ATLANTA--(BUSINESS WIRE)--
Invesco Mortgage Capital Inc. (NYSE: IVR) (the “Company”) today
announced results for the quarter ended September 30, 2010.
The Company reported net income of $27.6 million, or $1.01 per share
(basic and diluted), for the quarter ended September 30, 2010, compared
to $22.0 million, or $0.91 per share (basic and diluted), for the
quarter ended June 30, 2010. The increase in net income and earnings per
share was primarily driven by an increase in average earning assets as
the equity from the May 2010 follow-on capital offering was fully
deployed throughout the third quarter.
The Company declared a dividend of $1.00 per share for the third quarter
of 2010. The dividend was paid on October 27, 2010.
“During the third quarter, we realized the full benefit of the follow-on
capital offering we completed in May 2010,” said Richard King, Chief
Executive Officer. “For the quarter, we were able to grow net income by
25%, improve our earnings per share by 11% and increase our dividend. We
believe asset selection is the key to our success and having the ability
and expertise to invest across the mortgage market is a distinct
competitive advantage.”
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($ in millions, except per share amounts)
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Q3 ‘10
|
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|
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Q2 ‘10
|
| | |
(unaudited)
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|
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(unaudited)
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Average Earning Assets (at fair value)
| | |
$2,401.5
| | | |
$2,045.6
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|
Average Borrowed Funds
| | |
1,862.9
| | | |
1,618.4
|
|
Average Equity
| | |
560.4
| | | |
498.3
|
| | | | | | |
|
|
Interest Income
| | |
36.1
| | | |
29.2
|
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Interest Expense
| | |
8.9
| | | |
6.4
|
|
Net Interest Income
| | |
27.2
| | | |
22.8
|
|
Operating Expenses
| | |
2.9
| | | |
2.8
|
|
Other Income
| | |
3.3
| | | |
2.0
|
|
Net Income
| | |
27.6
| | | |
22.0
|
| | | | | | |
|
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Average Portfolio Yield
| | |
6.01%
| | | |
5.71%
|
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Cost of Funds
| | |
1.90%
| | | |
1.58%
|
|
Debt to Equity Ratio
| | |
3.4
| | | |
3.3
|
|
Return on Average Equity
| | |
19.71%
| | | |
17.71%
|
|
Book Value per Share (Diluted)
| | |
$20.28
| | | |
$19.90
|
|
Earnings per share (Basic and Diluted)
| | |
$1.01
| | | |
$0.91
|
|
Dividend
| | |
$1.00
| | | |
$0.74
|
Financial Summary
The Company’s portfolio of mortgage-backed securities (“MBS”) was $2.5
billion as of September 30, 2010, an increase of $0.2 billion from June
30, 2010. For the quarter ended September 30, 2010, average earning
assets were $2.4 billion which generated interest income of $36.1
million. This represents an increase of $0.4 billion, or 17.4%, and $6.9
million, or 23.6%, respectively, from the second quarter of 2010.
During the third quarter, the constant prepayment rate (“CPR”) of the
Company’s portfolio of agency residential mortgage-backed securities
(“RMBS”) continued to perform better than bonds with similar
characteristics. The Company’s 15-year agency RMBS portfolio had a
3-month CPR of 12.3, versus a rate of approximately 27.0 for bonds with
similar characteristics. The Company’s 30-year agency RMBS portfolio had
a 3-month CPR of 14.3, compared to a rate of approximately 31.1 for
bonds with similar characteristics. The Company’s agency hybrid
adjustable rate mortgage (“ARM”) portfolio had a 3-month CPR of 28.9 and
the non-agency RMBS portfolio prepaid at a 3-month CPR of 17.8. Overall,
the weighted average 3-month CPR on the portfolio was 13.7.
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 September 30,
2010, the Company had average borrowings of approximately $1.9 billion
and interest expense of $8.9 million, compared to $1.6 billion and $6.4
million, respectively, for the second quarter of 2010.
Operating expenses for the third quarter 2010 totalled $2.9 million
compared to $2.8 million for the second quarter 2010. The ratio of
operating expenses to average equity in the third quarter of 2010
decreased 0.15% to 2.09% as the Company benefited from improved
operating efficiency during the quarter.
The Company’s book value per share as of September 30, 2010 was $20.28,
compared to $19.90 per share as of June 30, 2010.
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, Monday,
November 8, 2010, at 9:00 a.m. ET, by calling one of the following
numbers:
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US/Canada Toll Free:
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800 768 6727
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International:
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212 231 2920
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Passcode:
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Invesco
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An audio replay will be available until 5:00 pm ET on November 22, 2010
by calling:
800-633-8284 (North America), enter reservation # 21484647,
402-977-9140
(International), enter reservation # 21484647.
