Invesco Mortgage Capital (US:IVR)2025-11-05 21:20Investment Portfolio - As of September 30, 2025, the company was invested in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), among other mortgage-related assets[118]. - As of September 30, 2025, the total investment portfolio was $5,749,238, a decrease of 2.1% from $5,873,696 as of September 30, 2024[134]. - The holdings of 30-year fixed-rate Agency RMBS represented 83% of the total investment portfolio, consistent with the previous quarter but down from 87% a year ago[134]. - The holdings of Agency CMBS represented approximately 16% of the total investment portfolio as of September 30, 2025, up from 11% a year ago[137]. - The company purchased $2.0 billion in MBS during the nine months ended September 30, 2025, compared to $1.9 billion in the same period of 2024[229]. Financial Performance - Net interest income for the three months ended September 30, 2025, was $17,614, an increase of 134.0% compared to $7,510 for the same period in 2024[156]. - The net income attributable to common stockholders for the three months ended September 30, 2025, was $50,208, up 42.4% from $35,271 in the same period of 2024[156]. - For the three months ended September 30, 2025, net income attributable to common stockholders was $50.2 million, an increase from $35.3 million in the same period of 2024, resulting in a basic and diluted net income per share of $0.74 compared to $0.63 per share in 2024[194]. - For the nine months ended September 30, 2025, net income attributable to common stockholders was $39.9 million, slightly down from $40.2 million in 2024, with a basic and diluted net income per share of $0.61 compared to $0.78 per share in 2024[195]. - Earnings available for distribution for Q3 2025 increased slightly to $39,026,000 compared to $38,345,000 in Q3 2024, reflecting a 1.8% increase[208]. Interest Rates and Economic Indicators - The effective Federal Funds rate decreased to 4.09% as of September 30, 2025, down from 4.33% at the end of the previous quarter, reflecting a 0.24% decline[129]. - The yield on the two-year Treasury fell to 3.60%, a decrease of 12 basis points from the previous quarter, while the ten-year yield decreased by 8 basis points to 4.15%[126]. - Inflation continued to exceed the Federal Reserve's 2% target, with the headline consumer price index (CPI) rising 2.9% year-over-year in August 2025[124]. - The average unemployment rate increased slightly to 4.3% in August 2025, up from 4.1% in June 2025[124]. Borrowings and Funding - The average balance of collateralized borrowings under repurchase agreements for the quarter ended September 30, 2025, was $4,889,782[141]. - Total average borrowings decreased by $114.7 million to $4,889,782 thousand for the three months ended September 30, 2025, but increased by $238.7 million to $4,799,047 thousand for the nine months ended September 30, 2025 compared to the same periods in 2024[168]. - Average cost of funds decreased by 78 basis points to 4.52% for the three months ended September 30, 2025, and by 95 basis points to 4.53% for the nine months ended September 30, 2025 compared to the same periods in 2024[169]. Derivative Instruments and Gains/Losses - The company recorded net losses on derivative instruments of $9.2 million for the three months ended September 30, 2025, compared to net losses of $127.3 million in the same period of 2024[194]. - The company recorded a realized loss on derivative instruments of $49,189,000 for Q3 2025, compared to a loss of $172,797,000 in Q3 2024, indicating an improvement[206]. - The company recognized net losses of $8.6 million on futures contracts for the three months ended September 30, 2025, and $55.0 million for the nine months ended September 30, 2025[188]. - The company recorded net gains of $2.6 million on TBAs during the nine months ended September 30, 2025, compared to net gains of $1.6 million in the same period of 2024[189]. Shareholder Activities - The company sold 4,638,385 shares of common stock during the three months ended September 30, 2025, generating cash proceeds of $36,145 after fees[148]. - The company did not repurchase any shares of common stock during the nine months ended September 30, 2025[149]. - The company repurchased and retired 89,223 shares of Series C Preferred Stock during the three months ended September 30, 2025[192]. Expenses and Management Fees - Management fees incurred were $2.7 million for the three months ended September 30, 2025, compared to $2.9 million in the same period of 2024[190]. - General and administrative expenses not covered under the management agreement amounted to $1.8 million for the three months ended September 30, 2025, consistent with the same period in 2024[191]. - Total expenses for the three months ended September 30, 2025, were $4,465,000, a slight decrease from $4,693,000 for the same period in 2024[173]. Liquidity and Cash Flow - The company believes it has sufficient liquidity and capital resources for ongoing commitments and potential investments, ensuring continued qualification as a REIT[226]. - As of September 30, 2025, the company held cash, cash equivalents, and restricted cash of $180.7 million, an increase from $168.5 million as of September 30, 2024[228]. - Operating activities provided net cash of approximately $97.3 million for the nine months ended September 30, 2025, compared to $121.3 million for the same period in 2024, reflecting a decrease of 19.8%[228]. - Financing activities provided net cash of $245.1 million for the nine months ended September 30, 2025, down from $747.3 million in the previous year[230].