On November 6, 2023, Invesco Mortgage Capital Inc (IVR, Financial) released its financial results for the third quarter ended September 30, 2023. The company reported a net loss per common share of $1.62, a significant drop from the $0.03 reported in the second quarter of 2023. Despite the net loss, earnings available for distribution per common share rose to $1.51 from $1.45 in Q2 2023.
Financial Performance and Challenges
According to John Anzalone, Chief Executive Officer, the third quarter presented a challenging environment for Agency RMBS due to shifting expectations for fiscal and monetary policy, leading to higher interest rates and escalating interest rate volatility. This resulted in a 17.1% decline in the company's book value per common share for the third quarter. The decline in book value, combined with the $0.40 common stock dividend, resulted in an economic return of (13.8)% for the quarter.
Financial Achievements and Key Details
Invesco Mortgage Capital Inc (IVR, Financial) maintained a sizeable balance of unrestricted cash and unencumbered investments totaling $392 million. Earnings available for distribution continued to benefit from attractive interest income on target assets, favorable funding, and low-cost, pay-fixed swaps. The company's debt-to-equity ratio ended the third quarter at 6.4x, up from 5.9x as of June 30th.
Analysis on the Company's Performance
The company's financial performance in Q3 2023 was significantly impacted by the challenging environment for Agency RMBS. Despite this, the company managed to increase its earnings available for distribution per common share. However, the company's net loss per share and decline in book value per common share indicate a need for strategic adjustments to navigate the shifting financial markets.
Other Pertinent Details
As of November 3, 2023, the company's book value per common share is estimated to be between $9.07 and $9.45. The company remains cautious on the near-term outlook for the sector given the uncertain path of fiscal and monetary policy and heightened geopolitical risks.
Explore the complete 8-K earnings release (here) from Invesco Mortgage Capital Inc for further details.
