Invesco Mortgage Capital Inc. Reports Second Quarter 2010 Financial Results

Invesco Mortgage Capital Inc. (NYSE: IVR) (the “Company”) today announced results for the quarter ended June 30, 2010.

The Company reported net income of $22.0 million, or $0.91 per share (basic and diluted), for the quarter ended June 30, 2010, compared to $13.2 million, or $0.77 per share, for the quarter ended March 31, 2010. The increase in net income and earnings per share was primarily driven by an increase in average earning assets and portfolio yield as the Company successfully deployed the capital raised in the follow-on common stock offering completed in May 2010.

The Company declared a dividend of $0.74 per share for the second quarter of 2010. The dividend was paid on July 27, 2010. The difference between earnings per share and the dividend per share is in part due to the higher number of common shares outstanding at the ex-dividend date compared to the average number of common shares outstanding for the quarter.

“The second quarter completes our first year as a public company and we are very pleased with the results,” said Richard King, Chief Executive Officer. “During the second quarter we completed a follow-on common stock offering, increased net income by 67%, improved earnings per share by 18% and reduced our expense ratio 41 basis points. This performance is in line with the strategy we outlined for our shareholders and further demonstrates our portfolio management capabilities.”

Financial Summary

In May 2010, the Company completed a follow-on offering of 9.1 million shares of common stock and raised net proceeds of approximately $179.5 million. The increase in equity from the capital raise was a primary driver for the change in the Company’s net income for the second quarter of 2010. The Company deployed the proceeds from the offering to increase its portfolio of mortgage-backed securities (“MBS”) to $2.3 billion as of June 30, 2010, which was an increase of $0.9 billion or 64% from March 31, 2010. For the quarter ended June 30, 2010, average earning assets were $2.0 billion and generated interest income of $29.2 million. This represents an increase of $0.8 billion or 67% and $11.2 million or 62%, respectively, from the first quarter of 2010.

The constant prepayment rate (“CPR”) of the Company’s portfolio during the second quarter continued to perform better than bonds with similar characteristics. The Company’s 15-year agency residential mortgage-backed securities (“RMBS”) portfolio had a 3-month CPR of 11.4, versus a rate of approximately 19.0 for bonds with similar characteristics. The Company’s 30-year agency RMBS portfolio had a 3-month CPR of 16.0, compared to a rate of approximately 29.2 for bonds with similar characteristics. The Company’s agency Hybrid Adjustable Rate Mortgage (“ARM”) portfolio prepaid at a 46.1 CPR and the non-agency RMBS portfolio prepaid at a 3-month CPR of 16.3. Overall, the weighted average 3-month CPR on the portfolio was 14.2.

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 June 30, 2010, the Company had average borrowings of $1.6 billion and interest expense of $6.4 million compared to $826.3 million and $3.6 million, respectively, for the first quarter of 2010. The increase in average borrowed funds was a result of the Company’s entry into in repurchase agreements in connection with the deployment of the capital raised in the May follow-on offering.

Operating expenses for the second quarter 2010 totalled $2.8 million compared to $2.2 million for the first quarter 2010. The ratio of operating expenses to average equity in the second quarter of 2010 decreased 0.41% to 2.24% as the Company benefited from improved operating efficiency after the May follow-on offering.

The Company’s book value per share as of June 30, 2010 was $19.90.

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, Wednesday, August 4, 2010, at 8:30 a.m. ET, by calling one of the following numbers:

An audio replay will be available until 11:00 am ET on August 18, 2010 by calling:
800-633-8284 (North America), enter reservation # 21476781; or
402-977-9140 (International), enter reservation # 21476781.

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.