Invesco Mortgage Capital Inc. Reports Third Quarter 2024 Financial Results
Invesco Mortgage Capital (NYSE: IVR) reported Q3 2024 financial results with net income per share of $0.63, compared to a loss of $0.38 in Q2. Book value per share increased to $9.37 from $9.27, delivering a 5.4% economic return. The company maintained its $0.40 quarterly dividend. The $5.9 billion investment portfolio primarily consisted of $5.2 billion Agency RMBS and $0.7 billion Agency CMBS. Earnings available for distribution decreased to $0.68 per share from $0.86, reflecting reduced effective net interest income. The debt-to-equity ratio increased to 6.1x from 5.6x quarter-over-quarter. The company announced plans to redeem Series B Preferred shares to optimize capital structure.
Invesco Mortgage Capital (NYSE: IVR) ha riportato i risultati finanziari del Q3 2024 con un utile netto per azione di $0,63, rispetto a una perdita di $0,38 nel Q2. Il valore contabile per azione è aumentato a $9,37 da $9,27, con un ritorno economico del 5,4%. L'azienda ha mantenuto il suo dividendo trimestrale di $0,40. Il portafoglio investimenti di $5,9 miliardi consisteva principalmente in $5,2 miliardi di Agency RMBS e $0,7 miliardi di Agency CMBS. Gli utili disponibili per la distribuzione sono diminuiti a $0,68 per azione da $0,86, riflettendo una riduzione del reddito netto da interessi effettivi. Il rapporto debito su capitale è aumentato a 6,1x da 5,6x rispetto al trimestre precedente. L'azienda ha annunciato piani per riscattare le azioni di tipo B preferenziali per ottimizzare la struttura del capitale.
Invesco Mortgage Capital (NYSE: IVR) reportó los resultados financieros del Q3 2024 con un ingreso neto por acción de $0.63, en comparación con una pérdida de $0.38 en el Q2. El valor en libros por acción aumentó a $9.37 desde $9.27, proporcionando un retorno económico del 5.4%. La compañía mantuvo su dividendo trimestral de $0.40. El portafolio de inversiones de $5.9 mil millones consistió principalmente en $5.2 mil millones en Agency RMBS y $0.7 mil millones en Agency CMBS. Las ganancias disponibles para distribución disminuyeron a $0.68 por acción desde $0.86, reflejando una reducción en el ingreso neto por intereses efectivos. La relación deuda-capital aumentó a 6.1x desde 5.6x trimestre a trimestre. La compañía anunció planes para redimir acciones preferentes de la Serie B para optimizar la estructura de capital.
인베스코 모기지 캐피털 (NYSE: IVR)는 Q3 2024 재무 결과를 발표했으며, 주당 순이익은 $0.63으로 Q2의 손실 $0.38에 비해 증가했습니다. 주당 장부 가치는 $9.27에서 $9.37로 증가하여 5.4%의 경제적 수익률을 달성했습니다. 회사는 $0.40의 분기 배당금을 유지했습니다. $5.9억 달러의 투자 포트폴리오는 주로 $5.2억 달러의 에이전시 RMBS와 $0.7억 달러의 에이전시 CMBS로 구성되어 있습니다. 배당 가능한 수익은 $0.86에서 $0.68로 감소했으며, 이는 순이자 수익의 감소를 반영합니다. 부채 비율은 5.6배에서 6.1배로 증가했습니다. 회사는 자본 구조를 최적화하기 위해 B 시리즈 우선주를 상환할 계획을 발표했습니다.
Invesco Mortgage Capital (NYSE: IVR) a annoncé les résultats financiers du T3 2024 avec un revenu net par action de 0,63 $, contre une perte de 0,38 $ au T2. La valeur comptable par action a augmenté à 9,37 $ contre 9,27 $, offrant un rendement économique de 5,4 %. L'entreprise a maintenu son dividende trimestriel de 0,40 $. Le portefeuille d'investissement de 5,9 milliards de dollars était principalement constitué de 5,2 milliards de dollars d'Agency RMBS et de 0,7 milliard de dollars d'Agency CMBS. Les bénéfices disponibles pour distribution ont diminué à 0,68 $ par action contre 0,86 $, reflétant une réduction du revenu net d'intérêts effectifs. Le ratio d'endettement a augmenté à 6,1x contre 5,6x d'un trimestre à l'autre. L'entreprise a annoncé son intention de racheter les actions préférentielles de Série B afin d'optimiser sa structure de capital.
