ATLANTA--(BUSINESS WIRE)--
Invesco Mortgage Capital Inc. (NYSE: IVR) (the “Company”) today
announced results for the quarter ended June 30, 2010.
The Company reported net income of $22.0 million, or $0.91 per share
(basic and diluted), for the quarter ended June 30, 2010, compared to
$13.2 million, or $0.77 per share, for the quarter ended March 31, 2010.
The increase in net income and earnings per share was primarily driven
by an increase in average earning assets and portfolio yield as the
Company successfully deployed the capital raised in the follow-on common
stock offering completed in May 2010.
The Company declared a dividend of $0.74 per share for the second
quarter of 2010. The dividend was paid on July 27, 2010. The difference
between earnings per share and the dividend per share is in part due to
the higher number of common shares outstanding at the ex-dividend date
compared to the average number of common shares outstanding for the
quarter.
“The second quarter completes our first year as a public company and we
are very pleased with the results,” said Richard King, Chief Executive
Officer. “During the second quarter we completed a follow-on common
stock offering, increased net income by 67%, improved earnings per share
by 18% and reduced our expense ratio 41 basis points. This performance
is in line with the strategy we outlined for our shareholders and
further demonstrates our portfolio management capabilities.”
|
($ in millions, except per share amounts)
|
|
|
|
|
Q2 ‘10
|
|
|
|
Q1 ‘10
|
| | | |
(unaudited)
|
|
|
|
(unaudited)
|
|
Average Earning Assets (at fair value)
| | | |
$
|
2,045.6
| | | | |
$
|
1,224.4
| |
|
Average Borrowed Funds
| | | | |
1,618.4
| | | | | |
826.3
| |
|
Average Equity
| | | | |
498.3
| | | | | |
335.9
| |
| | | | | | | |
|
|
Interest Income
| | | | |
29.2
| | | | | |
18.0
| |
|
Interest Expense
| | | | |
6.4
| | | | | |
3.6
| |
|
Net Interest Income
| | | | |
22.8
| | | | | |
14.4
| |
|
Operating Expenses
| | | | |
2.8
| | | | | |
2.2
| |
|
Other Income
| | | | |
2.0
| | | | | |
1.0
| |
|
Net Income
| | | | |
22.0
| | | | | |
13.2
| |
| | | | | | | |
|
|
Average Portfolio Yield
| | | | |
5.71
|
%
| | | | |
5.88
|
%
|
|
Cost of Funds
| | | | |
1.58
|
%
| | | | |
1.60
|
%
|
|
Debt to Equity Ratio
| | | | |
3.3
| | | | | |
3.0
| |
|
Return on Average Equity
| | | | |
17.71
|
%
| | | | |
15.68
|
%
|
|
Book Value per Share (Diluted)
| | | |
$
|
19.90
| | | | |
$
|
20.26
| |
|
EPS (Basic and Diluted)
| | | |
$
|
0.91
| | | | |
$
|
0.77
| |
|
Dividend
| | | |
$
|
0.74
| | | | |
$
|
0.78
| |
| | | | | | | | | | | |
|
| | | | | | | | | | | |
|
Financial Summary
In May 2010, the Company completed a follow-on offering of 9.1 million
shares of common stock and raised net proceeds of approximately $179.5
million. The increase in equity from the capital raise was a primary
driver for the change in the Company’s net income for the second quarter
of 2010. The Company deployed the proceeds from the offering to increase
its portfolio of mortgage-backed securities (“MBS”) to $2.3 billion as
of June 30, 2010, which was an increase of $0.9 billion or 64% from
March 31, 2010. For the quarter ended June 30, 2010, average earning
assets were $2.0 billion and generated interest income of $29.2 million.
This represents an increase of $0.8 billion or 67% and $11.2 million or
62%, respectively, from the first quarter of 2010.
The constant prepayment rate (“CPR”) of the Company’s portfolio during
the second quarter continued to perform better than bonds with similar
characteristics. The Company’s 15-year agency residential
mortgage-backed securities (“RMBS”) portfolio had a 3-month CPR of 11.4,
versus a rate of approximately 19.0 for bonds with similar
characteristics. The Company’s 30-year agency RMBS portfolio had a
3-month CPR of 16.0, compared to a rate of approximately 29.2 for bonds
with similar characteristics. The Company’s agency Hybrid Adjustable
Rate Mortgage (“ARM”) portfolio prepaid at a 46.1 CPR and the non-agency
RMBS portfolio prepaid at a 3-month CPR of 16.3. Overall, the weighted
average 3-month CPR on the portfolio was 14.2.
The Company financed its MBS portfolio with a combination of borrowings
under repurchase agreements and the Federal Reserve’s Term Asset-Backed
Securities Loan Facility (“TALF”). For the quarter ended June 30, 2010,
the Company had average borrowings of $1.6 billion and interest expense
of $6.4 million compared to $826.3 million and $3.6 million,
respectively, for the first quarter of 2010. The increase in average
borrowed funds was a result of the Company’s entry into in repurchase
agreements in connection with the deployment of the capital raised in
the May follow-on offering.
