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Invesco Mortgage Capital Inc. Reports First Quarter 2013 Financial Results

  Invesco Mortgage Capital Inc. Reports First Quarter 2013 Financial Results

PR Newswire

ATLANTA, May 1, 2013

ATLANTA, May 1, 2013 /PRNewswire/ --Invesco Mortgage Capital Inc. (NYSE: IVR)
(the "Company") today announced results for the quarter ended March 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20110131/MM39469LOGO-b)

The Company reported net income of $85.0 million, or $0.65 per common share
(basic), for the quarter ended March 31, 2013 (after deducting the preferred
dividend of $2.7 million) compared to $90.6 million, or $0.77 per common share
(basic and diluted), for the quarter ended December 31, 2012. The Company
also reported its book value per common share as of March 31, 2013 was $20.42,
compared to $20.83 per common share as of December 31, 2012.

"We are pleased to announce that we earned 65 cents per share in the first
quarter. We are also happy with our overall progress, having closed our first
residential loan securitization and having issued our first exchangeable
notes," said Richard King, President and CEO. "These steps allow us to
capture new mortgage market investment opportunities and to diversify and term
out funding, further strengthening Invesco Mortgage Capital."



($ in millions, except per share amounts)
                                            Q1 '13      Q4 '12
                                            (unaudited) (unaudited)
Average Earning Assets (at amortized costs) $19,985.0   $17,776.3
Average Borrowed Funds                      17,238.0    15,822.1
Average Equity                              $2,708.5    $2,482.5
Interest Income                             $160.5      $145.4
Interest Expense                            67.6        65.1
Net Interest Income                         92.9        80.3
Other Income                                6.7         23.2
Operating Expenses                          11.9        10.2
Net Income                                  87.7        93.3
Preferred Dividend                          2.7         2.7
Net Income after Preferred Dividend         $85.0       $90.6
Average Portfolio Yield                     3.21%       3.27%
Average Cost of Funds                       1.57%       1.65%
Debt to Equity Ratio                        6.4         6.1
Return on Average Equity                    12.55%      14.60%
Book Value per Common Share (Diluted)       $20.42      $20.83
Earnings per Common share (Basic)           $0.65       $0.77
Dividend per Common share                   $0.65       $0.65
Dividend per Preferred share                $0.4844     $0.4844

Financial Summary

The Company's portfolio of mortgage-backed securities ("MBS") was $21.2
billion as of March 31, 2013, an increase of $2.7 billion from December 31,
2012. For the quarter ended March 31, 2013, average earning assets were $20.0
billion, representing an increase of $2.2 billion from December 31, 2012. The
portfolio generated interest income of $160.5 million, which reflects an
increase of $15.1 million December 31, 2012.

For the quarter ended March 31, 2013, the Company had average borrowings of
approximately $17.2 billion and interest expense, including cost of hedging,
of $67.6 million, compared to $15.8 billion and $65.1 million, respectively,
for the fourth quarter of 2012. Our average cost of funds was 1.57% and 1.65%
for the first quarter of 2013 and the fourth quarter of 2012, respectively.

Operating expenses for the first quarter of 2013 totalled $11.9 million,
compared to $10.2 million for the fourth quarter of 2012. The ratio of
operating expenses to average equity in the first quarter of 2013 increased
0.12% to 1.76%.

The Company declared a common stock dividend of $0.65 per common share for the
first quarter of 2013. The dividend was paid on April 26, 2013.

The Company declared a preferred stock dividend of $0.4844 per preferred share
for the first quarter of 2013. The dividend was paid on April 25, 2013.

About Invesco Mortgage Capital Inc.

Invesco Mortgage Capital Inc. is a real estate investment trust that focuses
on financing and managing residential and commercial mortgage-backed
securities and mortgage loans. Invesco Mortgage Capital Inc. is externally
managed and advised by Invesco Advisers, Inc., a subsidiary of Invesco Ltd.
(NYSE: IVZ), a leading independent global investment management company.