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 |
(Unaudited) |
|
|
|
| |
| |
| | | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| $ in thousands, except per share data | | | | 2010 |
|
| 2009 |
| | 2010 |
|
| 2009 |
|
| Revenues | | | | | | | | | | |
|
Interest income
| | | |
36,067
| | |
10,983
| | |
83,284
| | |
10,983
| |
|
Interest expense
| | | |
8,873
|
| |
2,070
|
| |
18,904
|
| |
2,070
|
|
| Net interest income | | | |
27,194
|
| |
8,913
|
| |
64,380
|
| |
8,913
|
|
| | | | | | | | | |
|
| Other income (loss)
Gain (loss) on sale of investments, net
| | | |
(311
|
)
| |
—
| | |
1,064
| | |
—
| |
|
Equity in earnings and fair value change in unconsolidated limited
partnerships
| | | |
3,793
| | |
—
| | |
5,888
| | |
—
| |
|
Loss on other-than-temporarily impaired securities
| | | |
(124
|
)
| |
—
| | |
(510
|
)
| |
—
| |
|
Unrealized loss on interest rate swaps
| | | |
(9
|
)
| |
(13
|
)
| |
(44
|
)
| |
(13
|
)
|
| Total other income | | | |
3,349
|
| |
(13
|
)
| |
6,398
|
| |
(13
|
)
|
| | | | | | | | | |
|
| Expenses | | | | | | | | | | |
|
Management fee – related party
| | | |
2,039
| | |
753
| | |
5,094
| | |
753
| |
|
General and administrative
| | | |
263
| | |
245
| | |
729
| | |
349
| |
|
Insurance
| | | |
236
| | |
354
| | |
929
| | |
369
| |
|
Professional fees
| | | |
386
|
| |
375
|
| |
1,181
|
| |
388
|
|
| Total expenses | | | |
2,924
|
| |
1,727
|
| |
7,933
|
| |
1,859
|
|
|
Net income
| | | |
27,619
|
| |
7,173
|
| |
62,845
|
| |
7,041
|
|
| | | | | | | | | |
|
|
Net income attributable to non-controlling interest
| | | |
1,433
|
| |
970
|
| |
3,860
|
| |
970
|
|
|
Net income attributable to common shareholders
| | | |
26,186
|
| |
6,203
|
| |
58,985
|
| |
6,071
|
|
Earnings per share:
| | | | | | | | | | |
|
Net income attributable to common shareholders
(basic and diluted)
| | | |
1.01
|
| |
0.70
|
| |
2.74
|
| |
NM
|
|
|
Dividends declared per common share
| | | |
1.00
|
| |
—
|
| |
2.52
|
| |
—
|
|
|
Weighted average number of shares of common stock:
| | | |
| |
| |
| |
|
|
Basic
| | | |
26,047
| | |
8,886
| | |
21,552
| | |
NM
| |
|
Diluted
| | | |
27,478
|
| |
10,311
|
| |
22,981
|
| |
NM
|
|
| | | | | | | | | | | | | |
|
| | | | | | | | | | | | | |
|
INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
| |
| $ in thousands, except per share amounts | | As of |
| ASSETS | | September 30,
2010 |
|
|
| December 31,
2009 |
| |
(Unaudited)
| | | | |
Mortgage-backed securities, at fair value
| |
2,457,871
| | | |
802,592
|
|
Cash
| |
20,394
| | | |
24,041
|
|
Restricted cash
| |
40,235
| | | |
14,432
|
|
Principal paydown receivable
| |
1,138
| | | |
2,737
|
|
Investments in unconsolidated limited partnerships, at fair value
| |
61,290
| | | |
4,128
|
|
Accrued interest receivable
| |
10,950
| | | |
3,518
|
|
Prepaid insurance
| |
685
| | | |
681
|
|
Deferred offering costs
| |
237
| | | |
288
|
|
Other assets
| |
591
| | | |
983
|
|
Total assets
| |
2,593,391
| | | |
853,400
|
| | | | | |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
| Liabilities:
| | | | | | |
|
Repurchase agreements
| |
1,748,969
| | | |
545,975
|
|
TALF financing
| |
151,757
| | | |
80,377
|
|
Derivative liability, at fair value
| |
46,265
| | | |
3,782
|
|
Dividends and distributions payable
| |
27,473
| | | |
10,828
|
|
Payable for investment securities purchased
| |
57,016
| | | |
—
|
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Accrued interest payable
| |
1,601
| | | |
598
|
