Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 27, 2015 | Jun. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CAPSTEAD MORTGAGE CORP | ||
Entity Central Index Key | 766701 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $1,238,555,013 | ||
Entity Common Stock, Shares Outstanding | 95,812,050 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets: | ||
Residential mortgage investments ($13.48 and $13.12 billion pledged under repurchase arrangements at December 31, 2014 and December 31, 2013, respectively) | $13,908,104 | $13,475,874 |
Cash collateral receivable from interest rate swap counterparties | 53,139 | 25,502 |
Interest rate swap agreements at fair value | 1,657 | 5,005 |
Cash and cash equivalents | 307,526 | 413,356 |
Receivables and other assets | 118,643 | 96,231 |
Total Assets | 14,389,069 | 14,015,968 |
Liabilities: | ||
Repurchase arrangements and similar borrowings | 12,806,843 | 12,482,900 |
Interest rate swap agreements at fair value | 27,034 | 11,304 |
Unsecured borrowings | 100,000 | 100,000 |
Common stock dividend payable | 34,054 | 30,872 |
Accounts payable and accrued expenses | 30,367 | 25,109 |
Total Liabilities | 12,998,298 | 12,650,185 |
Stockholders' equity: | ||
Common stock - $0.01 par value; 250,000 shares authorized: 95,848 and 95,807 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively | 958 | 958 |
Paid-in capital | 1,325,340 | 1,329,792 |
Accumulated deficit | -346,885 | -349,866 |
Accumulated other comprehensive income | 227,422 | 219,143 |
Stockholders' Equity Attributable to Parent | 1,390,771 | 1,365,783 |
Total Liabilities and Equity | 14,389,069 | 14,015,968 |
Redeemable Preferred Stock [Member] | Cumulative Redeemable Preferred Stock, Series E [Member] | ||
Stockholders' equity: | ||
Cumulative Preferred Stock | $183,936 | $165,756 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Residential mortgage investments | $13,480,000 | $13,120,000 |
Preferred stock, par value (in dollars per share) | $0.10 | $0.10 |
Preferred stock, shares authorized (in shares) | 100,000 | 100,000 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 250,000 | 250,000 |
Common stock, shares issued (in shares) | 95,848 | 95,807 |
Common stock, shares outstanding (in shares) | 95,848 | 95,807 |
Redeemable Preferred Stock [Member] | Cumulative Redeemable Preferred Stock, Series E [Member] | ||
Preferred stock, dividend rate (in hundredths) | 7.50% | |
Preferred stock, shares issued (in shares) | 7,618 | 6,861 |
Preferred stock, shares outstanding (in shares) | 7,618 | 6,861 |
Preferred stock, aggregate liquidation preference | $190,454 | $171,521 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Interest income: | |||
Residential mortgage investments | $226,749 | $215,137 | $255,931 |
Other | 315 | 322 | 698 |
Interest Income | 227,064 | 215,459 | 256,629 |
Interest expense: | |||
Repurchase arrangements and similar borrowings | -65,155 | -66,368 | -69,101 |
Unsecured borrowings | -8,488 | -8,736 | -8,747 |
Interest expense | -73,643 | -75,104 | -77,848 |
Net interest income (expense) | 153,421 | 140,355 | 178,781 |
Other revenue (expense): | |||
Salaries and benefits | -4,112 | -3,962 | -4,055 |
Short-term incentive compensation | -2,115 | -3,565 | -5,043 |
Long term incentive compensation | -2,075 | -1,814 | -1,874 |
Other general and administrative expense | -4,157 | -4,476 | -4,271 |
Miscellaneous other revenue (expense) | -142 | -300 | -171 |
Operating expenses | -12,601 | -14,117 | -15,414 |
Income before equity in earnings of unconsolidated affiliates | 140,820 | 126,238 | 163,367 |
Equity in earnings of unconsolidated affiliates | 0 | 249 | 259 |
Net income | 140,820 | 126,487 | 163,626 |
Net income available to common stockholders: | |||
Net income | 140,820 | 126,487 | 163,626 |
Less preferred stock dividends | -13,781 | -17,536 | -21,021 |
Less redemption preference premiums paid | 0 | -19,924 | 0 |
Net income (loss) available to common stockholders, basic, total | $127,039 | $89,027 | $142,605 |
Basic and diluted net income per common share | $1.33 | $0.93 | $1.50 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Other comprehensive income (loss) | |||
Net income | $140,820 | $126,487 | $163,626 |
Amounts related to available-for-sale securities: | |||
Change in net unrealized gains | 27,283 | -101,001 | 91,750 |
Amounts related to cash flow hedges: | |||
Change in net unrealized gains (losses) | -41,059 | 9,320 | -22,262 |
Reclassification adjustment for amounts included in net income | 22,055 | 16,914 | 19,882 |
Other comprehensive income (loss) | 8,279 | -74,767 | 89,370 |
Comprehensive income | $149,099 | $51,720 | $252,996 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock [Member] | Common Stock [Member] | Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income [Member] | Total |
In Thousands, unless otherwise specified | ||||||
Beginning Balance at Dec. 31, 2011 | $184,514 | $883 | $1,257,653 | ($354,883) | $204,540 | $1,292,707 |
Net income | 0 | 0 | 0 | 163,626 | 0 | 163,626 |
Change in unrealized gain on mortgage securities, net | 0 | 0 | 0 | 0 | 91,750 | 91,750 |
Amounts related to cash flow hedges, net | 0 | 0 | 0 | 0 | -2,380 | -2,380 |
Cash dividends: | ||||||
Common | 0 | 0 | -1,785 | -141,660 | 0 | -143,445 |
Preferred | 0 | 0 | 0 | -21,021 | 0 | -21,021 |
Redemption of convertible preferred stock | 0 | |||||
Conversion of preferred stock | -1 | 0 | 1 | 0 | 0 | 0 |
Additions to capital | 4,479 | 109 | 146,362 | 0 | 0 | 150,950 |
Common stock repurchases | 0 | -30 | -35,032 | 0 | 0 | -35,062 |
Ending Balance at Dec. 31, 2012 | 188,992 | 962 | 1,367,199 | -353,938 | 293,910 | 1,497,125 |
Net income | 0 | 0 | 0 | 126,487 | 0 | 126,487 |
Change in unrealized gain on mortgage securities, net | 0 | 0 | 0 | 0 | -101,001 | -101,001 |
Amounts related to cash flow hedges, net | 0 | 0 | 0 | 0 | 26,234 | 26,234 |
Cash dividends: | ||||||
Common | 0 | 0 | -13,830 | -104,932 | 0 | -118,762 |
Preferred | 0 | 0 | 0 | -17,536 | 0 | -17,536 |
Redemption of convertible preferred stock | -187,109 | 0 | -19,924 | 0 | 0 | -207,033 |
Conversion of preferred stock | -1,883 | 2 | 1,881 | 0 | 0 | 0 |
Issuance of Series E preferred stock | 165,756 | 0 | 0 | 0 | 0 | 165,756 |
Other additions to capital | 0 | 0 | 1,752 | 53 | 0 | 1,805 |
Common stock repurchases | 0 | -6 | -7,286 | 0 | 0 | -7,292 |
Ending Balance at Dec. 31, 2013 | 165,756 | 958 | 1,329,792 | -349,866 | 219,143 | 1,365,783 |
Net income | 0 | 0 | 0 | 140,820 | 0 | 140,820 |
Change in unrealized gain on mortgage securities, net | 0 | 0 | 0 | 0 | 27,283 | 27,283 |
Amounts related to cash flow hedges, net | 0 | 0 | 0 | 0 | -19,004 | -19,004 |
Cash dividends: | ||||||
Common | 0 | 0 | -6,365 | -124,058 | 0 | -130,423 |
Preferred | 0 | 0 | 0 | -13,781 | 0 | -13,781 |
Redemption of convertible preferred stock | 0 | |||||
Issuance of Series E preferred stock | 18,180 | 0 | 0 | 0 | 0 | 18,180 |
Other additions to capital | 0 | 0 | 1,913 | 0 | 0 | 1,913 |
Ending Balance at Dec. 31, 2014 | $183,936 | $958 | $1,325,340 | ($346,885) | $227,422 | $1,390,771 |
CONSOLIDATED_STATEMENTS_OF_STO1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY [Abstract] | |||
Common per share (in dollars per share) | $1.36 | $1.24 | $1.49 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Operating activities: | |||
Net income | $140,820 | $126,487 | $163,626 |
Noncash items: | |||
Amortization of investment premiums | 101,872 | 125,872 | 96,677 |
Amortization of equity-based awards | 2,390 | 2,201 | 2,236 |
Other depreciation and amortization | 137 | 162 | 195 |
Incentive compensation paid in shares of common stock | 0 | 0 | 2,799 |
Change in measureable hedge ineffectiveness related to interest rate swap agreements designated as cash flow hedges | 76 | -168 | -411 |
Gain on sales of foreclosed real estate | 0 | 0 | -273 |
Net change in receivables, other assets, accounts payable and accrued expenses | 3,517 | 6,658 | -919 |
Net cash provided by operating activities | 248,812 | 261,212 | 263,930 |
Investing activities: | |||
Purchases of residential mortgage investments | -3,307,963 | -3,326,345 | -4,384,866 |
Interest receivable acquired with the purchase of residential mortgage investments | -5,313 | -5,559 | -7,180 |
Proceeds from sales of foreclosed real estate | 0 | 0 | 2,010 |
Principal collections on residential mortgage investments, including changes in mortgage securities principal remittance receivable | 2,785,337 | 3,516,634 | 2,756,772 |
Net cash (used in) provided by investing activities | -527,939 | 184,730 | -1,633,264 |
Financing activities: | |||
Proceeds from repurchase arrangements and similar borrowings | 128,594,880 | 136,909,245 | 127,808,676 |
Principal payments on repurchase arrangements and similar borrowings | -128,270,935 | -137,210,576 | -126,376,876 |
(Increase) decrease in cash collateral receivable from interest rate swap counterparties | -27,637 | 24,470 | -1,467 |
Cash paid to redeem convertible preferred stock | 0 | -207,033 | 0 |
Common stock repurchases | 0 | -7,292 | -35,062 |
Proceeds from capital raising activities: | |||
Issuance of preferred stock | 18,180 | 165,756 | 4,479 |
Issuance of common stock | 0 | 0 | 142,035 |
Other capital stock transactions | -468 | -410 | -585 |
Dividends paid | -140,723 | -132,191 | -173,138 |
Net cash provided by (used in) financing activities | 173,297 | -458,031 | 1,368,062 |
Net change in cash and cash equivalents | -105,830 | -12,089 | -1,272 |
Cash and cash equivalents at beginning of year | 413,356 | 425,445 | 426,717 |
Cash and cash equivalents at end of year | $307,526 | $413,356 | $425,445 |
BUSINESS
BUSINESS | 12 Months Ended |
Dec. 31, 2014 | |
BUSINESS [Abstract] | |
BUSINESS | NOTE 1 ¾ BUSINESS |
Capstead Mortgage Corporation operates as a self-managed real estate investment trust for federal income tax purposes (a “REIT”) and is based in Dallas, Texas. Unless the context otherwise indicates, Capstead Mortgage Corporation, together with its subsidiaries, is referred to as “Capstead” or the “Company.” Capstead earns income from investing in a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of adjustable-rate mortgage (“ARM”) securities issued and guaranteed by government-sponsored enterprises, either Fannie Mae or Freddie Mac (together, the “GSEs”), or by an agency of the federal government, Ginnie Mae. Residential mortgage pass-through securities guaranteed by the GSEs or Ginnie Mae, referred to as “Agency Securities,” are considered to have limited, if any, credit risk. |
ACCOUNTING_POLICIES
ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2014 | |
ACCOUNTING POLICIES [Abstract] | |
ACCOUNTING POLICIES | NOTE 2 ¾ ACCOUNTING POLICIES |
Basis of Presentation | |
The consolidated financial statements include the accounts of Capstead Mortgage Corporation and its wholly-owned and majority-owned subsidiaries over which it exercises control. Capstead also consolidates, if appropriate, any variable interest entities in which it holds an interest. Common securities held by the Company in statutory trusts organized to issue long-term unsecured borrowings (prior to the dissolution of these trusts in December 2013 – see NOTE 5) were not considered variable interests at risk pursuant to variable interest entity accounting principles and were accounted for as investments in unconsolidated affiliates. Investments in any unconsolidated affiliates are initially recorded at cost and subsequently adjusted for the Company’s equity in earnings and losses and cash contributions and distributions. Intercompany balances and transactions are eliminated. Prior year amounts related to equity-based compensation for employees (see NOTE 12) have been reclassified from Salary and benefits to Long-term incentive compensation in the Statements of Income. | |
Recent Accounting Pronouncements | |
In June 2014 the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-11, Transfers and Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures (“ASU 2014-11”). ASU 2014-11 requires repurchase-to-maturity transactions to be accounted for as financings and eliminates existing guidance regarding so-called “linked transactions” between a buyer of securities and a seller that also provides related repurchase financings. ASU 2014-11 also introduces new disclosure requirements and is effective for periods beginning after December 15, 2014. The adoption of ASU 2014-11 by the Company is not expected to have any effect on its results of operations, financial condition, or cash flows. | |
Use of Estimates | |
The use of estimates is inherent in the preparation of financial statements. Amortization of investment premiums on financial assets is based in part on estimates of future levels of mortgage prepayments, which are impacted by future changes in interest rates and other factors. While the actual level of mortgage prepayments for a given accounting period is the single largest determinant in amortizing investment premiums, if expectations for future levels of mortgage prepayments increase substantially, earnings could be adversely affected. | |
Fair values of financial instruments are estimated based on a market approach using available market information and appropriate valuation methodologies (Level Two Inputs); however, judgment is required in interpreting market data to develop these estimates. Fair values fluctuate on a daily basis and are influenced by changes in, and market expectations for changes in, interest rates, market liquidity conditions and levels of mortgage prepayments, as well as other factors. Accordingly, estimates of fair value are as of the balance sheet dates and are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and estimation methodologies may have a material effect on estimated fair values. Judgment is also exercised in making impairment conclusions and estimating impairment charges. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include unrestricted cash on hand and highly liquid investments with original maturities of three months or less when purchased. | |
Financial Assets | |
Capstead’s financial assets consist almost exclusively of Agency Securities classified as available-for-sale and carried at fair value with unrealized gains and losses reported as a separate component of Accumulated other comprehensive income. Loans classified as held for investment or mortgage securities classified as held-to-maturity are recorded at amortized cost (unpaid principal balance, adjusted for unamortized investment premiums and discounts). Interest is recorded as income when earned. Investment premiums and discounts are recognized as adjustments to interest income by the interest method, generally over the expected life of the related financial assets. Realized gains and losses from sales are recorded as a component of Other revenue (expense). The specific identification method is used to determine the cost of financial assets sold. Financial assets are reviewed for potential impairment at each balance sheet date. Other-than-temporary impairments of investments in mortgage securities can occur with changes in the Company’s intent or ability to hold the mortgage securities until any declines in fair value are recovered and as a result of adverse changes in the financial condition of the issuer(s) such that a full recovery of cost basis is no longer expected. The amount of any such other-than-temporary impairment for an investment in a mortgage security is measured by comparing the recorded amount of the security to its fair value. Other-than-temporary impairment charges would be recorded as a component of Other revenue (expense) if the impairment results from changes in in the Company’s intent or ability to hold the securities. Should other-than-temporary impairment arise as a result of adverse changes in the financial condition of the issuer(s) without changing the Company’s intent and ability to hold the securities, the credit component of the impairment would be recorded as a component of Other revenue (expense) and with any remainder recorded as a component of Other comprehensive income. | |
Borrowings | |
Capstead’s borrowings are carried at their principal balances outstanding. Debt issue costs associated with Unsecured borrowings are recorded in Receivables and other assets, and are recognized as adjustments to interest expense by the interest method over the term of these borrowings. | |
Borrowings under repurchase arrangements create exposure to the potential for failure on the part of counterparties to honor their commitment to return pledged collateral. In the event of a default by a counterparty, the Company may have difficulty recovering its collateral. To mitigate this risk, the Company monitors the creditworthiness of its counterparties and manages its exposure to any single counterparty. | |
Derivative Financial Instruments (“Derivatives”) | |
