Real estate investment trust (REIT) Invesco Mortgage Capital (IVR) posted a $13.2m net Q110 income, compared with $10.5m in the previous quarter. A $4.4m increase in net interest income on higher average earning assets drove the increase from last quarter. Invesco attributed the higher earning assets to the stock offering completed in January. “During the first quarter of 2010, we completed a successful follow-on common stock offering, deployed the capital consistent with the plan we outlined for investors and delivered strong earnings for our shareholders,” said CEO Richard King in a press statement. “We believe this demonstrates the strength of our investment team and highlights the benefits of the hybrid mortgage REIT model.” Average earning assets rose to $1.2bn from $861.9m in Q409. At the same time, operating expenses rose to $2.2m from $1.6m. Average portfolio yield increased modestly to 5.88% from 5.82%. Earning per share, however decreased to $0.77 per share in Q110 from $1.02 per share in Q409. A $1.3m lower gain on sale of securities pushed down earnings per share, Invesco said. In February, Fannie Mae (FNM) and Freddie Mac (FRE) increased the buyouts of delinquent mortgages from certain residential mortgage-backed securities (RMBS). For RMBS purchased at a premium, the effect would be to accelerate the amount of premium amortization and thereby reducing interest income, Invesco said. In Q409, Invesco anticipated the increased buyouts and sold a portion of agency RMBS it believed to be at risk. As a result, the company estimates the increased buyouts reduced interest income by less than $1m and expects a similar impact for Q210. Write to Diana Golobay. Disclosure: the author holds no relevant investments.
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