Invesco Mortgage Capital Q2 Earnings Call Highlights

Invesco Mortgage Capital delivered a 3.8% economic return in the second quarter, supported by $0.12-per-share monthly dividends, while book value per share declined 0.6%. The investment portfolio grew 12.4% to $8.2 billion after the company raised approximately $118 million through its at-the-market equity program. New investments focused on specified pools of 30-year Agency RMBS, with nearly 85% of the portfolio in securities offering prepayment protection. Management maintained a constructive but cautious outlook for Agency RMBS and CMBS, citing attractive valuations, lower rate volatility, and supportive market conditions. The company ended the quarter with 97% of borrowing costs hedged and $548.3 million in unrestricted cash and unencumbered investments.

Invesco Mortgage Capital reported a 3.8% economic return for the second quarter of 2026, supported by monthly dividends of $0.12 per share and a modest 0.6% decline in book value per share. The mortgage real estate investment trust said its agency mortgage-backed securities holdings benefited from attractive carry and tighter risk premiums during the quarter. Chief Executive Officer Kevin Collins said the company entered the third quarter with a constructive but measured outlook for Agency residential mortgage-backed securities, or RMBS, and Agency commercial mortgage-backed securities, or CMBS. He cited appealing valuations, moderated interest-rate volatility and inflation expectations, and supportive supply-and-demand conditions, while acknowledging ongoing uncertainty surrounding monetary policy and geopolitical developments.

Invesco Mortgage Capital’s investment portfolio totaled $8.2 billion at quarter-end, including $6 billion of Agency RMBS, $1.2 billion of Agency to-be-announced, or TBA, securities, and $0.9 billion of Agency CMBS. The portfolio grew 12.4% from the first quarter as the company invested proceeds raised through its at-the-market equity issuance program. The company raised approximately $118 million during the second quarter and more than $250 million year to date. Collins said the capital issuance has expanded the company’s investment capacity, improved operating efficiency, reduced expenses on a per-share basis, and could improve the liquidity profile of its common stock over time. “We’ll look to continue to do that to the extent that we can do so responsibly and where it makes sense,” Collins said in response to an analyst question about future ATM issuance. He said the company will seek windows to issue shares near book value while maintaining a focus on reducing fixed costs per share and improving stock liquidity. Chief Investment Officer Brian Norris said new investments were concentrated in specified pools of 30-year Agency RMBS with coupons ranging from 4.5% to 6%. The company viewed lower specified-pool prepayments during the quarter as an opportunity to add exposure at more favorable valuations. Nearly 85% of the portfolio was allocated to securities with prepayment protection through specified pools and Agency CMBS. Agency TBA exposure declined to 14.7% of the portfolio from 16.9% in the first quarter. Agency CMBS exposure declined to 11.1% from 11.9%, although management described the sector as a core portfolio holding.

Management said the Treasury yield curve bear flattened during the second quarter, as short-term rates increased more than longer-term yields amid shifting expectations for Federal Reserve policy. Norris said roughly one-third of the curve flattening occurred during the final two weeks of the quarter following Federal Reserve Chairman Kevin Warsh’s first Federal Open Market Committee ...