Invesco Mortgage Capital Inc. (IVR): Business Model Canvas [11-2024 Updated]

Invesco Mortgage Capital Inc. (IVR) operates within the dynamic landscape of real estate investment trusts, focusing on generating income through mortgage-backed securities. This blog post delves into the Business Model Canvas of IVR, revealing how the company leverages

• key partnerships
• strategic activities
• valuable resources

to deliver attractive risk-adjusted returns for its investors. Discover the intricacies of IVR's operational framework and what sets it apart in the competitive financial markets.

Invesco Mortgage Capital Inc. (IVR) - Business Model: Key Partnerships

Collaborations with financial institutions

Invesco Mortgage Capital Inc. (IVR) collaborates with various financial institutions to secure funding and manage liquidity. As of September 30, 2024, IVR had approximately $5.2 billion in repurchase agreement borrowings with a weighted average remaining maturity of 32 days, implying strong partnerships with banks and financial entities for financing its investment portfolio.

Agreements with mortgage brokers

IVR maintains agreements with mortgage brokers to facilitate the acquisition of mortgage-backed securities (MBS). The company’s investment portfolio, as of September 30, 2024, included $5.87 billion in mortgage-backed securities, demonstrating the importance of these partnerships in sourcing high-quality assets.

Relationships with investors and stakeholders

Strong relationships with investors and stakeholders are crucial for IVR's capital-raising efforts. The company reported net proceeds of $107.9 million from common stock offerings during the nine months ended September 30, 2024. Additionally, preferred stock dividends amounted to $16.57 million for the nine months ended September 30, 2024, reflecting ongoing investor engagement.

Partnership Type	Details	Financial Impact
Financial Institutions	Repurchase agreements with banks	$5.2 billion in borrowings
Mortgage Brokers	Acquisition of mortgage-backed securities	$5.87 billion in MBS
Investors	Common stock offerings	$107.9 million in net proceeds
Investors	Preferred stock dividends	$16.57 million for nine months

Invesco Mortgage Capital Inc. (IVR) - Business Model: Key Activities

Managing mortgage-backed securities portfolio

Invesco Mortgage Capital Inc. manages a substantial portfolio of mortgage-backed securities (MBS). As of September 30, 2024, the fair value of their MBS portfolio was $5.87 billion. The portfolio primarily consists of Agency RMBS, which accounted for approximately 88% of the total MBS holdings. The weighted average yield on the mortgage-backed securities was 5.41%.

During the third quarter of 2024, Invesco recorded net realized gains of $5.0 million on MBS sales, compared to net losses of $33.2 million in the same period of 2023. The effective interest expense for the third quarter of 2024 was $66.3 million, resulting in a net interest income of $7.5 million.

Conducting market analysis and research

Invesco conducts extensive market analysis to inform its investment strategies. The company utilizes various market indicators and research methodologies to assess the performance of mortgage-backed securities. For instance, the average margin requirement under their repurchase agreements was 4.3% for Agency RMBS as of September 30, 2024, reflecting the company's proactive approach to managing its financial leverage.

In addition, Invesco’s risk management strategies involve monitoring interest rates and credit spreads, which directly impact the valuations of their securities. As of September 30, 2024, they reported a net unrealized gain of $160.2 million on their MBS portfolio, a significant improvement compared to the net unrealized loss of $191.8 million in the previous year.

Risk management and hedging strategies

Invesco employs robust risk management and hedging strategies to mitigate financial risks associated with interest rates and credit spreads. As of September 30, 2024, the company had entered into futures contracts with a notional amount of $750 million to help manage interest rate exposure.

The economic debt-to-equity ratio was reported at 6.1 as of September 30, 2024, indicating the level of leverage used in their operations. Additionally, the company faced net losses on derivative instruments totaling $127.3 million during the third quarter of 2024, reflecting the complexities involved in their hedging strategies.

Metric	Q3 2024	Q3 2023
Net Income (Loss) Attributable to Common Stockholders	$35.3 million	$(74.0) million
Net Realized Gains (Losses) on MBS	$5.0 million	$(33.2) million
Net Interest Income	$7.5 million	$9.4 million
Economic Debt-to-Equity Ratio	6.1	5.8

Overall, Invesco Mortgage Capital Inc. demonstrates a comprehensive approach to managing its mortgage-backed securities portfolio, conducting market analysis, and implementing risk management and hedging strategies to navigate the complexities of the mortgage finance landscape.