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Accounts payable and accrued expenses
| |
931
| | | |
665
|
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Due to affiliate
| |
2,301
| | | |
865
|
|
Total liabilities
| |
2,036,313
| | | |
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, 26,047,682 and 8,887,212 shares issued and outstanding,
at September 30, 2010 and December 31, 2009, respectively
| |
260
| | | |
89
|
|
Additional paid in capital
| |
514,423
| | | |
172,385
|
|
Accumulated other comprehensive income
| |
10,511
| | | |
7,721
|
Retained earnings
| |
771
| | | |
320
|
|
Total Invesco Mortgage Capital Inc. shareholders’ equity
| |
525,965
| | | |
180,515
|
Non-controlling interest
| |
31,113
| | | |
29,795
|
Total equity
| |
557,078
| | | |
210,310
|
| | | | | |
|
Total liabilities and shareholders’ equity
| |
2,593,391
| | | |
853,400
|
| | | | | |
|
| | | | | |
|
Mortgage-Backed Securities |
|
|
The following table summarizes certain characteristics of the
Company’s mortgage-backed securities portfolio as of September 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
| | | |
656,387
| | |
33,487
| | | |
689,874
| | |
7,648
| | | |
697,522
| | |
4.88
|
%
| | |
3.24
|
%
|
|
30 year fixed-rate
| | | |
652,555
| | |
44,993
| | | |
697,548
| | |
9,568
| | | |
707,116
| | |
5.82
|
%
| | |
3.87
|
%
|
|
ARM
| | | |
8,247
| | |
180
| | | |
8,427
| | |
(245
|
)
| | |
8,182
| | |
3.04
|
%
| | |
2.23
|
%
|
|
Hybrid ARM
| | | |
33,112
| | |
1,081
|
| | |
34,193
| | |
630
|
| | |
34,823
| | |
4.08
|
%
| | |
3.14
|
%
|
|
Total Agency
| | | |
1,350,301
| | |
79,741
|
| | |
1,430,042
| | |
17,601
|
| | |
1,447,643
| | |
5.30
|
%
| | |
3.54
|
%
|
| | | | | | | | | | | | | | | | | | | | | |
|
|
MBS-CMO
| | | |
22,085
| | |
889
| | | |
22,974
| | |
540
| | | |
23,514
| | |
5.89
|
%
| | |
4.52
|
%
|
|
Non-Agency MBS
| | | |
1,078,638
| | |
(341,410
|
)
| | |
737,228
| | |
21,984
| | | |
759,212
| | |
4.68
|
%
| | |
6.68
|
%
|
|
CMBS
| | | |
211,512
| | |
(2,899
|
)
| | |
208,613
| | |
18,889
|
| | |
227,502
| | |
5.17
|
%
| | |
5.45
|
%
|
|
Total
| | | |
2,662,536
| | |
(263,679
|
)
| | |
2,398,857
| | |
59,014
|
| | |
2,457,871
| | |
5.05
|
%
| | |
4.68
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
|
(1) Net weighted average coupon (“WAC”) is presented net of
servicing and other fees.
|
|
|
(2) Average yield incorporates future prepayment assumptions.
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
|
Repurchase Agreements |
|
|
| |
|
| |
The following table summarizes the Company’s borrowings by type of
investment for the period ended September 30, 2010 and December
31, 2009:
|
| | | | | |
|
| $ in thousands | | | September 30, 2010 | | | December 31, 2009 |
|
Repurchase Agreements
| | |
Amount
Outstanding
|
|
|
Weighted
Average
Interest Rate
| | |
Amount
Outstanding
|
|
|
Weighted
Average
Interest Rate
|
|
Agency RMBS
| | |
1,296,368
| | |
0.30%
| | |
545,975
| | |
0.26%
|
|
Non-Agency RBS
| | |
434,262
| | |
1.75%
| | |
—
| | |
—
|
|
CMBS
| | |
18,339
| | |
1.29%
| | |
—
| | |
—
|
|
Total Repurchase agreements
| | |
1,748,969
| | |
0.67%
| |
|
545,975
| | |
0.26%
|
|
CMBS under TALF
| | |
151,757
| | |
3.56%
| |
|
80,377
| | |
3.82%
|
|
Total Borrowings
| | |
1,900,726
| | |
0.90%
| |
|
626,352
| | |
0.72%
|
Source: Invesco Mortgage Capital Inc.
Contact:
Invesco Mortgage Capital Inc.
Investor Relations Contact:
Donald
Ramon, 404-439-3228
or
Media Relations Contact:
Bill
Hensel, 404-479-2886