Invesco Mortgage Capital (NYSE: IVR) berichtete über die Finanzergebnisse des Q3 2024 mit einem Nettoergebnis pro Aktie von $0,63, verglichen mit einem Verlust von $0,38 im Q2. Der Buchwert pro Aktie stieg von $9,27 auf $9,37 und lieferte eine wirtschaftliche Rendite von 5,4%. Das Unternehmen behielt seine vierteljährliche Dividende von $0,40 bei. Das Investitionsportfolio von $5,9 Milliarden bestand hauptsächlich aus $5,2 Milliarden Agency RMBS und $0,7 Milliarden Agency CMBS. Die zur Ausschüttung verfügbaren Erträge sanken von $0,86 auf $0,68 pro Aktie, was auf einen Rückgang der effektiven Nettozinserträge hinweist. Das Verhältnis von Schulden zu Eigenkapital stieg im Quartalsvergleich von 5,6x auf 6,1x. Das Unternehmen gab Pläne bekannt, die Series B Preferred Shares einzulösen, um die Kapitalstruktur zu optimieren.
- Net income improved to $0.63 per share from -$0.38 in Q2
- Book value per share increased to $9.37 from $9.27
- Economic return of 5.4% compared to -4.1% in Q2
- Maintained stable quarterly dividend of $0.40 per share
- Earnings available for distribution decreased to $0.68 from $0.86 per share
- Debt-to-equity ratio increased to 6.1x from 5.6x
- Book value declined to estimated $8.42-$8.76 range as of October 31
- Effective net interest income decreased quarter-over-quarter
Insights
Invesco Mortgage Capital's Q3 2024 results show notable improvements with
The portfolio composition reflects a strategic shift towards higher-coupon Agency RMBS, with
The October book value decline to
- Net income per common share of
compared to net loss of$0.63 in Q2 2024$0.38 - Earnings available for distribution per common share(1) of
compared to$0.68 in Q2 2024$0.86 - Common stock dividend of
per common share, unchanged from Q2 2024$0.40 - Book value per common share(2) of
compared to$9.37 as of June 30, 2024$9.27 - Economic return(3) of
5.4% compared to (4.1)% in Q2 2024
Update from John Anzalone, Chief Executive Officer
"Agency mortgage valuations improved during the third quarter as interest rate volatility declined and the yield curve steepened in connection with the Federal Reserve's decision to begin easing monetary policy. In this macroeconomic environment, our higher coupon Agency RMBS investments outperformed, contributing to a
"Our debt-to-equity ratio ended the third quarter at 6.1x, up from 5.6x as of June 30th, while our economic debt-to-equity ratio(1) increased from 5.9x to 6.1x quarter over quarter. As of the end of the quarter, our
"For the quarter, earnings available for distribution per common share was
"We recently announced the redemption of our Series B Preferred shares, which will help optimize our capital structure and reduce our dividend obligations going forward.
"The anticipated easing of monetary policy should lead to a steeper yield curve and lower interest rate volatility in the coming months, creating a favorable environment for Agency RMBS investments. However, risks including accelerating inflation, fiscal policy expectations and short-term funding pressures into year end could reduce investor demand for the sector in the near-term. Despite these risks, we are constructive on the sector, as Agency mortgage performance stands to benefit from normalization of monetary policy given attractive valuations and supportive supply and demand technicals."
(1) Earnings available for distribution (and by calculation, earnings available for distribution per common share), economic debt-to-equity ratio and effective net interest income are non-Generally Accepted Accounting Principles ("GAAP") financial measures. Refer to the section entitled "Non-GAAP Financial Measures" for important disclosures and reconciliations to the most comparable |
(2) Book value per common share as of September 30, 2024 and June 30, 2024 is calculated as total stockholders' equity less the liquidation preference of the Company's Series B Preferred Stock and Series C Preferred Stock ( |
(3) Economic return for the quarter ended September 30, 2024 is defined as the change in book value per common share from June 30, 2024 to September 30, 2024 of |
(4) Book value per common share as of October 31, 2024 is adjusted to exclude a pro rata portion of the current quarter's common stock dividend (which for purposes of this calculation is assumed to be the same as the previous quarter) and is calculated as total stockholders' equity less the liquidation preference of the Company's Series B Preferred Stock and Series C Preferred Stock ( |
Key performance indicators for the quarters ended September 30, 2024 and June 30, 2024 are summarized in the table below.
