :----- | | Repurchase agreements | 5,354,561 | 4,893,958 | +460,603 | | Total stockholders' equity | 759,166 | 730,729 | +28,437 | | Debt-to-equity ratio | 7.1 | 6.7 | +0.4 | | Economic debt-to-equity ratio | 7.1 | 6.7 | +0.4 | - The economic debt-to-equity ratio remained stable at **7.1** as of March 31, 2025, compared to **6.7** as of December 31, 2024, reflecting the impact of off-balance sheet TBA financing[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash, cash equivalents, and restricted cash decreased to **$181.5 million** as of March 31, 2025, from **$200.5 million** as of March 31, 2024[213](index=213&type=chunk) - Operating activities provided **$19.3 million** in net cash in Q1 2025, down from **$57.5 million** in Q1 2024[213](index=213&type=chunk) - Investing activities used **$516.5 million** in net cash in Q1 2025, a significant shift from providing **$37.1 million** in Q1 2024, driven by increased MBS purchases and derivative settlements[214](index=214&type=chunk) - Financing activities provided **$467.8 million** in net cash in Q1 2025, reversing from using **$92.7 million** in Q1 2024, primarily due to net proceeds from repurchase agreements and common stock issuance[215](index=215&type=chunk) - The average margin requirement (haircut) under repurchase agreements was **4.5%** for Agency RMBS and **4.8%** for Agency CMBS as of March 31, 2025[216](index=216&type=chunk) - The company believes it has sufficient short-term liquidity and capital resources, but long-term needs depend on obtaining additional debt financing or equity/debt offerings[223](index=223&type=chunk)[224](index=224&type=chunk) [Exposure to Financial Counterparties](index=41&type=section&id=Exposure%20to%20Financial%20Counterparties) - As of March 31, 2025, one counterparty held collateral exceeding borrowed amounts by over **$38.0 million**, or **5%** of stockholders' equity[226](index=226&type=chunk) - The company has repurchase agreement financing with **21 counterparties** across North America, Asia, and Europe, totaling **$5,354,561 thousand**[227](index=227&type=chunk) [Dividends](index=42&type=section&id=Dividends) - To maintain REIT qualification, the company must distribute at least **90%** of its REIT taxable income annually[228](index=228&type=chunk) - Distribution requirements are based on REIT taxable income, which differs from U.S. GAAP net income due to unrealized gains/losses on investments and derivatives, and temporary differences in premium/discount amortization[229](index=229&type=chunk) [Other Matters](index=42&type=section&id=Other%20Matters) - The company believes it satisfied all REIT asset tests for the period ended March 31, 2025, and intends to maintain REIT qualification for the full year 2025[231](index=231&type=chunk) - The company conducts its business to avoid registration as an investment company under the 1940 Act, relying on specific exclusions (e.g., Section 3(c)(5)(C) for real estate-related assets)[232](index=232&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to interest rate, prepayment, and market value risks, outlining management strategies and providing sensitivity analysis [Interest Rate Risk](index=43&type=section&id=Interest%20Rate%20Risk) - The company is exposed to interest rate risk from its investments and short-term repurchase agreements, which are periodically refinanced at current market rates[235](index=235&type=chunk) - Interest rate risk is mitigated using derivative contracts, primarily interest rate swap agreements and futures contracts[235](index=235&type=chunk) - Rising interest rates can increase borrowing costs, narrowing net interest spread and potentially leading to losses, while also increasing defaults and credit losses[236](index=236&type=chunk) - Hedging effectiveness can be reduced if actual prepayment speeds differ from assumptions, potentially causing losses[237](index=237&type=chunk) [Interest Rate Effects on Fair Value](index=43&type=section&id=Interest%20Rate%20Effects%20on%20Fair%20Value) - Changes in interest rates affect the market value of assets and liabilities, including hedging instruments, potentially at different rates[238](index=238&type=chunk) - Interest rate risk is assessed by estimating the duration of assets and liabilities, which measures market price volatility[239](index=239&type=chunk) - Volatility in fair value can increase significantly with material changes in interest rates, and other factors like yield curve shape and market expectations also