Derivatives used by Capstead for risk management purposes are carried at fair value as assets or liabilities. The accounting for changes in fair value of each Derivative held depends on whether it has been designated as a hedge for accounting purposes, as well as the type of hedging relationship identified. Capstead will typically designate any Derivatives held as cash flow hedges related to a designated portion of its current and anticipated future borrowings. To qualify as a cash flow hedge, at the inception of the hedge relationship the Company must document that the hedge relationship is anticipated to be highly effective and monitor ongoing effectiveness on at least a quarterly basis. As long as the hedge relationship remains effective, the effective portion of changes in fair value of the Derivative is recorded in Accumulated other comprehensive income and the ineffective portion is recorded in interest expense. The effective portion of changes in fair value is reclassified from Accumulated other comprehensive income to earnings over the term of the Derivative primarily in the form of Derivative cash flows that are either in excess of or lower than market rates. Changes in fair value of Derivatives not held as accounting hedges, if any, or for which the hedge relationship is no longer considered highly effective, are recorded in Miscellaneous other revenue (expense). | |
The Company uses interest rate swap agreements in cash flow hedge relationships in order to hedge variability in borrowing rates due to changes in the underlying benchmark interest rate related to a designated portion of its current and anticipated future borrowings. Variable-rate swap payments to be received and any measured hedge ineffectiveness are recorded in interest expense as an offset to interest owed on the hedged borrowings that reset to market rates generally every 30 to 90 days. Fixed-rate swap payments to be made are also recorded in interest expense. The combination of these cash flows results in a relatively fixed rate on these borrowings, subject to certain adjustments. These adjustments include changes in spreads between variable rates on the swap agreements and actual borrowing rates as well as the effects of measured hedge ineffectiveness. | |
Holding Derivatives creates exposure to credit risk related to the potential for failure on the part of counterparties to honor their commitments. In addition, the Company is required to post collateral based on any declines in the market value of the Derivatives. In the event of default by a counterparty, the Company may have difficulty recovering its collateral and may not receive payments provided for under the terms of the Derivative. To mitigate this risk, the Company uses only well-established commercial banks as counterparties and, pursuant to recent regulatory changes, most Derivatives held at December 31, 2014 were entered into through exchanges designed in part to mitigate credit risk. | |
Cash collateral receivable from interest rate swap counterparties represents cash remitted to swap counterparties to meet initial and ongoing margin requirements that are based on the fair value of these Derivatives, including related interest receivable or payable under the terms of the agreements. The Company may also remit mortgage securities to certain of its swap counterparties to meet ongoing margin requirements. Such mortgage securities, if any, are included in Residential mortgage investments. Similarly, Cash collateral payable to interest rate swap counterparties represents cash received from counterparties to meet margin call requirements. For presentation purposes, the Company does not offset individual counterparty collateral receivables (or payables) with the recorded fair value of related interest rate swap agreements pursuant to master netting arrangements. In addition, gross unrealized gains on Derivatives (recorded as assets) are stated separately from gross unrealized losses (recorded as liabilities) without regard to counterparty. | |
Long-term Incentive Compensation | |
Capstead provides its employees and its directors with long-term incentive compensation in the form of equity-based awards. Equity-based compensation costs are initially measured at the estimated fair value of the awards on the grant date developed using appropriate valuation methodologies, as adjusted for estimates of future award forfeitures. Valuation methodologies used and subsequent expense recognition is dependent upon each award’s service and performance conditions, the latter also referred to as performance metrics. | |
Compensation costs for stock awards subject only to service conditions are measured at the closing stock price on the dates of grant and are recognized as expense on a straight-line basis over the requisite service periods for the awards, as adjusted for changes in estimated, and ultimately actual, forfeitures. Compensation costs for components of stock awards and restricted stock units (“RSUs”) subject to nonmarket-based performance metrics, (i.e. metrics not predicated on changes in the Company’s stock price) are measured at the closing stock price on the dates of grant, adjusted for the probability of achieving certain benchmarks included in the performance metrics. These initial cost estimates are recognized as expense over the requisite performance periods, as adjusted for changes in estimated, and ultimately actual, forfeitures and performance. Compensation costs for components of RSUs subject to market-based performance metrics are measured at the dates of grant using a Monte Carlo simulation model which incorporates into the valuation the inherent uncertainty regarding the achievement of the market-based performance metrics. These initial valuation amounts are recognized as expense over the requisite performance periods, subject only to adjustments for changes in estimated, and ultimately actual, forfeitures. | |
Income Taxes | |
Capstead Mortgage Corporation and its qualified REIT subsidiaries (“Capstead REIT”) have elected to be taxed as a REIT. As a result, Capstead REIT is not taxed on taxable income distributed to stockholders if certain REIT qualification tests are met. Capstead’s policy is to distribute 100% of the taxable income of the REIT, after application of available tax attributes, within the time limits prescribed by the Internal Revenue Code (the “Code”), which may extend into the subsequent taxable year. The Company may find it advantageous from time to time to elect taxable REIT subsidiary status for certain of its subsidiaries in which case taxable income of any such subsidiary would be subject to federal and, where applicable, state or local income taxes. Any such income taxes are accounted for using the liability method. Related deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. | |
The Company has not recognized any liabilities for unrecognized tax benefits using a “more likely than not” threshold for the recognition and measurement of the financial statement effects of tax positions taken on a tax return filing. Should any such liabilities be recognized in future periods, the Company will record related interest and penalties in Other general and administrative expense. | |
Dividend Classification | |
Capstead records common and preferred stock dividends in the Accumulated deficit component of Stockholders’ equity only to the extent of available earnings for the related period. Any dividends declared in excess of available earnings are considered a return of capital for financial reporting purposes and are recorded as reductions of Paid-in capital. The tax and financial reporting classification of dividends can differ primarily as a result of differences between taxable income and Net income and how taxable income is allocated to dividends paid. |
NET_INCOME_PER_COMMON_SHARE
NET INCOME PER COMMON SHARE | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
NET INCOME PER COMMON SHARE [Abstract] | |||||||||||||
NET INCOME PER COMMON SHARE | NOTE 3 ¾ NET INCOME PER COMMON SHARE | ||||||||||||
Basic net income per common share is computed by dividing net income, after (a) deducting dividends paid or accrued on preferred stock, (b) deducting any preferred stock redemption premiums paid and (c) allocating earnings to equity awards deemed to be participating securities pursuant to the two-class method, by the weighted average number of shares of common stock outstanding, calculated excluding unvested stock awards. Participating securities include any unvested equity awards that contain non-forfeitable rights to dividends prior to vesting. | |||||||||||||
Diluted net income per common share is computed by dividing the numerator used to compute basic net income per common share after adding back any dividends on shares of convertible preferred stock (prior to their redemption in June 2013 and when such shares were dilutive), by the denominator used to compute basic net income per common share, further adjusted for the dilutive effect, if any, of equity awards and shares of convertible preferred stock. Shares of the Company’s 7.50% Series E Cumulative Redeemable Preferred Stock first issued in May 2013 are contingently convertible into shares of common stock only upon the occurrence of a change in control and therefore are not considered dilutive securities absent such an occurrence. Any unvested equity awards that are deemed participating securities are included in the calculation of diluted net income per common share, if dilutive, under either the two-class method or the treasury stock method, depending upon which method produces the more dilutive result. | |||||||||||||
Components of the computation of basic and diluted net income per common share were as follows for the indicated periods (dollars in thousands, except per share amounts): | |||||||||||||
Year ended December 31 | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Basic net income per common share | |||||||||||||
Numerator for basic net income per common share: | |||||||||||||
Net income | $ | 140,820 | $ | 126,487 | $ | 163,626 | |||||||
Redemption preference premiums paid on Convertible preferred stock | – | (19,924 | ) | – | |||||||||
Preferred stock dividends | (13,781 | ) | (17,536 | ) | (21,021 | ) | |||||||
Earnings participation of unvested equity awards | (95 | ) | (139 | ) | (372 | ) | |||||||
$ | 126,944 | $ | 88,888 | $ | 142,233 | ||||||||
Denominator for basic net income per common share: | |||||||||||||
Weighted average common stock outstanding | 95,789 | 95,679 | 95,115 | ||||||||||
Average unvested stock awards outstanding | (398 | ) | (506 | ) | (522 | ) | |||||||
95,391 | 95,173 | 94,593 | |||||||||||
$ | 1.33 | $ | 0.93 | $ | 1.5 | ||||||||
Diluted net income per common share | |||||||||||||
Numerator for diluted net income per common share: | |||||||||||||
Numerator for basic net income per common share | $ | 126,944 | $ | 88,888 | $ | 142,233 | |||||||
Dividends on dilutive convertible preferred stock | – | 44 | 298 | ||||||||||
$ | 126,944 | $ | 88,932 | $ | 142,531 | ||||||||
Denominator for diluted net income per common share: | |||||||||||||
Denominator for basic net income per common share | 95,391 | 95,173 | 94,593 | ||||||||||
Net effect of dilutive equity awards | 238 | 145 | 111 | ||||||||||
Net effect of dilutive convertible preferred stock | – | 75 | 308 | ||||||||||
95,629 | 95,393 | 95,012 | |||||||||||
$ | 1.33 | $ | 0.93 | $ | 1.5 | ||||||||
Securities that could be potentially dilutive in the future that were not included in the computation of diluted net income per common share because to do so would have been antidilutive during the indicated periods were as follows (in thousands): | |||||||||||||
Year ended December 31 | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Antidilutive convertible preferred stock | – | – | 16,493 | ||||||||||
Antidilutive equity awards excludable under the treasury stock method: | |||||||||||||
Shares issuable under option awards | 15 | 30 | 10 | ||||||||||
RSUs | – | 243 | – | ||||||||||
RESIDENTIAL_MORTGAGE_INVESTMEN
RESIDENTIAL MORTGAGE INVESTMENTS | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
RESIDENTIAL MORTGAGE INVESTMENTS [Abstract] | |||||||||||||||||||||||||
RESIDENTIAL MORTGAGE INVESTMENTS | NOTE 4 ¾ RESIDENTIAL MORTGAGE INVESTMENTS | ||||||||||||||||||||||||
Residential mortgage investments classified by collateral type and interest rate characteristics were as follows as of the indicated dates (dollars in thousands): | |||||||||||||||||||||||||
Unpaid | Investment Premiums | Amortized Cost Basis | Carrying | Net | Average | ||||||||||||||||||||
Principal | Amount (a) | WAC (b) | Yield(b) | ||||||||||||||||||||||
Balance | |||||||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||||||
Agency Securities: | |||||||||||||||||||||||||
Fannie Mae/Freddie Mac: | |||||||||||||||||||||||||
Fixed-rate | $ | 1,660 | $ | 4 | $ | 1,664 | $ | 1,665 | 6.63 | % | 6.45 | % | |||||||||||||
ARMs | 10,230,419 | 328,781 | 10,559,200 | 10,800,332 | 2.51 | 1.72 | |||||||||||||||||||
Ginnie Mae ARMs | 2,983,659 | 103,911 | 3,087,570 | 3,099,168 | 2.63 | 1.53 | |||||||||||||||||||
13,215,738 | 432,696 | 13,648,434 | 13,901,165 | 2.54 | 1.69 | ||||||||||||||||||||
Residential mortgage loans: | |||||||||||||||||||||||||
Fixed-rate | 1,848 | 2 | 1,850 | 1,850 | 6.96 | 5.46 | |||||||||||||||||||
ARMs | 3,046 | 13 | 3,059 | 3,059 | 3.73 | 3.14 | |||||||||||||||||||
4,894 | 15 | 4,909 | 4,909 | 4.95 | 3.97 | ||||||||||||||||||||
Collateral for structured financings | 1,997 | 33 | 2,030 | 2,030 | 8.11 | 7.62 | |||||||||||||||||||
$ | 13,222,629 | $ | 432,744 | $ | 13,655,373 | $ | 13,908,104 | 2.54 | 1.69 | ||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Agency Securities: | |||||||||||||||||||||||||
Fannie Mae/Freddie Mac: | |||||||||||||||||||||||||
Fixed-rate | $ | 2,158 | $ | 6 | $ | 2,164 | $ | 2,167 | 6.67 | % | 6.4 | % | |||||||||||||
ARMs | 10,675,620 | 343,452 | 11,019,072 | 11,231,057 | 2.58 | 1.59 | |||||||||||||||||||
Ginnie Mae ARMs | 2,145,639 | 74,396 | 2,220,035 | 2,233,495 | 2.64 | 1.57 | |||||||||||||||||||
12,823,417 | 417,854 | 13,241,271 | 13,466,719 | 2.59 | 1.59 | ||||||||||||||||||||
Residential mortgage loans: | |||||||||||||||||||||||||
Fixed-rate | 2,633 | 3 | 2,636 | 2,636 | 6.99 | 5.62 | |||||||||||||||||||
ARMs | 4,244 | 18 | 4,262 | 4,262 | 3.81 | 3.46 | |||||||||||||||||||
6,877 | 21 | 6,898 | 6,898 | 5.03 | 4.27 | ||||||||||||||||||||
Collateral for structured financings | 2,220 | 37 | 2,257 | 2,257 | 8.09 | 7.34 | |||||||||||||||||||
$ | 12,832,514 | $ | 417,912 | $ | 13,250,426 | $ | 13,475,874 | 2.59 | 1.59 | ||||||||||||||||
(a) | Includes unrealized gains and losses for residential mortgage investments classified as available-for-sale (see NOTE 9). | ||||||||||||||||||||||||
(b) | Net WAC, or weighted average coupon, is the weighted average interest rate of the mortgage loans underlying the indicated investments net of servicing and other fees as of the indicated balance sheet date. Net WAC is expressed as a percentage calculated on an annualized basis on the unpaid principal balances of the mortgage loans underlying these investments. Average yield is presented for the year then ended, and is based on the cash component of interest income expressed as a percentage calculated on an annualized basis on average amortized cost basis (the “cash yield”) less the effects of amortizing investment premiums. Investment premium amortization is determined using the interest method and incorporates actual and anticipated future mortgage prepayments. | ||||||||||||||||||||||||
Because of federal government support for the GSEs, Agency Securities are considered to have limited, if any, credit risk. Residential mortgage loans held by Capstead were originated prior to 1995 when Capstead operated a mortgage conduit and the related credit risk is borne by the Company. Collateral for structured financings consists of private residential mortgage securities that are backed by loans obtained through this mortgage conduit and are pledged to secure repayment of related structured financings. Credit risk for these securities is borne by the related bondholders. The maturity of Residential mortgage investments is directly affected by prepayments of principal on the underlying mortgage loans. Consequently, actual maturities will be significantly shorter than the portfolio’s weighted average contractual maturity of 290 months. | |||||||||||||||||||||||||