Operating expenses for the second quarter 2010 totalled $2.8 million
compared to $2.2 million for the first quarter 2010. The ratio of
operating expenses to average equity in the second quarter of 2010
decreased 0.41% to 2.24% as the Company benefited from improved
operating efficiency after the May follow-on offering.
The Company’s book value per share as of June 30, 2010 was $19.90.
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. Additional information is available at www.invescomortgagecapital.com.
Earnings Call
Members of the investment community and the general public are invited
to listen to the Company’s earnings conference call today, Wednesday,
August 4, 2010, at 8:30 a.m. ET, by calling one of the following numbers:
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US/Canada Toll Free:
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|
|
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800 768 6727
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International:
| | | | |
212 231 2920
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Passcode:
| | | | |
Invesco
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An audio replay will be available until 11:00 am ET on August 18, 2010
by calling:
800-633-8284 (North America), enter reservation #
21476781; or
402-977-9140 (International), enter reservation #
21476781.
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
today, 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 |
| |
| |
| Three Months Ended | | Six Months Ended |
| $ in thousands, except per share data | June 30,
2010 |
| March 31,
2010 | | June 30, 2010 |
| Revenues | | | | | |
|
Interest income
|
29,207
| | |
18,010
| | |
47,217
| |
|
Interest expense
|
6,379
|
| |
3,652
|
| |
10,031
|
|
| Net interest income |
22,828
|
| |
14,358
|
| |
37,186
|
|
| | | | |
|
Other income (loss) | | | | | | | | |
Gain on sale of investments, net
|
642
| | |
733
| | |
1,375
| |
|
Equity in earnings and fair value change
| | | | | | | | |
|
in unconsolidated limited partnerships
|
1,649
| | |
446
| | |
2,095
| |
|
Loss on other-than-temporarily impaired securities
|
(262
|
)
| |
(124
|
)
| |
(386
|
)
|
|
Unrealized loss on interest rate swaps
|
(10
|
)
| |
(25
|
)
| |
(35
|
)
|
| Total other income |
2,019
|
| |
1,030
|
| |
3,049
|
|
| | | | |
|
| Expenses | | | | | |
|
Management fee – related party
|
1,771
| | |
1,284
| | |
3,055
| |
|
General and administrative
|
284
| | |
182
| | |
466
| |
|
Insurance
|
347
| | |
346
| | |
693
| |
|
Professional Fees
|
386
|
| |
409
|
| |
795
|
|
| Total expenses |
2,788
|
| |
2,221
|
| |
5,009
|
|
|
Net income (loss)
|
22,059
|
| |
13,167
|
| |
35,226
|
|
| | | | |
|
|
Net income attributable to non-controlling interest
|
1,309
|
| |
1,118
|
| |
2,427
|
|
|
Net income (loss) attributable to common
| | | | | | | | |
|
shareholders
|
20,750
|
| |
12,049
|
| |
32,799
|
|
|
Earnings per share:
| | | | | |
Net income attributable to common shareholders
| | | | | | | | |
(basic/diluted)
|
0.91
|
| |
0.77
|
| |
1.70
|
|
|
Dividends declared per common share
|
0.74
|
| |
0.78
|
| |
1.52
|
|
|
Weighted average number of shares of common stock:
| | | | | |
|
Basic
|
22,808
|
| |
15,685
|
| |
19,266
|
|
|
Diluted
|
24,239
|
| |
17,111
|
| |
20,695
|
|
| | | | | | | |
|
The company completed an initial public offering on July 1,
2009. As a result, results of operations for the quarter ended
June 30, 2009 were not meaningful and not presented.
