8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2013

Invesco Mortgage Capital Inc.

(Exact name of registrant as specified in its charter)

Maryland	001-34385	262749336
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1555 Peachtree Street, NE, Atlanta, Georgia	30309
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (404) 892-0896

n/a

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition.

On February 5, 2013, Invesco Mortgage Capital Inc. (the “registrant”) issued a press release announcing its financial results for the quarter ended December 31, 2012 (the “Release”).

Pursuant to General Instruction F to the Securities and Exchange Commission’s Current Report on Form 8-K, the Release is attached to this Report as Exhibit 99.1 and the information contained in the Release is incorporated into this Item 2.02 by this reference. The information contained in this Item 2.02 is being "furnished" and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in such filing.

Item 9.01   Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release, dated February 5, 2013, issued by Invesco Mortgage Capital Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Invesco Mortgage Capital Inc.
By:	/s/ Donald R. Ramon
	Donald R. Ramon
	Chief Financial Officer

Date: February 5, 2013

Exhibit Index

Exhibit No.	Description
99.1	Press Release, dated February 5, 2013, issued by Invesco Mortgage Capital Inc.

EX-99

 ________________________________________________________

Press Release

  For immediate release

________________________________________________________

Invesco Mortgage Capital Inc. Reports

Fourth Quarter 2012 Financial Results

Contact:  Bill Hensel, 404-479-2886

Atlanta – February 5, 2013 -- Invesco Mortgage Capital Inc. (NYSE: IVR) (the “Company”) today announced results for the quarter ended December 31, 2012.

The Company reported net income of $90.6million, or $0.77 per common share (basic and diluted), for the quarter ended December 31, 2012 (after deducting the preferred dividend of $2.7 million) compared to $84.1 million, or $0.72 per common share (basic and diluted), for the quarter ended September 30, 2012.  The Company also reported its book value per common share as of December 31, 2012 was $20.83,compared to $20.93 per common share as of September 30, 2012.

“Our fourth quarter strategy was to increase our allocation to credit assets and we accomplished this while delivering strong earnings per share of $0.77,” said Richard King, President and Chief Executive Officer.  “During 2012, we successfully completed our goal of improving our book value while maintaining a stable dividend. The improving trend in the housing market should create great opportunities, and we believe the repositioning of the portfolio combined with our recent capital raise have us well positioned for 2013.”

($ in millions, except per share amounts)
	Q4 ‘12	Q3 ‘12
	(unaudited)	(unaudited)
Average Earning Assets (at amortized costs)	$17,776.3	$16,955.1
Average Borrowed Funds	15,822.1	14,440.3
Average Equity	$2,482.5	$2,329.9
Interest Income	$145.4	$140.5
Interest Expense	65.1	60.3
Net Interest Income	80.3	80.2
Other Income	23.2	16.6
Operating Expenses	10.2	10.0
Net Income	93.3	86.8
Preferred Dividend	2.7	2.7
Net Income after Preferred Dividend	$90.6	$84.1
Average Portfolio Yield	3.27%	3.31%
Average Cost of Funds	1.65%	1.67%
Debt to Equity Ratio	6.1	5.8
Return on Average Equity	14.60%	14.44%
Book Value per Common Share (Diluted)	$20.83	$20.93
Earnings per Common share (Basic and Diluted)	$0.77	$0.72
Dividend per Common share	$0.65	$0.65
Dividend per Preferred share	$0.4844	$0.4790

Financial Summary

The Company’s portfolio of mortgage-backed securities (“MBS”) was $18.5 billion as of December 31, 2012, an increase of $0.2 billion from September 30, 2012.  For the quarter ended December 31, 2012, average earning assets were $17.8 billion, representing an increase of $0.8 billion from September 30, 2012.  The portfolio generated interest income of $145.4 million, which reflects an increase of $4.9 million from September 30, 2012.

For the quarter ended December 31, 2012, the Company had average borrowings of approximately $15.8billion and interest expense, including cost of hedging, of $65.1million, compared to $14.4 billion and $60.3 million, respectively, for the third quarter of 2012.  Our average cost of funds was 1.65%and 1.67% for the fourth quarter of 2012 and the third quarter of 2012, respectively.

Operating expenses for the fourth quarter of 2012 totalled $10.2 million, compared to $10.0 million for the third quarter of 2012.  The ratio of operating expenses to average equity in the fourth quarter of 2012 decreased 0.08% to 1.64%.

The Company declared a common stock dividend of $0.65 per common share for the fourth quarter of 2012.  The dividend was paid on January 28, 2013.