Fixed-rate investments consist of residential mortgage loans and Agency Securities backed by residential mortgage loans with fixed rates of interest. Adjustable-rate investments generally are ARM Agency Securities backed by residential mortgage loans that have coupon interest rates that adjust at least annually to more current interest rates or begin doing so after an initial fixed-rate period. After the initial fixed-rate period, if applicable, mortgage loans underlying ARM securities typically either (i) adjust annually based on specified margins over the one-year Constant Maturity U.S. Treasury Note Rate (“CMT”) or the one-year London interbank offered rate (“LIBOR”), (ii) adjust semiannually based on specified margins over six-month LIBOR, or (iii) adjust monthly based on specified margins over indices such as one-month LIBOR, the Eleventh District Federal Reserve Bank Cost of Funds Index, or over a rolling twelve month average of the one-year CMT index, usually subject to periodic and lifetime limits, or caps, on the amount of such adjustments during any single interest rate adjustment period and over the contractual term of the underlying loans. | |||||||||||||||||||||||||
Capstead classifies its ARM securities based on each security’s average number of months until coupon reset (“months to roll”). Months to roll is an indicator of asset duration which is a measure of market price sensitivity to interest rate movements. A shorter duration generally indicates less interest rate risk. Current-reset ARM securities have months to roll of less than 18 months while longer-to-reset ARM securities have months to roll of 18 months or greater. As of December 31, 2014, the average months to roll for the Company’s $7.67 billion (amortized cost basis) in current-reset ARM securities was 6.4 months while the average months to roll for the Company’s $5.98 billion (amortized cost basis) in longer-to-reset ARM securities was 39.5 months. |
INVESTMENTS_IN_UNCONSOLIDATED_
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | 12 Months Ended |
Dec. 31, 2014 | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES [Abstract] | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES | NOTE 5 ¾ INVESTMENTS IN UNCONSOLIDATED AFFILIATES |
To facilitate the issuance of Unsecured borrowings, in 2006 and 2005 Capstead formed and capitalized three Delaware statutory trusts through the issuance to the Company of the trusts’ common securities totaling $3.1 million (see NOTE 8). In December 2013 the Company simplified its capital structure by dissolving the trusts and distributing the related junior subordinated notes (originally issued to the trusts by the Company) to the holders of the trusts’ common and preferred securities. Prior to dissolution, the Company’s equity in the earnings of the trusts consisted solely of the common trust securities’ pro rata share in interest accruing on junior subordinated notes issued to the trusts. |
REPURCHASE_ARRANGEMENTS_AND_SI
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS [Abstract] | |||||||||||||||||
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS | NOTE 6 ¾ REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS | ||||||||||||||||
Capstead pledges its Residential mortgage investments as collateral under repurchase arrangements with commercial banks and other financial institutions, referred to as counterparties, the terms and conditions of which are negotiated on a transaction-by-transaction basis when each such borrowing is initiated or renewed. Repurchase arrangements entered into by the Company involve the sale and a simultaneous agreement to repurchase the transferred assets at a future date and are accounted for as borrowings. The Company maintains the beneficial interest in the specific securities pledged during the term of each repurchase arrangement and receives the related principal and interest payments. The amount borrowed is generally equal to the fair value of the securities pledged, as determined by the lending counterparty, less an agreed-upon discount, referred to as a “haircut.” Interest rates on these borrowings are fixed based on prevailing rates corresponding to the terms of the borrowings, and interest is paid at the termination of the repurchase arrangement at which time the Company may enter into a new repurchase arrangement at prevailing haircuts and rates with the same counterparty or repay that counterparty and negotiate financing with a different counterparty. None of the Company’s counterparties are obligated to renew or otherwise enter into new repurchase arrangements at the conclusion of existing repurchase arrangements. In response to declines in fair value of pledged securities due to changes in market conditions or the publishing of monthly security pay down factors, lenders typically require the Company to post additional securities as collateral, pay down borrowings or fund cash margin accounts with the counterparties in order to re-establish the agreed-upon collateral requirements. These actions are referred to as margin calls. Conversely, in response to increases in fair value of pledged securities, the Company routinely margin calls its lending counterparties in order to return previously pledged collateral. | |||||||||||||||||
Repurchase arrangements and similar borrowings (and related pledged collateral, including accrued interest receivable), classified by collateral type and remaining maturities, and related weighted average borrowing rates as of the indicated dates were as follows (dollars in thousands): | |||||||||||||||||
Collateral Type | Collateral | Accrued | Borrowings | Average | |||||||||||||
Carrying | Interest | Outstanding | Borrowing | ||||||||||||||
Amount | Receivable | Rates | |||||||||||||||
31-Dec-14 | |||||||||||||||||
Borrowings with maturities of 30 days or less: | |||||||||||||||||
Agency Securities | $ | 10,401,080 | $ | 24,045 | $ | 9,878,889 | 0.35 | % | |||||||||
Borrowings with maturities greater than 30 days: | |||||||||||||||||
Agency Securities (31 to 90 days) | 1,205,570 | 2,248 | 1,150,924 | 0.35 | |||||||||||||
Agency Securities (greater than 90 days) | 1,874,892 | 4,640 | 1,775,000 | 0.56 | |||||||||||||
Similar borrowings: | |||||||||||||||||
Collateral for structured financings* | 2,030 | – | 2,030 | 8.11 | |||||||||||||
$ | 13,483,572 | $ | 30,933 | $ | 12,806,843 | 0.38 | |||||||||||
Year-end borrowing rates adjusted for effects of related Derivatives (see NOTE 7) | 0.58 | ||||||||||||||||
31-Dec-13 | |||||||||||||||||
Borrowings with maturities of 30 days or less: | |||||||||||||||||
Agency Securities | $ | 12,169,534 | $ | 28,195 | $ | 11,578,211 | 0.38 | % | |||||||||
Borrowings with maturities greater than 30 days: | |||||||||||||||||
Agency Securities (31 to 90 days) | 951,966 | 2,068 | 902,432 | 0.38 | |||||||||||||
Similar borrowings: | |||||||||||||||||
Collateral for structured financings* | 2,257 | – | 2,257 | 8.09 | |||||||||||||
$ | 13,123,757 | $ | 30,263 | $ | 12,482,900 | 0.38 | |||||||||||
Year-end borrowing rates adjusted for effects of related Derivatives held as cash flow hedges | 0.49 | ||||||||||||||||
* | The maturity of structured financings is directly affected by prepayments on the related mortgage pass-through securities pledged as collateral. Additionally, these financings are subject to redemption by the residual bondholders. | ||||||||||||||||
Average borrowings outstanding differed from respective year-end balances during the indicated periods primarily due to changes in portfolio levels and differences in the timing of portfolio acquisitions relative to portfolio runoff as illustrated below (dollars in thousands): | |||||||||||||||||
Year ended December 31 | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Average | Average | Average | Average | ||||||||||||||
Borrowings | Rate | Borrowings | Rate | ||||||||||||||
Average borrowings and rates adjusted for the effects of related Derivatives held as cash flow hedges for the indicated years | $ | 12,651,061 | 0.52 | % | $ | 12,702,941 | 0.52 | % | |||||||||
Interest paid on Repurchase arrangements and similar borrowings, including related Derivative cash flows, totaled $59.7 million, $71.1 million and $69.5 million during 2014, 2013 and 2012, respectively. |
USE_OF_DERIVATIVE_FINANCIAL_IN
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT [Abstract] | |||||||||||||||||||||||||
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT | NOTE 7 ¾ USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT | ||||||||||||||||||||||||
To help mitigate exposure to higher interest rates, Capstead typically uses currently-paying and forward-starting, one-month LIBOR-indexed, pay-fixed, receive-variable, interest rate swap agreements that require interest payments for two-year terms. These Derivatives are designated as cash flow hedges of the variability of the underlying benchmark interest rate of current and forecasted 30- to 90-day borrowings under repurchase arrangements. This hedge relationship establishes a relatively stable fixed rate on related borrowings because the variable-rate payments received on the swap agreements offset a significant portion of the interest accruing on the related borrowings, leaving the fixed-rate swap payments as the Company’s effective borrowing rate, subject to certain adjustments. These adjustments include differences between variable rate payments received on the swap agreements and related unhedged borrowing rates as well as the effects of measured hedge ineffectiveness. Additionally, changes in fair value of these Derivatives tend to partially offset opposing changes in fair value of the Company’s residential mortgage investments that can occur in response to changes in market interest rates. | |||||||||||||||||||||||||
During 2014 Capstead entered into swap agreements with notional amounts of $2.30 billion. These swap agreements require fixed rate interest payments averaging 0.62% for two-year periods commencing on various dates between April 2014 and January 2015. Also during 2014, $1.30 billion notional amount of swaps requiring fixed rate interest payments averaging 0.55% matured, while $4.30 billion notional amount of forward-starting swaps requiring fixed rate interest payments averaging 0.54% moved into current-pay status. | |||||||||||||||||||||||||
At December 31, 2014, the Company’s portfolio of financing-related swap positions had the following characteristics (dollars in thousands): | |||||||||||||||||||||||||
Period of | Notional | Average Fixed Rate | |||||||||||||||||||||||
Contract Expiration | Amount | Payment Requirement | |||||||||||||||||||||||
Currently-paying contracts: | |||||||||||||||||||||||||
First quarter 2015 | $ | 1,100,000 | 0.5 | % | |||||||||||||||||||||
Second quarter 2015 | 200,000 | 0.43 | |||||||||||||||||||||||
Third quarter 2015 | 400,000 | 0.47 | |||||||||||||||||||||||
Fourth quarter 2015 | 1,200,000 | 0.45 | |||||||||||||||||||||||
First quarter 2016 | 1,700,000 | 0.51 | |||||||||||||||||||||||
Second quarter 2016 | 1,100,000 | 0.47 | |||||||||||||||||||||||
Third quarter 2016 | 700,000 | 0.56 | |||||||||||||||||||||||
Fourth quarter 2016 | 800,000 | 0.66 | |||||||||||||||||||||||
(average expiration: 12 months) | 7,200,000 | 0.51 | |||||||||||||||||||||||
Forward-starting contracts: | |||||||||||||||||||||||||
First quarter 2017 (average expiration: 24 months) | 500,000 | 0.72 | |||||||||||||||||||||||
(average expiration: 12 months) | $ | 7,700,000 | |||||||||||||||||||||||
In addition to portfolio financing-related swap positions, in 2010 the Company entered into three forward-starting, three-month LIBOR-indexed, pay-fixed, receive-variable, interest rate swap agreements with notional amounts totaling $100 million and average fixed rates of 4.09% with 20-year payment terms coinciding with the floating-rate terms of the Company’s Unsecured borrowings which begin between October 30, 2015 and September 15, 2016. These Derivatives are designated as cash flow hedges of the variability of the underlying benchmark interest rate associated with the floating-rate terms of these long-term borrowings (see NOTE 8). | |||||||||||||||||||||||||
Interest rate swap agreements are measured at fair value on a recurring basis primarily using Level Two Inputs in accordance with ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820). In determining fair value estimates for these Derivatives, Capstead utilizes the standard methodology of netting the discounted future fixed cash payments and the discounted future variable cash receipts which are based on expected future interest rates derived from observable market interest rate curves. Related net interest payable at the balance sheet date is recorded separately. The Company also incorporates both its own nonperformance risk and its counterparties’ nonperformance risk in determining the fair value of these Derivatives. In considering the effect of nonperformance risk, the Company considered the impact of netting and credit enhancements, such as collateral postings and guarantees, and has concluded that counterparty risk is not significant to the overall valuation of these agreements. | |||||||||||||||||||||||||
The following tables include fair value and other related disclosures regarding all Derivatives held as of and for the indicated periods (in thousands): | |||||||||||||||||||||||||
Balance Sheet | 31-Dec | ||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||
Balance sheet-related | |||||||||||||||||||||||||
Swap agreements in a gain position (an asset) related to: | |||||||||||||||||||||||||
Borrowings under repurchase arrangements | (a) | $ | 1,657 | $ | 1,094 | ||||||||||||||||||||
Unsecured borrowings | (a) | – | 3,911 | ||||||||||||||||||||||
Swap agreements in a loss position (a liability) related to: | |||||||||||||||||||||||||
Borrowings under repurchase arrangements | (a) | (6,332 | ) | (11,304 | ) | ||||||||||||||||||||
Unsecured borrowings | (a) | (20,702 | ) | – | |||||||||||||||||||||
Related net interest payable | (b) | (9,516 | ) | (5,493 | ) | ||||||||||||||||||||
$ | (34,893 | ) | $ | (11,792 | ) | ||||||||||||||||||||
(a) | The fair value of Derivatives with realized and unrealized gains are aggregated and recorded as an asset on the face of the Balance Sheets separately from the fair value of Derivatives with realized and unrealized losses that are recorded as a liability. The amount of unrealized losses scheduled to be recognized in the Statements of Income over the next twelve months primarily in the form of fixed-rate swap payments in excess of current market rates totaled $12.2 million at December 31, 2014. | ||||||||||||||||||||||||
(b) | Included in “Accounts payable and accrued expenses” on the face of the Balance Sheets. | ||||||||||||||||||||||||
Location of Gain or (Loss) Recognized in | Year ended December 31 | ||||||||||||||||||||||||
Net Income | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Income statement-related | |||||||||||||||||||||||||
Components of effect on interest expense: | |||||||||||||||||||||||||
Amount of loss reclassified from Accumulated other comprehensive income related to the effective portion of active positions | $ | (22,055 | ) | $ | (16,914 | ) | $ | (19,882 | ) | ||||||||||||||||
Amount of gain (loss) recognized (ineffective portion) | (473 | ) | 24 | (542 | ) | ||||||||||||||||||||
Increase in interest expense and decrease in Net income as a result of the use of Derivatives | * | $ | (22,528 | ) | $ | (16,890 | ) | $ | (20,424 | ) | |||||||||||||||
Other comprehensive income-related | |||||||||||||||||||||||||
Amount of gain (loss) recognized in Other comprehensive income (loss) (effective portion) | $ | (41,059 | ) | $ | 9,320 | $ | (22,262 | ) | |||||||||||||||||
* | Included in “Interest expense: Repurchase arrangements and similar borrowings” on the face of the Statements of Income. | ||||||||||||||||||||||||
Capstead’s swap agreements and borrowings under repurchase arrangements are subject to master netting arrangements in the event of default on, or termination of, any one contract. See NOTE 6 for more information on the Company’s use of repurchase arrangements. The following tables provide disclosures concerning offsetting of financial liabilities and Derivatives as of the indicated dates (in thousands): | |||||||||||||||||||||||||
Offsetting of Derivative Asset | |||||||||||||||||||||||||
Gross | Gross | Net Amounts | Gross Amounts Not Offset | ||||||||||||||||||||||
Amounts | of Assets | in the Balance Sheet(a) | |||||||||||||||||||||||
Amounts of | Offset in | Presented in | Financial Instruments | Cash Collateral Received | Net | ||||||||||||||||||||
Recognized | the Balance | the Balance | Amount | ||||||||||||||||||||||
Assets | Sheet | Sheet | |||||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||||||
Counterparty 2 | $ | – | $ | 95 | $ | 95 | $ | (95 | ) | $ | – | $ | – | ||||||||||||
Counterparty 4 | 1,128 | 434 | 1,562 | (1,562 | ) | – | – | ||||||||||||||||||
$ | 1,128 | $ | 529 | $ | 1,657 | $ | (1,657 | ) | $ | – | $ | – | |||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Counterparty 1 | $ | 3,911 | $ | – | $ | 3,911 | $ | (3,911 | ) | $ | – | $ | – | ||||||||||||
Counterparty 2 | 634 | – | 634 | (634 | ) | – | – | ||||||||||||||||||
Counterparty 4 | 460 | – | 460 | (460 | ) | – | – | ||||||||||||||||||
$ | 5,005 | $ | – | $ | 5,005 | $ | (5,005 | ) | $ | – | $ | – | |||||||||||||