Invesco Mortgage Capital Inc. (IVR) - Business Model: Key Resources

Skilled management team and analysts

As of September 30, 2024, Invesco Mortgage Capital Inc. (IVR) has a management team that includes experienced professionals with backgrounds in real estate investment, finance, and risk management. The management fees incurred for the three months ended September 30, 2024, were $2.9 million, reflecting the costs associated with this skilled team.

Technology for portfolio management

IVR utilizes advanced technology and data analytics to manage its portfolio of mortgage-backed securities (MBS). As of September 30, 2024, the total value of MBS held by IVR was $5.87 billion, which includes $5.18 billion in Agency RMBS and $675 million in Agency CMBS. Effective portfolio management technologies are essential for tracking these assets and making informed investment decisions.

Access to capital markets for funding

Invesco Mortgage Capital has significant access to capital markets, which is critical for its funding strategy. As of September 30, 2024, the company had $5.18 billion in repurchase agreements, which are essential for financing its MBS holdings. The average margin requirement under these agreements was 4.3% for Agency RMBS and 4.5% for Agency CMBS. Additionally, IVR had cash and cash equivalents totaling $48.25 million, underscoring its liquidity position.

Key Resource	Details
Management Team	Management fees: $2.9 million (Q3 2024)
Technology	Total MBS Value: $5.87 billion
Capital Markets Access	Repurchase agreements: $5.18 billion; Cash: $48.25 million

Invesco Mortgage Capital Inc. (IVR) - Business Model: Value Propositions

Attractive risk-adjusted returns for shareholders

Invesco Mortgage Capital Inc. (IVR) has positioned itself to deliver attractive risk-adjusted returns for its shareholders through strategic investments primarily in Agency mortgage-backed securities (MBS). As of September 30, 2024, the company reported a net income attributable to common stockholders of $35.3 million for the third quarter, translating to earnings per share of $0.63, a significant recovery from a loss of $1.62 per share in the same quarter of the previous year.

The company also demonstrated a robust net interest income of $7.5 million for the third quarter of 2024, compared to $9.4 million in the same quarter of 2023, showcasing its ability to generate consistent income despite fluctuations in market conditions.

Diversified investment portfolio

IVR maintains a diversified investment portfolio, which is crucial for mitigating risks associated with market volatility. As of September 30, 2024, the total assets were valued at $6.08 billion, with mortgage-backed securities (MBS) accounting for $5.87 billion. The breakdown of the MBS portfolio includes:

Type of Security	Fair Value ($ in thousands)	Percentage of Total Portfolio
Agency RMBS	5,181,013	88.2%
Agency CMBS	675,074	11.5%
Credit Portfolio	17,609	0.3%

This diversification across different types of securities allows IVR to optimize its investment strategies and manage risks effectively while aiming for stable returns.

Focus on Agency RMBS for stability

Invesco Mortgage Capital's focus on Agency RMBS is a key component of its value proposition, as these securities are backed by government-sponsored enterprises, providing a layer of security and stability. As of September 30, 2024, the company's Agency RMBS portfolio had an average weighted yield of 5.43%, reflecting the company's strategy to capitalize on favorable market conditions. Furthermore, the company's book value per common share decreased to $9.37 as of September 30, 2024, down from $10.00 at the end of 2023, indicating fluctuations in the underlying asset values but still showing resilience in its core offerings.

By focusing on Agency RMBS, IVR can better navigate interest rate risks and market fluctuations, making it an attractive option for investors seeking stability amid economic uncertainties.

Invesco Mortgage Capital Inc. (IVR) - Business Model: Customer Relationships

Regular communication with investors

Invesco Mortgage Capital Inc. (IVR) maintains active communication with its investors through various channels. The company has sold 10,084,138 shares of common stock under its equity distribution agreements for proceeds of $88.5 million during the three months ended September 30, 2024. In the nine months ended September 30, 2024, the total proceeds from share sales amounted to $107.9 million. Regular updates on financial performance are provided through quarterly earnings calls and reports.

