Invesco Mortgage Capital (IVR)·Q4 2025 Earnings Summary

Invesco Mortgage Capital Q4 2025: Book Value Jumps 3.7%, Up Another 4.5% YTD

January 30, 2026 · by Fintool AI Agent

Invesco Mortgage Capital (NYSE: IVR) delivered a solid Q4 2025, with book value growth of 3.7% and a 5.9% dividend increase offsetting a modest decline in earnings available for distribution. The Agency RMBS-focused mREIT generated an 8.0% economic return for the quarter as Federal Reserve rate cuts and declining interest rate volatility drove mortgage spread tightening.

Update from earnings call: CIO Brian Norris disclosed book value is up approximately 4.5% year-to-date through January 28, 2026, implying current book value near $9.11 per share.

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Did Invesco Mortgage Capital Beat Earnings?

IVR met consensus expectations on its core earnings metric while delivering upside on book value and dividends:

Values retrieved from S&P Global

Key Financial Results:

The decline in EAD per share from $0.58 to $0.56 was driven by higher effective cost of funds (2.24% vs 2.14%) despite the Fed's rate cuts, as the company's hedging gains from interest rate swaps moderated.

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What Did Management Say?

CEO John Anzalone highlighted the improved investment environment and constructive outlook:

"Financial conditions improved during the quarter, supported by two Federal Reserve rate cuts, solid corporate earnings, improved financial conditions, and strong economic growth. Equity markets extended their gains, credit spreads remained tight, and agency mortgages outperformed Treasuries, aided by lower rate volatility and a supportive supply and demand environment."

On the Agency MBS outlook:

"Given the meaningful decline in interest rate volatility, we remain constructive on Agency RMBS, though we view near-term risks as balanced following the sector's strong performance, reinforced by the recent announcements that Fannie Mae and Freddie Mac will purchase $200 billion in Agency RMBS."

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Q&A Highlights: What Did Analysts Ask?

On leverage and coupon positioning (Trevor Cranston, Citizens JMP):

CIO Brian Norris noted the company is comfortable with current leverage around 7x but may let it "drift a little bit" as book value increases. On positioning: "The TBA dollar roll market is pretty attractive in those coupons right now" — referring to belly coupons (3.5%-5.5%), where implied funding is significantly below short-term repo rates.

On rotating down the coupon stack (Jason Weaver, JonesTrading):

Management flagged the administration's push on housing affordability and focus on lowering mortgage rates as a reason to shift future purchases lower in the coupon stack: "The goal is likely to not necessarily reduce the allocation by selling, but to future purchases come a little bit lower in the coupon stack."

On GSE purchases and spread potential (Jason Stewart, Compass Point):

Brian Norris outlined what could drive spreads another 10-15 basis points tighter: "If there was announcement that they increased the caps from currently the $450 billion... In December, the GSEs added a combined $24 billion between loans and mortgages. If we were to see that pace continue to increase, that would be a pretty clear signal that the administration or the Treasury and the FHFA plan to increase those caps."

On book value sensitivity (Eric Hagen, BTIG):

Management tempered expectations for further spread tightening: "The $200 billion of purchases is largely priced into the market as we sit here today. Unless we start to see banks come in in greater size and also increased caps, we don't necessarily expect spreads to tighten much."

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What Changed From Last Quarter?

Positive Developments:

1. Book value recovery — Up 3.7% to $8.72 from $8.41, the third consecutive quarterly increase after bottoming at $8.05 in Q2 2025

2. Dividend raised — Increased 5.9% to $0.36/share from $0.34, with the company also shifting to monthly dividend payments starting January 2026

3. Net interest margin expansion — GAAP NIM improved 21 bps to 1.11%, driven by a 32 bp decline in average cost of funds (4.20% vs 4.52%)

4. Portfolio growth — Average earning assets increased $487M to $5.87B as the company deployed capital into the improved spread environment

Areas of Concern:

1. Leverage increased — Debt-to-equity rose to 7.0x from 6.7x, reflecting more aggressive positioning

2. EAD declined — Earnings available for distribution fell 3.4% sequentially as hedging gains moderated

3. Effective margin compression — Despite GAAP improvement, effective interest rate margin declined 21 bps to 3.07%

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Portfolio Composition

IVR's $6.3 billion MBS portfolio at quarter-end was positioned primarily in higher-coupon Agency RMBS:

The company maintained $453.3 million in unrestricted cash and unencumbered investments, providing a liquidity cushion.

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How Did the Stock React?

IVR shares closed at $8.90 on January 29, down 0.5% during regular trading. However, the stock rose 2.2% in after-hours trading to $9.10 following the earnings release. *

Key Context:

• Current price ($8.90) trades at a 2.1% premium to book value ($8.72)
• 52-week range: $5.86 - $9.50
• 50-day moving average: $8.42 (stock +5.7% above)
• 200-day moving average: $7.74 (stock +15.0% above)

Values retrieved from S&P Global

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Capital Allocation

Q4 2025 Activity:

• Common Stock Issuance: 849,987 shares issued for $7.2 million net proceeds through ATM program
• Preferred Stock Repurchases: 76,356 shares of Series C Preferred repurchased at $1.8 million carrying value
• Dividend Policy Change: Shifted from quarterly to monthly dividend payments, with first monthly dividend of $0.12/share declared January 15, 2026

The monthly dividend structure provides income investors with more frequent cash flows and better aligns with the mREIT peer group standard.

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Forward Catalysts

1. Fannie/Freddie $200B Agency RMBS purchases — Management noted this is "largely priced into the market" but December combined purchases of $24B suggest potential for increased caps from current $450B

2. Continued Fed easing — Markets pricing in additional 50 bps of cuts through 2026; Fed ended QT in December and will reinvest mortgage paydowns into T-bills

3. Steeper yield curve — 2s/30s spread ended Q4 at 137 bps, 83 bps steeper than a year ago, benefiting longer-term investments like Agency RMBS

4. Potential GSE cap increase — Could drive another 10-15 bps of spread tightening if caps raised above $450B

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Macro Environment

Key backdrop from the earnings call:

• Inflation: Headline CPI at 2.7%, core CPI at 2.6% — trending modestly lower
• Labor market: U.S. economy lost 67,000 jobs during Q4 2025, cited as rationale for Fed cuts
• Fed policy: Cut rates 25 bps at each of last three 2025 meetings despite above-target inflation; ended QT after reducing holdings by $2.2 trillion since mid-2022
• Rate expectations: Markets pricing 50 bps of additional cuts through 2026
• Interest rate volatility: Declined significantly since April, now in line with longer-term averages

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The Bottom Line

IVR delivered a clean quarter with book value growth, a dividend increase, and constructive forward commentary — and the momentum has continued with book value up another 4.5% YTD. The shift to monthly dividends signals confidence in the income stream, while the 8.0% economic return demonstrates the portfolio's performance in a favorable rate environment. Management's view is balanced near-term given recent outperformance, but they remain constructive longer-term as volatility stays low and the yield curve steepens.

Current levered returns on Agency RMBS hedged with swaps remain attractive at mid-to-upper teens (140 bps spread to 5/10-year SOFR blend at year-end, less ~10 bps tightening YTD).

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Related: IVR Company Page · Q4 2025 Earnings Transcript · Q3 2025 Earnings