INVESCO MORTGAGE CAPITAL INC

Welcome to Invesco Mortgage Capital, Inc.' 's fourth quarter 2020 investor conference call. All participants will be in a listen-only mode until the question and answer session. At that time, to ask a question, press the star followed by the one on your telephone. As a reminder, this call is being recorded. Now I would like to turn the call over to Jack Bateman in investor relations. Mr. Bateman, you may begin.

Thank you, and welcome to the Invesco Mortgage Capital fourth quarter 2020 earnings call. The management team and I are delighted you've joined us, and we look forward to sharing with you our prepared remarks and conducting a question and answer session. Before turning the call over to our CEO, John Anzalone, I wanted to provide a reminder that statements made in this conference call and the related presentation may include forward-looking statements which reflect management's expectations about future events and our overall plans and performance. These forward-looking statements are made as of today and are not guarantees. They involve risks, uncertainties, and assumptions, and there can be no assurance that actual results will not be materially different from our expectations. For discussion of these risks and uncertainties, please see the risks described in our most recent annual report on Form 10-K and subsequent filings with the SEC. Invesco makes no obligation to update any forward-looking statement. We may also discuss non-GAAP financial measures during today's call. Reconciliations of these non-GAAP financial measures may be found at the end of our earnings presentation. To view the slide presentation today, you may access our website at InvescoMortgageCapital.com and click on the Q4 2020 earnings presentation link under investor relations. Again, welcome and thank you for joining us today. And I'll turn the call over to John Anzalone. John.

Good morning and welcome to IVR's Fourth Quarter Earnings Call. I will give some brief comments before turning the call over to our Chief Investment Officer, Brian Norris, to discuss the current portfolio in more detail. Also joining us on the call to participate in the Q&A are our President, Kevin Collins, our CFO, Lee Fegley, and our COO, Dave Lyle. I am pleased to announce that core earnings came in at $0.10 per share for the quarter. exceeding our recently increased dividend of $0.08 per share. Book value was $3.86 at quarter end, which represents an increase of 11.2% for the quarter. The combination of the increased dividend and our book value appreciation produced an economic return of 13.5% for the quarter. The improvement in book value has continued since quarter end as we estimate that book value was up approximately 5% through last Friday, with those gains concentrated in January and relatively flat performance so far during February. During the fourth quarter, financial markets continued to recover as the impact of stimulus programs and optimism around the rollout of vaccinations began to take hold. Risk assets across fixed income continued to benefit from strong investor interest, and agency mortgages in particular had a strong quarter. Consistent demand for current coupon agency mortgages from the Federal Reserve and commercial banks outweighed elevated issuance, leading to a strong performance for the sector. At IVR, we have largely completed our reallocation to agency MBS, ending the year with 98% of our assets in agencies. We continue to take advantage of the strong demand for credit assets by further reducing our credit book by $336 million, resulting in a credit portfolio of $161 million at quarter end. Our liquidity position remains strong as we ended December with a $745 million balance in cash and unencumbered assets. Earlier this month, we successfully completed a common stock offering with net proceeds of approximately $103 million that was deployed into additional agency mortgages. This will allow us to build upon our success in restoring core earnings while adding scale and helping to balance our capital structure. As we look out over the next several quarters, our outlook remains relatively constructive. We remain positive on agency mortgages as we expect demand from the Federal Reserve and commercial banks to remain strong, while the steeper curve and recent underperformance keeps the ROE and new investments attractive. Funding costs should remain attractive as well as we expect the Fed to keep short-term interest rates low for the foreseeable future. Despite the recent widening, agency mortgage valuations remain rich and along with increased levels of prepayments present some potential headwinds for the basis. However, our focus on active management and security selection when purchasing specified pool collateral helps to mitigate these risks. I'll stop here and let Brian go through the portfolio.