Transparency in reporting and performance updates

IVR emphasizes transparency in its financial reporting. For the three months ended September 30, 2024, the company reported net income of $40.7 million, compared to a net loss of $68.6 million for the same period in 2023. The total interest income for the same quarter was $73.8 million, while interest expense was $66.3 million, resulting in a net interest income of $7.5 million. Additionally, the company recorded net realized gains on investments of $165.2 million during this period.

Period	Net Income (Loss) ($ in millions)	Interest Income ($ in millions)	Interest Expense ($ in millions)	Net Interest Income ($ in millions)	Net Realized Gains on Investments ($ in millions)
Q3 2024	40.7	73.8	66.3	7.5	165.2
Q3 2023	(68.6)	75.1	65.7	9.4	(224.9)

Engaging with stakeholders through shareholder meetings

IVR actively engages its stakeholders through annual shareholder meetings. These meetings provide a platform for discussing company performance and future strategies. The company has a history of addressing shareholder concerns and presenting its roadmap for growth. As of September 30, 2024, IVR had total stockholders' equity of $857.0 million, which reflects the company's commitment to maintaining a strong financial position and ensuring shareholder value. Additionally, preferred stock dividends declared during 2024 amounted to $16.6 million.

Invesco Mortgage Capital Inc. (IVR) - Business Model: Channels

Direct outreach to institutional investors

Invesco Mortgage Capital Inc. actively engages with institutional investors through targeted outreach programs. As of September 30, 2024, the company reported total stockholders' equity of $857.0 million. This direct engagement is critical for maintaining investor relations and ensuring a robust capital structure.

Online platforms for investor relations

The company utilizes online platforms to enhance its communication with investors. In the nine months ended September 30, 2024, Invesco raised approximately $107.9 million through the sale of common stock under its equity distribution agreements. This reflects a strong reliance on digital channels for investor engagement and capital raising.

Period	Shares Sold	Net Proceeds ($ in thousands)	Commissions and Other Costs ($ in thousands)
Three Months Ended September 30, 2024	10,084,138	88,546	1,261
Three Months Ended September 30, 2023	3,880,763	42,344	575
Nine Months Ended September 30, 2024	12,211,131	107,915	1,515
Nine Months Ended September 30, 2023	9,699,471	109,104	1,478

Financial disclosures through SEC filings

Invesco Mortgage Capital Inc. adheres to regulatory requirements by providing comprehensive financial disclosures through SEC filings. For the nine months ended September 30, 2024, the company reported net income attributable to common stockholders of $40.2 million, resulting in an earnings per share of $0.78. This transparency is crucial for maintaining investor confidence and compliance with federal regulations.

Metric	2024	2023
Net Income (Loss) Attributable to Common Stockholders ($ in thousands)	40,235	(59,821)
Earnings (Loss) Per Share	0.78	(1.40)

Invesco Mortgage Capital Inc. (IVR) - Business Model: Customer Segments

Institutional investors seeking income

Invesco Mortgage Capital Inc. primarily targets institutional investors, such as pension funds, insurance companies, and mutual funds, who are looking for stable income streams. These investors are attracted to IVR due to its portfolio of mortgage-backed securities (MBS) that offer attractive yields. As of September 30, 2024, the total assets under management amounted to approximately $6.08 billion, with a significant portion allocated to Agency RMBS, which constituted approximately 88.9% of the total assets.

Retail investors interested in REITs

Retail investors are another key customer segment for IVR, particularly those interested in real estate investment trusts (REITs) as a means to diversify their portfolios and generate income. As of September 30, 2024, IVR had approximately 60.73 million common shares outstanding. The book value per common share was reported at $9.37, reflecting a decrease of 6.3% compared to the previous fiscal year. Retail investors are often drawn to IVR's dividend yields, which have been consistently paid, with a recent quarterly dividend of $0.40 per share.

Financial advisors managing client portfolios

Financial advisors represent a vital customer segment as they manage client portfolios that include various asset classes, including REITs like IVR. These advisors seek to provide their clients with investment options that yield reliable income. The average net interest income for the nine months ending September 30, 2024, was reported at $23.15 million, down from $41.40 million in the prior year. Financial advisors leverage IVR’s performance metrics, such as the recent net income attributable to common stockholders of $40.23 million, which illustrates the company’s potential for profitability amidst market fluctuations.