impact fair value[240](index=240&type=chunk) [Spread Risk](index=43&type=section&id=Spread%20Risk) - Spread risk, the difference between investment interest rates and risk-free rates, is managed through asset selection, sector allocation, portfolio value-at-risk regulation, and maintaining adequate liquidity[241](index=241&type=chunk) - Changes in spreads impact book value and liquidity, potentially forcing asset sales or strategy changes[241](index=241&type=chunk) [Prepayment Risk](index=44&type=section&id=Prepayment%20Risk) - Prepayment risk affects interest income through the amortization of premiums and accretion of discounts on investments[242](index=242&type=chunk) - Increased prepayment rates accelerate premium amortization (reducing interest income) and discount accretion (increasing interest income)[242](index=242&type=chunk) - Uncertainty in inflation, fiscal/monetary policy, and interest rate volatility makes prepayment prediction difficult, potentially leading to material differences from expectations[243](index=243&type=chunk) [Extension Risk](index=44&type=section&id=Extension%20Risk) - If prepayment rates decrease in a rising interest rate environment, the life of fixed-rate assets can extend beyond the term of hedging instruments, negatively impacting results as borrowing costs become unfixed while asset income remains fixed[245](index=245&type=chunk) - This situation can cause asset market values to decline without offsetting hedging gains, potentially forcing asset sales and incurring losses[245](index=245&type=chunk) [Market Value Risk](index=44&type=section&id=Market%20Value%20Risk) - Available-for-sale securities' fair value fluctuates with interest rates; generally decreasing in a rising rate environment and increasing in a falling one[246](index=246&type=chunk) - Crises can cause extreme volatility and illiquidity in fixed income markets, elevating margin call risk and materially impacting operating results and financial condition[247](index=247&type=chunk) Interest Rate Sensitivity Analysis | Change in Interest Rates | As of March 31, 2025 | As of December 31, 2024 | | :----------------------- | :------------------- | :---------------------- | | | % Change in Projected Net Interest Income | % Change in Projected Portfolio Value | % Change in Projected Net Interest Income | % Change in Projected Portfolio Value | | +1.00% | (6.08)% | (0.75)% | (0.16)% | (0.59)% | | +0.50% | (2.68)% | (0.25)% | 0.02% | (0.21)% | | -0.50% | 2.01% | (0.13)% | (0.48)% | (0.05)% | | -1.00% | 3.65% | (0.77)% | (1.30)% | (0.47)% | - A sensitivity analysis shows that a **+1.00%** change in interest rates could lead to a **(6.08)%** decrease in projected net interest income and a **(0.75)%** decrease in projected portfolio value as of March 31, 2025[248](index=248&type=chunk)[249](index=249&type=chunk) [Real Estate Risk](index=45&type=section&id=Real%20Estate%20Risk) - Residential and commercial property values are volatile and can be adversely affected by economic conditions, local real estate markets, and demographic factors[252](index=252&type=chunk) - Decreases in property values reduce collateral value and borrower repayment capacity, potentially leading to losses for the company[252](index=252&type=chunk) [Credit Risk](index=45&type=section&id=Credit%20Risk) - The company retains credit loss risk on residential mortgage investments, managed through pre-acquisition due diligence and regular re-evaluation based on macroeconomic and loan-specific metrics[253](index=253&type=chunk) - Deteriorating fundamentals and tightening lending conditions can increase loan delinquencies and defaults, impacting MBS performance and potentially leading to downgrades by rating agencies[254](index=254&type=chunk) [Risk Management](index=45&type=section&id=Risk%20Management) - The company manages risk exposure by monitoring and adjusting reset indices and interest rates on assets and financings[255](index=255&type=chunk)[257](index=257&type=chunk) - Strategies include structuring financing with diverse maturities, terms, and adjustment periods, exploring non-marked-to-market financing, and using hedging instruments like interest rate swaps and financial futures[257](index=257&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed the effectiveness of disclosure controls and procedures as of March 31, 2025, concluding they were effective, with no material changes in internal control over financial reporting [Effectiveness of Disclosure Controls