Earnings Call

Members of the investment community and the general public are invited to
listen to the Company's earnings conference call on Thursday, May 2, 2013, at
9:00 a.m. ET, by calling one of the following numbers:

US/Canada Toll Free:888-942-8507
International:1-415-228-4839
Passcode: Invesco

An audio replay will be available until 5:00 pm ET on May 16, 2013 by calling:

888-688-2171 (North America) or 402-998-0565 (International).

The presentation slides that will be reviewed during the call will be
available on the Company's website at www.invescomortgagecapital.com.

Cautionary Notice Regarding Forward-Looking Statements

This press release, and comments made in the associated conference call, may
include statements and information that constitute "forward-looking
statements" within the meaning of the U.S. securities laws. Forward-looking
statements include statements with respect to our beliefs, plans, objectives,
goals, targets, expectations, anticipations, assumptions, estimates,
intentions and future performance. In addition, words such as "will,"
"anticipates," "expects" and "plans," as well as any other statement that
necessarily depends on future events, are intended to identify forward-looking
statements.

Forward-looking statements are not guarantees and they involve risks,
uncertainties and assumptions. There can be no assurance that actual results
will not differ materially from our expectations. We caution investors not to
rely unduly on any forward-looking statements and urge investors to carefully
consider the risks identified under the captions "Risk Factors,"
"Forward-Looking Statements" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our annual report on Form
10-K and quarterly reports on Form 10-Q, which are available on the Securities
and Exchange Commission's website at www.sec.gov. 

All written or oral forward-looking statements that we make, or that are
attributable to us, are expressly qualified by this cautionary notice. We
expressly disclaim any obligation to update the information in any public
disclosure if any forward-looking statement later turns out to be inaccurate.

INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                                                            Three Months Ended
                                                            March 31,
$ in thousands, except per share data                       2013      2012
 Interest Income
 Mortgage-backed securities                                  160,344   141,960
 Residential loans                                           137       -
              Total interest income                          160,481   141,960
 Interest Expense
 Repurchase agreements                                       66,328    55,285
 Exchangeable senior note                                    1,160     -
 Asset-back securities issued                                79        -
              Total interest expense                         67,567    55,285
 Net interest income                                         92,914    86,675
 Other income
 Gain on sale of investments                                 6,712     6,045
 Equity in earnings and fair value change in unconsolidated  1,590     1,009
 ventures
 Unrealized loss on interest rate swaps and swaptions        (2,003)   (509)
 Realized and unrealized credit default swap income          351       657
 Total other income                                          6,650     7,202
 Expenses
 Management fee – related party                              10,354    8,639
 General and administrative                                  1,543     1,130
 Total expenses                                              11,897    9,769
 Net income                                                  87,667    84,108
 Net income attributable to non-controlling interest         962       1,026
 Net income attributable to Invesco Mortgage Capital Inc.    86,705    83,082
 Dividends to preferred shareholders                         2,713     -
 Net income attributable to common shareholders              83,992    83,082
 Earnings per share:
 Net income attributable to common shareholders
              (basic)                                        0.65      0.72
              (diluted)                                      0.64      0.72
 Dividends declared per common share                         0.65      0.65



INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts             As of
                                                     March 31,    December 31,
ASSETS                                               2013         2012
                                                     (Unaudited)
Mortgage-backed securities, at fair value             21,248,432    18,470,563
Residential loans, held-for-investment                405,541       -
Cash and cash equivalents                             274,538       286,474
Investment related receivable                         34,155        41,429
Investments in unconsolidated ventures, at fair       35,456        35,301
value
Accrued interest receivable                           72,863        62,977
Derivative assets, at fair value                      8,026         6,469
Deferred securitization and financing costs           13,464        -
Other investments                                     10,000        10,000
Other assets                                          1,482         1,547
  Total assets (1)                                    22,103,957    18,914,760
LIABILITIES AND EQUITY
Liabilities:
Repurchase agreements                                 17,873,256    15,720,460
Asset-backed securities issued                        374,196       -
Exchangeable senior notes                             400,000       -
Derivative liability, at fair value                   420,439       436,440
Dividends and distributions payable                   91,049        79,165
Investment related payable                            305           63,715
Accrued interest payable                              17,189        15,275
Accounts payable and accrued expenses                 1,109         877
Due to affiliate                                      10,956        9,308
  Total liabilities (1)                               19,188,499    16,325,240
Equity:
Preferred Stock: par value $0.01 per share;
50,000,000 shares
  authorized, 7.75% series A cumulative redeemable,
  $25 liquidation
  preference, 5,600,000 issued and outstanding at
  March 31, 2013
  and December 31, 2012, respectively                 135,356       135,362
Common Stock: par value $0.01 per share; 450,000,000
shares
  authorized, 134,477,190 and 116,195,500 shares
  issued and
  outstanding, at March 31, 2013 and December 31,     1,345         1,162
  2012, respectively
Additional paid in capital                            2,697,177     2,316,290
Accumulated other comprehensive income                35,248        86,436
Retained earnings                                     15,430        18,848
  Total shareholders' equity                          2,884,556     2,558,098
Non-controlling interest                              30,902        31,422
  Total equity                                        2,915,458     2,589,520
  Total liabilities and equity                        22,103,957    18,914,760

