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Good morning, ladies and gentlemen. Welcome to Invesco Mortgage Capital investor conference call. All participants will be on a listen-only mode until the question-and-answer session. [Operator instructions] Now, I would like to turn the call over to your speakers for today, Richard King, Chief Executive Officer; John Anzalone, Chief Investment Officer; and Don Ramon, Chief Financial Officer. Mr. King, you may begin.

Good morning and as always thank you for joining us. Our goals for the call today are to give our shareholders an understanding of what drove the fourth quarter results and then more importantly share our vision of the future of this company. We want investors to understand where we intend to take Invesco Mortgage Capital and why we’re so excited about it. First, let me take a few minutes to cover the Q4 results. Our goal in the fourth quarter was to continue to reposition the portfolio for stability of book value and the dividend. We use cash flows to do primarily two things. The first was to buy back our shares which was an attractive use of capital because the discount was nearly 20% and we bought 10.7 million shares and spent just over $160 million in the fourth quarter. The second use of cash was to invest in each of our three initiatives which are also attractive because we believe they’ll help us to stabilize book value, stabilize core earnings and ultimately that should help the shares to trade at a premium. We did put meaningful capital to work in each of the commercial real estate loans, risk sharing transactions and our prime jumbo securitization where we've retained the subordinate tranches. As agency mortgage prices rallied early in the fourth quarter following the no taper decision at the September Fed meeting, we sold some 30 year agency mortgages and used proceeds to buy several [ph] hybrids to further reduce duration and agency mortgage spread duration. We were able to generate core earnings of $0.48, very close to the $0.50 dividend and importantly reposition the portfolio to better maintain that dividend in 2014. Book value grew during the quarter by 1.9%. You can see in the book value…

Thanks Rich, and thanks again to everyone joining us on the call. I will expand on Rich’s comments starting with a review of where the portfolio is today, how it’s evolved over the past year and where we see opportunities in the future. I’ll start on Slide 4 with the portfolio update. As Rich just discussed, during the quarters of 2013 we reallocated the portfolio to significantly reduce our interest rate exposure -- to increase our exposure to improving fundamentals by adding credit assets. The pie charts on the left side of the graph illustrate the shift. In terms of reducing interest rate risk, we reduced our overall exposure to agency mortgages from 72% of assets, down to 56.8% of assets, which is a reduction of $2.4 billion during 2013. We also reduced our exposure to 30-year collateral within our agency book, which I'll talk about in more detail in a minute. As such, we reduced our equity duration, which is duration gap times leverage, to approximately 5.4 years at year end. As we moved away from agencies, we were also able to reduce our leverage allocated to repo from 6.1 to 5.7 times. As we moved away from agencies we reallocated capital to the credit side. Non-agency RMBS increased from 16.6% of assets, up to 19.6%, an increase of $696 million and our allocation to CMBS increased from 11.1% of assets, up to 13.6% which represented $584 million. We also made progress on the loan side, participating in five securitizations on the residential side which represented $1.8 billion and four CRE loans representing $64 million. I'll now talk in greater detail in each sector. I’ll start with agency mortgages on Slide 5. As you can see on the pie charts, not only did we reduce our absolute exposure to…

Thanks, John. Invesco Mortgage Capital is positioned to capitalize on the future of the U.S mortgage market. In 2009 through 2012 mortgage investors were rewarded to simply accept interest rates and credit risk, but that was not the case in 2013 and it will require more for mortgage rates to thrive in the future and prices of shares in the mortgage REIT space reflects that view. Our goal in 2014 is to differentiate Invesco Mortgage Capital giving investors' confidence that we can and will continue to earn strong dividend, but with significantly lower book value volatility. We’ve outlined today the strategies we believe will best capture attractive returns prospectively. On Slide 12 why we believe we’re the best positioned to executive on these initiatives? We have a business model that’s flexible. We have a strategy that’s forward looking and an opportunity set that is broad. We have a team with a breadth, experience and expertise needed to underwrite properties and borrowers. A team that is stable and one that avoid the mistakes that led to the mortgage crisis. Finally, we have a platform that provides the necessary resources, among them unique loan sourcing opportunities and strong counterparty relationships that improve sourcing and funding. We aim to provide investors with a way to capture the opportunities available today and a very well underwritten mortgage credit without accepting inordinate interest rate risk and volatilities associated with rising rates. That concludes our prepared remarks. Operator, please open up the line for questions.

Thank you. [Operator instructions] And our first question comes from Trevor Cranston from JMP Securities and sir your line is open.

Trevor I’m sorry we can’t hear you are you on [Indiscernible]

Mr. Cranston your line is open. Please proceed with your question.

Operator let's proceed with the next and then we can come back to Trevor.

Thank you. And our next question comes from Nick Agarwal, Wells Fargo Securities. And sir your line is open.

Hey, good morning, guys. A quick question on the active pipeline, can you give us a sense of what the size is on the CRE?

We have a deal log, it's relatively long. I can’t give you a number but we have a number of deals that we’re working on now.

