Invesco Mortgage Capital Inc. Reports Fourth Quarter 2016 Financial Results

ATLANTA, Feb. 21, 2017

Interest rates rose sharply and credit spreads tightened during the fourth quarter as risk appetite improved following the U.S. Presidential election and subsequent action taken by the Federal Reserve to raise the Federal Funds rate. While tighter credit spreads benefited the Company's high quality credit portfolio during the quarter, the impact of higher rates on the Company's Agency RMBS portfolio resulted in book value per diluted common share** declining by 3.3% for the quarter. "During the fourth quarter and throughout 2016 we increased our allocation to lower duration Agency RMBS, reduced leverage, and held higher levels of cash in order to reduce book value volatility and protect the future earnings stream.  The reduction in risk led to lower core earnings in the fourth quarter, but positions us well to capitalize on future improvements in investment returns and improve core earnings," said Richard King, President and CEO.

The Company delivered an 11.3% economic return*** for the year ended December 31, 2016 to its shareholders.

Highlights

• Q4 2016 net income attributable to common stockholders of $270.1 million or $2.42 basic earnings per common share or $2.15 diluted earnings per common share
• Q4 2016 core earnings* of $39.8 million, core earnings per common share* of $0.36, and a common stock dividend of $0.40 per share
• Q4 2016 book value per diluted common share** of $17.48 vs. $18.08 at 9/30/2016 and $17.14 at 12/31/2015
• Economic return*** for the three months and year ended December 31, 2016 of -1.1% and 11.3%, respectively
• Q4 2016 comprehensive loss attributable to common stockholders was ($22.7) million or ($0.20) basic comprehensive loss per common share vs. comprehensive income attributable to common stockholders of $155.8 million or $1.40 basic comprehensive income per common share for Q3 2016
• YTD 2016 comprehensive income attributable to common stockholders was $205.7 million or $1.84 basic comprehensive income per common share vs. comprehensive loss attributable to common stockholders of ($40.4) million or ($0.33) basic comprehensive loss per common share for 2015

* Core earnings (and by calculation, core earnings per common share) are non-Generally Accepted Accounting Principles ("GAAP") financial measures. Refer to the section entitled "Non-GAAP Financial Measures" for important disclosures and a reconciliation to the most comparable U.S. GAAP measures.

**Book value per diluted common share is calculated as total equity less the liquidation preference of our Series A Preferred Stock ($140.0 million) and Series B Preferred Stock ($155.0 million); divided by total common shares outstanding plus Operating Partnership Units convertible into shares of common stock (1,425,000 shares).