|
|
|
|
|
INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS |
|
| |
| |
| $ in thousands, except per share amounts | |
| |
|
| ASSETS | | June 30,
2010 | | December 31,
2009 |
| |
(Unaudited)
| | |
Mortgage-backed securities, at fair value
| |
2,315,492
| |
802,592
|
|
Cash
| |
16,235
| |
24,041
|
|
Restricted cash
| |
30,877
| |
14,432
|
|
Principal paydown receivable
| |
21,752
| |
2,737
|
|
Investments in unconsolidated limited partnerships, at fair value
| |
42,585
| |
4,128
|
|
Accrued interest receivable
| |
10,477
| |
3,518
|
|
Prepaid insurance
| |
921
| |
681
|
|
Deferred offering costs
| |
—
| |
288
|
|
Other assets
| |
568
| |
983
|
|
Total assets
| |
2,438,907
| |
853,400
|
| | | |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | |
| Liabilities:
| | | | |
|
Repurchase agreements
| |
1,676,348
| |
545,975
|
|
TALF financing
| |
151,757
| |
80,377
|
|
Derivative liability, at fair value
| |
31,294
| |
3,782
|
|
Dividends and distributions payable
| |
20,329
| |
10,828
|
|
Payable for investment securities purchased
| |
7,548
| |
—
|
|
Accrued interest payable
| |
1,343
| |
598
|
|
Accounts payable and accrued expenses
| |
1,420
| |
665
|
|
Due to affiliate
| |
2,090
| |
865
|
|
Total liabilities
| |
1,892,129
| |
643,090
|
| | | |
|
| Invesco Mortgage Capital Inc. Shareholders’ equity:
| | | | |
Preferred Stock: par value $0.01 per share; 50,000,000 shares
authorized, 0
shares issued and outstanding
| |
—
| |
—
|
Common Stock: par value $0.01 per share; 450,000,000 shares
authorized,
26,046,767 and 8,887,212 shares issued and
outstanding, at June 30, 2010
and December 31, 2009,
respectively
| |
261
| |
89
|
|
Additional paid in capital
| |
514,400
| |
172,385
|
|
Accumulated other comprehensive income
| |
904
| |
7,721
|
|
Retained earnings (accumulated deficit)
| |
633
| |
320
|
|
Total Invesco Mortgage Capital Inc. shareholders’ equity
| |
516,198
| |
180,515
|
| | | |
|
|
Non-controlling interest
| |
30,580
| |
29,795
|
|
Total equity
| |
546,778
| |
210,310
|
| | | |
|
|
Total liabilities and shareholders’ equity
| |
2,438,907
| |
853,400
|
| | | |
|
| | | |
|
Mortgage-Backed Securities |
|
|
The following table summarizes certain characteristics of the
Company’s mortgage-backed securities portfolio as of June 30, 2010:
|
| |
| |
| |
| |
| |
| |
| |
$ in thousands | Principal
Balance | | Unamortized
Premium
(Discount) | | Amortized
Cost | | Unrealized
Gain/
(Loss) | | Fair
Value | | Net
Weighted
Average
Coupon (1) | | Average
Yield (2) |
|
Agency RMBS:
| | | | | | | | | | | | | |
|
15 year fixed-rate
|
583,542
| |
28,577
| | |
612,119
| |
10,074
| | |
622,193
| |
4.88
|
%
| |
3.36
|
%
|
|
30 year fixed-rate
|
651,633
| |
44,251
| | |
695,884
| |
11,977
| | |
707,861
| |
5.79
|
%
| |
3.86
|
%
|
|
ARM
|
8,787
| |
192
| | |
8,979
| |
(257
|
)
| |
8,722
| |
2.86
|
%
| |
2.06
|
%
|
|
Hybrid ARM
|
57,004
|
|
2,459
|
|
|
59,463
|
|
702
|
|
|
60,165
| |
4.77
|
%
| |
2.29
|
%
|
|
Total Agency
|
1,300,966
|
|
75,479
|
|
|
1,376,445
|
|
22,496
|
|
|
1,398,941
| |
5.32
|
%
| |
3.56
|
%
|
| | | | | | | | | | | | |
|
|
MBS – CMO
|
25,727
| |
1,076
| | |
26,803
| |
254
| | |
27,057
| |
6.00
|
%
| |
4.59
|
%
|
|
Non-Agency MBS
|
1,050,642
| |
(359,278
|
)
| |
691,364
| |
(1,255
|
)
| |
690,109
| |
4.42
|
%
| |
9.84
|
%
|
|
CMBS
|
189,512
|
|
(2,552
|
)
|
|
186,960
|
|
12,425
|
|
|
199,385
| |
5.02
|
%
| |
5.29
|
%
|
|
Total
|
2,566,847
|
|
(285,275
|
)
|
|
2,281,572
|
|
33,920
|
|
|
2,315,492
| |
4.93
|
%
| |
5.62
|
%
|
| | | | | | | | | | | | | | | | |
|
|
_____________________
|
|
(1) WAC is presented net of servicing and other fees.
|
|
(2) Average yield incorporates future prepayment and loss assumptions
|
|
|
|
|
| Repurchase Agreements |
|
|
The following table summarizes the Company’s borrowings by type
of investment for the period ended June 30, 2010 and December 31,
2009:
|
| |
| |
$ in thousands | June 30, 2010 |
| December 31, 2009 |
|
Repurchase Agreements
|
Amount
Outstanding
|
|
Weighted
Average
|
|
Amount
Outstanding
|
|
Weighted
Average
|
|
Agency RMBS
|
1,306,680
|
|
0.29
|
%
| |
545,975
|
|
0.26
|
%
|
|
Non-Agency RBS
|
369,668
| |
1.80
|
%
| |
—
| |
—
| |
|
Total Repurchase agreements
|
1,676,348
| |
0.62
|
%
| |
545,975
| |
0.26
|
%
|
|
CMBS under TALF
|
151,757
| |
3.56
|
%
| |
80,377
| |
3.82
|
%
|
|
Total Borrowings
|
1,828,105
| |
0.87
|
%
| |
626,352
| |
0.72
|
%
|
Source: Invesco Mortgage Capital Inc.
Contact:
Invesco Mortgage Capital Inc.
Investor Relations
Donald Ramon,
404-439-3228
or
Media Relations
Bill Hensel, 404-479-2886