 

 (1) Our consolidated balance sheets include assets of consolidated variable
 interest entity ('VIE') that can only be used to settle obligations of this
 VIE and liabilities of the VIE for which creditors do not have recourse to
 the primary beneficiary (Invesco Mortgage Capital, Inc.). At March 31, 2013
 and December 31, 2012 assets of the consolidated VIE totaled $408,291 and $0
 respectively, and liabilities of consolidated VIE totaled $375,261 and $0
 respectively.

Mortgage-Backed Securities

The following table summarizes certain characteristics of the Company's
mortgage-backed securities portfolio as of March 31, 2013:

                                                                                            Period-
                                                                                            ^
                                                                               Net ^       end ^       Quarterly ^
                              Unamortized              Unrealized              Weighted    Weighted    Weighted^
                                                                                            ^
                Principal     Premium      Amortized   Gain/       Fair        Average ^    Average     Average ^
                                                                                            ^
$ in thousands  Balance       (Discount)   Cost        (Loss),     Value       Coupon       Yield       Yield ^(3)
^                                                      net                     ^(1)         ^(2)
Agency RMBS: ^
 15 year        1,927,848   102,811      2,030,659   58,848      2,089,507   4.06 ^  %  2.29 ^ %  2.19 ^    %
 fixed-rate ^
 30 year        11,302,383  752,598      12,054,981  116,840     12,171,821  4.00 ^  %  2.83 ^ %  2.84 ^    %
 fixed-rate ^
 ARM ^          70,163      2,139        72,302      1,753       74,055      3.34 ^  %  2.02 ^ %  2.13 ^    %
 Hybrid ARM ^   461,439     10,529       471,968     14,329      486,297     3.16 ^  %  2.23 ^ %  2.33 ^    %
   Total Agency
   pass-through 13,761,833  868,077      14,629,910  191,770     14,821,680  3.98 ^  %  2.73 ^ %  2.72 ^    %
   ^
 Agency-CMO^(4) 1,395,266   (894,925)    500,341     2,738       503,079     2.86 ^  %  2.46 ^ %  1.46 ^    %
 Non-Agency     3,812,636   (350,396)    3,462,240   93,063      3,555,303   4.18 ^  %  4.30 ^ %  4.63 ^    %
 RMBS^(5)
 CMBS ^         2,679,653   (477,301)    2,202,352   166,018     2,368,370   4.41 ^  %  4.77 ^ %  4.75 ^    %
Total ^         21,649,388  (854,545)    20,794,843  453,589     21,248,432  4.00 ^  %  3.20 ^ %  3.21 ^    %
(1) Net weighted average coupon as of March 31, 2013 ("WAC") is presented net of
servicing and other fees. ^
(2) Average yield based on amortized costs as of March 31, 2013 and incorporates future prepayment
and loss assumptions. ^
(3) Average yield based on average amortized costs for the three months ended March 31, 2013 and
incorporates future prepayment and loss assumptions. ^
(4) Included in the Agency-CMO are interest only securities which represent 15.1% of the balance
based on fair value. ^
(5) The non-Agency RMBS held by the Company is 72.7% variable rate, 22.7% fixed rate, and 4.6%
floating rate based on fair value. ^

