Invesco Mortgage Capital reported a sharp decline in book value and a quarterly loss for the three months ended Sept. 30, 2026, as higher interest-rate volatility and wider mortgage-backed securities spreads hurt portfolio returns. The mortgage REIT’s earnings available for distribution remained positive, and it kept its common dividend unchanged from the prior quarter.
Key details
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Quarterly results weakened: Invesco recorded a net loss of $0.92 per common share, compared with net income of $0.34 per share in the second quarter. Earnings available for distribution were $0.47 per share, down from $0.50.
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Book value and total return fell: Book value per common share dropped to $6.74 at Sept. 30 from $8.03 at June 30, a 16.1% decline. Including dividends, the company reported an economic return of negative 11.6%, versus a positive 3.8% in the prior quarter.
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Dividend held steady: Monthly common-stock dividends totaled $0.36 per share for the quarter, unchanged from the second quarter.
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Leverage increased: The debt-to-equity ratio rose to 7.6 times from 6.3 times at June 30. The company’s economic debt-to-equity ratio, a separate measure, increased to 8.3 times from 7.5 times.
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Portfolio totaled $8.0 billion: At quarter end, it comprised $6.6 billion of Agency residential mortgage-backed securities (RMBS), $0.7 billion of Agency “to-be-announced” securities, and $0.7 billion of Agency commercial mortgage-backed securities (CMBS). In the latter part of the quarter, Invesco reduced its Agency CMBS holdings and shifted the proceeds into Agency RMBS.
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Cash and unencumbered investments: The company reported $401.3 million in unrestricted cash and unencumbered investments at quarter end.
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Management’s account of market conditions: CEO Kevin Collins said short- and long-term Treasury yields rose amid expectations for further Federal Reserve rate increases, stronger growth expectations and concerns about federal deficits and Treasury supply. Interest-rate volatility also picked up, contributing to materially wider Agency RMBS spreads and modestly wider Agency CMBS spreads. Invesco said its portfolio underperformed Treasuries, with some of the impact offset by improvement in swap spreads.
Plain-English implications
The quarter combined a substantial reduction in book value with a negative return even after dividends, while reported leverage rose. The dividend remained unchanged, and earnings available for distribution exceeded the amount of dividends paid per share during the quarter.