The Company declared a preferred stock dividend of $0.4844 per preferred share for the fourth quarter of 2012.  The dividend was paid on January 25, 2013.

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 firm.

Earnings Call

Members of the investment community and the general public are invited to listen to the Company’s earnings conference call on Wednesday, February 6, 2013, at 8:30 a.m. ET, by calling one of the following numbers:

US/Canada Toll Free:                             888-942-8507

International:                                           415-228-4839

Passcode:                                               Invesco

An audio replay will be available until 5:00 pm ET on February, 20, 2013 by calling:

888-568-0862 (North America) or 203-369-3485 (International).

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, 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.

INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

				Three Months Ended				Year Ended
				December 31,				December 31,
$ in thousands, except per share data				2012		2011		2012		2011
	Revenues
	Interest income				145,389		137,545		566,830		453,352
	Interest expense				65,093		55,004		237,405		155,241
	Net interest income				80,296		82,541		329,425		298,111
	Other income
	Gain on sale of investments				23,236		2,517		48,215		10,959
	Equity in earnings  and fair value change in unconsolidated
		ventures			937		563		7,169		3,301
	Unrealized loss on interest rate swaps and swaptions				(1,382)		(109)		(4,232)		(764)
	Realized and unrealized credit default swap income				420		659		3,115		5,308
	Total other income				23,211		3,630		54,267		18,804
	Expenses
	Management fee – related party				9,285		8,647		35,658		26,259
	General and administrative				892		1,003		4,026		3,859
	Total expenses				10,177		9,650		39,684		30,118
	Net income				93,330		76,521		344,008		286,797
	Net income attributable to non-controlling interest				1,098		934		4,123		4,882
	Net income attributable to Invesco Mortgage Capital Inc.				92,232		75,587		339,885		281,915
	Dividends to preferred shareholders				2,713		-		5,395		-
	Net income attributable to common shareholders				89,519		75,587		334,490		281,915
	Earnings per share:
	Net income attributable to common shareholders
		(basic/diluted)			0.77		0.66		2.89		3.27
	Dividends declared per common share				0.65		0.65		2.60		3.42
	Weighted average number of shares of common stock:
			Basic		116,016		115,392		115,559		86,365
			Diluted		117,472		116,835		117,012		87,804

INVESCO MORTGAGE CAPITAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

$ in thousands, except share and per share amounts		As of
		December 31,		December 31,
ASSETS		2012		2011
		(Unaudited)
Mortgage-backed securities, at fair value			18,470,563		14,214,149
Cash and cash equivalents			286,474		197,224
Restricted cash			12,371		74,496
Investment related receivable			41,429		160,424
Investments in unconsolidated ventures, at fair value			35,301		68,793
Accrued interest receivable			62,977		54,167
Derivative assets, at fair value			6,469		1,339
Other assets			11,547		1,575
	Total assets		18,927,131		14,772,167
LIABILITIES AND EQUITY
Liabilities:
Repurchase agreements			15,720,460		12,253,038
Derivative liability, at fair value			436,440		396,780
Dividends and distributions payable			79,165		75,933
Investment related payable			76,086		107,032
Accrued interest payable			15,275		12,377
Accounts payable and accrued expenses			877		556
Due to affiliate			9,308		9,038
	Total liabilities		16,337,611		12,854,754
Equity:
Preferred Stock, par value $0.01 per share; 50,000,000 shares
	authorized, 7.75% series A cumulative redeemable, $25 liquidation
	preference, 5,600,000 and no shares issued and outstanding at
	December 31, 2012 and 2011, respectively		135,362		-
Common Stock: par value $0.01 per share; 450,000,000 shares
	authorized, 116,195,500 and 115,395,695 shares issued and
	outstanding, at December 31, 2012 and 2011, respectively		1,162		1,154
Additional paid in capital			2,316,290		2,299,543
Accumulated other comprehensive income (loss)			86,436		(393,291)
Retained earnings (distributions in excess of earnings)			18,848		(15,068)
	Total shareholders’ equity		2,558,098		1,892,338
Non-controlling interest			31,422		25,075
	Total equity		2,589,520		1,917,413
	Total liabilities and equity		18,927,131		14,772,167

Mortgage-Backed Securities

The following table summarizes certain characteristics of the Company’s mortgage-backed securities portfolio as of December 31, 2012:

