Invesco Mortgage Capital Sees $83 Million Loss in Fourth Quarter

Losses from the sale of investments and the impact of rising rates drive Invesco Mortgage Capital to a loss of $0.63 per share in the fourth quarter.

Feb 20, 2014 at 10:06AM

Invesco Mortgage Capital (NYSE:IVR) announced Wednesday that it saw a net loss of $83 million, or $0.63 per share, in the fourth quarter of 2013, a sharp drop from net income of $89.5 million, or $0.77 per share, it collected in the same period of 2012.

The loss stemmed from a $143 million loss seen on the sale of investments with rising interest rates, whereas it saw a $23 million gain in income resulting from its investment sales in the fourth quarter of 2012. After excluding those and other gains and losses related to derivative instruments, core earnings per share stood at $0.48 in the fourth quarter of 2013 versus $0.59 per share in the year-ago quarter.

The portfolio yield rose from 3.35% in the third quarter of 2013 to 3.49% in the fourth quarter, and the average cost of funds also rose from 1.97% to 2.14%. In addition, the company announced it had repurchased 10.7 million shares of its common stock at a cost of approximately $160 million, or $14.97 per share. This contributed a $0.23 gain to its book value per share, which rose from $17.64 to $17.97 from the third quarter to the fourth.

For full-year 2013, Invesco's net income per share stood at $0.99 versus $2.89 in 2012. Again, after excluding losses on the sale of investments, the difference in core earnings per share was markedly better, dropping 13% from $2.52 in 2012 to $2.19 in 2013. The company's core earnings in total was almost unchanged at $290 million in 2013, versus $291 million in 2012, but Invesco increased its shares outstanding by 7%, from 116 million to 124.5 million.

"In the fourth quarter we made significant progress on new initiatives aimed at reducing book value volatility and stabilizing core earnings," noted President and CEO Richard King in a press release. "Despite the increase in interest rates, book value increased 1.9% and core earnings were $0.48 per share."

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