($ in millions, except share amounts) | Q3 2024 | Q2 2024 | Variance |
Average Balances (1) | (unaudited) | (unaudited) | |
Average earning assets (at amortized cost) | |||
Average borrowings | |||
Average total stockholders' equity | |||
Total interest income | |||
Total interest expense | |||
Net interest income | ( | ||
Total expenses | ( | ||
Net income (loss) attributable to common stockholders | ( | ||
Average earning asset yields | 5.31 % | 5.61 % | (0.30) % |
Average cost of funds | 5.30 % | 5.59 % | (0.29) % |
Average net interest rate margin | 0.01 % | 0.02 % | (0.01) % |
Period-end weighted average asset yields (2) | 5.41 % | 5.45 % | (0.04) % |
Period-end weighted average cost of funds | 5.15 % | 5.46 % | (0.31) % |
Period-end weighted average net interest rate margin | 0.26 % | (0.01) % | 0.27 % |
Book value per common share (3) | |||
Earnings (loss) per common share (basic) | ( | ||
Earnings (loss) per common share (diluted) | ( | ||
Debt-to-equity ratio | 6.1x | 5.6x | 0.5x |
Non-GAAP Financial Measures (4) | |||
Earnings available for distribution | ( | ||
Effective interest expense | |||
Effective net interest income | ( | ||
Effective cost of funds | 2.03 % | 1.52 % | 0.51 % |
Effective interest rate margin | 3.28 % | 4.09 % | (0.81) % |
Earnings available for distribution per common share | ( | ||
Economic debt-to-equity ratio | 6.1x | 5.9x | 0.2x |
(1) Average earning assets, average borrowings and average total stockholders' equity are calculated based on the weighted month-end balances of mortgage-backed securities at amortized cost, repurchase agreement borrowings and total |
(2) Period-end weighted average asset yields are based on amortized cost as of period-end and incorporate future prepayment and loss assumptions when appropriate. |
(3) Book value per common share is calculated as total stockholders' equity less the liquidation preference of the Company's Series B Preferred Stock and Series C Preferred Stock ( |
(4) Earnings available for distribution (and by calculation, earnings available for distribution per common share), effective interest expense (and by calculation, effective cost of funds), effective net interest income (and by calculation, effective interest rate margin), and economic debt-to-equity ratio are non-GAAP financial measures. Refer to the section entitled "Non-GAAP Financial Measures" for important disclosures and a reconciliation to the most comparable |
Portfolio Composition
The following table summarizes the Company's MBS portfolio as of September 30, 2024 and June 30, 2024.
As of | ||||||||||||||||
September 30, 2024 | June 30, 2024 | |||||||||||||||
$ in thousands | Fair Value | Percentage of | Period-end | Fair Value | Percentage of | Period-end | ||||||||||
Agency RMBS: | ||||||||||||||||
30 year fixed-rate pass-through coupon: | ||||||||||||||||
4.0 % | 577,105 | 9.8 % | 4.66 % | 562,192 | 11.6 % | 4.66 % | ||||||||||
4.5 % | 703,865 | 12.0 % | 4.95 % | 868,511 | 17.9 % | 4.95 % | ||||||||||
5.0 % | 1,147,475 | 19.5 % | 5.27 % | 876,344 | 18.1 % | 5.35 % | ||||||||||
5.5 % | 1,260,678 | 21.5 % | 5.59 % | 965,700 | 20.0 % | 5.59 % | ||||||||||
6.0 % | 1,418,691 | 24.2 % | 5.98 % | 1,087,049 | 22.5 % | 6.02 % | ||||||||||
Total 30 year fixed-rate pass-through | 5,107,814 | 87.0 % | 5.43 % | 4,359,796 | 90.1 % | 5.40 % | ||||||||||
Agency-CMO | 73,199 | 1.2 % | 9.91 % | 74,711 | 1.5 % | 9.94 % | ||||||||||
Agency CMBS | 675,074 | 11.5 % | 4.64 % | 384,593 | 8.0 % | 4.97 % | ||||||||||
Non-Agency CMBS | 9,936 | 0.2 % | 8.91 % | 10,264 | 0.2 % | 8.91 % | ||||||||||
Non-Agency RMBS | 7,673 | 0.1 % | 9.31 % | 7,463 | 0.2 % | 9.44 % | ||||||||||
Total MBS portfolio | 5,873,696 | 100.0 % | 5.41 % | 4,836,827 | 100.0 % | 5.45 % |
The following table presents certain characteristics of the Company's borrowings as of September 30, 2024 and June 30, 2024.
As of | ||||||||||||
$ in thousands | September 30, 2024 | June 30, 2024 | ||||||||||
Amount | Weighted | Weighted | Amount | Weighted | Weighted | |||||||
Agency RMBS repurchase agreements | 4,535,956 | 5.15 % | 33 | 3,945,401 | 5.46 % | 20 | ||||||
Agency CMBS repurchase agreements | 648,929 | 5.16 % | 25 | 315,074 | 5.46 % | 17 | ||||||
Total borrowings | 5,184,885 | 5.15 % | 32 | 4,260,475 | 5.46 % | 19 |
The following table summarizes certain characteristics of TBAs accounted for as derivatives as of June 30, 2024. The Company did not have any TBAs outstanding as of September 30, 2024.