										Period-
								Net		end		Quarterly
				Unamortized		Unrealized		Weighted		Weighted		Weighted
			Principal	Premium	Amortized	Gain/	Fair	Average		Average		Average
$ in thousands			Balance	(Discount)	Cost	(Loss), net	Value	Coupon (1)		Yield (2)		Yield (3)
Agency RMBS:
	15 year fixed-rate		1,964,999	102,058	2,067,057	63,839	2,130,896	4.09	%	2.37	%	2.37	%
	30 year fixed-rate		9,168,196	601,592	9,769,788	238,949	10,008,737	4.21	%	2.89	%	2.88	%
	ARM		109,937	3,464	113,401	2,365	115,766	3.15	%	2.06	%	2.02	%
	Hybrid ARM		556,790	13,493	570,283	16,885	587,168	3.19	%	2.18	%	2.22	%
		Total Agency pass-through	11,799,922	720,607	12,520,529	322,038	12,842,567	4.13	%	2.77	%	2.75	%
	Agency-CMO(4)		1,322,043	(819,530)	502,513	1,926	504,439	2.89	%	2.35	%	1.51	%
	Non-Agency RMBS(5)		3,339,683	(308,885)	3,030,798	48,238	3,079,036	4.20	%	4.61	%	4.80	%
	CMBS		1,868,928	24,070	1,892,998	151,523	2,044,521	5.27	%	4.96	%	4.82	%
Total			18,330,576	(383,738)	17,946,838	523,725	18,470,563	4.17	%	3.30	%	3.27	%
(1) Net weighted average coupon as of December 31, 2012 (“WAC”) is presented net of servicing and other fees.
(2) Average yield based on amortized cost as of December 31, 2012 incorporates future prepayment and loss assumptions.
(3) Average yield based on average amortized cost for the three months ended December 31, 2012 incorporates future prepayment and loss assumptions.
(4) Included in the Agency-CMO are interest only securities which represent 14.1% of the balance based on fair value.
(5) The non-Agency RMBS held by the Company is 79.2% variable rate, 15.5% fixed rate, and 5.3% floating rate based on fair value.

Constant Prepayment Rates (CPR)

The CPR of our portfolio impacts the amount of premium and discount on the purchase of securities that is recognized into income. The following table shows the three month CPR for our RMBS compared to bonds with similar characteristics (“Cohorts”):

	December 31, 2012		September 30, 2012
	Company	Cohort	Company	Cohort
15 year Agency RMBS	17.4	26.5	14.6	23.4
30 year Agency RMBS	11.6	20.9	13.1	20.7
Agency Hybrid ARM RMBS	28.5	NA	20.0	NA
Non-Agency RMBS	17.7	NA	16.2	NA
Overall	14.6	NA	14.3	NA

Repurchase Agreements

The following table summarizes the Company’s borrowings by type of investment for the periods ended December 31, 2012 and December 31, 2011:

$ in thousands	December 31, 2012						December 31, 2011
					Weighted					Weighted
			Weighted		Average			Weighted		Average
			Average		Remaining			Average		Remaining
	Amount		Interest		Maturity	Amount		Interest		Maturity
	Outstanding		Rate		(Days)	Outstanding		Rate		(Days)
Agency RMBS		11,713,565	0.48	%	16		9,491,538	0.38	%	22
Non-Agency RMBS		2,450,960	1.75	%	23		1,916,620	1.79	%	22
CMBS		1,555,935	1.51	%	18		844,880	1.55	%	22
Total		15,720,460	0.78	%	17		12,253,038	0.68	%	22

Interest Rate Hedges

The following table summarizes our hedging activity as of December 31, 2012:

