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Invesco Mortgage Capital Inc. Reports Second Quarter 2018 Financial Results

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Invesco Mortgage Capital Inc. Reports Second Quarter 2018 Financial Results

Diversified investment strategy and duration hedge discipline support book value stability

Basic EPS of $0.72, Core EPS* of $0.41

PR Newswire

ATLANTA, Aug. 7, 2018 /PRNewswire/ -- Invesco Mortgage Capital Inc. (NYSE:IVR) (the "Company") today announced financial results for the quarter ended June 30, 2018.

(PRNewsfoto/Invesco Mortgage Capital Inc.)

Financial Summary:

  • Q2 2018 net income attributable to common stockholders of $80.0 million or $0.72 basic earnings per common share ("EPS") compared to $41.5 million or $0.37 basic EPS in Q1 2018
  • Q2 2018 core earnings* of $46.1 million or core EPS of $0.41 compared to $50.4 million or core EPS of $0.45 in Q1 2018
  • Q2 2018 book value per diluted common share** of $17.06 compared to $17.16 at Q1 2018
  • Economic return*** of 1.9% for the quarter, (2.5%) year to date
  • Q2 2018 debt-to-equity ratio of 6.1x compared to 6.2x at Q1 2018
  • Q2 2018 common stock dividend maintained at $0.42 per share

"We are pleased to announce core earnings of $0.41 per share for the second quarter, an economic return of 1.9% for the quarter, and continued book value stability. Despite the rise in interest rates, a flattening yield curve and further Federal Reserve balance sheet reduction in the quarter, we continued to benefit from our diversified investment strategy. Credit spreads have remained in a relatively narrow range in the current market environment, even as Agency RMBS spreads weakened. While our decline in core earnings was substantially attributable to a higher cost of funds, our disciplined approach to actively maintaining our equity duration target helped mitigate the pressure from headwinds during the second quarter," said John Anzalone, Chief Executive Officer.  "We remain confident about our ability to capture attractive returns in Agency RMBS and CMBS."

*

Core earnings (and by calculation, core earnings per common share) are non-Generally Accepted Accounting Principles ("GAAP") financial measures. Refer to the section entitled "Non-GAAP Financial Measures" for important disclosures and a reconciliation to the most comparable U.S. GAAP measures.

**

Book value per diluted common share is calculated as total equity less the liquidation preference of our Series A Preferred Stock ($140.0 million), Series B Preferred Stock ($155.0 million) and Series C Preferred Stock ($287.5 million); divided by total common shares outstanding plus Operating Partnership Units convertible into shares of common stock (1,425,000 shares).

***

Economic return for the quarter ended June 30, 2018 is defined as the change in book value per diluted common share from March 31, 2018 to June 30, 2018 of ($0.10); plus dividends declared of $0.42 per common share; divided by the March 31, 2018 book value per diluted common share of $17.16. Economic return for the six months ended June 30, 2018 is defined as the change in book value per diluted common share from December 31, 2017 to June 30, 2018 of ($1.29); plus dividends declared of $0.84 per common share; divided by the December 31, 2017 book value per diluted common share of $18.35.

Key performance indicators for the quarters ended June 30, 2018 and March 31, 2018 are summarized in the table below.

($ in millions, except share amounts)

Q2 '18

Q1 '18

Variance

Average Balances

(unaudited)

(unaudited)


Average earning assets (at amortized costs)

$17,731.5


$18,131.0


-$399.5


Average borrowings

$15,276.0


$15,652.3


-$376.3


Average equity

$2,093.4


$2,119.0


-$25.6






U.S. GAAP Financial Measures




Total interest income

$151.6


$153.2


-$1.6


Total interest expense

$77.9


$68.1


$9.8


Net interest income

$73.7


$85.1


-$11.4


Total expenses

$11.6


$12.0


-$0.4


Net income (loss) attributable to common stockholders

$80.0


$41.5


$38.5






Average earning asset yields

3.42

%

3.38

%

0.04

%

Cost of funds

2.04

%

1.74

%

0.30

%

Net interest rate margin

1.38

%

1.64

%

-0.26

%





Book value per diluted common share*

$17.06


$17.16


-$0.10


Earnings (loss) per common share (basic)

$0.72


$0.37


$0.35


Earnings (loss) per common share (diluted)

$0.72


$0.37


$0.35


Debt-to-equity ratio

6.1

x

6.2

x

-0.1

x

Comprehensive income (loss) attributable to common stockholders per common share (basic)

$0.32


($0.77)


$1.09






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