Okay. So is it safe to assume that roughly the $64 million is a good run rate on a quarterly basis then?

We -- I think we hope to do more than that but that that may be a good assumption for the short-term.

And on the resident securitization side, did five deals last year, are you also still targeting roughly a deal a quarter?

Yeah, we can -- if we can get that we would like to do that. Nick Agarwal – Wells Fargo: And are you able to continue to see those deals given the bank appetite for this collateral?

Yeah, I mean, we've been seeing one approximately one every quarter, so we'd expect that continue.

Okay. Great thanks guys.

[Operator instructions]

Operator, are there any other further question?

And excuse me I do have Steve DeLaney, JMP Securities. Your line is open. Steven DeLaney – JMP Securities: Hi, good morning every one and apologies Trevor was on the call but from New York and I think he lost the connection somewhere and probably off the cell phone. So I’m going to jump in for him if I may?

And we have Mark DeVries and that was with Barclays, your line is open. Mark DeVries – Barclays: Okay. Sorry about that Steve. So first question, I know you mentioned that you didn’t really change your hedge position even though you are selling agencies. Could you just talk a little bit about kind where you think your net duration is at this point, particularly factoring any kind of other non-agency CMBS you may have some positive duration associated with it?

Yeah. At year end I think we pointed out net – an equity duration of around little over five and it’s somewhat less than that now, but still probably in the four to five range. Just commenting on that, we have been seeing a lot of book value volatility around rate note and we've pointed out that in the fourth quarter we saw rates up quite a bit, book value was up a little bit and so far this quarter rates are down, book value is up a little bit. So we definitely are in a position where the direction of movement in rates isn’t having a great impact on our book value. Mark DeVries – Barclays: Okay. And then the next question on just a little more detail on the GSE risk-sharing transactions. I think John you mentioned you're looking for kind of 12% level returns on that. Can you just give us a little bit more detail and kind of what the yields are on that and what kind of expected losses are embedded and what amount of leverage you would look to apply?

Right so on the, I guess, on all the deals on the lower tranche –two [ph] tranche – spreads are approximately LIBOR plus before in a quarter and they've kind of settled in around that range. So applying a couple turns of leverage on there, on them, gets us to low double digit yields. Financing on that has been pretty attractive and we’ve seen haircuts in the 20%-ish range with rates kind of somewhere in that LIBOR plus one fifty.

And losses on those pools are likely to be absorbed by the first 30 day basis points [ph] that GSEs are keeping. Mark DeVries – Barclays: Got it. Okay, thanks.

And our next question comes from Ken Bruce, Bank of America Merrill Lynch. Your line is open. Kenneth Bruce – Bank of America Merrill Lynch: Hi. So thank you for the information just in terms of what you’re, kind of directing or redirecting the portfolio into. Is there a target portfolio or an allocation that you have kind of in your mind as to what would be optimal at this point? Is that the proper way to think about it that you are trying to get to a kind of a target portfolio and that – at the point that you’re at that steady state that we can effectively model it or do you expect this strategy to drift around a bit more over the next year or so?

Well, we have a hybrid business model. And we’re looking for the best risk adjusted returns across the mortgage space. We’re not targeting X percentage of the portfolio to be in each category, ad infinitum. But we do believe that we’re moving towards lower repo balances and more assets where they either don’t need financing or needs less to earn close to 12% ROE. So we’ve outlined that we could get CRE loans up to 25% or 30% residential securitization. We expect that that will continue to grow over time and that we will see more opportunities than say the one quarter. And we also expect the risk sharing to grow. So the absolute percentage of the entire portfolio that’s in each of those things and then the securities finance at repo will depend on the opportunities set as we go forward. Kenneth Bruce – Bank of America Merrill Lynch: And is it appropriate to think about IVR as it’s trying to manage the portfolio to that hurdle rate, say, maybe it’s 12% today. That will likely drift around a bit. But, as you see the alternative opportunities to invest in the portfolio that the company is going to deleverage over time, I guess I’m just trying to think about how to model your business understanding that there are these different opportunities to invest today. They seem to have very good returns with a lot less leverage given where rates are likely headed. I think that’s probably a good position to be taking, but just trying to think through how it’s going to evolve over time is I guess, one of the challenges that we’re having given the broader diversity today.

Yeah, that’s exactly right. We’ll be deleveraging over time. So you could assume that the securities portfolio may remain leveraged cost five and a half times like it is today. But the percentage of our equity that’s invested in that space will continue to decline. You should see every quarter we should make progress in terms of the new initiatives. And every one of those new initiatives is either no leverage or at most maybe in the risk sharing made to terms. You’ll continue to see our leverage decline. Kenneth Bruce – Bank of America Merrill Lynch: Okay. Thank you for your color and comments this morning.

[Operator Instructions]

Operator, there are no further questions?

Excuse me. There are no further questions on the phone line. Thank you.

All right, thank you for listening today and we’re excited to talk to you at the next available opportunity.