INVESCO MORTGAGE CAPITAL INC

and answer session. 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 would like to turn the call over to Greg Seals in 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. 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. 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 Invesco's IVR CEO, John Anzalone.

John. Thank you, and good morning, and welcome to Invesco Mortgage Capital's second quarter earnings call. I'll provide some brief comments before turning the call over to our Chief Investment Officer, Brian Norris, to discuss our portfolio in more detail. Also joining us on the call this morning for Q&A is our President, Kevin Collins, our COO, Dave Lyle, and our CFO, Mark Gregson. Financial conditions were quite volatile during the second quarter, initially driven by a sharply negative reaction to the tariff announcements on April 2nd, which triggered a spike in interest rate volatility and a broad repricing of risk assets. Despite the early turbulence, financial conditions ended the quarter modestly accommodated as interest rate volatility declined and most risk asset valuations rebounded following the announcement of a delay in tariff implementation. Even with relatively stable inflation data during the quarter and the potential impact of higher tariffs, investor expectations for inflation have moderated, as reflected in lower breakeven rates on Treasury inflation-protected securities. This shift partly reflected growing concerns about the long-term effects of trade policies and economic growth. Meanwhile, labor market data continues to signal resilience, as the economy added about 150,000 jobs per month during Q2, and the unemployment rate held steady at 4.1%. As the quarter progressed, stable employment data and declining recession risk led to a moderation in market expectations for near-term monetary policy action. Federal funds futures market expectations now reflect approximately two rate cuts by year end, an additional two to three cuts in 2026. Interest rates declined across the front end of the treasury yield curve during the second quarter, while long-end rates moved higher, reflecting expectations for accommodative policy from the FOMC, alongside concerns about potential increases in treasury issuance over the coming years. As a result of the spike in interest rate volatility and broad sell-off in risk assets, agency mortgages sharply underperformed treasuries in April. However, following the announced delay in tariffs, interest rate volatility subsequently declined in May and June, ending the quarter modestly below its starting level. Performance in agency mortgages and agency CMBS, along with broader risk assets, followed a similar trajectory, recovering meaningfully by quarter end after a weak start in April. Finally, valuations on our interest rate swap hedges were negatively impacted, as trade policy-related volatility combined with fiscal policy concerns to drive swap spreads noticeably tighter. These factors resulted in an economic return for the quarter of negative 4.8%, consisting of our 34-cent dividend per common share and a 76-cent decline in our per common share. Our debt-to-equity ratio decreased from 7.1 times at the end of March to 6.5 times at the end of June, reflecting our belief that elevated near-term uncertainty regarding trade and monetary policy warrants a modestly more defensive posture. At quarter end, our $5.2 billion investment portfolio consisted of 4.3 billion agency mortgages and 900 million agency CMVFs, and we maintained a sizable balance of unrestricted cash and unencumbered investments totaling $362 million. As of July 18, 2025, we estimate book value for common share to be between $7.99 and $8.31, as agency mortgages and agency CMBS both perform well into the beginning of the third quarter. While our near-term outlook remains cautious, our long-term outlook for agency mortgages is favorable, as we expect demand to improve in higher coupons given attractive valuations continued stabilization in interest rate volatility, and a steeper yield curve. In addition, we remain positive on agency CMES, as limited issuance, strong fundamental performance, and stable cash flow profiles should provide favorable support for this sector. And I'll turn the call over to Brian for more details.