Customer Segment	Key Metrics	Characteristics
Institutional Investors	Total assets: $6.08 billion	Focus on steady income and portfolio diversification
Retail Investors	Common shares outstanding: 60.73 million	Interest in REITs for income generation
Financial Advisors	Net income (Q3 2024): $40.23 million	Manage portfolios including REITs for clients

Invesco Mortgage Capital Inc. (IVR) - Business Model: Cost Structure

Interest expenses from borrowings

The total interest expense for Invesco Mortgage Capital Inc. for the three months ended September 30, 2024, was $66.3 million, compared to $65.7 million for the same period in 2023. For the nine months ended September 30, 2024, the interest expense was $187.3 million, an increase from $174.4 million in 2023. The average cost of funds during this period was 5.30% for the third quarter of 2024 and 5.48% for the nine months of 2024.

Period	Total Interest Expense ($ in thousands)	Average Cost of Funds (%)
Three Months Ended September 30, 2024	66,315	5.30
Three Months Ended September 30, 2023	65,701	5.36
Nine Months Ended September 30, 2024	187,288	5.48
Nine Months Ended September 30, 2023	174,449	4.83

Management and operational costs

Management fees for the three months ended September 30, 2024, were $2.9 million, down from $3.1 million in the same period in 2023. For the nine months ended September 30, 2024, management fees totaled $8.7 million compared to $9.2 million in 2023. General and administrative expenses were $1.8 million for the third quarter of 2024 and $5.5 million for the nine months, compared to $1.7 million and $5.7 million in the same periods in 2023.

Expense Type	Three Months Ended September 30, 2024 ($ in thousands)	Three Months Ended September 30, 2023 ($ in thousands)	Nine Months Ended September 30, 2024 ($ in thousands)	Nine Months Ended September 30, 2023 ($ in thousands)
Management Fees	2,888	3,090	8,694	9,237
General and Administrative	1,805	1,691	5,544	5,743

Costs related to compliance and reporting

The costs related to compliance and reporting are typically embedded within the general and administrative expenses. While specific figures for compliance costs are not separately disclosed, they contribute to the overall operational expenses, which were approximately $14.2 million for the nine months ended September 30, 2024, compared to $15.0 million in the same period in 2023.

Period	Total Operational Expenses ($ in thousands)
Nine Months Ended September 30, 2024	14,238
Nine Months Ended September 30, 2023	14,980

Invesco Mortgage Capital Inc. (IVR) - Business Model: Revenue Streams

Interest income from mortgage-backed securities

As of September 30, 2024, Invesco Mortgage Capital Inc. reported total interest income of $73.8 million for the three months ended and $210.4 million for the nine months ended. This was a slight decrease from $75.1 million and $215.8 million respectively for the same periods in 2023. The interest income primarily consists of:

$ in thousands	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2024	Nine Months Ended September 30, 2023
Coupon interest	72,348	72,200	206,037	211,435
Net (premium amortization) discount accretion	1,477	2,932	4,399	4,412
Total interest income	73,825	75,132	210,436	215,847

Gains from asset sales and trading

Invesco experienced significant fluctuations in gains from asset sales and trading. For the three months ended September 30, 2024, the company reported a net gain of $165.2 million, contrasting with a net loss of $224.9 million in the same period of 2023. For the nine months ended September 30, 2024, the net gain stood at $53.8 million, compared to a loss of $272.6 million in 2023. The details are as follows:

$ in thousands	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2024	Nine Months Ended September 30, 2023
Net realized gains (losses) on sale of MBS	4,963	(33,157)	(4,787)	(57,406)
Net unrealized gains (losses) on MBS	160,205	(191,752)	59,048	(215,226)
Total gains (losses) on investments, net	165,168	(224,897)	53,803	(272,620)

Dividends from investments in unconsolidated ventures

Invesco's revenue streams also include dividends from investments in unconsolidated ventures. As of September 30, 2024, the equity in earnings (losses) of these ventures was reported as $0 for the three months ended and $(193,000) for the nine months ended, contrasting with $2,000 and $4,000 respectively in the same periods of 2023.

$ in thousands	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2024	Nine Months Ended September 30, 2023
Equity in earnings (losses) of unconsolidated ventures	0	2	(193)	4

Updated on 16 Nov 2024

Resources:

1. 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.
2. 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.