$ in thousands | As of June 30, 2024 | |||||||
Notional Amount | Implied Cost Basis | Implied Market Value | Net Carrying Value | |||||
200,000 | 199,945 | 198,420 | (1,525) |
The tables below present certain characteristics of the Company's interest rate swaps whereby the Company pays interest at a fixed rate and receives floating interest based on the secured overnight financing rate ("SOFR") as of September 30, 2024 and June 30, 2024.
$ in thousands | As of September 30, 2024 | |||||||
Maturities | Notional Amount | Weighted | Weighted | Weighted | ||||
Less than 3 years | 1,730,000 | 1.93 % | 4.96 % | 2.1 | ||||
3 to 5 years | 575,000 | 0.33 % | 4.96 % | 3.4 | ||||
5 to 7 years | 950,000 | 0.54 % | 4.96 % | 5.8 | ||||
7 to 10 years | 100,000 | 3.61 % | 4.96 % | 9.3 | ||||
Greater than 10 years | 435,000 | 1.84 % | 4.96 % | 19.0 | ||||
Total | 3,790,000 | 1.37 % | 4.96 % | 5.4 |
$ in thousands | As of June 30, 2024 | |||||||
Maturities | Notional Amount | Weighted | Weighted | Weighted | ||||
Less than 3 years | 180,000 | 0.48 % | 5.33 % | 1.6 | ||||
3 to 5 years | 1,375,000 | 0.29 % | 5.33 % | 3.3 | ||||
5 to 7 years | 1,150,000 | 0.55 % | 5.33 % | 6.1 | ||||
7 to 10 years | 565,000 | 3.87 % | 5.33 % | 9.7 | ||||
Greater than 10 years | 645,000 | 2.25 % | 5.33 % | 18.8 | ||||
Total | 3,915,000 | 1.22 % | 5.33 % | 7.5 |
As of September 30, 2024, the Company held futures contracts representing short positions in Ultra 10 year
Capital Activities
Dividends
As previously announced on September 24, 2024, the Company declared a common stock dividend of
Issuances of Common Stock
The Company sold 10,084,138 shares of common stock for net proceeds of
Repurchases of Preferred Stock
During the three months ended September 30, 2024, the Company repurchased and retired 66,507 shares of Series C Preferred Stock, respectively, for a total cost of
Redemption of Series B Preferred Stock
On November 5, 2024, the Company announced that it intends to redeem all outstanding shares of its Series B Preferred Stock on December 27, 2024 for a cash redemption price of
About Invesco Mortgage Capital Inc.
Invesco Mortgage Capital Inc. is a real estate investment trust that primarily focuses on investing in, financing and managing mortgage-backed securities and other mortgage-related assets. Invesco Mortgage Capital Inc. is externally managed and advised by Invesco Advisers, Inc., a registered investment adviser and an indirect wholly-owned subsidiary of Invesco Ltd., a leading independent global investment management firm.
Earnings Call
Members of the investment community and the general public are invited to listen to the Company's earnings conference call on Wednesday, November 6, 2024, at 9:00 a.m. ET, by calling one of the following numbers:
North America Toll Free: | 888-982-7409 |
International: | 1-212-287-1625 |
Passcode: | Invesco |
An audio replay will be available until 5:00 pm ET on November 20, 2024 by calling:
866-363-4045 (
The presentation slides that will be reviewed during the call will be available on the Company's website at www.invescomortgagecapital.com.
Cautionary Notice Regarding Forward-Looking Statements
This press release, the related presentation and comments made in the associated conference call, may include statements and information that constitute "forward-looking statements" within the meaning of the
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks identified under the captions "Risk Factors," "Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K and quarterly reports on Form 10-Q, which are available on the Securities and Exchange Commission's website at www.sec.gov.
All written or oral forward-looking statements that we make, or that are attributable to us, are expressly qualified by this cautionary notice. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.
INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands, except share data | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Interest income | 73,825 | 68,028 | 75,132 | 210,436 | 215,847 | ||||
Interest expense | 66,315 | 59,393 | 65,701 | 187,288 | 174,449 | ||||
Net interest income | 7,510 | 8,635 | 9,431 | 23,148 | 41,398 | ||||
Other income (loss) | |||||||||
Gain (loss) on investments, net | 165,168 | (45,212) | (224,897) | 53,803 | (272,620) | ||||
(Increase) decrease in provision for credit losses | 80 | (263) | (43) | (222) | (212) | ||||
Equity in earnings (losses) of unconsolidated ventures | — | — | 2 | (193) | 4 | ||||
Gain (loss) on derivative instruments, net | (127,345) | 28,262 | 151,689 | (5,922) | 203,418 | ||||
Other investment income (loss), net | — | — | — | — | (66) | ||||
Total other income (loss) | 37,903 | (17,213) | (73,249) | 47,466 | (69,476) | ||||
Expenses | |||||||||
Management fee – related party | 2,888 | 2,945 | 3,090 | 8,694 | 9,237 | ||||
General and administrative | 1,805 | 1,943 | 1,691 | 5,544 | 5,743 | ||||
Total expenses | 4,693 | 4,888 | 4,781 | 14,238 | 14,980 | ||||
Net income (loss) | 40,720 | (13,466) | (68,599) | 56,376 | (43,058) | ||||
Dividends to preferred stockholders | (5,474) | (5,508) | (5,772) | (16,567) | (17,474) | ||||
Gain on repurchase and retirement of preferred stock | 25 | 208 | 347 | 426 | 711 | ||||
Net income (loss) attributable to common stockholders | 35,271 | (18,766) | (74,024) | 40,235 | (59,821) | ||||
Earnings (loss) per share: | |||||||||
Net income (loss) attributable to common stockholders | |||||||||
Basic | 0.63 | (0.38) | (1.62) | 0.78 | (1.40) | ||||
Diluted | 0.63 | (0.38) | (1.62) | 0.78 | (1.40) |
INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Net income (loss) | 40,720 | (13,466) | (68,599) | 56,376 | (43,058) | ||||
Other comprehensive income (loss): | |||||||||
Unrealized gain (loss) on mortgage-backed securities, | (287) | (150) | (91) | (639) | (698) | ||||
Reclassification of unrealized loss on available-for-sale | — | 263 | 43 | 302 | 212 | ||||
Reclassification of amortization of net deferred (gain) | — | — | (1,810) | — | (9,505) | ||||
Currency translation adjustments on investment in | — | — | — | — | (10) | ||||
Reclassification of currency translation loss on | — | — | — | — | 123 | ||||
Total other comprehensive income (loss) | (287) | 113 | (1,858) | (337) | (9,878) | ||||
Comprehensive income (loss) | 40,433 | (13,353) | (70,457) | 56,039 | (52,936) | ||||
Dividends to preferred stockholders | (5,474) | (5,508) | (5,772) | (16,567) | (17,474) | ||||
Gain on repurchase and retirement of preferred stock | 25 | 208 | 347 | 426 | 711 | ||||
Comprehensive income (loss) attributable to common | 34,984 | (18,653) | (75,882) | 39,898 | (69,699) |
INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||
As of | |||
$ in thousands, except share amounts | September 30, 2024 | December 31, 2023 | |
ASSETS | |||
Mortgage-backed securities, at fair value (including pledged securities of | 5,873,696 | 5,045,306 | |
— | 11,214 | ||
Cash and cash equivalents | 48,254 | 76,967 | |
Restricted cash | 120,199 | 121,670 | |
Investment related receivable | 26,739 | 26,604 | |
Derivative assets, at fair value | 12,035 | 939 | |
Other assets | 1,307 | 1,509 | |
Total assets | 6,082,230 | 5,284,209 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Liabilities: | |||
Repurchase agreements | 5,184,885 | 4,458,695 | |
Dividends payable | 24,292 | 19,384 | |
Accrued interest payable | 10,686 | 15,787 | |
Collateral held payable | 336 | 2,475 | |
Accounts payable and accrued expenses | 1,607 | 1,296 | |
Due to affiliate | 3,421 | 3,907 | |
Total liabilities | 5,225,227 | 4,501,544 | |
Commitments and contingencies (See Note 14) (1) | |||
Stockholders' equity: | |||
Preferred Stock, par value | |||
| 102,678 | 106,014 | |
| 175,995 | 182,474 | |
Common Stock, par value | 607 | 484 | |
Additional paid in capital | 4,119,347 | 4,011,138 | |
Accumulated other comprehensive income | 361 | 698 | |
Retained earnings (distributions in excess of earnings) | (3,541,985) | (3,518,143) | |
Total stockholders' equity | 857,003 | 782,665 | |
Total liabilities and stockholders' equity | 6,082,230 | 5,284,209 |
(1) | See Note 14 of the Company's condensed consolidated financial statements filed in Item 1 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. |
Non-GAAP Financial Measures
The table below shows the non-GAAP financial measures the Company uses to analyze its operating results and the most directly comparable
Non-GAAP Financial Measure | Most Directly Comparable | |
Earnings available for distribution (and by calculation, | Net income (loss) attributable to common stockholders (and | |
Effective interest expense (and by calculation, effective cost | Total interest expense (and by calculation, cost of funds) | |