Offsetting of Financial Liabilities and Derivative Liabilities | |||||||||||||||||||||||||
Gross | Gross | Net Amounts | Gross Amounts Not Offset | ||||||||||||||||||||||
Amounts | of Liabilities | in the Balance Sheet (c) | |||||||||||||||||||||||
Amounts of | Offset in | Presented in | Financial | Cash | Net | ||||||||||||||||||||
Recognized | the Balance | the Balance | Instruments | Collateral | Amount | ||||||||||||||||||||
Liabilities(b) | Sheet | Sheet (a) | Pledged | ||||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||||||
Derivatives by counterparty: | |||||||||||||||||||||||||
Counterparty 1 | $ | 24,533 | $ | – | $ | 24,533 | $ | – | $ | (24,533 | ) | $ | – | ||||||||||||
Counterparty 2 | 4,042 | 95 | 4,137 | (95 | ) | (4,042 | ) | – | |||||||||||||||||
Counterparty 3 | 736 | – | 736 | – | (736 | ) | – | ||||||||||||||||||
Counterparty 4 | 6,710 | 434 | 7,144 | (1,562 | ) | (5,582 | ) | – | |||||||||||||||||
36,021 | 529 | 36,550 | (1,657 | ) | (34,893 | ) | – | ||||||||||||||||||
Repurchase arrangements and similar borrowings | 12,812,947 | – | 12,812,947 | (12,812,947 | ) | – | – | ||||||||||||||||||
$ | 12,848,968 | $ | 529 | $ | 12,849,497 | $ | (12,814,604 | ) | $ | (34,893 | ) | $ | – | ||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Derivatives by counterparty: | |||||||||||||||||||||||||
Counterparty 1 | $ | 6,002 | $ | – | $ | 6,002 | $ | (3,911 | ) | $ | (2,091 | ) | $ | – | |||||||||||
Counterparty 2 | 6,352 | – | 6,352 | (634 | ) | (5,718 | ) | – | |||||||||||||||||
Counterparty 3 | 1,581 | – | 1,581 | – | (1,581 | ) | – | ||||||||||||||||||
Counterparty 4 | 2,862 | – | 2,862 | (460 | ) | (2,402 | ) | – | |||||||||||||||||
16,797 | – | 16,797 | (5,005 | ) | (11,792 | ) | – | ||||||||||||||||||
Repurchase arrangements and similar borrowings | 12,487,604 | – | 12,487,604 | (12,487,604 | ) | – | – | ||||||||||||||||||
$ | 12,504,401 | $ | – | $ | 12,504,401 | $ | (12,492,609 | ) | $ | (11,792 | ) | $ | – | ||||||||||||
(a) | Amounts presented are limited to recognized liabilities and cash collateral received associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. | ||||||||||||||||||||||||
(b) | Amounts include accrued interest of $9.5 million and $5.5 million on interest rate swap agreements and $6.1 million and $4.7 million on repurchase arrangements and similar borrowings, included in “Accounts payable and accrued expenses” on the face of the Balance Sheets as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||
(c) | Amounts presented are limited to recognized assets and collateral pledged associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. | ||||||||||||||||||||||||
Changes in Accumulated other comprehensive income by component for the three years ended December 31, 2014 were as follows (in thousands): | |||||||||||||||||||||||||
Gains and Losses | Unrealized Gains | Total | |||||||||||||||||||||||
on Cash Flow | and Losses on | ||||||||||||||||||||||||
Hedges | Available-for-Sale | ||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||
Balance at December 31, 2011 | $ | (30,159 | ) | $ | 234,699 | $ | 204,540 | ||||||||||||||||||
Activity for the year ended December 31, 2012: | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (22,262 | ) | 91,750 | 69,488 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 19,882 | – | 19,882 | ||||||||||||||||||||||
Other comprehensive income (loss) | (2,380 | ) | 91,750 | 89,370 | |||||||||||||||||||||
Balance at December 31, 2012 | (32,539 | ) | 326,449 | 293,910 | |||||||||||||||||||||
Activity for the year ended December 31, 2013: | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 9,320 | (101,001 | ) | (91,681 | ) | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 16,914 | – | 16,914 | ||||||||||||||||||||||
Other comprehensive income (loss) | 26,234 | (101,001 | ) | (74,767 | ) | ||||||||||||||||||||
Balance at December 31, 2013 | (6,305 | ) | 225,448 | 219,143 | |||||||||||||||||||||
Activity for the year ended December 31, 2014: | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (41,059 | ) | 27,283 | (13,776 | ) | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 22,055 | – | 22,055 | ||||||||||||||||||||||
Other comprehensive income (loss) | (19,004 | ) | 27,283 | 8,279 | |||||||||||||||||||||
Balance at December 31, 2014 | $ | (25,309 | ) | $ | 252,731 | $ | 227,422 |
UNSECURED_BORROWINGS
UNSECURED BORROWINGS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
UNSECURED BORROWINGS [Abstract] | |||||||||||||||||
UNSECURED BORROWINGS | NOTE 8 ¾ UNSECURED BORROWINGS | ||||||||||||||||
Unsecured borrowings consist of 30-year junior subordinated notes originally issued in 2005 and 2006 to three special-purpose statutory trusts formed to issue $3.1 million of the trusts’ common securities to Capstead and to privately place $100 million of so-called trust preferred securities with unrelated third party investors. In December 2013 the statutory trusts were dissolved after the subordinated notes were distributed to the holders of the trusts’ common and preferred securities. Included in Receivables and other assets are $2.1 million in remaining issue costs at December 31, 2014 associated with the original issuance of these notes. Note balances and related weighted average interest rates as of the indicated dates (calculated including issue cost amortization) were as follows (dollars in thousands): | |||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Borrowings | Average | Borrowings | Average | ||||||||||||||
Outstanding | Rate * | Outstanding | Rate * | ||||||||||||||
Junior subordinated notes associated with: | |||||||||||||||||
Capstead Mortgage Trust I | $ | 35,000 | 8.31 | % | $ | 35,000 | 8.31 | % | |||||||||
Capstead Mortgage Trust II | 40,000 | 8.46 | 40,000 | 8.46 | |||||||||||||
Capstead Mortgage Trust III | 25,000 | 8.78 | 25,000 | 8.78 | |||||||||||||
$ | 100,000 | 8.49 | $ | 100,000 | 8.49 | ||||||||||||
* | The indicated weighted average rates have been in effect since issuance. After considering cash flow hedges that coincide with the floating rate terms of these borrowings that begin October 30, and December 15, 2015 for the notes associated with Capstead Mortgage Trusts I and II and September 15, 2016 for the notes associated with Capstead Mortgage Trust III, the effective borrowing rate will average 7.56% beginning September 15, 2016 through maturity, subject to certain adjustments for the effects of measured hedge ineffectiveness, if any. | ||||||||||||||||
The notes associated with Capstead Mortgage Trust I mature in October 2035 and are currently redeemable, in whole or in part, without penalty, at the Company’s option. The notes associated with Capstead Mortgage Trust II mature in December 2035 and are redeemable, in whole or in part, without penalty, at the Company’s option anytime on or after December 15, 2015. The notes associated with Capstead Mortgage Trust III mature in September 2036 and are redeemable, in whole or in part, without penalty, at the Company’s option anytime on or after September 15, 2016. | |||||||||||||||||
Since issuance, the weighted average effective interest rate for Unsecured borrowings (calculated including issue cost amortization) was 8.49% and related interest paid was $8.4 million, $8.6 million, and $8.6 million during 2014, 2013 and 2012, respectively. |
DISCLOSURES_REGARDING_FAIR_VAL
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS | NOTE 9 ¾ DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS | ||||||||||||||||
This note provides fair value-related disclosures as of the indicated balance sheet dates for Capstead’s financial assets and liabilities, most of which are influenced by changes in, and market expectations for changes in, interest rates and market liquidity conditions, as well as other factors beyond the control of management. All fair values were determined using Level 2 Inputs in accordance with ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820). | |||||||||||||||||
Residential mortgage investments, nearly all of which are mortgage securities classified as available-for-sale, are measured at fair value on a recurring basis. In determining fair value estimates for mortgage securities, the Company considers recent trading activity for similar investments and pricing levels indicated by lenders in connection with designating collateral for repurchase arrangements, provided such pricing levels are considered indicative of actual market clearing transactions. In determining fair value estimates for longer-term borrowings under repurchase arrangements, the Company considers pricing levels indicated by lenders for entering into new transactions using similar pledged collateral with terms equal to the remaining terms of the longer-term borrowings. In determining fair value estimates for unsecured borrowings, the Company considers current pricing for financial instruments with similar characteristics. Excluded from these disclosures are financial instruments for which the Company’s cost basis is deemed to approximate fair value due primarily to the short duration of these instruments, which are valued using primarily Level 1 measurements, including Cash and cash equivalents, cash collateral receivable from, or payable to, interest rate swap counterparties, receivables, payables and borrowings under repurchase arrangements with initial terms of 120 days or less. See NOTE 7 for information relative to the valuation of interest rate swap agreements. | |||||||||||||||||
Fair value-related disclosures for financial instruments other than debt securities were as follows as of the indicated dates (in thousands): | |||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Amount | Value | Amount | Value | ||||||||||||||
Financial assets: | |||||||||||||||||
Residential mortgage loans | $ | 4,909 | $ | 5,000 | $ | 6,898 | $ | 7,000 | |||||||||
Interest rate swap agreements | 1,657 | 1,657 | 5,005 | 5,005 | |||||||||||||
Financial liabilities: | |||||||||||||||||
Repurchase arrangements with initial terms of greater than 120 days | 2,128,517 | 2,128,400 | 36,299 | 36,300 | |||||||||||||
Unsecured borrowings | 100,000 | 100,500 | 100,000 | 101,000 | |||||||||||||
Interest rate swap agreements | 27,034 | 27,034 | 11,304 | 11,304 | |||||||||||||
Fair value-related disclosures for debt securities were as follows as of the indicated dates (in thousands): | |||||||||||||||||
Amortized | Gross Unrealized | ||||||||||||||||
Cost Basis | Gains | Losses | Fair Value | ||||||||||||||
31-Dec-14 | |||||||||||||||||
Agency Securities classified as available-for-sale: | |||||||||||||||||
Fannie Mae/Freddie Mac | $ | 10,559,231 | $ | 243,351 | $ | 2,218 | $ | 10,800,364 | |||||||||
Ginnie Mae | 3,087,570 | 16,755 | 5,157 | 3,099,168 | |||||||||||||
Residential mortgage securities classified as held-to-maturity | 3,663 | 124 | – | 3,787 | |||||||||||||
31-Dec-13 | |||||||||||||||||
Agency Securities classified as available-for-sale: | |||||||||||||||||
Fannie Mae/Freddie Mac | 11,019,116 | 224,456 | 12,468 | 11,231,104 | |||||||||||||
Ginnie Mae | 2,220,035 | 18,384 | 4,924 | 2,233,495 | |||||||||||||
Residential mortgage securities classified as held-to-maturity | 4,376 | 211 | – | 4,587 | |||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Fair | Unrealized | Fair | Unrealized | ||||||||||||||
Value | Loss | Value | Loss | ||||||||||||||
Securities in an unrealized loss position: | |||||||||||||||||
One year or greater | $ | 706,839 | $ | 5,320 | $ | 39,030 | $ | 380 | |||||||||
Less than one year | 1,095,724 | 2,055 | 2,857,724 | 17,012 | |||||||||||||
$ | 1,802,563 | $ | 7,375 | $ | 2,896,754 | $ | 17,392 | ||||||||||
Capstead’s investment strategy involves managing a leveraged portfolio of relatively short-duration ARM Agency Securities and management expects these securities will be held until payoff absent a major shift in strategy or a severe contraction in the Company’s ability to obtain financing to support its portfolio. Declines in fair value caused by increases in interest rates are typically modest for investments in short-duration ARM Agency Securities compared to investments in longer-duration ARM or fixed-rate assets. These declines are generally recoverable in a relatively short period of time as coupon interest rates on the underlying mortgage loans reset to rates more reflective of the then current interest rate environment. | |||||||||||||||||
From a credit risk perspective, federal government support for the GSEs helps ensure that fluctuations in value due to credit risk associated with these securities will be limited. Given that (a) any existing unrealized losses on mortgage securities held by the Company are not attributable to credit risk and declines in fair value of ARM securities due to changes in interest rates are generally recoverable in a relatively short period of time, (b) the Company typically holds its investments to maturity, and (c) it is more likely than not that the Company will not be required to sell any of its investments given the resiliency of the financing market for Agency Securities, none of these investments are considered other-than-temporarily impaired at December 31, 2014. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
INCOME TAXES | NOTE 10 ¾ INCOME TAXES | ||||||||||||
Capstead REIT and a subsidiary for which the Company has elected taxable REIT subsidiary status file separate tax returns in U.S. federal and state jurisdictions, where applicable. Provided Capstead REIT remains qualified as a REIT and all its taxable income is distributed to stockholders within allowable time limits, no income taxes are due on this income. Accordingly, no provision has been made for income taxes for Capstead REIT. Taxable income, if any, of the Company’s taxable REIT subsidiary, which is largely dormant, is fully taxable and provision is made for any resulting income taxes. The Company is no longer subject to examination and the related assessment of tax by federal, state, or local tax authorities for years before 2011, with the possible exception of certain information reporting and disclosure penalties with respect to earlier years. Management believes any such amounts would not have a material adverse effect on the Company’s financial condition. | |||||||||||||
The Company’s effective tax rate differs substantially from statutory federal income tax rates primarily due to the benefit of Capstead REIT’s status as a REIT, along with other items affecting the Company’s effective tax rate as illustrated below for the indicated periods (in thousands): | |||||||||||||
Year ended December 31 | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Income taxes computed at the federal statutory rate | $ | 49,287 | $ | 44,270 | $ | 57,269 | |||||||
Benefit of REIT status | (49,28 | ) | (44,270 | ) | (57,268 | ) | |||||||
Income taxes computed on income of Capstead’s sole taxable REIT subsidiary | 4 | – | 1 | ||||||||||
Change in net deferred income tax assets | (4 | ) | 1 | (1 | ) | ||||||||
Other | – | (1 | ) | – | |||||||||
Income tax provision | $ | – | $ | – | $ | – | |||||||
No income taxes were paid during 2014, 2013 or 2012. Significant components of the Company’s taxable REIT subsidiary’s deferred income tax assets and liabilities were as follows as of the indicated dates (in thousands): | |||||||||||||
31-Dec | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred income tax assets: | |||||||||||||
Alternative minimum tax credit (a) | $ | 1,941 | $ | 1,942 | |||||||||
Net operating loss carryforwards (b) | 58 | 60 | |||||||||||
Other | 20 | 21 | |||||||||||
2,019 | 2,023 | ||||||||||||
Deferred income tax liabilities | – | – | |||||||||||
Net deferred tax assets | $ | 2,019 | $ | 2,023 | |||||||||
Valuation allowance (c) | $ | 2,019 | $ | 2,023 | |||||||||
(a) | Alternative minimum tax credit carryforwards can be utilized to offset payment of federal income taxes on future taxable income, if any, earned by this subsidiary, subject to certain limitations. | ||||||||||||
(b) | Excludes $3.5 million in remaining net operating loss carryforwards which expire beginning after 2019. To the extent these carryforwards are utilized in future periods, the benefit will reduce actual taxes payable. | ||||||||||||
(c) | Because this subsidiary is not expected to earn significant amounts of taxable income, related net deferred tax assets are fully reserved at December 31, 2014. | ||||||||||||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
STOCKHOLDERS EQUITY [Abstract] | |||||||||||||
STOCKHOLDERS' EQUITY | NOTE 11 ¾ STOCKHOLDERS’ EQUITY | ||||||||||||