Constant Prepayment Rates (CPR)

The CPR of our portfolio impacts the amount of premium and discount on the
purchase of securities that is recognized into income. The following table
shows the three month CPR for our RMBS compared to bonds with similar
characteristics ("Cohorts"):

                       March 31, 2013   December 31, 2012
                       Company  Cohort  Company    Cohort
15 year Agency RMBS    18.5     27.5    17.4       26.5
30 year Agency RMBS    9.5      19.5    11.6       20.9
Agency Hybrid ARM RMBS 25.6     NA      28.5       NA
Non-Agency RMBS        15.5     NA      17.7       NA
Overall                12.5     NA      14.6       NA



Borrowings

The following table summarizes the Company's borrowings by type of investment
for the periods ended March 31, 2013 and December 31, 2012:

 $ in           March 31, 2013                      December 31, 2012
 thousands
                                        Weighted                             Weighted
                            Weighted    Average                  Weighted    Average
                            Average     Remaining                Average     Remaining
               Amount       Interest    Maturity    Amount       Interest    Maturity
               Outstanding  Rate        (days)      Outstanding  Rate        (days)
 Agency RMBS    13,545,701  0.40     %  15          11,713,565   0.48     %  16
 Non-Agency     2,520,515   1.62     %  32          2,450,960    1.75     %  23
 RMBS
 CMBS           1,807,040   1.47     %  20          1,555,935    1.51     %  18
 Exchangeable   400,000     5.00     %  1,810       -            -        %  -
 Senior Notes
 Total          18,273,256  0.78     %  57          15,720,460   0.78     %  17

Interest Rate Hedges

The following table summarizes our hedging activity as of March 31, 2013:

$ in thousands                                                Fixed Interest
                                                              Rate
Counterparty                       Notional    Maturity Date  in Contract
The Bank of New York Mellon        100,000     5/24/2013      1.83%
The Bank of New York Mellon        200,000     6/15/2013      1.73%
SunTrust Bank                      100,000     7/15/2014      2.79%
Deutsche Bank AG                   200,000     1/15/2015      1.08%
Deutsche Bank AG                   250,000     2/15/2015      1.14%
Credit Suisse International        100,000     2/24/2015      3.26%
Credit Suisse International        100,000     3/24/2015      2.76%
Wells Fargo Bank, N.A.             100,000     7/15/2015      2.85%
Wells Fargo Bank, N.A.             50,000      7/15/2015      2.44%
Morgan Stanley Capital             300,000     1/24/2016      2.12%
Services, LLC
The Bank of New York Mellon        300,000     1/24/2016      2.13%
Morgan Stanley Capital             300,000     4/5/2016       2.48%
Services, LLC
Citibank, N.A.                     300,000     4/15/2016      1.67%
Credit Suisse International        500,000     4/15/2016      2.27%
The Bank of New York Mellon        500,000     4/15/2016      2.24%
JPMorgan Chase Bank, N.A.          500,000     5/15/2016      2.31%
Goldman Sachs Bank USA             500,000     5/24/2016      2.34%
Goldman Sachs Bank USA             250,000     6/15/2016      2.67%
Wells Fargo Bank, N.A.             250,000     6/15/2016      2.67%
JPMorgan Chase Bank, N.A.          500,000     6/24/2016      2.51%
Citibank, N.A.                     500,000     10/15/2016     1.93%
Deutsche Bank AG                   150,000     2/5/2018       2.90%
ING Capital Markets LLC        (5) 350,000     2/24/2018      0.95%
Morgan Stanley Capital             100,000     4/5/2018       3.10%
Services, LLC
JPMorgan Chase Bank, N.A.          200,000     5/15/2018      2.93%
UBS AG                             500,000     5/24/2018      1.10%
The Royal Bank of Scotland Plc     500,000     9/5/2018       1.04%
Wells Fargo Bank, N.A.             200,000     3/15/2021      3.14%
Citibank, N.A.                     200,000     5/25/2021      2.83%
The Royal Bank of Scotland Plc (7) 400,000     3/15/2023      2.39%
UBS AG                         (6) 400,000     3/15/2023      2.51%
HSBC Bank USA, National            250,000     6/5/2023       1.91%
Association
HSBC Bank USA, National        (1) 250,000     7/5/2023       1.97%
Association
The Royal Bank of Scotland Plc (2) 500,000     8/15/2023      1.98%
UBS AG                         (4) 250,000     11/15/2023     2.23%
HSBC Bank USA, National        (3) 500,000     12/15/2023     2.20%
Association
Total                              10,650,000                 2.11%
(1) Forward start date of July
2013
(2) Forward start date of
August 2013
(3) Forward start date of
December 2013
(4) Forward start date of
November 2013
(5) Forward start date of
February 2013
(6) Forward start date of
March 2015
(7) Forward start date of
March 2015