and Procedures](index=45&type=section&id=Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) - As of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[256](index=256&type=chunk) - These controls provide reasonable assurance that information required for SEC reports is recorded, processed, summarized, and reported timely[256](index=256&type=chunk) - Acknowledged inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures[258](index=258&type=chunk) [Changes in Internal Control over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2025[259](index=259&type=chunk) [PART II OTHER INFORMATION](index=48&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company was not involved in any material legal proceedings as of March 31, 2025 - The company was not involved in any legal proceedings as of March 31, 2025[261](index=261&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to the Annual Report on Form 10-K for December 31, 2024 - No material changes to risk factors were reported during the period covered by this Quarterly Report compared to the Annual Report on Form 10-K for December 31, 2024[262](index=262&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased and retired **90,146** shares of Series C Preferred Stock at an average price of **$24.29** per share - The company repurchased and retired **90,146 shares** of Series C Preferred Stock during Q1 2025 at an average price of **$24.29 per share**[263](index=263&type=chunk)[264](index=264&type=chunk) - As of March 31, 2025, **616,513 additional shares** of Series C Preferred Stock remained authorized for repurchase under the program[264](index=264&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[265](index=265&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[266](index=266&type=chunk) [Item 5. Other Information](index=48&type=section&id=Item%205.%20Other%20Information) No other information was reported under this item - No other information was reported[267](index=267&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, preferred stock articles, and certifications - The exhibit index includes Articles of Amendment and Restatement, Articles Supplementary for Preferred Stock, Certifications (31.1, 31.2, 32.1, 32.2), and XBRL Taxonomy documents[274](index=274&type=chunk)

[Press Release and CEO Update](index=1&type=section&id=Press%20Release) CEO John Anzalone discusses Q1 2025 economic performance, portfolio status, and market outlook [CEO Update](index=1&type=section&id=Update%20from%20John%20Anzalone%2C%20Chief%20Executive%20Officer) CEO John Anzalone discusses Q1 2025 economic performance, portfolio growth, and the impact of market volatility on book value - The **economic return** for **Q1 2025** was **2.6%**, comprising a **$0.34** **dividend per common share** and a **$0.11** decline in **book value per common share**[3](index=3&type=chunk) - The **debt-to-equity ratio** increased to **7.1x** as of March **31**, **2025**, up from **6.7x** at the end of the prior quarter[4](index=4&type=chunk) - The **investment portfolio** totaled **$5.9 billion**, primarily composed of **$5.0 billion** in **Agency RMBS** and **$0.9 billion** in **Agency CMBS**, with **$372 million** in **unrestricted cash and unencumbered investments**[4](index=4&type=chunk) - **Book value per common share** is estimated to have declined to a range of **$7.74** to **$8.06** as of April **30**, **2025**, due to increased interest rate volatility and deteriorating risk sentiment[5](index=5&type=chunk) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) The company's Q1 2025 financial performance shows improved net income and EAD, alongside shifts in key balance sheet and interest rate metrics [Key Performance Indicators](index=1&type=section&id=Key%20performance%20indicators) Q1 2025 key performance indicators reflect improved net income and EAD, with changes in dividend, book value, and leverage Q1 2025 vs. Q4 2024 Key Metrics | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Net income (loss) per common share | $0.26 | ($0.09) | | Earnings available for distribution per common share | $0.64 | $0.53 | | Common stock dividend per common share | $0.34 | $0.40 | | Book value per common share | $8.81 | $8.92 | | Economic return | 2.6% | (0.5)% | Detailed Financial Metrics Q1 2025 vs Q4 2024 | ($ in millions, except per share/ratio) | Q1 2025 | Q4 2024 | Variance | | :--- | :--- | :--- | :--- | | **U.S. GAAP Measures** | | | | | Net interest income | $18.8 | $13.7 | $5.1 | | Net income (loss) attributable to common stockholders | $16.3 | ($5.5) | $21.8 | | Average net interest rate margin | 0.99 % | 0.47 % | 0.52 % | | Book value per common share | $8.81 | $8.92 | ($0.11) | | Debt-to-equity ratio | 7.1 x | 6.7 x | 0.4 x | | **Non-GAAP Measures** | | | | | Earnings available for distribution | $40.0 | $32.3 | $7.7 | | Effective net interest income | $46.9 | $46.0 | $0.9 | | Effective interest rate margin | 3.27 % | 3.13 % | 0.14 % | [Portfolio and Hedging Details](index=3&type=section&id=Portfolio%20Composition) This section details the company's MBS portfolio composition, borrowing strategies, and various hedging instruments used to manage interest rate risk [MBS Portfolio](index=3&type=section&id=Portfolio%20Composition_sub) The MBS portfolio grew in Q1 2025, maintaining concentration in Agency securities with shifts towards higher coupon RMBS MBS Portfolio Composition ($ in thousands) | Category | Fair Value (Mar 31, 2025) | % of Portfolio | Fair Value (Dec 31, 2024) | % of Portfolio | | :--- | :--- | :--- | :--- | :--- | | Total 30 year fixed-rate pass through | $4,974,663 | 83.7% | $4,541,525 | 83.4% | | Agency-CMO | $73,539 | 1.2% | $70,776 | 1.3% | | Agency CMBS | $890,372 | 15.0% | $816,147 | 15.0% | | Non-Agency CMBS | — | —% | $9,836 | 0.2% | | Non-Agency RMBS | $7,215 | 0.1% | $7,224 | 0.1% | | **Total MBS portfolio** | **$5,945,789** | **100.0%** | **$5,445,508** | **100.0%** | [Borrowings](index=3&type=section&id=Borrowings) Total borrowings increased in Q1 2025, with a decreased weighted average interest rate and shorter maturity Borrowings Summary ($ in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Amount Outstanding | $5,354,561 | $4,893,958 | | Weighted Average Interest Rate | 4.47% | 4.80% | | Weighted Average Remaining Maturity (days) | 25 | 29 | [TBA Derivatives](index=3&type=section&id=TBA%20derivatives) The company's net TBA derivative contracts showed a reduced net carrying value liability in Q1 2025 with offsetting notional amounts Net TBA Derivatives Summary ($ in thousands) | Metric | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Net Notional Amount | $— | $— | | Net Implied Cost Basis | $219 | $606 | | Net Carrying Value - Liability | ($219) | ($606) | [Interest Rate Swaps](index=4&type=section&id=interest%20rate%20swaps) The company increased its use of interest rate swaps for hedging, extending maturity and locking in higher fixed pay rates Interest Rate Swaps Summary ($ in thousands) | Metric | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Total Notional Amount | $3,640,000 | $3,265,000 | | Weighted Average Fixed Pay Rate | 1.29% | 0.97% | | Weighted Average Floating Receive Rate | 4.41% | 4.49% | | Weighted Average Years to Maturity | 6.4 | 5.3 | [Futures Contracts](index=4&type=section&id=futures%20contracts) The company significantly reduced its short position in U.S. Treasury futures during Q1 2025, primarily in Ultra 10-year contracts U.S. Treasury Futures Notional Amount - Short ($ in thousands) | Futures Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 10 year U.S. Treasury | $400,000 | $136,000 | | Ultra 10 year U.S. Treasury | $315,000 | $1,057,000 | | 30 year U.S. Treasury | $187,500 | $209,000 | | **Total** | **$902,500** | **$1,402,000** | [Capital Activities](index=4&type=section&id=Capital%20Activities) The company's capital activities for Q1 2025 include common stock dividends, preferred stock dividends, and share issuances and repurchases [Dividends](index=4&type=section&id=Dividends) The company declared common stock and Series C Preferred Stock dividends for Q1 2025 - Declared a **common stock dividend** of **$0.34** per share for **Q1 2025**[22](index=22&type=chunk) - Declared a **Series C Preferred Stock** dividend of **$0.46875** per share, payable in June **2025**[22](index=22&type=chunk) [Stock Issuances and Repurchases](index=4&type=section&id=Issuances%20of%20Common%20Stock) The company issued common stock through its at-the-market program and repurchased Series C Preferred Stock in Q1 2025 - Sold **4,212,057** shares of common stock for **net proceeds** of **$36.0 million** through its at-the-market program[23](index=23&type=chunk) - Repurchased and retired **90,146** shares of **Series C Preferred Stock** for a **total cost** of **$2.2 million**[24](index=24&type=chunk) [Portfolio and Liquidity Update](index=5&type=section&id=Portfolio%20and%20Liquidity%20Update%20as%20of%20April%2030%2C%202025) This section provides an update on the