In May 2013 Capstead completed a public offering of 6.8 million shares ($170.0 million face amount) of its 7.50% Series E Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share. Shares of the Series E preferred stock are redeemable at the Company’s option for $25.00 per share, plus any accumulated and unpaid dividends, on or after May 13, 2018. Proceeds of the offering after underwriting fees and other costs totaled $164.3 million and together with $42.7 million of cash on hand were used to fund the June 2013 redemption of the Company’s then-outstanding convertible preferred stock. The shares of the convertible preferred stock that were redeemed had redemption preferences aggregating $207.0 million, a total of $19.9 million in excess of these shares’ recorded amounts on the balance sheet. This redemption preference premium is reflected as a $0.21 per common share reduction in net income available to common stockholders for the year ended December 31, 2013. | |||||||||||||
In late 2013 Capstead began issuing additional shares of Series E preferred stock through an at-the-market continuous offering program. Shares of Series E preferred stock issued under this program, issue prices and proceeds, both presented net of underwriting fees and other costs were as follows for the indicated periods: | |||||||||||||
Shares | Net | Net | |||||||||||
Issue Price | Proceeds | ||||||||||||
Year ended December 31, 2013 | 61,000 | $ | 23.78 | $ | 1,447,000 | ||||||||
Year ended December 31, 2014 | 757,000 | 24.01 | 18,180,000 | ||||||||||
Subsequent to year-end through February 27, 2015 (unaudited) | 222,000 | 24.65 | 5,465,000 | ||||||||||
During 2012 the Company raised $142.0 million in new common equity capital, after underwriting discounts and offering expenses, by issuing 10.5 million shares of common stock through a similar program. Also during 2012, the Company raised $4.5 million, net of expenses, in convertible preferred equity capital by issuing 309,000 shares of convertible preferred stock through a similar program. | |||||||||||||
Additional amounts of Series E preferred capital and new common equity capital may be raised in the future under continuous offering programs or by other means, subject to market conditions, compliance with federal securities laws and blackout periods associated with the dissemination of earnings and dividend announcements and other important Company-specific news. | |||||||||||||
Between November 2012 and January 2013, the Company repurchased 3.6 million shares of common stock at a cost of $42.4 million pursuant to a $100 million common stock repurchase program. | |||||||||||||
During 2014, 2013 and 2012, additions to common equity capital related to equity-based awards to directors and employees totaled $1.9 million, $1.8 million and $4.4 million, respectively, consisting primarily of amounts related to stock awards and also including net proceeds from the exercise of option awards. See NOTE 12 for further information pertaining to long-term equity-based awards. | |||||||||||||
Capstead’s charter provides that if its board of directors determines in good faith that the direct or indirect ownership of the common shares has become concentrated to an extent which would cause Capstead REIT to fail to qualify as a REIT, the Company may redeem or repurchase, at fair market value, any number of shares of common or preferred stock sufficient to maintain or bring such ownership into conformity with the Code. In addition, the Company may refuse to transfer or issue shares of common or preferred stock to any person whose ownership of such shares would result in Capstead REIT being unable to comply with the requirements of the Code. Finally, the charter provides that the Company may redeem or refuse to transfer any of its shares to prevent the imposition of a penalty tax as a result of ownership of such shares by certain disqualified organizations, including governmental bodies and tax-exempt entities that are not subject to tax on unrelated business taxable income. |
COMPENSATION_PROGRAMS
COMPENSATION PROGRAMS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
COMPENSATION PROGRAMS [Abstract] | |||||||||
COMPENSATION PROGRAMS | NOTE 12 ¾ COMPENSATION PROGRAMS | ||||||||
The compensation committee of Capstead’s board of directors (the “Committee”) administers all compensation programs for employees including salaries, short- and long-term incentive compensation, including equity-based awards, as well as other benefit programs. After reviewing existing programs and practices and soliciting feedback from investors during 2013, the Committee made a number of important changes that became effective in 2013 and early 2014. The most prominent changes involved replacing an absolute return-based, discretionary bonus program and an absolute return-based stock award program with largely nondiscretionary and formulaic, target-based annual and long-term incentive compensation programs for key executives with multiple, pre-established performance goals and defined threshold, target and maximum awards as a percentage of base salary. | |||||||||
In May 2014 stockholders approved the Amended and Restated 2014 Flexible Incentive Plan, which provides for the issuance of up to five million shares of common stock pursuant to equity-based awards as well as other incentive awards that recognize the creation of value for stockholders and promote the Company’s long-term growth and success. At December 31, 2014, the Plan had 4,927,763 shares of common stock remaining available for future issuances. | |||||||||
Short-Term Incentive Compensation Programs | |||||||||
Effective June 30, 2013, the Committee terminated the absolute return-based, discretionary bonus program and adopted the new annual incentive compensation program that included relative performance metrics measured against the Company’s peers in the mortgage REIT industry as well as the attainment of individual goals and objectives for key executives. The relative performance metrics used were based on relative economic return (change in book value plus dividends) and relative operating efficiency (operating expenses divided by Unsecured borrowings and Stockholders’ equity), calculated for the full year and prorated for the six month period during which the program was effective in 2013. | |||||||||
Under this new program, each performance metric is assigned a weighting and the Company’s performance relative to each metric is calculated separately. No awards can be earned for performance below the defined threshold returns and awards are capped for performance above the defined maximum return levels. For 2014 the program was modified to add an absolute economic return performance metric which measures performance against defined return levels. Included in Accounts payable and accrued expenses at December 31, 2014 are annual incentive compensation accruals for all employees totaling $1.4 million. Recognized in Short-term incentive compensation are $1.2 million, $2.8 million and $4.1 million related to annual incentive compensation for all employees during 2014, 2013 and 2012, respectively. | |||||||||
The Committee administers an additional performance-based short-term incentive compensation program for key executives that provides for quarterly cash payments equal to per share dividends declared on Capstead’s common stock multiplied by a notional amount of non-vesting or “phantom” shares of common stock (“Dividend Equivalent Rights” or “DERs”). DERs only represent the right to receive the same cash distributions that the Company’s common stockholders are entitled to receive during the term of the grants, subject to certain conditions, including continuous service. In December 2014 the Committee extended the term of the 654,000 outstanding DERs to December 31, 2015. Included in Accounts payable and accrued expenses are fourth quarter 2014 DERs distribution amounts totaling $222,000 that were paid in January 2015. Recognized in Short-term incentive compensation are $889,000, $811,000 and $914,000 related to the DERs program during 2014, 2013 and 2012, respectively. | |||||||||
Long-term Equity-based Awards – Performance-based RSUs | |||||||||
The Committee adopted the new performance-based long-term incentive compensation program for key executives in December 2013. The program provides for the grant of performance-based RSUs that are convertible into common shares following three-year performance periods, contingent upon whether, and to what extent, defined performance levels established for certain relative and absolute return performance metrics are met or exceeded. The relative return metrics measure the Company’s performance against its peers in the mortgage REIT industry on the basis of relative economic return and relative total stockholder return (change in stock price plus reinvested dividends). The absolute economic return metric measures performance against defined return levels. For conversion purposes, each performance metric is assigned a weighting and the Company’s performance relative to each metric is calculated separately. The actual number of shares of common stock the units can convert into for each of the metrics, if any, can range from one-half of a share per unit if that metric’s minimum threshold of performance is met, to two shares per unit if the related maximum performance threshold is met or exceeded, adjusted for the weighting assigned to the metric. If a metric’s minimum performance threshold is not met, no shares are issuable under that metric. Dividends accrue from the date of grant and will be paid in cash when the units convert into shares of common stock based on the number of shares ultimately issued, if any. | |||||||||
Pursuant to this program, in January 2015 and December 2013 the Committee granted 247,512 and 242,505 RSUs with three-year performance periods ending December 31, 2017 and 2016, respectively. Initial grant date fair values of $8.83 and $12.45 were assigned to each unit of the January 2015 and December 2013 grants, respectively. These initial fair values imply compensation costs of $2.2 million and $3.0 million, respectively, to be recognized as expense over the three-year performance periods assuming performance levels estimated at issuance are achieved and there are no forfeitures. During 2014 the three-year compensation cost estimate for the December 2013 grant was reduced to $1.7 million, or $7.21 per unit, due to lowered expectations for attainment of certain nonmarket-based performance metrics and recognized in Long-term incentive compensation is $582,000 related to the first year of this grant’s three-year performance period. Included in Common Stock dividends payable at December 31, 2014 and 2013 are estimated dividends payable pertaining to these awards of $213,000 and $75,000, respectively. | |||||||||
Long-term Equity-based Awards – Stock Awards | |||||||||
Under an absolute return performance-based stock award program terminated in 2013, the Committee granted common stock awards to all employees with staggered three-year vesting periods. These awards vest if annualized returns in excess of established return levels are generated during three-year measurement periods. Vesting can be deferred and a new three-year measurement period established to include the subsequent year, up to and including the seventh calendar year after the year of grant. Any remaining unvested awards issued under this program will expire if the required returns are not generated for the final three-year measurement period. Grants under this program for 114,423, 121,026 and 67,599 shares vested during 2014, 2013 and 2012, respectively. Average grant date fair values for these grants were $13.31, $12.01 and $10.18, respectively. Grants for another 125,221 shares with an average grant date fair value of $12.58 vested in February 2015 pertaining to initial measurement periods ending December 31, 2014. Grants for 133,571 and 69,849 shares with average grant date fair values of $12.17 and $11.67 will vest in January of 2016 and 2017, respectively, if annualized returns in excess of established return levels are generated during these grants’ initial measurement periods. | |||||||||
In December 2014 and 2013 respectively, the Committee granted service-based stock awards for 37,237 and 35,703 shares of common stock with grant date fair values of $12.47 and $12.34 to employees that weren’t awarded RSUs. These awards vest January 2, 2018 and January 2, 2017, respectively. In January 2014 the remaining 22,164 shares associated with 2007 service-based stock awards issued to all employees vested. As a component of the Company’s director compensation program, directors are granted stock awards annually upon election or re-election to the board of directors that vest approximately one year from issuance. In July 2014, director stock awards for 35,000 shares with a grant date fair value of $13.16 were granted that vest in July 2015. In April 2014, director grants awarded in 2013 for 28,000 shares with a grant date fair value of $13.02 vested. | |||||||||
Performance-based and service-based stock award activity for year ended December 31, 2014 is summarized below: | |||||||||
Number of | Weighted Average | ||||||||
Shares | Grant Date | ||||||||
Fair Value | |||||||||
Unvested stock awards outstanding at beginning of year | 528,931 | $ | 12.51 | ||||||
Grants | 72,237 | 12.8 | |||||||
Vestings | (164,587 | ) | 13.23 | ||||||
Unvested stock awards outstanding at end of year | 436,581 | 12.29 | |||||||
During 2014, 2013 and 2012, the Company recognized in Long-term incentive compensation $1.5 million, $1.8 million and $1.9 million, respectively, related to amortization of the grant date fair value of employee performance-based and service-based stock awards. The amounts amortized for these periods assumed that performance metrics, if applicable, would continue to be met for related initial measurement periods. In addition, the Company recognized in Other general and administrative expense $315,000, $387,000 and $362,000 related to amortization of the grant date fair value of service-based director stock awards during 2014, 2013 and 2012, respectively. Unrecognized compensation expense for unvested stock awards totaled $2.2 million as of December 31, 2014, to be expensed over a weighted average period of 1.5 years (assumes minimal employee and director attrition and, if applicable, absolute return performance metrics being met for related initial measurement periods). | |||||||||
All service-based stock awards receive dividends on a current basis without risk of forfeiture if the related awards do not vest. Outstanding performance-based stock awards defer the payment of dividends accruing between the grant dates and the end of related performance periods. If these awards do not vest, the related accrued dividends will be forfeited. Included in Common stock dividend payable at December 31, 2014 and 2013 are estimated dividends payable pertaining to these awards totaling $1.4 million and $1.2 million, respectively. | |||||||||
Long-term Equity-based Awards – Option Awards | |||||||||
Option awards currently outstanding have ten-year contractual terms from the grant date and were issued with strike prices equal to the quoted market prices of Capstead’s common shares on the dates of grant, all of which were prior to 2010. The fair value of option awards was estimated on the dates of grant using a Black-Scholes option pricing model and expensed over vesting periods that ended prior to 2012. Option award activity for the year ended December 31, 2014 is summarized below: | |||||||||
Number of Shares | Weighted Average Exercise Price | ||||||||
Option awards outstanding at beginning of year | 77,500 | $ | 11.75 | ||||||
Expirations | (10,000 | ) | 14.41 | ||||||
Exercises | (27,500 | ) | 10.63 | ||||||
Option awards outstanding at end of year | 40,000 | 11.86 | |||||||
All outstanding option awards are exercisable at December 31, 2014. These awards have a weighted average remaining contractual term of 3.5 years and an aggregate intrinsic value of $26,000. The total intrinsic value of option awards exercised was $67,000, $26,000 and $620,000 during 2014, 2013 and 2012, respectively. | |||||||||
Other Benefit Programs | |||||||||
Capstead sponsors a qualified defined contribution retirement plan for all employees and a nonqualified deferred compensation plan for certain of its executives. In general the Company matches up to 50% of a participant’s voluntary contribution up to a maximum of 6% of a participant’s base salary and annual incentive compensation payments and makes discretionary contributions of up to another 3% of such compensation regardless of participation in the plans. Company contributions are subject to certain vesting requirements that have been met by nearly all of Capstead’s current employees. During 2014, 2013 and 2012, the Company recognized in Salaries and benefits $258,000, $320,000 and $406,000 related to contributions to these plans, respectively. |
QUARTERLY_RESULTS_UNAUDITED
QUARTERLY RESULTS (UNAUDITED) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
QUARTERLY RESULTS (UNAUDITED) [Abstract] | |||||||||||||||||
QUARTERLY RESULTS | NOTE 13 ¾ QUARTERLY RESULTS (UNAUDITED) | ||||||||||||||||
