ATLANTA, Aug. 1, 2012 /PRNewswire/ --Invesco Mortgage Capital Inc. (NYSE: IVR) (the "Company") today announced results for the quarter ended June 30, 2012.
(Logo: http://photos.prnewswire.com/prnh/20110131/MM39469LOGO-b)
The Company reported net income of $79.8 million, or $0.68 per share (basic and diluted), for the quarter ended June 30, 2012 compared to $84.1 million, or $0.72 per share (basic and diluted), for the quarter ended March 31, 2012.
The Company also reported its book value per share as of June 30, 2012 was $18.40 compared to $18.42 per share as of March 31, 2012.
"We're pleased with our second quarter results and believe they continue to demonstrate earnings and book value stability,"said Richard King, President and Chief Executive Officer. "As we progress into the third quarter, we have seen a continuation of book value improvement and the preferred offering we completed in July will be supportive of the dividend."
($ in millions, except per share amounts) | ||
Q2 '12 | Q1 '12 | |
(unaudited) | ||
Average Earning Assets (at fair value) | $15,855.5 | $15,256.9 |
Average Borrowed Funds | 13,449.7 | 12,977.3 |
Average Equity | 2,171.7 | 2,082.5 |
Interest Income | $139.0 | 142.0 |
Interest Expense | 56.7 | 55.3 |
Net Interest Income | 82.3 | 86.7 |
Other Income | 7.2 | 7.2 |
Operating Expenses | 9.7 | 9.8 |
Net Income | 79.8 | 84.1 |
Average Portfolio Yield | 3.51% | 3.72% |
Average Cost of Funds | 1.69% | 1.70% |
Debt to Equity Ratio | 6.3 | 6.0 |
Return on Average Equity | 14.70% | 16.16% |
Book Value per Share (Diluted) | $18.40 | $18.42 |
Earnings per share (Basic and Diluted) | $0.68 | $0.72 |
Dividend | $0.65 | $0.65 |
Financial Summary
The Company's portfolio of mortgage-backed securities ("MBS") was $16.0 billion as of June 30, 2012, an increase of $0.4 billion from March 31, 2012. For the quarter ended June 30, 2012, average earning assets were $15.9 billion representing an increase of $0.6 billion from March 31, 2012. The portfolio generated interest income of $139.0 million which was down $3.0 million from March 31, 2012.
For the quarter ended June 30, 2012, the Company had average borrowings of approximately $13.4 billion and interest expense including cost of hedging of $56.7 million, compared to $13.0 billion and $55.3 million, respectively, for the first quarter of 2012. Our average cost of funds was 1.69% and 1.70% for the second quarter of 2012 and the first quarter of 2012, respectively.
Operating expenses for the second quarter of 2012 totalled $9.7 million compared to $9.8 million for the first quarter of 2012. The ratio of operating expenses to average equity in the second quarter of 2012 decreased 0.09% to 1.79%.
The Company declared a dividend of $0.65 per share for the second quarter of 2012. The dividend was paid on July 27, 2012.
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, Thursday, August 2, 2012, at 8:30 a.m. ET, by calling one of the following numbers:
US/Canada Toll Free:888-942-8507
International: 415-228-4839
Passcode: Invesco
An audio replay will be available until 5:00 pm ET on August 16, 2012 by calling:
800-839-1117 (North America)
+1 203-369-3355 (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 | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
$ in thousands, except per share data | 2012 | 2011 | 2012 | 2011 | ||||||||||
Revenues | ||||||||||||||
Interest income | 139,004 | 108,981 | 280,964 | 177,517 | ||||||||||
Interest expense | 56,700 | 34,207 | 111,985 | 49,785 | ||||||||||
Net interest income | 82,304 | 74,774 | 168,979 | 127,732 | ||||||||||
