Core Viewpoint - Invesco Mortgage Capital Inc. reported a challenging second quarter in 2025, with a significant economic return of (4.8)%, driven by market volatility and a decline in book value per share, despite maintaining a consistent dividend payout. Financial Performance - The company experienced a net loss attributable to common stockholders of $26.6 million, translating to a loss per share of $0.40, compared to a net income of $16.3 million and earnings per share of $0.26 in Q1 2025 [10][11]. - Total interest income decreased to $70.6 million from $73.8 million in Q1 2025, while total interest expense also fell to $52.9 million from $55.0 million, resulting in a net interest income of $17.7 million, down from $18.8 million [9][10]. - The average earning assets at amortized cost decreased to $5,078.9 million from $5,422.6 million, and average borrowings also declined to $4,577.6 million from $4,930.2 million [9]. Portfolio and Valuation - As of June 30, 2025, the company’s investment portfolio was valued at $5.2 billion, comprising $4.3 billion in Agency RMBS and $0.9 billion in Agency CMBS, with a debt-to-equity ratio of 6.5x, down from 7.1x at the end of Q1 2025 [3][10]. - The estimated book value per common share as of July 18, 2025, is projected to be between $7.99 and $8.31, reflecting a cautious near-term outlook for Agency RMBS but a favorable long-term outlook due to expected investor demand [4][10]. Dividends and Capital Activities - The company declared a common stock dividend of $0.34 per share, consistent with the previous quarter, to be paid on July 25, 2025 [22]. - During the quarter, the company sold 282,750 shares of common stock for net cash proceeds of $2.2 million and repurchased 96,803 shares of Series C Preferred Stock for $2.3 million [23][24]. Economic Return and Non-GAAP Measures - The economic return for the quarter was calculated as the change in book value per common share of ($0.76) plus dividends declared of $0.34, resulting in an economic return of (4.8)%, compared to a positive return of 2.6% in Q1 2025 [6][10]. - Earnings available for distribution per common share decreased to $0.58 from $0.64 in Q1 2025, indicating a decline in the company’s ability to generate income for distribution [10][43].

Summary of Investigator Resources (IVR) Conference Call - July 23, 2025 Industry Overview - **Precious Metals Market Dynamics**: Investors tend to favor gold during global uncertainty, but silver historically outperforms gold in bull markets. In the 1970s, gold increased from $35 to $850, a 24 times return, while silver rose 35% during the same period [1][2]. - **Demand Drivers for Silver**: Silver serves dual purposes as a store of wealth and an industrial commodity, utilized in electronics, electric vehicles (EVs), and green energy technologies. The ongoing decarbonization trend is expected to drive demand for silver significantly [3][4]. - **Supply Constraints**: Approximately 75% of silver production comes from Latin America, Russia, and China, regions known for geopolitical instability. The Silver Institute reports deficits of 100 to 250 million ounces, which is about one-fourth of global production [5][6]. Company Overview: Investigator Resources - **Paris Silver Project**: Investigator Resources owns the Paris Silver Project, which contains 57 million ounces of high-grade silver. The project is positioned in a stable jurisdiction and has district-scale exploration potential [9][10]. - **Financial Position**: The company has a market cap of approximately $48 million and $5 million in cash, indicating strong funding for ongoing projects [11]. - **Definitive Feasibility Study (DFS)**: The DFS is underway, with previous studies indicating $480 million in free cash. The silver price has increased by 70% since the last study, suggesting potential upside of an additional $650 million [12][13]. Investment Opportunity - **Cost Optimization**: The company is focusing on reducing operational expenditures (OpEx) to lower cutoff grades, which would allow for more silver to be included in the mine plan. This includes transitioning to alternative power sources and optimizing tailings management [14][15]. - **Exploration Potential**: The Paris project is part of a 15-kilometer silver corridor with confirmed widespread mineralization. Recent acquisitions, such as the Athena project, present additional exploration opportunities [16][18]. - **Upcoming Drilling Programs**: Drilling is set to commence in September in a separate area near Broken Hill, which has historical gold and copper mines, highlighting further potential for discovery [19][20]. Market Context - **Macro Factors**: The current economic environment, characterized by massive money printing, rising U.S. debt, and declining confidence in fiat currencies, is driving investors towards precious metals as a hedge against inflation. The gold to silver ratio is currently at 86:1, significantly above the historical average of 65:1, indicating potential for silver price appreciation [6][7][8]. Conclusion - **Strategic Positioning**: Investigator Resources is well-positioned to capitalize on the rising demand for silver, with a low-cost, high-grade project and significant exploration potential. The current market conditions present a compelling investment opportunity in the silver sector [21].

Paris Silver Project Overview - The Paris Silver Project boasts a JORC (2012) Resource of 57 million ounces of silver and 99 thousand tonnes of lead[35] - A Pre-Feasibility Study (PFS) was completed in 2021, and a Definitive Feasibility Study (DFS) is currently underway[35] - The project is considered a high-grade, low-cost, high-margin silver project located in a Tier-1 jurisdiction[11] Silver Market Dynamics - Silver is described as having a dual role as both an industrial metal and a store of wealth, with rising demand and tight supply[11] - Only approximately 27.8% of silver comes from primary silver mines, with the rest being a by-product of other mining operations[19] - The silver market is forecast to continue experiencing a deficit[23] Investigator Resources Limited - The company's market capitalization is $48.5 million, with $5.1 million in cash as of June 30, 2025 (unaudited), resulting in an enterprise value of $43.4 million[38] - The top 20 shareholders hold 30% of the company's shares[38] - The PFS indicated a free cash flow of A$487 million, an NPV8 of A$202 million, a CAPEX of A$131 million, an IRR of 48%, and an ASIC of A$17.45/oz[40] Exploration and Expansion Potential - Investigator Resources is exploring a 15km mineralized corridor around the Paris Silver Project[11] - The company has a farm-in agreement on an adjacent high-grade silver prospect called Athena, where historical drilling terminated in silver mineralization[51, 52] - Drilling is scheduled to commence in September 2025 at Curnamona, a copper/gold prospect[55]

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]

Here are three stocks with buy rank and strong value characteristics for investors to consider today, May 27th:  JAKKS Pacific (JAKK) : This multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995, carries a Zacks Rank #1 (Strong Buy), and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 3.1% over the last 60 days.JAKKS Pacific has a price-to-earnings ratio (P/E) of 4.66 compared with 10.60 for the industry. The comp ...

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)