company's investment portfolio and liquidity position as of April 30, 2025 [April 30, 2025 Update](index=5&type=section&id=Portfolio%20and%20Liquidity%20Update%20as%20of%20April%2030%2C%202025_sub) As of April 30, 2025, the company's investment portfolio decreased, with a lower estimated debt-to-equity ratio and maintained liquidity Portfolio and Liquidity Snapshot as of April 30, 2025 | Metric | Value | | :--- | :--- | | Total investment portfolio | $5.1 billion | | Portfolio Composition | 82% Agency RMBS, 18% Agency CMBS | | Unrestricted cash and unencumbered investments | ~$336 million | | Estimated debt-to-equity ratio | 6.4x | [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the company's condensed consolidated financial statements, including statements of operations, comprehensive income, and balance sheets [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 net income attributable to common stockholders showed a significant recovery from the prior quarter's loss Condensed Consolidated Statements of Operations ($ in thousands) | | Three Months Ended Mar 31, 2025 | Three Months Ended Dec 31, 2024 | | :--- | :--- | :--- | | Net interest income | 18,821 | 13,679 | | Total other income (loss) | 5,479 | (5,392) | | Total expenses | 4,659 | 4,781 | | Net income (loss) | 19,641 | 3,506 | | **Net income (loss) attributable to common stockholders** | **16,289** | **(5,472)** | | **Basic earnings (loss) per share** | **$0.26** | **($0.09)** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)) Comprehensive income attributable to common stockholders for Q1 2025 was positive, reversing the prior quarter's loss Condensed Consolidated Statements of Comprehensive Income (Loss) ($ in thousands) | | Three Months Ended Mar 31, 2025 | Three Months Ended Dec 31, 2024 | | :--- | :--- | :--- | | Net income (loss) | 19,641 | 3,506 | | Total other comprehensive income (loss) | 616 | (188) | | **Comprehensive income (loss)** | **20,257** | **3,318** | | **Comprehensive income (loss) attributable to common stockholders** | **16,905** | **(5,660)** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets and liabilities increased, with a rise in stockholders' equity Condensed Consolidated Balance Sheets ($ in thousands) | | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Mortgage-backed securities, at fair value | 5,945,789 | 5,445,508 | | Cash and cash equivalents | 42,894 | 73,403 | | **Total assets** | **6,158,764** | **5,688,034** | | **LIABILITIES AND EQUITY** | | | | Repurchase agreements | 5,354,561 | 4,893,958 | | **Total liabilities** | **5,399,598** | **4,957,305** | | **Total stockholders' equity** | **759,166** | **730,729** | | **Total liabilities and stockholders' equity** | **6,158,764** | **5,688,034** | [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) The company presents non-GAAP measures such as Earnings Available for Distribution, effective interest metrics, and economic debt-to-equity ratio to provide additional insights into performance [Earnings Available for Distribution (EAD)](index=9&type=section&id=Earnings%20Available%20for%20Distribution) EAD, a non-GAAP measure, increased in Q1 2025, reflecting the portfolio's income-generating ability for dividends - **EAD** is calculated by adjusting **GAAP net income** for items such as **net gains/losses on investments and derivatives**, and **TBA dollar roll income**, to provide a consistent measure of operating performance[40](index=40&type=chunk)[41](index=41&type=chunk) Reconciliation of Net Income to EAD ($ in thousands) | | Three Months Ended Mar 31, 2025 | Three Months Ended Dec 31, 2024 | | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders | 16,289 | (5,472) | | Adjustments (net) | 23,758 | 37,725 | | **Earnings available for distribution** | **40,047** | **32,253** | | **EAD per common share** | **$0.64** | **$0.53** | [Effective Interest Metrics](index=11&type=section&id=Effective%20Interest%20Expense%2FEffective%20Cost%20of%20Funds%2FEffective%20Net%20Interest%20Income%2FEffective%20Interest%20Rate%20Margin) Effective interest metrics in Q1 2025 demonstrate the positive impact of hedging on funding costs and interest spread - **Effective interest metrics** are calculated by adjusting **GAAP interest expense** and **net interest income** for the contractual **net interest** on **interest rate swaps**, which are recorded in gain/loss on derivatives under **GAAP**[48](index=48&type=chunk)[49](index=49&type=chunk) Reconciliation of GAAP to Effective