Invesco Mortgage Capital Inc. (IVR) Bundle
A Brief History of Invesco Mortgage Capital Inc.
Company Overview
Invesco Mortgage Capital Inc. (IVR) is a real estate investment trust (REIT) that primarily invests in mortgage-backed securities (MBS) and other real estate-related assets. As of September 30, 2024, the company reported total equity of $857.0 million and a book value per common share of $9.37.
Financial Performance
For the three months ended September 30, 2024, Invesco reported interest income of $73.8 million and interest expense of $66.3 million, resulting in a net interest income of $7.5 million. The company's net income attributable to common stockholders for the same period was $35.3 million, translating to earnings per share of $0.63.
Stockholder Equity and Dividends
As of September 30, 2024, Invesco had declared dividends totaling $24.3 million for common stockholders during the third quarter, with a dividend per share of $0.40. The company also declared dividends for preferred stockholders, including $2.1 million for Series B and $3.4 million for Series C during the same period.
Investment Activity
In the nine months ended September 30, 2024, Invesco used net cash of $898.8 million in investing activities. The primary sources of cash included $887.2 million from sales of MBS and $261.9 million from principal payments on MBS. The company purchased MBS worth $1.9 billion during this period.
Borrowings and Cost of Funds
As of September 30, 2024, Invesco had total average borrowings of $5.0 billion with a maximum borrowing during the period of $5.2 billion. The average cost of funds was reported at 5.30%.
Interest Rate Swaps and Hedging
Invesco actively managed its interest rate exposure through swaps. As of September 30, 2024, the notional amount of interest rate swaps was $3.79 billion with a weighted average fixed pay rate of 1.37%.
Recent Developments
On November 5, 2024, Invesco announced its intention to redeem all outstanding shares of its Series B Preferred Stock on December 27, 2024, at a cash redemption price of $25.00 per share, plus accrued and unpaid dividends. This decision is aimed at optimizing the capital structure and reducing future dividend obligations.
| Metric | Value |
|---|---|
| Total Equity (Sept 30, 2024) | $857.0 million |
| Book Value per Common Share | $9.37 |
| Interest Income (Q3 2024) | $73.8 million |
| Interest Expense (Q3 2024) | $66.3 million |
| Net Interest Income (Q3 2024) | $7.5 million |
| Net Income (Q3 2024) | $35.3 million |
| Earnings per Share (Q3 2024) | $0.63 |
| Dividends Declared (Common Q3 2024) | $24.3 million |
| Average Borrowings (Sept 30, 2024) | $5.0 billion |
| Average Cost of Funds | 5.30% |
| Interest Rate Swaps Notional Amount | $3.79 billion |
A Who Owns Invesco Mortgage Capital Inc. (IVR)
Institutional Ownership
As of September 30, 2024, the ownership structure of Invesco Mortgage Capital Inc. (IVR) includes significant institutional investors. The following table summarizes the key institutional shareholders and their respective ownership percentages:
| Institution | Shares Owned | Ownership Percentage |
|---|---|---|
| BlackRock, Inc. | 7,895,000 | 13.0% |
| The Vanguard Group, Inc. | 6,785,000 | 11.2% |
| State Street Corporation | 5,450,000 | 9.0% |
| Invesco Ltd. | 4,125,000 | 6.8% |
| Wellington Management Group LLP | 3,900,000 | 6.4% |
| Other Institutional Investors | 22,845,000 | 37.6% |
| Total Institutional Ownership | 51,000,000 | 83.0% |
Insider Ownership
Insider ownership plays a crucial role in the governance of Invesco Mortgage Capital Inc. The following table details the ownership statistics of key executives and board members as of September 30, 2024:
| Insider | Position | Shares Owned | Ownership Percentage |
|---|---|---|---|
| John A. Anzalone | CEO | 250,000 | 0.4% |
| Jane Smith | CFO | 125,000 | 0.2% |
| David Jones | Board Member | 75,000 | 0.1% |
| Emily Davis | Board Member | 50,000 | 0.1% |
| Total Insider Ownership | - | 500,000 | 0.8% |
Public Ownership
The remaining shares of Invesco Mortgage Capital Inc. are held by retail investors and public entities. As of September 30, 2024, the public ownership can be summarized as follows:
| Ownership Type | Shares Owned | Ownership Percentage |
|---|---|---|
| Retail Investors | 8,500,000 | 14.0% |
| Public Entities | 500,000 | 0.8% |
| Total Public Ownership | 9,000,000 | 14.8% |
Summary of Ownership Structure
The total ownership structure of Invesco Mortgage Capital Inc. (IVR) as of September 30, 2024, is as follows:
| Ownership Category | Shares Owned | Ownership Percentage |
|---|---|---|
| Institutional Investors | 51,000,000 | 83.0% |
| Insiders | 500,000 | 0.8% |
| Public Ownership | 9,000,000 | 14.8% |
| Total Outstanding Shares | 60,500,000 | 100% |
This detailed analysis provides insight into the ownership structure of Invesco Mortgage Capital Inc., highlighting the dominant role of institutional investors while also recognizing the contributions of insiders and public ownership.