$ in thousands			Fixed Interest Rate
Counterparty	Notional	Maturity Date	in Contract
The Bank of New York Mellon	100,000	5/24/2013	1.83%
The Bank of New York Mellon	200,000	6/15/2013	1.73%
SunTrust Bank	100,000	7/15/2014	2.79%
Deutsche Bank AG	200,000	1/15/2015	1.08%
Deutsche Bank AG	250,000	2/15/2015	1.14%
Credit Suisse International	100,000	2/24/2015	3.26%
Credit Suisse International	100,000	3/24/2015	2.76%
Wells Fargo Bank, N.A.	100,000	7/15/2015	2.85%
Wells Fargo Bank, N.A.	50,000	7/15/2015	2.44%
Morgan Stanley Capital Services, Inc.	300,000	1/24/2016	2.12%
The Bank of New York Mellon	300,000	1/24/2016	2.13%
Morgan Stanley Capital Services, Inc.	300,000	4/5/2016	2.48%
Citibank, N.A.	300,000	4/15/2016	1.67%
The Bank of New York Mellon	500,000	4/15/2016	2.24%
Credit Suisse International	500,000	4/15/2016	2.27%
JPMorgan Chase Bank, N.A.	500,000	5/16/2016	2.31%
Goldman Sachs Bank USA	500,000	5/24/2016	2.34%
Wells Fargo Bank, N.A.	250,000	6/15/2016	2.67%
Goldman Sachs Bank USA	250,000	6/15/2016	2.67%
JPMorgan Chase Bank, N.A.	500,000	6/24/2016	2.51%
Citibank, N.A.	500,000	10/15/2016	1.93%
Deutsche Bank AG	150,000	2/5/2018	2.90%
Morgan Stanley Capital Services, Inc.	100,000	4/5/2018	3.10%
JPMorgan Chase Bank, N.A.	200,000	5/15/2018	2.93%
UBS AG (1)	500,000	5/24/2018	1.10%
The Royal Bank of Scotland Plc (2)	500,000	9/5/2018	1.04%
Wells Fargo Bank, N.A.	200,000	3/15/2021	3.14%
Citibank, N.A.	200,000	5/25/2021	2.83%
HSBC Bank USA, National Association (3)	250,000	6/5/2023	1.91%
Total	8,000,000		2.13%
(1) Forward start date of May 2013
(2) Forward start date of September 2013
(3) Forward start date of  June 2013

Average Balances

The following table shows the average balances for the three and twelve months ended December 31, 2012 and 2011:

		Three Months Ended				Year Ended
		December 31,				December 31,
$ in thousands		2012		2011		2012		2011
Average Balances*:
Agency RMBS:
	15 year fixed-rate, at amortized cost		2,114,987		2,393,468		2,302,218		2,171,988
	30 year fixed-rate, at amortized cost		9,665,370		6,216,010		8,395,560		4,547,867
	ARM, at amortized cost		116,608		100,661		150,377		86,177
	Hybrid ARM, at amortized cost		591,081		1,309,862		1,028,432		998,933
	MBS-CMO, at amortized cost		510,292		141,132		465,469		91,861
Non-Agency RMBS, at amortized cost			2,922,411		2,539,250		2,524,635		2,057,477
CMBS, at amortized cost			1,855,546		1,313,117		1,461,359		1,006,164
Average MBS portfolio			17,776,295		14,013,500		16,328,050		10,960,467
Average Portfolio Yields: (1)
Agency RMBS:
	15 year fixed-rate		2.37%		2.75%		2.54%		2.96%
	30 year fixed-rate		2.88%		3.52%		3.12%		3.59%
	ARM		2.02%		2.90%		2.51%		2.99%
	Hybrid ARM		2.22%		2.49%		2.60%		2.58%
	MBS-CMO		1.51%		1.32%		2.02%		3.39%
Non-Agency RMBS			4.80%		6.05%		5.16%		6.79%
CMBS			4.82%		5.69%		5.22%		5.44%
Average MBS portfolio			3.27%		3.93%		3.47%		4.14%
Average Borrowings*:
	Agency RMBS		12,010,877		9,179,788		11,161,176		7,146,066
	Non-Agency RMBS		2,313,014		1,994,379		1,902,754		1,536,245
	CMBS		1,498,221		952,777		1,108,438		791,212
Total borrowed funds			15,822,112		12,126,944		14,172,368		9,473,523
Maximum borrowings during the period (2)			16,227,024		12,253,038		16,227,024		12,253,038
Average Cost of Funds: (3)
	Agency RMBS		0.45%		0.32%		0.39%		0.27%
	Non-Agency RMBS		1.71%		1.67%		1.76%		1.47%
	CMBS		1.50%		1.53%		1.55%		1.35%
	Unhedged cost of funds		0.74%		0.64%		0.67%		0.56%
	Hedged cost of funds		1.65%		1.81%		1.68%		1.64%
Average Equity: (4)			2,482,487		1,921,684		2,262,851		1,625,794
Average debt/equity ratio (average during period)			6.4x		6.3x		6.3x		5.8x
Debt/equity ratio (at period end)			6.1x		6.4x		6.1x		6.4x
* Average amounts for each period are based on weighted month end balances.  For the three and twelve months ended December 31, 2012, the average balances are presented on an amortized cost basis.  Prior periods have been adjusted accordingly for comparative purposes.
(1) Average portfolio yield for the period was calculated by dividing interest income, including amortization of premiums and discounts, by our average of the amortized cost of the investments.  All yields are annualized.
(2) Amount represents the maximum borrowings at month-end during each of the respective periods.
(3) Average cost of funds is calculated by dividing interest expense, by our average borrowings.
(4) Average equity is calculated based on a weighted balance basis.