Interest Metrics (Q1 2025) | Metric | GAAP | Adjustment for Swaps | Effective (Non-GAAP) | | :--- | :--- | :--- | :--- | | Net Interest Income ($M) | $18.8 | $28.1 | $46.9 | | Net Interest Rate Margin | 0.99% | 2.28% | 3.27% | | Total Interest Expense ($M) | $55.0 | ($28.1) | $26.9 | | Cost of Funds | 4.46% | (2.28)% | 2.18% | [Economic Debt-to-Equity Ratio](index=12&type=section&id=Economic%20Debt-to-Equity%20Ratio) The economic debt-to-equity ratio, including off-balance sheet financing, increased in Q1 2025 - The **economic debt-to-equity ratio** is a **non-GAAP measure** that adds the implied cost basis of **TBAs** to **total debt** to provide what management believes is a more complete view of at-risk leverage[55](index=55&type=chunk) Debt-to-Equity Ratio Calculation | Ratio | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Debt-to-equity ratio (GAAP) | 7.1x | 6.7x | | Economic debt-to-equity ratio (Non-GAAP) | 7.1x | 6.7x | [Other Information](index=5&type=section&id=Other%20Information) This section provides general company information, earnings call details, and average balance sheet metrics [Company and Earnings Call Information](index=5&type=section&id=About%20Invesco%20Mortgage%20Capital%20Inc.) Invesco Mortgage Capital Inc. is a REIT managed by Invesco Advisers, with Q1 2025 earnings call details provided - The company is a **REIT** externally managed by **Invesco Advisers, Inc.**, focusing on investing in **mortgage-backed securities** and other mortgage-related assets[25](index=25&type=chunk) - An earnings call was scheduled for **9:00 a.m. ET** on May **8**, **2025**, with access details provided for investors and the public[26](index=26&type=chunk) [Average Balances](index=13&type=section&id=Average%20Balances) Q1 2025 average earning assets and borrowings show shifts in yields and costs of funds compared to prior periods Average Balances and Yields/Costs | ($ in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Average earning assets | 5,422,552 | 5,440,662 | 4,972,242 | | Average earning asset yields | 5.45 % | 5.60 % | 5.52 % | | Average borrowings | 4,930,237 | 4,865,582 | 4,419,757 | | Average cost of funds | 4.46 % | 5.13 % | 5.57 % |

Core Viewpoint - Invesco Mortgage Capital is experiencing significant stock depreciation and is expected to report a decline in earnings per share (EPS) while showing substantial revenue growth in the upcoming earnings disclosure [1][2]. Group 1: Stock Performance - Invesco Mortgage Capital closed at $6.35, reflecting a +0.32% change from the previous session, which is lower than the S&P 500's daily gain of 1.81% [1]. - The stock has depreciated by 25.44% over the past month, underperforming the Finance sector's loss of 4.82% and the S&P 500's loss of 6.14% [1]. Group 2: Earnings and Revenue Estimates - The anticipated EPS for the upcoming earnings report is $0.56, indicating a 34.88% decline compared to the same quarter last year [2]. - Revenue is expected to be $14.79 million, showing a 111.29% increase compared to the year-ago quarter [2]. - For the full year, projected earnings are $2.22 per share, reflecting a -22.92% change from the previous year, while revenue is expected to be $92.8 million, demonstrating a +151.99% change [3]. Group 3: Analyst Forecasts and Rankings - Recent revisions to analyst forecasts for Invesco Mortgage Capital are important as they reflect short-term business trends and analysts' confidence in the company's performance [4]. - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently rates Invesco Mortgage Capital at 4 (Sell), with a consensus EPS projection that has decreased by 11.04% in the past 30 days [6]. Group 4: Valuation Metrics - Invesco Mortgage Capital is trading at a Forward P/E ratio of 2.86, which is a discount compared to the industry average Forward P/E of 7.02 [7]. - The REIT and Equity Trust industry, part of the Finance sector, has a Zacks Industry Rank of 229, placing it in the bottom 8% of over 250 industries [7].

Invesco Mortgage Capital (IVR) closed the latest trading day at $8.17, indicating a +0.49% change from the previous session's end. This move outpaced the S&P 500's daily loss of 0.33%. Meanwhile, the Dow experienced a drop of 0.37%, and the technology-dominated Nasdaq saw a decrease of 0.53%.The real estate investment trust's shares have seen a decrease of 8.03% over the last month, not keeping up with the Finance sector's loss of 0.51% and the S&P 500's loss of 4.03%.The investment community will be closel ...