Effective net interest income (and by calculation, effective | Net interest income (and by calculation, net interest rate | |
Economic debt-to-equity ratio | Debt-to-equity ratio |
The non-GAAP financial measures used by the Company's management should be analyzed in conjunction with
Earnings Available for Distribution
The Company's business objective is to provide attractive risk-adjusted returns to its stockholders, primarily through dividends and secondarily through capital appreciation. The Company uses earnings available for distribution as a measure of its investment portfolio's ability to generate income for distribution to common stockholders and to evaluate its progress toward meeting this objective. The Company calculates earnings available for distribution as
By excluding the gains and losses discussed above, the Company believes the presentation of earnings available for distribution provides a consistent measure of operating performance that investors can use to evaluate its results over multiple reporting periods and, to a certain extent, compare to its peer companies. However, because not all of the Company's peer companies use identical operating performance measures, the Company's presentation of earnings available for distribution may not be comparable to other similarly titled measures used by its peer companies. The Company excludes the impact of gains and losses when calculating earnings available for distribution because (i) when analyzed in conjunction with its
To maintain qualification as a REIT,
Earnings available for distribution is an incomplete measure of the Company's financial performance and there are other factors that impact the achievement of the Company's business objective. The Company cautions that earnings available for distribution should not be considered as an alternative to net income (determined in accordance with
The table below provides a reconciliation of
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands, except per share data | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Net income (loss) attributable to common stockholders | 35,271 | (18,766) | (74,024) | 40,235 | (59,821) | ||||
Adjustments: | |||||||||
(Gain) loss on investments, net | (165,168) | 45,212 | 224,897 | (53,803) | 272,620 | ||||
Realized (gain) loss on derivative instruments, net (1) | 172,797 | 22,344 | (84,565) | 146,459 | (19,611) | ||||
Unrealized (gain) loss on derivative instruments, net (1) | (4,569) | (7,335) | 5,002 | (11,096) | 6,220 | ||||
TBA dollar roll income (2) | 39 | 1,078 | — | 1,117 | 697 | ||||
Gain on repurchase and retirement of preferred stock | (25) | (208) | (347) | (426) | (711) | ||||
Foreign currency (gains) losses, net (3) | — | — | — | — | 66 | ||||
Amortization of net deferred (gain) loss on de- | — | — | (1,810) | — | (9,505) | ||||
Subtotal | 3,074 | 61,091 | 143,177 | 82,251 | 249,776 | ||||
Earnings available for distribution | 38,345 | 42,325 | 69,153 | 122,486 | 189,955 | ||||
Basic income (loss) per common share | 0.63 | (0.38) | (1.62) | 0.78 | (1.40) | ||||
Earnings available for distribution per common share (5) | 0.68 | 0.86 | 1.51 | 2.38 | 4.46 |
(1) | |
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Realized gain (loss) on derivative instruments, net | (172,797) | (22,344) | 84,565 | (146,459) | 19,611 | ||||
Unrealized gain (loss) on derivative instruments, net | 4,569 | 7,335 | (5,002) | 11,096 | (6,220) | ||||
Contractual net interest income (expense) on interest | 40,883 | 43,271 | 72,126 | 129,441 | 190,027 | ||||
Gain (loss) on derivative instruments, net | (127,345) | 28,262 | 151,689 | (5,922) | 203,418 |
(2) | A TBA dollar roll is a series of derivative transactions where TBAs with the same specified issuer, term and coupon but different settlement dates are simultaneously bought and sold. The TBA settling in the later month typically prices at a discount to the TBA settling in the earlier month. TBA dollar roll income represents the price differential between the TBA price for current month settlement versus the TBA price for forward month settlement. The Company includes TBA dollar roll income in earnings available for distribution because it is the economic equivalent of interest income on the underlying Agency RMBS, less an implied financing cost, over the forward settlement period. TBA dollar roll income is a component of gain (loss) on derivative instruments, net on the Company's condensed consolidated statements of operations. |
(3) | Foreign currency gains (losses), net includes foreign currency transaction gains and losses and the reclassification of currency translation adjustments that were previously recorded in accumulated other comprehensive income and is included in other investment income (loss), net on the condensed consolidated statements of operations. |
