Invesco Mortgage Capital Posts a Loss of $0.92 per Share and Sees Book Value Decline
Key Facts
Invesco Mortgage Capital reported a net loss of $0.92 per common share in the third quarter of 2026, compared with net income of $0.34 per share in the second quarter, according to results published by the company via PR Newswire. The loss attributable to common shareholders was $103.5 million, versus a loss of $23.1 million in the previous quarter. Book value per share fell to $6.74 on September 30, from $8.03 on June 30. Economic return was negative 11.6% for the quarter, after a positive return of 3.8% in the second quarter. The results highlight a decline in book value and a wider accounting loss alongside lower earnings available for distribution.
Earnings available for distribution were $0.47 per share in the third quarter, down from $0.50 in the second quarter, while the company kept total monthly common stock distributions at $0.36 per share, unchanged from the previous quarter. Earnings available for distribution therefore remained above the cash distribution declared per share during the quarter. These figures distinguish the net accounting loss from the company’s reported measure of earnings available for distribution. Total monthly distributions were unchanged despite the decline in earnings available compared with the second quarter. The company’s shares, which trade under the ticker IVR, closed at $5.45 on October 28, according to EL7 data.
Total interest income was $85.4 million in the third quarter, against interest expense of $61.2 million, bringing net interest income to $24.2 million. Average net interest margin narrowed to 1.27% from 1.42% in the second quarter. Over the same period, average funding costs rose to 4.01% from 3.73%. The comparison shows the margin declining as funding costs rose, while net interest income remained positive for the quarter. These indicators accompany a decline in earnings available for distribution from $0.50 to $0.47 per share between the two quarters.
The debt-to-equity ratio rose to 7.6 times on September 30, from 6.3 times on June 30, while the economic debt-to-equity ratio increased to 8.3 times from 7.5 times. The investment portfolio, including TBA agreements, was valued at $8.0 billion at the end of September, according to the company’s financial update. Unrestricted cash and unencumbered investments totaled $401.3 million, while repurchase agreement borrowings stood at $6.8 billion. The portfolio had been valued at $8.2 billion at the end of the second quarter, comprising $6.0 billion in agency residential mortgage-backed securities, $1.2 billion in TBA investments and $0.9 billion in agency commercial mortgage-backed securities. These figures put the portfolio’s size and funding sources in the context of higher leverage during the quarter.
Chief Executive Kevin Collins said, "Economic growth remained resilient during the third quarter, but financial conditions tightened as investors increasingly priced in additional Federal Reserve rate increases." The Fed raised its target rate range by a quarter percentage point in September to 3.75%-4.00% and said inflation remained elevated. On October 28, the central bank held the range at 3.75%-4.00%, with two members voting to raise it by a quarter percentage point, in a decision approved by a 10-to-2 vote. In its second-quarter report, Collins said financial conditions had improved despite intermittent bouts of volatility tied to geopolitical developments in the Middle East and changing monetary policy expectations. He added at the time that the assets targeted by the company had generated returns exceeding those of Treasuries. His comments reflect a different description of conditions between the two quarters, while third-quarter results showed a wider loss and a narrower net interest margin.
The company scheduled a conference call and audio webcast to review its third-quarter results for October 30, 2026, at 9 a.m. Eastern time. It said an audio replay of the call would remain available through November 13. The Federal Open Market Committee is scheduled to hold its next meeting on December 8 and 9, 2026. The meeting follows the Fed’s October decision to leave the rate range unchanged, with two votes in favor of an increase. The company’s third-quarter results, including the net loss, decline in book value and rise in funding costs, provide financial context for the call convened to review them.