Average Balances

The following table shows the average balances for the three months ended
March 31, 2013 and 2012:

                                          As of and for the Three Months ended
                                          March 31,
 $ in thousands                           2013                 2012
 Average Balances*:
 Agency RMBS:
      15 year fixed-rate, at amortized        2,045,062           2,461,408
      cost
      30 year fixed-rate, at amortized        11,500,385          7,003,685
      cost
      ARM, at amortized cost                  97,460              177,279
      Hybrid ARM, at amortized cost           527,379             1,468,048
      MBS-CMO, at amortized cost              502,535             396,103
 Non-Agency RMBS, at amortized cost           3,241,229           2,379,370
 CMBS, at amortized cost                      2,057,457           1,214,162
 Residential Loans, at amortized cost         13,518              -
 Average MBS and Residential Loans            19,985,025          15,100,055
 portfolio
 Average Portfolio Yields (1):
 Agency RMBS:
      15 year fixed-rate                      2.19%               2.71%
      30 year fixed-rate                      2.84%               3.52%
      ARM                                     2.13%               2.46%
      Hybrid ARM                              2.33%               2.59%
      MBS - CMO                               1.46%               1.85%
 Non-Agency RMBS                              4.63%               5.75%
 CMBS                                         4.75%               5.59%
 Residential Loans                            4.05%               n/a
 Average MBS and Residential Loans            3.21%               3.76%
 portfolio
 Average Borrowings*:
      Agency RMBS                             12,941,937          10,319,296
      Non-Agency RMBS                         2,524,189           1,787,893
      CMBS                                    1,674,943           870,104
      Exchangeable senior notes               84,444              -
      Asset-backed securities issued          12,473              -
 Total borrowed funds                         17,237,986          12,977,293
 Maximum borrowings during the period (2)     18,647,452          13,089,145
 Average Cost of Funds (3):
      Agency RMBS                             0.42%               0.32%
      Non-Agency RMBS                         1.73%               1.81%
      CMBS                                    1.48%               1.58%
      Exchangeable senior note                5.49%               n/a
      Asset-backed securities, issued         2.53%               n/a
      Unhedged cost of funds                  0.74%               0.61%
      Hedged cost of funds                    1.57%               1.70%
 Average Equity (4):                          2,708,474           2,082,508
 Average debt/equity ratio (average           6.36x               6.23x
 during period)
 Debt/equity ratio (as of period end)         6.40x               6.04x

 * Average amounts for each period are based on weighted month end balances,
 all percentages are annualized. For the three months ended March 31, 2013,
 the average balances are presented on an amortized cost basis. The three
 months ended March 31, 2012 has been reclassified for comparative purposes.
 (1) Average portfolio yield for the period was calculated by dividing
 interest income, including amortization of premiums and discounts, by our
 average of the amortized cost of the investments. All yields are annualized.
 (2) Amount represents the maximum borrowings at month-end during each of the
 respective periods.
 (3) Average cost of funds is calculated by dividing annualized interest
 expense, by our average borrowings.
 (4) Average equity is calculated based on a weighted balance basis.





SOURCE Invesco Mortgage Capital Inc.

Website: http://www.invescomortgagecapital.com
Contact: Bill Hensel, 404-479-2886