Other income | ||||||||||||||
Gain on sale of investments | 6,098 | 3,605 | 12,143 | 4,805 | ||||||||||
Equity in earnings and fair value change in unconsolidated | ||||||||||||||
ventures | 1,961 | 1,873 | 2,970 | 3,731 | ||||||||||
Unrealized loss on interest rate swaps and swaptions | (1,533) | (197) | (2,043) | (202) | ||||||||||
Realized and unrealized credit default swap income | 690 | 1,259 | 1,347 | 3,791 | ||||||||||
Total other income | 7,216 | 6,540 | 14,417 | 12,125 | ||||||||||
Expenses | ||||||||||||||
Management fee - related party | 8,681 | 5,753 | 17,320 | 9,728 | ||||||||||
General and administrative | 1,045 | 1,157 | 2,174 | 2,026 | ||||||||||
Total expenses | 9,726 | 6,910 | 19,494 | 11,754 | ||||||||||
Net income | 79,794 | 74,404 | 163,902 | 128,103 | ||||||||||
Net income attributable to non-controlling interest | 973 | 1,406 | 1,999 | 2,857 | ||||||||||
Net income attributable to common shareholders | 78,821 | 72,998 | 161,903 | 125,246 | ||||||||||
Earnings per share: | ||||||||||||||
Net income attributable to common shareholders | ||||||||||||||
(basic/diluted) | 0.68 | 0.99 | 1.40 | 2.00 | ||||||||||
Dividends declared per common share | 0.65 | 0.97 | 1.30 | 1.97 | ||||||||||
Weighted average number of shares of common stock: | ||||||||||||||
Basic | 115,409 | 73,486 | 115,402 | 62,731 | ||||||||||
Diluted | 116,868 | 74,929 | 116,853 | 64,167 | ||||||||||
INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
$ in thousands, except per share amounts | As of | |||||
June 30, | December 31, | |||||
ASSETS | 2012 | 2011 | ||||
(Unaudited) | ||||||
Mortgage-backed securities, at fair value | 16,049,674 | 14,214,149 | ||||
Cash | 168,610 | 197,224 | ||||
Restricted cash | 14,696 | 74,496 | ||||
Investment related receivable | 16,234 | 160,424 | ||||
Investments in unconsolidated ventures, at fair value | 52,384 | 68,793 | ||||
Accrued interest receivable | 56,930 | 54,167 | ||||
Derivative assets, at fair value | 1,711 | 1,339 | ||||
Other assets | 1,988 | 1,575 | ||||
Total assets | 16,362,227 | 14,772,167 | ||||
LIABILITIES AND EQUITY | ||||||
Liabilities: | ||||||
Repurchase agreements | 13,541,325 | 12,253,038 | ||||
Derivative liability, at fair value | 446,569 | 396,780 | ||||
Dividends and distributions payable | 75,942 | 75,933 | ||||
Investment related payable | 126,869 | 107,032 | ||||
Accrued interest payable | 11,159 | 12,377 | ||||
Accounts payable and accrued expenses | 1,501 | 556 | ||||
Due to affiliate | 8,949 | 9,038 | ||||
Total liabilities | 14,212,314 | 12,854,754 | ||||
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, 115,409,592 and 115,395,695 shares issued and | ||||||
outstanding, at June 30, 2012 and December 31, 2011, respectively | 1,154 | 1,154 | ||||
Additional paid in capital | 2,299,809 | 2,299,543 | ||||
Accumulated other comprehensive loss | (175,767) | (393,291) | ||||
Distributions in excess of earnings | (3,193) | (15,068) | ||||
Total shareholders' equity | 2,122,003 | 1,892,338 | ||||
Non-controlling interest | 27,910 | 25,075 | ||||
Total equity | 2,149,913 | 1,917,413 | ||||
Total liabilities and equity | 16,362,227 | 14,772,167 | ||||
Mortgage-Backed Securities
The following table summarizes certain characteristics of the Company's mortgage-backed securities portfolio as of June 30, 2012:
$ in thousands | Principal | Unamortized | Amortized | Unrealized | Fair | Net | Period-end | Quarterly | ||||||||||||
Agency RMBS: | ||||||||||||||||||||
15 year fixed-rate | 2,197,081 | 116,495 | 2,313,576 | 58,562 | 2,372,138 | 4.12 | % | 2.73 | % | 2.60 | % | |||||||||