(4) | |
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Interest expense on repurchase agreement borrowings | 66,315 | 59,393 | 67,511 | 187,288 | 183,954 | ||||
Amortization of net deferred (gain) loss on de- | — | — | (1,810) | — | (9,505) | ||||
Total interest expense | 66,315 | 59,393 | 65,701 | 187,288 | 174,449 |
(5) | Earnings available for distribution per common share is equal to earnings available for distribution divided by the basic weighted average number of common shares outstanding. |
The table below shows the components of earnings available for distribution for the following periods:
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Effective net interest income (1) | 48,393 | 51,906 | 79,747 | 152,589 | 221,920 | ||||
TBA dollar roll income | 39 | 1,078 | — | 1,117 | 697 | ||||
Equity in earnings (losses) of unconsolidated ventures | — | — | 2 | (193) | 4 | ||||
(Increase) decrease in provision for credit losses | 80 | (263) | (43) | (222) | (212) | ||||
Total expenses | (4,693) | (4,888) | (4,781) | (14,238) | (14,980) | ||||
Subtotal | 43,819 | 47,833 | 74,925 | 139,053 | 207,429 | ||||
Dividends to preferred stockholders | (5,474) | (5,508) | (5,772) | (16,567) | (17,474) | ||||
Earnings available for distribution | 38,345 | 42,325 | 69,153 | 122,486 | 189,955 |
(1) | See below for a reconciliation of net interest income to effective net interest income, a non-GAAP measure. |
Effective Interest Expense/Effective Cost of Funds/Effective Net Interest Income/Effective Interest Rate Margin
The Company calculates effective interest expense (and by calculation, effective cost of funds) as
The Company calculates effective net interest income (and by calculation, effective interest rate margin) as
The Company believes the presentation of effective interest expense, effective cost of funds, effective net interest income and effective interest rate margin measures, when considered together with
The following table reconciles total interest expense to effective interest expense and cost of funds to effective cost of funds for the following periods:
Three Months Ended | |||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
$ in thousands | Reconciliation | Cost of Funds | Reconciliation | Cost of Funds | Reconciliation | Cost of Funds | |||||
Total interest expense | 66,315 | 5.30 % | 59,393 | 5.59 % | 65,701 | 5.36 % | |||||
Add: Amortization of net deferred gain | — | — % | — | — % | 1,810 | 0.15 % | |||||
Less: Contractual net interest expense | (40,883) | (3.27) % | (43,271) | (4.07) % | (72,126) | (5.88) % | |||||
Effective interest expense | 25,432 | 2.03 % | 16,122 | 1.52 % | (4,615) | (0.37) % |
Nine Months Ended September 30, | |||||||
2024 | 2023 | ||||||
$ in thousands | Reconciliation | Cost of Funds | Reconciliation | Cost of Funds | |||
Total interest expense | 187,288 | 5.48 % | 174,449 | 4.83 % | |||
Add: Amortization of net deferred gain (loss) on de-designated | — | — % | 9,505 | 0.26 % | |||
Less: Contractual net interest expense (income) on interest rate | (129,441) | (3.78) % | (190,027) | (5.27) % | |||
Effective interest expense | 57,847 | 1.70 % | (6,073) | (0.18) % |
The following table reconciles net interest income to effective net interest income and net interest rate margin to effective interest rate margin for the following periods:
Three Months Ended | |||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
$ in thousands | Reconciliation | Net Interest | Reconciliation | Net Interest | Reconciliation | Net Interest | |||||
Net interest income | 7,510 | 0.01 % | 8,635 | 0.02 % | 9,431 | 0.11 % | |||||
Less: Amortization of net deferred | — | — % | — | — % | (1,810) | (0.15) % | |||||
Add: Contractual net interest income | 40,883 | 3.27 % | 43,271 | 4.07 % | 72,126 | 5.88 % | |||||
Effective net interest income | 48,393 | 3.28 % | 51,906 | 4.09 % | 79,747 | 5.84 % |
Nine Months Ended September 30, | ||||||||
2024 | 2023 | |||||||
$ in thousands | Reconciliation | Net Interest | Reconciliation | Net Interest | ||||
Net interest income | 23,148 | (0.01) % | 41,398 | 0.56 % | ||||
Less: Amortization of net deferred (gain) loss on de-designated | — | — % | (9,505) | (0.26) % | ||||
Add: Contractual net interest income (expense) on interest rate | 129,441 | 3.78 % | 190,027 | 5.27 % | ||||
Effective net interest income | 152,589 | 3.77 % | 221,920 | 5.57 % |
Economic Debt-to-Equity Ratio
The following tables show the allocation of the Company's stockholders' equity to its target assets, the Company's debt-to-equity ratio, and the Company's economic debt-to-equity ratio as of September 30, 2024 and June 30, 2024. The Company's debt-to-equity ratio is calculated in accordance with
