INVESCO MORTGAGE CAPITAL INC

At that time, to ask a question, press the star followed by the one on your telephone. As a reminder, this call is being recorded. Now I'd like to turn the call over to Greg Seals at Investor Relations. Mr. Seals, you may begin the call.

Thanks, Operator, and to all of you joining us on Invesco Mortgage Capital's quarterly earnings call. In addition to today's press release, we have provided a presentation that covers the topics we plan to address today. The press release and presentation are available on our website, InvescoMortgageCapital.com. This information can be found by going to the investor relations section of the website. Our presentation today will include forward-looking statements and certain non-GAAP financial measures. Please review the disclosures on slide two of the presentation regarding these statements and measures, as well as the appendix for the appropriate reconciliations to GAAP. Finally, Invesco Mortgage Capital is not responsible for and is not added or guaranteed The accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. Again, welcome and thank you for joining us today. I'll now turn the call over to John Anzalone.

John? Good morning and welcome to Investo Mortgage Capital's third quarter earnings call. I'll give some brief comments before turning the call over to our Chief Investment Officer, Brian Norris, to discuss the current portfolio in more detail. Also joining us on the call are President Kevin Collins, our CFO Lee Fedley, and our COO Dave Lyle. The market environment was extremely challenging during the third quarter, given shifting expectations for fiscal and monetary policy. Interest rate volatility remained elevated while treasury yields increased to their highest levels since 2007. This backdrop was particularly difficult for agency mortgages. as spreads reached multi-year-wise across the coupon stack and specified pool pay-ups declined. These conditions contributed to a 17% decline in our book value per share for the quarter. Elevated volatility and rising interest rates continued into the first few weeks of the fourth quarter, accelerating agency mortgage underperformance. Settlement turned more positive last week, fueled by investors' growing confidence that the FOMC's tightening cycle has ended. Positively, investors seeking to capitalize on historically cheap agency mortgage valuations have recently allowed the sector to recover a portion of its early fourth quarter losses. We estimate that as of November 3rd, our book value has declined to a range of $9.07 to $9.45 per share. Despite the extreme volatility, earnings available for distribution remain strong during the quarter, coming in at $1.51 per share. as we continue to benefit from our low-cost hedges as well as very attractive ROEs on new investments. Our debt-to-equity ratio ended the quarter at 6.4 times with substantially all of our $5.4 billion investment portfolio invested in agency mortgages, and we maintained a sizable balance of unreserved cash and unencumbered investments totaling $392 million. Post-quarter end, we responded to elevated interest rate volatility and further pressure on agency mortgage valuations by actively reducing the size of our portfolio, bringing our debt-to-equity ratio down to approximately 4.3 times at the end of October. This reduction in risk will impact our earnings power commensurate with our reduction in assets. We remain cautious on the near-term outlook for the sector, given the uncertain types of fiscal and monetary policy and heightened geopolitical risks. However, the potential reduction in interest rate volatility associated with the eventual normalization of monetary policy should be supportive of our target assets. Agency mortgage supply and demand dynamics are expected to improve in the coming quarters as loan originations remain low in the case of elevated interest rates and seasonal factors. Commercial banks should also soon receive greater clarity on the regulatory requirements which could encourage further deployment of capital away from loans and into lower risk-weighted assets such as agency mortgages. Finally, valuations and production coupon agency mortgages remain historically attractive, and funding capacity is robust. While we remain cautious in the near term due to elevated volatility, we believe over time the decline in interest rate volatility in a supportive technical environment combined with compelling valuations and favorable funding conditions should create attractive agency mortgage investment opportunities for long-term investors. I'll stop here, and Brian will go through the portfolio.