30 year fixed-rate | 7,556,547 | 498,390 | 8,054,937 | 200,333 | 8,255,270 | 4.65 | % | 3.39 | % | 3.16 | % | |||||||||
ARM | 164,436 | 4,413 | 168,849 | 3,747 | 172,596 | 3.21 | % | 2.65 | % | 2.66 | % | |||||||||
Hybrid ARM | 1,142,784 | 29,897 | 1,172,681 | 27,952 | 1,200,633 | 3.26 | % | 2.53 | % | 2.73 | % | |||||||||
Total Agency pass-through | 11,060,848 | 649,195 | 11,710,043 | 290,594 | 12,000,637 | 4.38 | % | 3.16 | % | 2.99 | % | |||||||||
Agency-CMO(4) | 1,185,974 | (732,664) | 453,310 | 1,769 | 455,079 | 2.91 | % | 3.18 | % | 2.50 | % | |||||||||
Non-Agency RMBS(5) | 2,545,321 | (241,461) | 2,303,860 | (53,259) | 2,250,601 | 4.33 | % | 4.97 | % | 5.37 | % | |||||||||
CMBS | 1,328,757 | (14,565) | 1,314,192 | 29,165 | 1,343,357 | 5.48 | % | 5.58 | % | 5.32 | % | |||||||||
Total | 16,120,900 | (339,495) | 15,781,405 | 268,269 | 16,049,674 | 4.31 | % | 3.58 | % | 3.51 | % | |||||||||
(1) Net weighted average coupon as of June 30, 2012 ("WAC") is presented net of servicing and other fees. | ||||||||||||||||||||
(2) Average yield as of June 30, 2012 incorporates future prepayment and loss assumptions. | ||||||||||||||||||||
(3) Average yield for the three months ended June 30, 2012 incorporates future prepayment and loss assumptions. | ||||||||||||||||||||
(4) The Agency-CMO held by the Company is 14.5% interest only securities. | ||||||||||||||||||||
(5) The non-Agency RMBS held by the Company is 84.5% variable rate, 10.3% fixed rate, and 5.2% 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"):
June 30, 2012 | March 31, 2012 | ||||||
Company | Cohort | Company | Cohort | ||||
15 year Agency RMBS | 11.3 | 21.6 | 10.3 | 21.7 | |||
30 year Agency RMBS | 12.3 | 18.9 | 10.2 | 18.6 | |||
Agency Hybrid ARM RMBS | 18.1 | NA | 16.2 | NA | |||
Non-Agency RMBS | 16.2 | NA | 16.0 | NA | |||
Overall | 13.3 | NA | 12.1 | NA | |||
Repurchase Agreements
The following table summarizes the Company's borrowings by type of investment for the periods ended June 30, 2012 and December 31, 2011:
$ in thousands | June 30, 2012 | December 31, 2011 | ||||||||||||||||
Weighted | Weighted | |||||||||||||||||
Weighted | Average | Weighted | Average | |||||||||||||||
Average | Remaining | Average | Remaining | |||||||||||||||
Amount | Interest | Maturity | Amount | Interest | Maturity | |||||||||||||
Outstanding | Rate | (Days) | Outstanding | Rate | (Days) | |||||||||||||
Agency RMBS | 10,927,821 | 0.40 | % | 19 | 9,491,538 | 0.38 | % | 22 | ||||||||||
Non-Agency RMBS | 1,673,271 | 1.76 | % | 34 | 1,916,620 | 1.79 | % | 22 | ||||||||||
CMBS | 940,233 | 1.55 | % | 20 | 844,880 | 1.55 | % | 22 | ||||||||||
Total | 13,541,325 | 0.65 | % | 21 | 12,253,038 | 0.68 | % | 22 | ||||||||||
Interest Rate Hedges
The following table summarizes our hedging activity as of June 30, 2012:
Fixed Interest Rate | |||||||
Counterparty | Notional | Maturity Date | in Contract | ||||
The Bank of New York Mellon | 175,000 | 8/5/2012 | 2.07% | ||||
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 Services, Inc. | 300,000 | 1/24/2016 | 2.12% | ||||
The Bank of New York Mellon | 300,000 | 1/24/2016 | 2.13% | ||||
Morgan Stanley Capital Services, Inc. | 300,000 | 4/5/2016 | 2.48% | ||||
Citibank, N.A. | 300,000 | 4/15/2016 | 1.67% | ||||
The Bank of New York Mellon | 500,000 | 4/15/2016 | 2.24% | ||||
Credit Suisse International | 500,000 | 4/15/2016 | 2.27% | ||||
JPMorgan Chase Bank, N.A. | 500,000 | 5/16/2016 | 2.31% | ||||
Goldman Sachs Bank USA | 500,000 | 5/24/2016 | 2.34% | ||||
Wells Fargo Bank, N.A. | 250,000 | 6/15/2016 | 2.67% | ||||
Goldman Sachs Bank USA | 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% | ||||