The Company presents an economic debt-to-equity ratio, a non-GAAP financial measure of leverage that considers the impact of the off-balance sheet financing of its investments in TBAs that are accounted for as derivative instruments under
As of September 30, 2024
$ in thousands | Agency RMBS | Agency CMBS | Credit Portfolio (1) | Total |
Mortgage-backed securities | 5,181,013 | 675,074 | 17,609 | 5,873,696 |
Cash and cash equivalents (2) | 42,190 | 6,064 | — | 48,254 |
Restricted cash (3) | 115,416 | 4,783 | — | 120,199 |
Derivative assets, at fair value (3) | 11,556 | 479 | — | 12,035 |
Other assets | 25,598 | 2,448 | — | 28,046 |
Total assets | 5,375,773 | 688,848 | 17,609 | 6,082,230 |
Repurchase agreements | 4,535,956 | 648,929 | — | 5,184,885 |
Other liabilities | 37,289 | 2,360 | 693 | 40,342 |
Total liabilities | 4,573,245 | 651,289 | 693 | 5,225,227 |
Total stockholders' equity (allocated) | 802,528 | 37,559 | 16,916 | 857,003 |
Debt-to-equity ratio (4) | 5.7 | 17.3 | — | 6.1 |
Economic debt-to-equity ratio (5) | 5.7 | 17.3 | — | 6.1 |
(1) | Investments in non-Agency CMBS and non-Agency RMBS are included in credit portfolio. |
(2) | Cash and cash equivalents is allocated based on the Company's financing strategy for each asset class. |
(3) | Restricted cash and derivative assets are allocated based on the hedging strategy for each asset class. |
(4) | Debt-to-equity ratio is calculated as the ratio of total repurchase agreements to total stockholders' equity. |
(5) | Economic debt-to-equity ratio is calculated as the ratio of total repurchase agreements and TBAs at implied cost basis to total stockholders' equity. The Company did not have any TBAs outstanding as of September 30, 2024. |
As of June 30, 2024
$ in thousands | Agency RMBS | Agency CMBS | Credit Portfolio (1) | Total |
Mortgage-backed securities | 4,434,507 | 384,593 | 17,727 | 4,836,827 |
Cash and cash equivalents (2) | 54,428 | 4,347 | — | 58,775 |
Restricted cash (3) | 109,485 | 15,182 | — | 124,667 |
Derivative assets, at fair value (3) | 7,896 | 1,095 | — | 8,991 |
Other assets | 35,665 | 1,474 | 130 | 37,269 |
Total assets | 4,641,981 | 406,691 | 17,857 | 5,066,529 |
Repurchase agreements | 3,945,401 | 315,074 | — | 4,260,475 |
Derivative liabilities, at fair value (3) | 1,525 | — | — | 1,525 |
Other liabilities | 40,686 | 3,918 | 709 | 45,313 |
Total liabilities | 3,987,612 | 318,992 | 709 | 4,307,313 |
Total stockholders' equity (allocated) | 654,369 | 87,699 | 17,148 | 759,216 |
Debt-to-equity ratio (4) | 6.0 | 3.6 | — | 5.6 |
Economic debt-to-equity ratio (5) | 6.3 | 3.6 | — | 5.9 |
(1) | Investments in non-Agency CMBS, non-Agency RMBS and an unconsolidated joint venture are included in credit portfolio. |
(2) | Cash and cash equivalents is allocated based on the Company's financing strategy for each asset class. |
(3) | Restricted cash and derivative assets and liabilities are allocated based on the hedging strategy for each asset class. |
(4) | Debt-to-equity ratio is calculated as the ratio of total repurchase agreements to total stockholders' equity. |
(5) | Economic debt-to-equity ratio is calculated as the ratio of total repurchase agreements and TBAs at implied cost basis ( |
Average Balances
The table below presents information related to the Company's average earning assets, average earning asset yields, average borrowings and average cost of funds for the following periods:
Three Months Ended | Nine Months Ended | ||||||||
$ in thousands | September 30, | June 30, | September 30, | September 30, | September 30, | ||||
Average earning assets (1) | 5,566,299 | 4,847,125 | 5,498,298 | 5,130,153 | 5,344,055 | ||||
Average earning asset yields (2) | 5.31 % | 5.61 % | 5.47 % | 5.47 % | 5.39 % | ||||
Average borrowings (3) | 5,004,504 | 4,251,953 | 4,902,400 | 4,560,365 | 4,811,136 | ||||
Average cost of funds (4) | 5.30 % | 5.59 % | 5.36 % | 5.48 % | 4.83 % |
(1) | Average balances for each period are based on weighted month-end balances. |
(2) | Average earning asset yields for each period are calculated by dividing interest income, including amortization of premiums and discounts, by average earning assets based on the amortized cost of the investments. All yields are annualized. |
(3) | Average borrowings for each period are based on weighted month-end balances. |
(4) | Average cost of funds is calculated by dividing annualized interest expense, including amortization of net deferred gain (loss) on de-designated interest rate swaps, by average borrowings. |
Greg Seals,
Investor Relations
404-439-3323
View original content to download multimedia:https://www.prnewswire.com/news-releases/invesco-mortgage-capital-inc-reports-third-quarter-2024-financial-results-302296925.html
SOURCE Invesco Mortgage Capital Inc.
FAQ
What was Invesco Mortgage Capital's (IVR) net income per share in Q3 2024?
What is IVR's current quarterly dividend payment?
What was IVR's book value per share as of September 30, 2024?