ATLANTA, Nov. 9, 2020 /PRNewswire/ -- Invesco Mortgage Capital Inc. (NYSE: IVR) today announced financial results for the quarter ended September 30, 2020.

Update from John Anzalone, Chief Executive Officer

"We are pleased to announce core earnings of $0.06 per common share for the third quarter of 2020. During the quarter, we resumed investing in Agency residential mortgage-backed securities ("Agency RMBS") and purchased approximately $5.6 billion of specified pools. In addition, we held $900.0 million notional in to-be-announced securities forward contracts ("TBAs") at quarter end. We further reduced our exposure to credit investments through select dispositions totaling approximately $1.1 billion. Valuations of our remaining credit investments continued to benefit from increased investor demand and contributed to a 9.5% increase in book value per common share. We also maintained a sizeable balance of unrestricted cash and unencumbered investments of $772.9 million as of September 30, 2020.

"We remain focused on restoring meaningful core earnings for distribution to stockholders and increased our third quarter dividend to $0.05 per common share. Over the coming quarters, we intend to increase our equity allocation to Agency RMBS as the asset class offers an attractive return profile, benefits from substantial liquidity and funding and is supported by ongoing purchases by the Federal Reserve."

Financial Summary

The Company reported net income attributable to common stockholders for the third quarter of 2020 of $96.9 million primarily due to net gains on investments of $65.1 million and a one-time gain on settlement of a debt obligation of $16.0 million. The Company earned net interest income of $28.9 million and incurred total expenses of $5.9 million and dividends to preferred stockholders of $11.1 million. Book value per common share for the third quarter of 2020 rose to $3.47 per share, an increase of 9.5%, compared to $3.17 in the second quarter of 2020 primarily due to realized and unrealized gains on credit assets resulting from improved valuations and a one-time gain on settlement of a debt obligation.

The Company resumed investing in Agency RMBS specified pools during the third quarter and further reduced credit investments through select dispositions. The Company also added Agency TBAs to its investment portfolio. Total average assets increased to $4.2 billion from $1.9 billion in the second quarter of 2020, and total average borrowings increased to $3.4 billion from $1.0 billion in the second quarter of 2020. The Company primarily used proceeds from sales of credit investments to repay the remaining balance of its secured loans during the third quarter and financed its purchases of Agency RMBS with short-term repurchase agreements. The Company has entered into interest rate swaps with a notional amount of $4.6 billion as of September 30, 2020 to hedge its exposure to changing interest rates. The Company's debt-to-equity ratio increased to 4.3x as of September 30, 2020 compared to 0.6x as of June 30, 2020 due to the change in the composition of its investment portfolio. As of September 30, 2020, approximately 60% of the Company's equity was allocated to Agency RMBS and 40% was allocated to credit investments. The Company intends to increase its equity allocation to Agency RMBS in the fourth quarter of 2020.

Total expenses for the third quarter of 2020 decreased to $5.9 million compared to $13.9 million for the second quarter of 2020 due to lower management fees and costs incurred in the second quarter for legal and advisory services associated with navigating market disruption associated with the COVID-19 pandemic. The Company's management fees declined to $4.1 million from $9.8 million in the second quarter of 2020 due to its lower equity base. The ratio of annualized total expenses to average stockholders' equity* decreased to 2.61% compared to 6.96% for the second quarter of 2020.

As previously announced, the Company declared the following dividends on September 10, 2020 and September 30, 2020: a Series A Preferred Stock dividend of $0.4844 per share paid on October 26, 2020 to its stockholders of record as of October 1, 2020 and a common stock dividend of $0.05 per share paid on October 27, 2020 to stockholders of record on October 12, 2020, respectively. The Company declared the following dividends on November 5, 2020: a Series A Preferred Stock dividend of $0.4844 per share payable on January 25, 2021 to its stockholders of record as of January 1, 2021, a Series B Preferred Stock dividend of $0.4844 per share payable on December 28, 2020 to its stockholders of record as of December 5, 2020 and a Series C Preferred Stock dividend of $0.46875 per share payable on December 28, 2020 to its stockholders of record as of December 5, 2020.