Morgan Stanley Capital Services, Inc. | 100,000 | 4/5/2018 | 3.10% | ||||
JPMorgan Chase Bank, N.A. | 200,000 | 5/15/2018 | 2.93% | ||||
Wells Fargo Bank, N.A. | 200,000 | 3/15/2021 | 3.14% | ||||
Citibank, N.A. | 200,000 | 5/25/2021 | 2.83% | ||||
Total | 6,925,000 | 2.29% |
Average Balances
The following table shows the average balances for the three and six months ended June 30, 2012 and 2011:
As of and for the | As of and for the | ||||||||||||
Three Months ended | Six Months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
$ in thousands | 2012 | 2011 | 2012 | 2011 | |||||||||
Average Balances*: | |||||||||||||
Agency RMBS: | |||||||||||||
15 year fixed-rate, at fair value | 2,425,483 | 2,064,440 | 2,468,860 | 1,981,753 | |||||||||
30 year fixed-rate, at fair value | 7,975,031 | 4,128,583 | 7,553,780 | 3,228,217 | |||||||||
ARM, at fair value | 174,514 | 92,283 | 177,368 | 66,632 | |||||||||
Hybrid ARM, at fair value | 1,286,519 | 1,013,785 | 1,392,654 | 691,757 | |||||||||
MBS-CMO, at fair value | 455,063 | 64,272 | 426,967 | 52,408 | |||||||||
Non-Agency RMBS, at fair value | 2,252,836 | 1,957,483 | 2,283,792 | 1,582,960 | |||||||||
CMBS, at fair value | 1,286,018 | 845,069 | 1,252,760 | 696,341 | |||||||||
Average MBS portfolio | 15,855,464 | 10,165,915 | 15,556,181 | 8,300,068 | |||||||||
Average Portfolio Yields: (1) | |||||||||||||
Agency RMBS: | |||||||||||||
15 year fixed-rate, | 2.60% | 3.16% | 2.63% | 3.14% | |||||||||
30 year fixed-rate | 3.16% | 3.64% | 3.30% | 3.55% | |||||||||
ARM | 2.66% | 3.08% | 2.54% | 2.92% | |||||||||
Hybrid ARM | 2.73% | 2.85% | 2.63% | 2.65% | |||||||||
MBS-CMO | 2.50% | 7.25% | 2.19% | 6.23% | |||||||||
Non-Agency RMBS | 5.37% | 7.24% | 5.65% | 7.57% | |||||||||
CMBS | 5.32% | 4.99% | 5.44% | 5.00% | |||||||||
Average MBS portfolio | 3.51% | 4.29% | 3.61% | 4.28% | |||||||||
Average Borrowings*: | |||||||||||||
Agency RMBS | 10,862,133 | 6,784,196 | 10,590,714 | 5,502,683 | |||||||||
Non-Agency RMBS | 1,667,755 | 1,405,948 | 1,727,824 | 1,076,174 | |||||||||
CMBS | 919,852 | 703,485 | 894,978 | 571,413 | |||||||||
Total borrowed funds | 13,449,740 | 8,893,629 | 13,213,516 | 7,150,270 | |||||||||
Maximum borrowings during the period (2) | 13,799,710 | 9,560,766 | 13,799,710 | 9,560,766 | |||||||||
Average Cost of Funds: (3) | |||||||||||||
Agency RMBS | 0.36% | 0.23% | 0.34% | 0.25% | |||||||||
Non-Agency RMBS | 1.77% | 1.29% | 1.79% | 1.35% | |||||||||
CMBS | 1.54% | 1.12% | 1.56% | 1.20% | |||||||||
Unhedged cost of funds | 0.62% | 0.47% | 0.62% | 0.49% | |||||||||
Hedged cost of funds | 1.69% | 1.54% | 1.69% | 1.39% | |||||||||
Average Equity: (4) | 2,171,664 | 1,567,126 | 2,127,086 | 1,362,798 | |||||||||
Average debt/equity ratio (average during period) | 6.19x | 5.68x | 6.21x | 5.25x | |||||||||
Debt/equity ratio (as of period end) | 6.30x | 5.24x | 6.30x | 5.24x | |||||||||
* Average amounts for each period are based on weighted month end balances, all percentages are annualized. | |||||||||||||
(1) Average portfolio yield for the period was calculated by dividing interest income, including amortization of premiums and discounts, by our average of the investment balance at fair value. | |||||||||||||
(2) Amount represents the maximum borrowings at month-end during each of the respective periods. | |||||||||||||
(3) Average cost of funds is calculated by dividing interest expense, by our average borrowings. | |||||||||||||
(4) Average equity is calculated based on a weighted balance basis. | |||||||||||||
SOURCE Invesco Mortgage Capital Inc.