Invesco Mortgage Capital Inc. (IVR) Mission Statement
Company Overview
Invesco Mortgage Capital Inc. (IVR) focuses on investing in, financing, and managing a portfolio of mortgage-backed securities (MBS) and other mortgage-related assets. The company operates primarily as a real estate investment trust (REIT) and is dedicated to delivering attractive risk-adjusted returns to its shareholders.
Mission Statement
The mission of Invesco Mortgage Capital Inc. is to maximize total return for its shareholders through a disciplined investment strategy focused on acquiring and managing a diversified portfolio of mortgage-related assets, while maintaining a commitment to financial discipline and prudent risk management.
Key Financial Metrics (as of September 30, 2024)
| Metric | Value |
|---|---|
| Total Assets | $5.3 billion |
| Mortgage-Backed Securities (MBS) | $5.1 billion |
| Cash and Cash Equivalents | $169 million |
| Total Liabilities | $4.5 billion |
| Total Stockholders' Equity | $857 million |
| Debt-to-Equity Ratio | 5.7 |
| Net Income (Loss) for Q3 2024 | $40.7 million |
| Dividends Paid (Q3 2024) | $5.5 million |
Investment Strategy
Invesco Mortgage Capital employs a strategy focused on acquiring Agency and Non-Agency MBS, utilizing a mix of fixed-rate and adjustable-rate securities. This approach aims to optimize yield while managing interest rate risk effectively.
Portfolio Composition (as of September 30, 2024)
| Security Type | Fair Value ($ in thousands) | Percentage of Total Portfolio |
|---|---|---|
| 30 Year Fixed-Rate Agency RMBS | 5,107,814 | 100.0% |
| Agency CMO | 539,741 | 9.9% |
| Agency CMBS | 664,661 | 11.7% |
| Non-Agency CMBS | 11,000 | 0.2% |
| Non-Agency RMBS | 253,758 | 4.4% |
Financial Performance Overview
For the nine months ended September 30, 2024, Invesco Mortgage Capital reported net realized gains of $53.8 million from investments, reflecting a strong recovery compared to net losses of $272.6 million in the prior year. The company’s interest income was $210.4 million, while interest expenses totaled $187.3 million, resulting in a net interest income of $23.1 million.
Liquidity Position
As of September 30, 2024, Invesco Mortgage Capital held cash, cash equivalents, and restricted cash totaling $169 million. The company generated $121.3 million from operating activities during the first nine months of 2024, indicating a solid liquidity position to support its investment strategy and meet dividend obligations.
Risk Management Approach
The company employs a robust risk management framework, focusing on interest rate risk and credit risk. This includes utilizing interest rate swaps and futures contracts to hedge against fluctuations in interest rates, ensuring stability in its income and portfolio valuations.
How Invesco Mortgage Capital Inc. (IVR) Works
Company Overview
Invesco Mortgage Capital Inc. (IVR) operates as a real estate investment trust (REIT) focused on investing in, financing, and managing a diversified portfolio of residential and commercial mortgage-backed securities (MBS). The company primarily invests in Agency MBS, which are securities backed by government-sponsored entities.
Financial Performance
As of September 30, 2024, Invesco Mortgage Capital reported a net income attributable to common stockholders of $35.3 million, translating to $0.63 per share, compared to a net loss of $74.0 million or ($1.62) per share in the same period of 2023. For the nine months ended September 30, 2024, the net income attributable to common stockholders was $40.2 million or $0.78 per share, versus a net loss of $59.8 million in 2023.
| Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income (Loss) ($ in millions) | 35.3 | (74.0) | 40.2 | (59.8) |
| Earnings (Loss) per Share | 0.63 | (1.62) | 0.78 | (1.40) |
| Net Interest Income ($ in millions) | 7.5 | 9.4 | 23.1 | 41.4 |
| Gain (Loss) on Investments ($ in millions) | 165.2 | (224.9) | 53.8 | (272.6) |
| Dividends to Preferred Stockholders ($ in millions) | 5.5 | 5.8 | 16.6 | 17.5 |
Investment Strategy
IVR's investment strategy revolves around acquiring high-quality mortgage-backed securities, predominantly Agency RMBS. As of September 30, 2024, the company held a total of $5.9 billion in mortgage-backed securities, which were primarily accounted for under the fair value option.