Summarized quarterly results of operations were as follows (in thousands, except per share amounts). | |||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
Interest income on residential mortgage investments (before investment premium amortization) | $ | 81,733 | $ | 82,233 | $ | 82,146 | $ | 82,509 | |||||||||
Investment premium amortization | (22,288 | ) | (25,141 | ) | (28,284 | ) | (26,159 | ) | |||||||||
Related interest expense | (15,407 | ) | (15,542 | ) | (16,099 | ) | (18,107 | ) | |||||||||
44,038 | 41,550 | 37,763 | 38,243 | ||||||||||||||
Other interest income (expense) (a) | (2,061 | ) | (2,045 | ) | (2,044 | ) | (2,023 | ) | |||||||||
Other revenue (expense) | (3,586 | ) | (2,941 | ) | (3,328 | ) | (2,746 | ) | |||||||||
Net income | $ | 38,391 | $ | 36,564 | $ | 32,391 | $ | 33,474 | |||||||||
Basic and diluted net income per common share | $ | 0.37 | $ | 0.35 | $ | 0.3 | $ | 0.31 | |||||||||
Year Ended December 31, 2013 | |||||||||||||||||
Interest income on residential mortgage investments (before investment premium amortization) | $ | 86,867 | $ | 85,214 | $ | 85,674 | $ | 83,254 | |||||||||
Investment premium amortization | (28,399 | ) | (33,642 | ) | (39,031 | ) | (24,800 | ) | |||||||||
Related interest expense | (18,468 | ) | (16,749 | ) | (15,759 | ) | (15,392 | ) | |||||||||
40,000 | 34,823 | 30,884 | 43,062 | ||||||||||||||
Other interest income (expense) (a) | (2,010 | ) | (2,015 | ) | (2,074 | ) | (2,066 | ) | |||||||||
Other revenue (expense) | (3,072 | ) | (2,914 | ) | (4,108 | ) | (4,023 | ) | |||||||||
Net income | $ | 34,918 | $ | 29,894 | $ | 24,702 | $ | 36,973 | |||||||||
Basic and diluted net income per common share (b) | $ | 0.31 | $ | 0.04 | $ | 0.23 | $ | 0.35 | |||||||||
(a) | Consists principally of interest on unsecured borrowings and includes other interest income and is presented net of earnings of related statutory trusts. The trusts were dissolved in December 2013. | ||||||||||||||||
(b) | Includes $0.23 associated with redemption preference premiums paid and other one-time effects of the second quarter 2013 preferred capital transactions. | ||||||||||||||||
ACCOUNTING_POLICIES_Policies
ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
ACCOUNTING POLICIES [Abstract] | |
Basis of Presentation | Basis of Presentation |
The consolidated financial statements include the accounts of Capstead Mortgage Corporation and its wholly-owned and majority-owned subsidiaries over which it exercises control. Capstead also consolidates, if appropriate, any variable interest entities in which it holds an interest. Common securities held by the Company in statutory trusts organized to issue long-term unsecured borrowings (prior to the dissolution of these trusts in December 2013 – see NOTE 5) were not considered variable interests at risk pursuant to variable interest entity accounting principles and were accounted for as investments in unconsolidated affiliates. Investments in any unconsolidated affiliates are initially recorded at cost and subsequently adjusted for the Company’s equity in earnings and losses and cash contributions and distributions. Intercompany balances and transactions are eliminated. Prior year amounts related to equity-based compensation for employees (see NOTE 12) have been reclassified from Salary and benefits to Long-term incentive compensation in the Statements of Income. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In June 2014 the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-11, Transfers and Servicing: Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures (“ASU 2014-11”). ASU 2014-11 requires repurchase-to-maturity transactions to be accounted for as financings and eliminates existing guidance regarding so-called “linked transactions” between a buyer of securities and a seller that also provides related repurchase financings. ASU 2014-11 also introduces new disclosure requirements and is effective for periods beginning after December 15, 2014. The adoption of ASU 2014-11 by the Company is not expected to have any effect on its results of operations, financial condition, or cash flows. | |
Use of Estimates | Use of Estimates |
The use of estimates is inherent in the preparation of financial statements. Amortization of investment premiums on financial assets is based in part on estimates of future levels of mortgage prepayments, which are impacted by future changes in interest rates and other factors. While the actual level of mortgage prepayments for a given accounting period is the single largest determinant in amortizing investment premiums, if expectations for future levels of mortgage prepayments increase substantially, earnings could be adversely affected. | |
Fair values of financial instruments are estimated based on a market approach using available market information and appropriate valuation methodologies (Level Two Inputs); however, judgment is required in interpreting market data to develop these estimates. Fair values fluctuate on a daily basis and are influenced by changes in, and market expectations for changes in, interest rates, market liquidity conditions and levels of mortgage prepayments, as well as other factors. Accordingly, estimates of fair value are as of the balance sheet dates and are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and estimation methodologies may have a material effect on estimated fair values. Judgment is also exercised in making impairment conclusions and estimating impairment charges. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash and cash equivalents include unrestricted cash on hand and highly liquid investments with original maturities of three months or less when purchased. | |
Financial Assets | Financial Assets |
Capstead’s financial assets consist almost exclusively of Agency Securities classified as available-for-sale and carried at fair value with unrealized gains and losses reported as a separate component of Accumulated other comprehensive income. Loans classified as held for investment or mortgage securities classified as held-to-maturity are recorded at amortized cost (unpaid principal balance, adjusted for unamortized investment premiums and discounts). Interest is recorded as income when earned. Investment premiums and discounts are recognized as adjustments to interest income by the interest method, generally over the expected life of the related financial assets. Realized gains and losses from sales are recorded as a component of Other revenue (expense). The specific identification method is used to determine the cost of financial assets sold. Financial assets are reviewed for potential impairment at each balance sheet date. Other-than-temporary impairments of investments in mortgage securities can occur with changes in the Company’s intent or ability to hold the mortgage securities until any declines in fair value are recovered and as a result of adverse changes in the financial condition of the issuer(s) such that a full recovery of cost basis is no longer expected. The amount of any such other-than-temporary impairment for an investment in a mortgage security is measured by comparing the recorded amount of the security to its fair value. Other-than-temporary impairment charges would be recorded as a component of Other revenue (expense) if the impairment results from changes in in the Company’s intent or ability to hold the securities. Should other-than-temporary impairment arise as a result of adverse changes in the financial condition of the issuer(s) without changing the Company’s intent and ability to hold the securities, the credit component of the impairment would be recorded as a component of Other revenue (expense) and with any remainder recorded as a component of Other comprehensive income. | |
Borrowings | Borrowings |
Capstead’s borrowings are carried at their principal balances outstanding. Debt issue costs associated with Unsecured borrowings are recorded in Receivables and other assets, and are recognized as adjustments to interest expense by the interest method over the term of these borrowings. | |
Borrowings under repurchase arrangements create exposure to the potential for failure on the part of counterparties to honor their commitment to return pledged collateral. In the event of a default by a counterparty, the Company may have difficulty recovering its collateral. To mitigate this risk, the Company monitors the creditworthiness of its counterparties and manages its exposure to any single counterparty. | |
Derivative Financial Instruments ("Derivatives") | Derivative Financial Instruments (“Derivatives”) |
Derivatives used by Capstead for risk management purposes are carried at fair value as assets or liabilities. The accounting for changes in fair value of each Derivative held depends on whether it has been designated as a hedge for accounting purposes, as well as the type of hedging relationship identified. Capstead will typically designate any Derivatives held as cash flow hedges related to a designated portion of its current and anticipated future borrowings. To qualify as a cash flow hedge, at the inception of the hedge relationship the Company must document that the hedge relationship is anticipated to be highly effective and monitor ongoing effectiveness on at least a quarterly basis. As long as the hedge relationship remains effective, the effective portion of changes in fair value of the Derivative is recorded in Accumulated other comprehensive income and the ineffective portion is recorded in interest expense. The effective portion of changes in fair value is reclassified from Accumulated other comprehensive income to earnings over the term of the Derivative primarily in the form of Derivative cash flows that are either in excess of or lower than market rates. Changes in fair value of Derivatives not held as accounting hedges, if any, or for which the hedge relationship is no longer considered highly effective, are recorded in Miscellaneous other revenue (expense). | |
The Company uses interest rate swap agreements in cash flow hedge relationships in order to hedge variability in borrowing rates due to changes in the underlying benchmark interest rate related to a designated portion of its current and anticipated future borrowings. Variable-rate swap payments to be received and any measured hedge ineffectiveness are recorded in interest expense as an offset to interest owed on the hedged borrowings that reset to market rates generally every 30 to 90 days. Fixed-rate swap payments to be made are also recorded in interest expense. The combination of these cash flows results in a relatively fixed rate on these borrowings, subject to certain adjustments. These adjustments include changes in spreads between variable rates on the swap agreements and actual borrowing rates as well as the effects of measured hedge ineffectiveness. | |
Holding Derivatives creates exposure to credit risk related to the potential for failure on the part of counterparties to honor their commitments. In addition, the Company is required to post collateral based on any declines in the market value of the Derivatives. In the event of default by a counterparty, the Company may have difficulty recovering its collateral and may not receive payments provided for under the terms of the Derivative. To mitigate this risk, the Company uses only well-established commercial banks as counterparties and, pursuant to recent regulatory changes, most Derivatives held at December 31, 2014 were entered into through exchanges designed in part to mitigate credit risk. | |
Cash collateral receivable from interest rate swap counterparties represents cash remitted to swap counterparties to meet initial and ongoing margin requirements that are based on the fair value of these Derivatives, including related interest receivable or payable under the terms of the agreements. The Company may also remit mortgage securities to certain of its swap counterparties to meet ongoing margin requirements. Such mortgage securities, if any, are included in Residential mortgage investments. Similarly, Cash collateral payable to interest rate swap counterparties represents cash received from counterparties to meet margin call requirements. For presentation purposes, the Company does not offset individual counterparty collateral receivables (or payables) with the recorded fair value of related interest rate swap agreements pursuant to master netting arrangements. In addition, gross unrealized gains on Derivatives (recorded as assets) are stated separately from gross unrealized losses (recorded as liabilities) without regard to counterparty. | |
Long-term Incentive Compensation | Long-term Incentive Compensation |
Capstead provides its employees and its directors with long-term incentive compensation in the form of equity-based awards. Equity-based compensation costs are initially measured at the estimated fair value of the awards on the grant date developed using appropriate valuation methodologies, as adjusted for estimates of future award forfeitures. Valuation methodologies used and subsequent expense recognition is dependent upon each award’s service and performance conditions, the latter also referred to as performance metrics. | |
Compensation costs for stock awards subject only to service conditions are measured at the closing stock price on the dates of grant and are recognized as expense on a straight-line basis over the requisite service periods for the awards, as adjusted for changes in estimated, and ultimately actual, forfeitures. Compensation costs for components of stock awards and restricted stock units (“RSUs”) subject to nonmarket-based performance metrics, (i.e. metrics not predicated on changes in the Company’s stock price) are measured at the closing stock price on the dates of grant, adjusted for the probability of achieving certain benchmarks included in the performance metrics. These initial cost estimates are recognized as expense over the requisite performance periods, as adjusted for changes in estimated, and ultimately actual, forfeitures and performance. Compensation costs for components of RSUs subject to market-based performance metrics are measured at the dates of grant using a Monte Carlo simulation model which incorporates into the valuation the inherent uncertainty regarding the achievement of the market-based performance metrics. These initial valuation amounts are recognized as expense over the requisite performance periods, subject only to adjustments for changes in estimated, and ultimately actual, forfeitures. | |
Income Taxes | Income Taxes |
Capstead Mortgage Corporation and its qualified REIT subsidiaries (“Capstead REIT”) have elected to be taxed as a REIT. As a result, Capstead REIT is not taxed on taxable income distributed to stockholders if certain REIT qualification tests are met. Capstead’s policy is to distribute 100% of the taxable income of the REIT, after application of available tax attributes, within the time limits prescribed by the Internal Revenue Code (the “Code”), which may extend into the subsequent taxable year. The Company may find it advantageous from time to time to elect taxable REIT subsidiary status for certain of its subsidiaries in which case taxable income of any such subsidiary would be subject to federal and, where applicable, state or local income taxes. Any such income taxes are accounted for using the liability method. Related deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. | |
The Company has not recognized any liabilities for unrecognized tax benefits using a “more likely than not” threshold for the recognition and measurement of the financial statement effects of tax positions taken on a tax return filing. Should any such liabilities be recognized in future periods, the Company will record related interest and penalties in Other general and administrative expense. | |
Dividend Classification | Dividend Classification |
Capstead records common and preferred stock dividends in the Accumulated deficit component of Stockholders’ equity only to the extent of available earnings for the related period. Any dividends declared in excess of available earnings are considered a return of capital for financial reporting purposes and are recorded as reductions of Paid-in capital. The tax and financial reporting classification of dividends can differ primarily as a result of differences between taxable income and Net income and how taxable income is allocated to dividends paid. |
NET_INCOME_PER_COMMON_SHARE_Ta
NET INCOME PER COMMON SHARE (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
NET INCOME PER COMMON SHARE [Abstract] | |||||||||||||
Components Of Computation Of Basic And Diluted Net Income Per Common Share | Components of the computation of basic and diluted net income per common share were as follows for the indicated periods (dollars in thousands, except per share amounts): | ||||||||||||
