Invesco Mortgage Capital's Book Value Drops 16.1% in a Quarter

The Tip Desk · November 10, 2026 · 3 min read

The mortgage REIT posted a $0.92 a share loss and an economic return of (11.6)% as book value fell to $6.74 a share.

Invesco Mortgage Capital Inc. (IVR) reported a net loss attributable to common stockholders of $98.8 million, or $0.92 a share, for the quarter ended September 30, 2026, reversing $31.8 million of income, or $0.34 a share, in the prior quarter.

The externally managed real estate investment trust said book value per common share declined 16.1% to $6.74 from $8.03 at June 30, 2026. Combined with $0.36 of monthly common dividends, that produced an economic return of (11.6)%, compared with 3.8% in the second quarter.

Chief Executive Officer Kevin Collins said economic growth remained resilient, but financial conditions tightened as investors priced in additional Federal Reserve rate hikes. Short-term Treasury yields rose on those policy expectations, he said, while longer-term yields increased on stronger growth, fiscal deficits and Treasury supply. Interest-rate volatility rose from subdued second-quarter levels, contributing to materially wider Agency RMBS spreads and modestly wider Agency CMBS spreads. Against that backdrop, the portfolio generated negative returns relative to Treasuries, an effect he said was partially offset by improvement in swap spreads.

Average earning assets rose to $7,574.3 million from $6,631.0 million, and average borrowings rose to $6,754.7 million from $5,927.7 million. Net interest income increased to $33.9 million from $30.1 million. Average net interest rate margin compressed to 1.38% from 1.42%. Period-end weighted average net interest rate margin compressed to 1.31% from 1.53%, with period-end cost of funds rising to 3.97% from 3.76%.

Earnings available for distribution per common share fell to $0.47 from $0.50. Effective net interest income rose to $53.9 million from $50.9 million, while the effective interest rate margin compressed to 2.56% from 2.82%.

The $8.0 billion investment portfolio including TBAs shifted mix. Agency RMBS rose to $6.6 billion, or 83.2% of the portfolio, from $6.0 billion. Agency TBA fell to $0.7 billion, or 8.3%, from $1.2 billion, or 14.7%. Agency CMBS fell to $0.7 billion, or 8.5%, from $0.9 billion, or 11.1%. Collins said that in the latter part of the quarter the company reduced its Agency CMBS allocation and redeployed proceeds into Agency RMBS as spread widening created increasingly attractive risk-adjusted return potential.

Total borrowings rose to $6,842.9 million from $6,210.4 million, with the weighted average interest rate up to 3.97% from 3.76%. Interest-rate swap notional increased to $5,185.0 million from $4,765.0 million, with the weighted average fixed pay rate rising to 2.72% from 1.99%. Short U.S. Treasury futures notional increased to $1,605.0 million from $1,280.0 million.

Debt-to-equity rose to 7.6x from 6.3x, and economic debt-to-equity rose to 8.3x from 7.5x. The company said it maintained unrestricted cash and unencumbered investments totaling $401.3 million.

During the quarter the company issued 6,706,923 common shares for $51.0 million of net proceeds through its at-the-market program and repurchased 17,415 Series C preferred shares. Monthly common dividends totaled $0.36 a share, unchanged from the second quarter.

Collins said the company’s outlook for both Agency RMBS and Agency CMBS remains constructive. He said recent spread widening has enhanced relative value and prospective return potential of both sectors, and that an eventual de-escalation of geopolitical tensions in the Middle East, coupled with moderation in interest-rate volatility, could provide an additional tailwind. Until then, he said, the company remains focused on maintaining prudent leverage, ample liquidity, and strategic portfolio diversification.