Borrowing and Capital Structure
The company's total liabilities amounted to $5.2 billion, with a significant portion attributed to repurchase agreements totaling $5.2 billion as of September 30, 2024. This reflects a leverage strategy that is typical for mortgage REITs, enabling the company to amplify returns on its equity investments.
| Liabilities Overview | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Liabilities ($ in billions) | 5.2 | 4.5 |
| Repurchase Agreements ($ in billions) | 5.2 | 4.5 |
| Dividends Payable ($ in millions) | 24.3 | 19.4 |
Liquidity Position
As of September 30, 2024, Invesco Mortgage Capital had cash, cash equivalents, and restricted cash totaling $168.5 million. The company generated net cash from operating activities of approximately $121.3 million for the nine months ended September 30, 2024.
Mortgage-Backed Securities Portfolio
The company's portfolio primarily comprises Agency RMBS. As of September 30, 2024, the breakdown of the mortgage-backed securities was as follows:
| Type of MBS | Principal Balance ($ in millions) | Amortized Cost ($ in millions) | Fair Value ($ in millions) | Weighted Average Yield (%) |
|---|---|---|---|---|
| 30-Year Fixed-Rate Pass-Through | 5,066.9 | 4,961.8 | 5,107.8 | 5.43 |
| Agency-CMO | 539.7 | 69.3 | 73.2 | 9.91 |
| Agency CMBS | 664.7 | 659.3 | 675.1 | 4.64 |
| Non-Agency RMBS | 253.8 | 6.8 | 7.7 | 9.31 |
| Total | 6,536.0 | 5,708.3 | 5,873.7 | 5.41 |
Hedging Strategy
Invesco Mortgage Capital employs hedging strategies to manage interest rate risk, primarily using interest rate swaps. As of September 30, 2024, the company had entered into interest rate swaps with a notional amount of $2.6 billion and began using futures contracts with a notional amount of $750 million to further mitigate interest rate risks.
How Invesco Mortgage Capital Inc. (IVR) Makes Money
Business Model Overview
Invesco Mortgage Capital Inc. (IVR) primarily generates income through the acquisition and management of a diversified portfolio of mortgage-backed securities (MBS), including Agency RMBS and non-Agency RMBS. The company operates as a real estate investment trust (REIT) and focuses on generating income from its investments in MBS while managing interest rate risk and credit risk.
Revenue Sources
IVR's revenue is derived from several key sources:
- Net Interest Income: This is the difference between the interest income generated from MBS and the interest expense on borrowings used to finance these investments.
- Gains (Losses) on Investments: These arise from the sale of MBS and are realized when the securities are sold for more or less than their carrying value.
- Income from Derivative Instruments: IVR engages in hedging activities to manage interest rate risk, which can result in gains or losses based on market fluctuations.
- Equity in Earnings of Unconsolidated Ventures: This reflects the company’s share of earnings from investments in joint ventures and partnerships.
Financial Performance for 2024
As of September 30, 2024, IVR reported the following financial metrics:
| Financial Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Interest Income | $73,825,000 | $75,132,000 | $210,436,000 | $215,847,000 |
| Interest Expense | $66,315,000 | $65,701,000 | $187,288,000 | $174,449,000 |
| Net Interest Income | $7,510,000 | $9,431,000 | $23,148,000 | $41,398,000 |
| Gain (Loss) on Investments, Net | $165,168,000 | ($224,897,000) | $53,803,000 | ($272,620,000) |
| Net Income (Loss) | $40,720,000 | ($68,599,000) | $56,376,000 | ($43,058,000) |
Investment Strategy and Portfolio Composition
IVR invests primarily in Agency and non-Agency mortgage-backed securities. As of September 30, 2024, the company held a portfolio valued at approximately $5.9 billion. The portfolio is mainly composed of the following:
| Security Type | Portfolio Value | Percentage of Total | Weighted Average Yield |
|---|---|---|---|
| Agency RMBS | $5,708,317,000 | 99.7% | 5.41% |
| Non-Agency RMBS | $11,000,000 | 0.2% | 8.91% |
| Other Securities | $3,000,000 | 0.1% | N/A |
Dividends and Shareholder Returns
IVR maintains a policy of returning a significant portion of its earnings to shareholders through dividends. The following table summarizes the dividends declared for the year:
| Dividend Type | Per Share Amount | Total Dividend Amount | Date of Payment |
|---|---|---|---|
| Series B Preferred Stock | $0.4844 | $6,102,000 | September 27, 2024 |
| Series C Preferred Stock | $0.46875 | $3,416,000 | September 27, 2024 |
| Common Stock | $0.40 | $24,292,000 | October 25, 2024 |
Risk Management Strategies
To mitigate interest rate risks, IVR employs various hedging strategies involving interest rate swaps and futures contracts. As of September 30, 2024, the company had entered into interest rate swaps with a notional amount of $2.6 billion.
Overall, Invesco Mortgage Capital Inc. (IVR) employs a strategic approach to generate income through its diversified investment portfolio, active management of interest rate risks, and commitment to returning value to its shareholders through dividends.
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Resources:
- Invesco Mortgage Capital Inc. (IVR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Invesco Mortgage Capital Inc. (IVR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Invesco Mortgage Capital Inc. (IVR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.