Year ended December 31 | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Basic net income per common share | |||||||||||||
Numerator for basic net income per common share: | |||||||||||||
Net income | $ | 140,820 | $ | 126,487 | $ | 163,626 | |||||||
Redemption preference premiums paid on Convertible preferred stock | – | (19,924 | ) | – | |||||||||
Preferred stock dividends | (13,781 | ) | (17,536 | ) | (21,021 | ) | |||||||
Earnings participation of unvested equity awards | (95 | ) | (139 | ) | (372 | ) | |||||||
$ | 126,944 | $ | 88,888 | $ | 142,233 | ||||||||
Denominator for basic net income per common share: | |||||||||||||
Weighted average common stock outstanding | 95,789 | 95,679 | 95,115 | ||||||||||
Average unvested stock awards outstanding | (398 | ) | (506 | ) | (522 | ) | |||||||
95,391 | 95,173 | 94,593 | |||||||||||
$ | 1.33 | $ | 0.93 | $ | 1.5 | ||||||||
Diluted net income per common share | |||||||||||||
Numerator for diluted net income per common share: | |||||||||||||
Numerator for basic net income per common share | $ | 126,944 | $ | 88,888 | $ | 142,233 | |||||||
Dividends on dilutive convertible preferred stock | – | 44 | 298 | ||||||||||
$ | 126,944 | $ | 88,932 | $ | 142,531 | ||||||||
Denominator for diluted net income per common share: | |||||||||||||
Denominator for basic net income per common share | 95,391 | 95,173 | 94,593 | ||||||||||
Net effect of dilutive equity awards | 238 | 145 | 111 | ||||||||||
Net effect of dilutive convertible preferred stock | – | 75 | 308 | ||||||||||
95,629 | 95,393 | 95,012 | |||||||||||
$ | 1.33 | $ | 0.93 | $ | 1.5 | ||||||||
Potentially Dilutive Securities Excluded From Computation Of Net Income Per Common Share | Securities that could be potentially dilutive in the future that were not included in the computation of diluted net income per common share because to do so would have been antidilutive during the indicated periods were as follows (in thousands): | ||||||||||||
Year ended December 31 | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Antidilutive convertible preferred stock | – | – | 16,493 | ||||||||||
Antidilutive equity awards excludable under the treasury stock method: | |||||||||||||
Shares issuable under option awards | 15 | 30 | 10 | ||||||||||
RSUs | – | 243 | – |
RESIDENTIAL_MORTGAGE_INVESTMEN1
RESIDENTIAL MORTGAGE INVESTMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
RESIDENTIAL MORTGAGE INVESTMENTS [Abstract] | |||||||||||||||||||||||||
Schedule Of Residential Mortgage Investments | Residential mortgage investments classified by collateral type and interest rate characteristics were as follows as of the indicated dates (dollars in thousands): | ||||||||||||||||||||||||
Unpaid | Investment Premiums | Amortized Cost Basis | Carrying | Net | Average | ||||||||||||||||||||
Principal | Amount (a) | WAC (b) | Yield(b) | ||||||||||||||||||||||
Balance | |||||||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||||||
Agency Securities: | |||||||||||||||||||||||||
Fannie Mae/Freddie Mac: | |||||||||||||||||||||||||
Fixed-rate | $ | 1,660 | $ | 4 | $ | 1,664 | $ | 1,665 | 6.63 | % | 6.45 | % | |||||||||||||
ARMs | 10,230,419 | 328,781 | 10,559,200 | 10,800,332 | 2.51 | 1.72 | |||||||||||||||||||
Ginnie Mae ARMs | 2,983,659 | 103,911 | 3,087,570 | 3,099,168 | 2.63 | 1.53 | |||||||||||||||||||
13,215,738 | 432,696 | 13,648,434 | 13,901,165 | 2.54 | 1.69 | ||||||||||||||||||||
Residential mortgage loans: | |||||||||||||||||||||||||
Fixed-rate | 1,848 | 2 | 1,850 | 1,850 | 6.96 | 5.46 | |||||||||||||||||||
ARMs | 3,046 | 13 | 3,059 | 3,059 | 3.73 | 3.14 | |||||||||||||||||||
4,894 | 15 | 4,909 | 4,909 | 4.95 | 3.97 | ||||||||||||||||||||
Collateral for structured financings | 1,997 | 33 | 2,030 | 2,030 | 8.11 | 7.62 | |||||||||||||||||||
$ | 13,222,629 | $ | 432,744 | $ | 13,655,373 | $ | 13,908,104 | 2.54 | 1.69 | ||||||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Agency Securities: | |||||||||||||||||||||||||
Fannie Mae/Freddie Mac: | |||||||||||||||||||||||||
Fixed-rate | $ | 2,158 | $ | 6 | $ | 2,164 | $ | 2,167 | 6.67 | % | 6.4 | % | |||||||||||||
ARMs | 10,675,620 | 343,452 | 11,019,072 | 11,231,057 | 2.58 | 1.59 | |||||||||||||||||||
Ginnie Mae ARMs | 2,145,639 | 74,396 | 2,220,035 | 2,233,495 | 2.64 | 1.57 | |||||||||||||||||||
12,823,417 | 417,854 | 13,241,271 | 13,466,719 | 2.59 | 1.59 | ||||||||||||||||||||
Residential mortgage loans: | |||||||||||||||||||||||||
Fixed-rate | 2,633 | 3 | 2,636 | 2,636 | 6.99 | 5.62 | |||||||||||||||||||
ARMs | 4,244 | 18 | 4,262 | 4,262 | 3.81 | 3.46 | |||||||||||||||||||
6,877 | 21 | 6,898 | 6,898 | 5.03 | 4.27 | ||||||||||||||||||||
Collateral for structured financings | 2,220 | 37 | 2,257 | 2,257 | 8.09 | 7.34 | |||||||||||||||||||
$ | 12,832,514 | $ | 417,912 | $ | 13,250,426 | $ | 13,475,874 | 2.59 | 1.59 | ||||||||||||||||
(a) | Includes unrealized gains and losses for residential mortgage investments classified as available-for-sale (see NOTE 9). | ||||||||||||||||||||||||
(b) | Net WAC, or weighted average coupon, is the weighted average interest rate of the mortgage loans underlying the indicated investments net of servicing and other fees as of the indicated balance sheet date. Net WAC is expressed as a percentage calculated on an annualized basis on the unpaid principal balances of the mortgage loans underlying these investments. Average yield is presented for the year then ended, and is based on the cash component of interest income expressed as a percentage calculated on an annualized basis on average amortized cost basis (the “cash yield”) less the effects of amortizing investment premiums. Investment premium amortization is determined using the interest method and incorporates actual and anticipated future mortgage prepayments. |
REPURCHASE_ARRANGEMENTS_AND_SI1
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS [Abstract] | |||||||||||||||||
Schedule Of Repurchase Arrangements And Similar Borrowings | Repurchase arrangements and similar borrowings (and related pledged collateral, including accrued interest receivable), classified by collateral type and remaining maturities, and related weighted average borrowing rates as of the indicated dates were as follows (dollars in thousands): | ||||||||||||||||
Collateral Type | Collateral | Accrued | Borrowings | Average | |||||||||||||
Carrying | Interest | Outstanding | Borrowing | ||||||||||||||
Amount | Receivable | Rates | |||||||||||||||
31-Dec-14 | |||||||||||||||||
Borrowings with maturities of 30 days or less: | |||||||||||||||||
Agency Securities | $ | 10,401,080 | $ | 24,045 | $ | 9,878,889 | 0.35 | % | |||||||||
Borrowings with maturities greater than 30 days: | |||||||||||||||||
Agency Securities (31 to 90 days) | 1,205,570 | 2,248 | 1,150,924 | 0.35 | |||||||||||||
Agency Securities (greater than 90 days) | 1,874,892 | 4,640 | 1,775,000 | 0.56 | |||||||||||||
Similar borrowings: | |||||||||||||||||
Collateral for structured financings* | 2,030 | – | 2,030 | 8.11 | |||||||||||||
$ | 13,483,572 | $ | 30,933 | $ | 12,806,843 | 0.38 | |||||||||||
Year-end borrowing rates adjusted for effects of related Derivatives (see NOTE 7) | 0.58 | ||||||||||||||||
31-Dec-13 | |||||||||||||||||
Borrowings with maturities of 30 days or less: | |||||||||||||||||
Agency Securities | $ | 12,169,534 | $ | 28,195 | $ | 11,578,211 | 0.38 | % | |||||||||
Borrowings with maturities greater than 30 days: | |||||||||||||||||
Agency Securities (31 to 90 days) | 951,966 | 2,068 | 902,432 | 0.38 | |||||||||||||
Similar borrowings: | |||||||||||||||||
Collateral for structured financings* | 2,257 | – | 2,257 | 8.09 | |||||||||||||
$ | 13,123,757 | $ | 30,263 | $ | 12,482,900 | 0.38 | |||||||||||
Year-end borrowing rates adjusted for effects of related Derivatives held as cash flow hedges | 0.49 | ||||||||||||||||
* | The maturity of structured financings is directly affected by prepayments on the related mortgage pass-through securities pledged as collateral. Additionally, these financings are subject to redemption by the residual bondholders. | ||||||||||||||||
Schedule Of Average Borrowings Outstanding | Average borrowings outstanding differed from respective year-end balances during the indicated periods primarily due to changes in portfolio levels and differences in the timing of portfolio acquisitions relative to portfolio runoff as illustrated below (dollars in thousands): | ||||||||||||||||
Year ended December 31 | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Average | Average | Average | Average | ||||||||||||||
Borrowings | Rate | Borrowings | Rate | ||||||||||||||
Average borrowings and rates adjusted for the effects of related Derivatives held as cash flow hedges for the indicated years | $ | 12,651,061 | 0.52 | % | $ | 12,702,941 | 0.52 | % |
USE_OF_DERIVATIVE_FINANCIAL_IN1
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT [Abstract] | |||||||||||||||||||||||||
Schedule of Swap Agreements Expiration Period and Characteristics | At December 31, 2014, the Company’s portfolio of financing-related swap positions had the following characteristics (dollars in thousands): | ||||||||||||||||||||||||
Period of | Notional | Average Fixed Rate | |||||||||||||||||||||||
Contract Expiration | Amount | Payment Requirement | |||||||||||||||||||||||
Currently-paying contracts: | |||||||||||||||||||||||||
First quarter 2015 | $ | 1,100,000 | 0.5 | % | |||||||||||||||||||||
Second quarter 2015 | 200,000 | 0.43 | |||||||||||||||||||||||
Third quarter 2015 | 400,000 | 0.47 | |||||||||||||||||||||||
Fourth quarter 2015 | 1,200,000 | 0.45 | |||||||||||||||||||||||
First quarter 2016 | 1,700,000 | 0.51 | |||||||||||||||||||||||
Second quarter 2016 | 1,100,000 | 0.47 | |||||||||||||||||||||||
Third quarter 2016 | 700,000 | 0.56 | |||||||||||||||||||||||
Fourth quarter 2016 | 800,000 | 0.66 | |||||||||||||||||||||||
(average expiration: 12 months) | 7,200,000 | 0.51 | |||||||||||||||||||||||
Forward-starting contracts: | |||||||||||||||||||||||||
First quarter 2017 (average expiration: 24 months) | 500,000 | 0.72 | |||||||||||||||||||||||
(average expiration: 12 months) | $ | 7,700,000 | |||||||||||||||||||||||
Impact of Derivative Instruments on Statements of Financial Performance and Financial Position | The following tables include fair value and other related disclosures regarding all Derivatives held as of and for the indicated periods (in thousands): | ||||||||||||||||||||||||
Balance Sheet | 31-Dec | ||||||||||||||||||||||||
Location | 2014 | 2013 | |||||||||||||||||||||||
Balance sheet-related | |||||||||||||||||||||||||
Swap agreements in a gain position (an asset) related to: | |||||||||||||||||||||||||
Borrowings under repurchase arrangements | (a) | $ | 1,657 | $ | 1,094 | ||||||||||||||||||||
Unsecured borrowings | (a) | – | 3,911 | ||||||||||||||||||||||
Swap agreements in a loss position (a liability) related to: | |||||||||||||||||||||||||
Borrowings under repurchase arrangements | (a) | (6,332 | ) | (11,304 | ) | ||||||||||||||||||||
Unsecured borrowings | (a) | (20,702 | ) | – | |||||||||||||||||||||
Related net interest payable | (b) | (9,516 | ) | (5,493 | ) | ||||||||||||||||||||
$ | (34,893 | ) | $ | (11,792 | ) | ||||||||||||||||||||
(a) | The fair value of Derivatives with realized and unrealized gains are aggregated and recorded as an asset on the face of the Balance Sheets separately from the fair value of Derivatives with realized and unrealized losses that are recorded as a liability. The amount of unrealized losses scheduled to be recognized in the Statements of Income over the next twelve months primarily in the form of fixed-rate swap payments in excess of current market rates totaled $12.2 million at December 31, 2014. | ||||||||||||||||||||||||
(b) | Included in “Accounts payable and accrued expenses” on the face of the Balance Sheets. | ||||||||||||||||||||||||
Location of Gain or (Loss) Recognized in | Year ended December 31 | ||||||||||||||||||||||||
Net Income | 2014 | 2013 | 2012 | ||||||||||||||||||||||
Income statement-related | |||||||||||||||||||||||||
Components of effect on interest expense: | |||||||||||||||||||||||||
Amount of loss reclassified from Accumulated other comprehensive income related to the effective portion of active positions | $ | (22,055 | ) | $ | (16,914 | ) | $ | (19,882 | ) | ||||||||||||||||
Amount of gain (loss) recognized (ineffective portion) | (473 | ) | 24 | (542 | ) | ||||||||||||||||||||
Increase in interest expense and decrease in Net income as a result of the use of Derivatives | * | $ | (22,528 | ) | $ | (16,890 | ) | $ | (20,424 | ) | |||||||||||||||
Other comprehensive income-related | |||||||||||||||||||||||||
Amount of gain (loss) recognized in Other comprehensive income (loss) (effective portion) | $ | (41,059 | ) | $ | 9,320 | $ | (22,262 | ) | |||||||||||||||||
* | Included in “Interest expense: Repurchase arrangements and similar borrowings” on the face of the Statements of Income. | ||||||||||||||||||||||||
Schedule of Offsetting Disclosures for Asset Derivatives Held and Repurchase Arrangements and Similar Borrowings Outstanding | Capstead’s swap agreements and borrowings under repurchase arrangements are subject to master netting arrangements in the event of default on, or termination of, any one contract. See NOTE 6 for more information on the Company’s use of repurchase arrangements. The following tables provide disclosures concerning offsetting of financial liabilities and Derivatives as of the indicated dates (in thousands): | ||||||||||||||||||||||||
Offsetting of Derivative Asset | |||||||||||||||||||||||||
Gross | Gross | Net Amounts | Gross Amounts Not Offset | ||||||||||||||||||||||
Amounts | of Assets | in the Balance Sheet(a) | |||||||||||||||||||||||
Amounts of | Offset in | Presented in | Financial Instruments | Cash Collateral Received | Net | ||||||||||||||||||||
Recognized | the Balance | the Balance | Amount | ||||||||||||||||||||||
Assets | Sheet | Sheet | |||||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||||||
Counterparty 2 | $ | – | $ | 95 | $ | 95 | $ | (95 | ) | $ | – | $ | – | ||||||||||||
Counterparty 4 | 1,128 | 434 | 1,562 | (1,562 | ) | – | – | ||||||||||||||||||
$ | 1,128 | $ | 529 | $ | 1,657 | $ | (1,657 | ) | $ | – | $ | – | |||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Counterparty 1 | $ | 3,911 | $ | – | $ | 3,911 | $ | (3,911 | ) | $ | – | $ | – | ||||||||||||
Counterparty 2 | 634 | – | 634 | (634 | ) | – | – | ||||||||||||||||||
Counterparty 4 | 460 | – | 460 | (460 | ) | – | – | ||||||||||||||||||
$ | 5,005 | $ | – | $ | 5,005 | $ | (5,005 | ) | $ | – | $ | – | |||||||||||||
Schedule of Offsetting Disclosures for Liability Derivatives Held and Repurchase Arrangements and Similar Borrowings Outstanding | Offsetting of Financial Liabilities and Derivative Liabilities | ||||||||||||||||||||||||
Gross | Gross | Net Amounts | Gross Amounts Not Offset | ||||||||||||||||||||||
Amounts | of Liabilities | in the Balance Sheet (c) | |||||||||||||||||||||||
Amounts of | Offset in | Presented in | Financial | Cash | Net | ||||||||||||||||||||
Recognized | the Balance | the Balance | Instruments | Collateral | Amount | ||||||||||||||||||||
Liabilities(b) | Sheet | Sheet (a) | Pledged | ||||||||||||||||||||||
31-Dec-14 | |||||||||||||||||||||||||
Derivatives by counterparty: | |||||||||||||||||||||||||
Counterparty 1 | $ | 24,533 | $ | – | $ | 24,533 | $ | – | $ | (24,533 | ) | $ | – | ||||||||||||
Counterparty 2 | 4,042 | 95 | 4,137 | (95 | ) | (4,042 | ) | – | |||||||||||||||||
Counterparty 3 | 736 | – | 736 | – | (736 | ) | – | ||||||||||||||||||
Counterparty 4 | 6,710 | 434 | 7,144 | (1,562 | ) | (5,582 | ) | – | |||||||||||||||||
36,021 | 529 | 36,550 | (1,657 | ) | (34,893 | ) | – | ||||||||||||||||||
Repurchase arrangements and similar borrowings | 12,812,947 | – | 12,812,947 | (12,812,947 | ) | – | – | ||||||||||||||||||
$ | 12,848,968 | $ | 529 | $ | 12,849,497 | $ | (12,814,604 | ) | $ | (34,893 | ) | $ | – | ||||||||||||
31-Dec-13 | |||||||||||||||||||||||||
Derivatives by counterparty: | |||||||||||||||||||||||||
Counterparty 1 | $ | 6,002 | $ | – | $ | 6,002 | $ | (3,911 | ) | $ | (2,091 | ) | $ | – | |||||||||||
Counterparty 2 | 6,352 | – | 6,352 | (634 | ) | (5,718 | ) | – | |||||||||||||||||
Counterparty 3 | 1,581 | – | 1,581 | – | (1,581 | ) | – | ||||||||||||||||||
Counterparty 4 | 2,862 | – | 2,862 | (460 | ) | (2,402 | ) | – | |||||||||||||||||
16,797 | – | 16,797 | (5,005 | ) | (11,792 | ) | – | ||||||||||||||||||
Repurchase arrangements and similar borrowings | 12,487,604 | – | 12,487,604 | (12,487,604 | ) | – | – | ||||||||||||||||||
$ | 12,504,401 | $ | – | $ | 12,504,401 | $ | (12,492,609 | ) | $ | (11,792 | ) | $ | – | ||||||||||||
(a) | Amounts presented are limited to recognized liabilities and cash collateral received associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. | ||||||||||||||||||||||||
(b) | Amounts include accrued interest of $9.5 million and $5.5 million on interest rate swap agreements and $6.1 million and $4.7 million on repurchase arrangements and similar borrowings, included in “Accounts payable and accrued expenses” on the face of the Balance Sheets as of December 31, 2014 and December 31, 2013, respectively. | ||||||||||||||||||||||||
(c) | Amounts presented are limited to recognized assets and collateral pledged associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. | ||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income | Changes in Accumulated other comprehensive income by component for the three years ended December 31, 2014 were as follows (in thousands): | ||||||||||||||||||||||||
Gains and Losses | Unrealized Gains | Total | |||||||||||||||||||||||
on Cash Flow | and Losses on | ||||||||||||||||||||||||
Hedges | Available-for-Sale | ||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||
Balance at December 31, 2011 | $ | (30,159 | ) | $ | 234,699 | $ | 204,540 | ||||||||||||||||||
Activity for the year ended December 31, 2012: | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (22,262 | ) | 91,750 | 69,488 | |||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 19,882 | – | 19,882 | ||||||||||||||||||||||
Other comprehensive income (loss) | (2,380 | ) | 91,750 | 89,370 | |||||||||||||||||||||
Balance at December 31, 2012 | (32,539 | ) | 326,449 | 293,910 | |||||||||||||||||||||
Activity for the year ended December 31, 2013: | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 9,320 | (101,001 | ) | (91,681 | ) | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 16,914 | – | 16,914 | ||||||||||||||||||||||
Other comprehensive income (loss) | 26,234 | (101,001 | ) | (74,767 | ) | ||||||||||||||||||||
Balance at December 31, 2013 | (6,305 | ) | 225,448 | 219,143 | |||||||||||||||||||||
Activity for the year ended December 31, 2014: | |||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (41,059 | ) | 27,283 | (13,776 | ) | ||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income | 22,055 | – | 22,055 | ||||||||||||||||||||||
Other comprehensive income (loss) | (19,004 | ) | 27,283 | 8,279 | |||||||||||||||||||||
Balance at December 31, 2014 | $ | (25,309 | ) | $ | 252,731 | $ | 227,422 |
UNSECURED_BORROWINGS_Tables
UNSECURED BORROWINGS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
UNSECURED BORROWINGS [Abstract] | |||||||||||||||||
Schedule Of Subordinated Note Balances And Related Weighted Average Interest Rates | 31-Dec-14 | 31-Dec-13 | |||||||||||||||
Borrowings | Average | Borrowings | Average | ||||||||||||||
Outstanding | Rate * | Outstanding | Rate * | ||||||||||||||
Junior subordinated notes associated with: | |||||||||||||||||
Capstead Mortgage Trust I | $ | 35,000 | 8.31 | % | $ | 35,000 | 8.31 | % | |||||||||
Capstead Mortgage Trust II | 40,000 | 8.46 | 40,000 | 8.46 | |||||||||||||
Capstead Mortgage Trust III | 25,000 | 8.78 | 25,000 | 8.78 | |||||||||||||
$ | 100,000 | 8.49 | $ | 100,000 | 8.49 | ||||||||||||
* | The indicated weighted average rates have been in effect since issuance. After considering cash flow hedges that coincide with the floating rate terms of these borrowings that begin October 30, and December 15, 2015 for the notes associated with Capstead Mortgage Trusts I and II and September 15, 2016 for the notes associated with Capstead Mortgage Trust III, the effective borrowing rate will average 7.56% beginning September 15, 2016 through maturity, subject to certain adjustments for the effects of measured hedge ineffectiveness, if any. |
DISCLOSURES_REGARDING_FAIR_VAL1
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||
Financial Instruments Other Than Debt Securities | Fair value-related disclosures for financial instruments other than debt securities were as follows as of the indicated dates (in thousands): | ||||||||||||||||
31-Dec-14 | 31-Dec-13 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Amount | Value | Amount | Value | ||||||||||||||
Financial assets: | |||||||||||||||||
Residential mortgage loans | $ | 4,909 | $ | 5,000 | $ | 6,898 | $ | 7,000 | |||||||||
Interest rate swap agreements | 1,657 | 1,657 | 5,005 | 5,005 | |||||||||||||
Financial liabilities: | |||||||||||||||||
Repurchase arrangements with initial terms of greater than 120 days | 2,128,517 | 2,128,400 | 36,299 | 36,300 | |||||||||||||
Unsecured borrowings | 100,000 | 100,500 | 100,000 | 101,000 | |||||||||||||
Interest rate swap agreements | 27,034 | 27,034 | 11,304 | 11,304 | |||||||||||||
Fair Value And Related Disclosures For Debt Securities | Fair value-related disclosures for debt securities were as follows as of the indicated dates (in thousands): | ||||||||||||||||
Amortized | Gross Unrealized | ||||||||||||||||
Cost Basis | Gains | Losses | Fair Value | ||||||||||||||
31-Dec-14 | |||||||||||||||||
Agency Securities classified as available-for-sale: | |||||||||||||||||
Fannie Mae/Freddie Mac | $ | 10,559,231 | $ | 243,351 | $ | 2,218 | $ | 10,800,364 | |||||||||
Ginnie Mae | 3,087,570 | 16,755 | 5,157 | 3,099,168 | |||||||||||||
Residential mortgage securities classified as held-to-maturity | 3,663 | 124 | – | 3,787 | |||||||||||||
31-Dec-13 | |||||||||||||||||
Agency Securities classified as available-for-sale: | |||||||||||||||||
Fannie Mae/Freddie Mac | 11,019,116 | 224,456 | 12,468 | 11,231,104 | |||||||||||||
Ginnie Mae | 2,220,035 | 18,384 | 4,924 | 2,233,495 | |||||||||||||
Residential mortgage securities classified as held-to-maturity | 4,376 | 211 | – | 4,587 | |||||||||||||
Securities In Unrealized Loss Position | 31-Dec-14 | 31-Dec-13 | |||||||||||||||
Fair | Unrealized | Fair | Unrealized | ||||||||||||||
Value | Loss | Value | Loss | ||||||||||||||
Securities in an unrealized loss position: | |||||||||||||||||
One year or greater | $ | 706,839 | $ | 5,320 | $ | 39,030 | $ | 380 | |||||||||
Less than one year | 1,095,724 | 2,055 | 2,857,724 | 17,012 | |||||||||||||
$ | 1,802,563 | $ | 7,375 | $ | 2,896,754 | $ | 17,392 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES [Abstract] | |||||||||||||
Schedule Of Effective Income Tax Rate Reconciliation | The Company’s effective tax rate differs substantially from statutory federal income tax rates primarily due to the benefit of Capstead REIT’s status as a REIT, along with other items affecting the Company’s effective tax rate as illustrated below for the indicated periods (in thousands): | ||||||||||||
Year ended December 31 | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Income taxes computed at the federal statutory rate | $ | 49,287 | $ | 44,270 | $ | 57,269 | |||||||
Benefit of REIT status | (49,28 | ) | (44,270 | ) | (57,268 | ) | |||||||
Income taxes computed on income of Capstead’s sole taxable REIT subsidiary | 4 | – | 1 | ||||||||||
Change in net deferred income tax assets | (4 | ) | 1 | (1 | ) | ||||||||
Other | – | (1 | ) | – | |||||||||
Income tax provision | $ | – | $ | – | $ | – | |||||||
Components Of Deferred Tax Assets And Liabilities | No income taxes were paid during 2014, 2013 or 2012. Significant components of the Company’s taxable REIT subsidiary’s deferred income tax assets and liabilities were as follows as of the indicated dates (in thousands): | ||||||||||||
31-Dec | |||||||||||||
2014 | 2013 | ||||||||||||
Deferred income tax assets: | |||||||||||||
Alternative minimum tax credit (a) | $ | 1,941 | $ | 1,942 | |||||||||
Net operating loss carryforwards (b) | 58 | 60 | |||||||||||
Other | 20 | 21 | |||||||||||
2,019 | 2,023 | ||||||||||||
Deferred income tax liabilities | – | – | |||||||||||
Net deferred tax assets | $ | 2,019 | $ | 2,023 | |||||||||
Valuation allowance (c) | $ | 2,019 | $ | 2,023 | |||||||||
(a) | Alternative minimum tax credit carryforwards can be utilized to offset payment of federal income taxes on future taxable income, if any, earned by this subsidiary, subject to certain limitations. | ||||||||||||
(b) | Excludes $3.5 million in remaining net operating loss carryforwards which expire beginning after 2019. To the extent these carryforwards are utilized in future periods, the benefit will reduce actual taxes payable. | ||||||||||||
(c) | Because this subsidiary is not expected to earn significant amounts of taxable income, related net deferred tax assets are fully reserved at December 31, 2014. | ||||||||||||
STOCKHOLDERS_EQUITY_Tables
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
STOCKHOLDERS EQUITY [Abstract] | |||||||||||||
Schedule of Series E Preferred Stock Issued Prices and Proceeds Presented Net of Underwriting Fees and Other Costs | In late 2013 Capstead began issuing additional shares of Series E preferred stock through an at-the-market continuous offering program. Shares of Series E preferred stock issued under this program, issue prices and proceeds, both presented net of underwriting fees and other costs were as follows for the indicated periods: | ||||||||||||
Shares | Net | Net | |||||||||||
Issue Price | Proceeds | ||||||||||||
Year ended December 31, 2013 | 61,000 | $ | 23.78 | $ | 1,447,000 | ||||||||
Year ended December 31, 2014 | 757,000 | 24.01 | 18,180,000 | ||||||||||
Subsequent to year-end through February 27, 2015 (unaudited) | 222,000 | 24.65 | 5,465,000 |
COMPENSATION_PROGRAMS_Tables
COMPENSATION PROGRAMS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
COMPENSATION PROGRAMS [Abstract] | |||||||||
Schedule Of Performance- And Service- Based Stock Award Activity | Performance-based and service-based stock award activity for year ended December 31, 2014 is summarized below: | ||||||||
Number of | Weighted Average | ||||||||
Shares | Grant Date | ||||||||
Fair Value | |||||||||
Unvested stock awards outstanding at beginning of year | 528,931 | $ | 12.51 | ||||||
Grants | 72,237 | 12.8 | |||||||
Vestings | (164,587 | ) | 13.23 | ||||||
Unvested stock awards outstanding at end of year | 436,581 | 12.29 | |||||||
Schedule Of Option Award Activity | Option awards currently outstanding have ten-year contractual terms from the grant date and were issued with strike prices equal to the quoted market prices of Capstead’s common shares on the dates of grant, all of which were prior to 2010. The fair value of option awards was estimated on the dates of grant using a Black-Scholes option pricing model and expensed over vesting periods that ended prior to 2012. Option award activity for the year ended December 31, 2014 is summarized below: | ||||||||
Number of Shares | Weighted Average Exercise Price | ||||||||
Option awards outstanding at beginning of year | 77,500 | $ | 11.75 | ||||||
Expirations | (10,000 | ) | 14.41 | ||||||
Exercises | (27,500 | ) | 10.63 | ||||||
Option awards outstanding at end of year | 40,000 | 11.86 |
QUARTERLY_RESULTS_Tables
QUARTERLY RESULTS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
QUARTERLY RESULTS (UNAUDITED) [Abstract] | |||||||||||||||||
Summarized Quarterly Results Of Operations | NOTE 13 ¾ QUARTERLY RESULTS (UNAUDITED) | ||||||||||||||||
Summarized quarterly results of operations were as follows (in thousands, except per share amounts). | |||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
Interest income on residential mortgage investments (before investment premium amortization) | $ | 81,733 | $ | 82,233 | $ | 82,146 | $ | 82,509 | |||||||||
Investment premium amortization | (22,288 | ) | (25,141 | ) | (28,284 | ) | (26,159 | ) | |||||||||
Related interest expense | (15,407 | ) | (15,542 | ) | (16,099 | ) | (18,107 | ) | |||||||||
44,038 | 41,550 | 37,763 | 38,243 | ||||||||||||||
Other interest income (expense) (a) | (2,061 | ) | (2,045 | ) | (2,044 | ) | (2,023 | ) | |||||||||
Other revenue (expense) | (3,586 | ) | (2,941 | ) | (3,328 | ) | (2,746 | ) | |||||||||
Net income | $ | 38,391 | $ | 36,564 | $ | 32,391 | $ | 33,474 | |||||||||
Basic and diluted net income per common share | $ | 0.37 | $ | 0.35 | $ | 0.3 | $ | 0.31 | |||||||||
Year Ended December 31, 2013 | |||||||||||||||||
Interest income on residential mortgage investments (before investment premium amortization) | $ | 86,867 | $ | 85,214 | $ | 85,674 | $ | 83,254 | |||||||||
Investment premium amortization | (28,399 | ) | (33,642 | ) | (39,031 | ) | (24,800 | ) | |||||||||
Related interest expense | (18,468 | ) | (16,749 | ) | (15,759 | ) | (15,392 | ) | |||||||||
40,000 | 34,823 | 30,884 | 43,062 | ||||||||||||||
Other interest income (expense) (a) | (2,010 | ) | (2,015 | ) | (2,074 | ) | (2,066 | ) | |||||||||
Other revenue (expense) | (3,072 | ) | (2,914 | ) | (4,108 | ) | (4,023 | ) | |||||||||
Net income | $ | 34,918 | $ | 29,894 | $ | 24,702 | $ | 36,973 | |||||||||
Basic and diluted net income per common share (b) | $ | 0.31 | $ | 0.04 | $ | 0.23 | $ | 0.35 | |||||||||
(a) | Consists principally of interest on unsecured borrowings and includes other interest income and is presented net of earnings of related statutory trusts. The trusts were dissolved in December 2013. | ||||||||||||||||
(b) | Includes $0.23 associated with redemption preference premiums paid and other one-time effects of the second quarter 2013 preferred capital transactions. |
ACCOUNTING_POLICIES_Details
ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes [Abstract] | |
Percentage of taxable income to be distributed (in hundredths) | 100.00% |
Minimum [Member] | |
Derivative [Line Items] | |
Interest owed on hedged borrowings rest to market rates (in days) | 30 days |
Maximum [Member] | |
Derivative [Line Items] | |
Interest owed on hedged borrowings rest to market rates (in days) | 90 days |
NET_INCOME_PER_COMMON_SHARE_Co
NET INCOME PER COMMON SHARE - Components of Computation of Basic and Diluted Net Income Per Common Share (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Numerator for basic net income per common share [Abstract] | |||
Net income | $140,820 | $126,487 | $163,626 |
Redemption preference premiums paid on Convertible preferred stock | 0 | -19,924 | 0 |
Preferred stock dividends | -13,781 | -17,536 | -21,021 |
Earnings participation of unvested equity awards | -95 | -139 | -372 |
Numerator for basic net income per common share | 126,944 | 88,888 | 142,233 |
Denominator for basic net income per common share [Abstract] | |||
Weighted average common stock outstanding (in shares) | 95,789 | 95,679 | 95,115 |
Average unvested stock awards outstanding (in shares) | -398 | -506 | -522 |
Denominator for basic net income per common share (in shares) | 95,391 | 95,173 | 94,593 |
Basic net income per common share (in dollars per share) | $1.33 | $0.93 | $1.50 |
Numerator for diluted net income per common share [Abstract] | |||
Numerator for basic net income per common share | 126,944 | 88,888 | 142,233 |
Dividends on dilutive convertible preferred stock | 0 | 44 | 298 |
Numerator for diluted net income per common share | $126,944 | $88,932 | $142,531 |
Denominator for diluted net income per common share [Abstract] | |||
Denominator for basic net income per common share | 95,391 | 95,173 | 94,593 |
Net effect of dilutive equity awards (in shares) | 238 | 145 | 111 |
Net effect of dilutive convertible preferred stock (in shares) | 0 | 75 | 308 |
Denominator for diluted net income per common share (in shares) | 95,629 | 95,393 | 95,012 |
Diluted net income per common share (in dollars per share) | $1.33 | $0.93 | $1.50 |
NET_INCOME_PER_COMMON_SHARE_Po
NET INCOME PER COMMON SHARE - Potentially Dilutive Securities Excluded from Computation of Net Income Per Common Share (Details) | 12 Months Ended | 1 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-13 |
Schedule of Earning Per Share, Basic, by Common Class [Line Items] | ||||
Antidilutive convertible preferred shares (in shares) | 0 | 0 | 16,493 | |
Shares issuable under option awards (in shares) | 15 | 30 | 10 | |
RSUs (in shares) | 0 | 243 | 0 | |
7.50% Cumulative Redeemable Preferred Stock, Series E [Member] | ||||
Schedule of Earning Per Share, Basic, by Common Class [Line Items] | ||||
Preferred stock dividend rate (in hundredths) | 7.50% | |||
Redeemable Preferred Stock [Member] | 7.50% Cumulative Redeemable Preferred Stock, Series E [Member] | ||||
Schedule of Earning Per Share, Basic, by Common Class [Line Items] | ||||
Preferred stock dividend rate (in hundredths) | 7.50% |
RESIDENTIAL_MORTGAGE_INVESTMEN2
RESIDENTIAL MORTGAGE INVESTMENTS - Schedule of Residential Mortgage Investments (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | $13,222,629 | $12,832,514 | ||
Investment Premiums | 432,744 | 417,912 | ||
Amortized Cost Basis | 13,655,373 | 13,250,426 | ||
Carrying Amount | 13,908,104 | [1] | 13,475,874 | [1] |
Net WAC (in hundredths) | 2.54% | [2] | 2.59% | [2] |
Average Yield (in hundredths) | 1.69% | [2] | 1.59% | [2] |
Agency Securities [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 13,215,738 | 12,823,417 | ||
Investment Premiums | 432,696 | 417,854 | ||
Amortized Cost Basis | 13,648,434 | 13,241,271 | ||
Carrying Amount | 13,901,165 | [1] | 13,466,719 | [1] |
Net WAC (in hundredths) | 2.54% | [2] | 2.59% | [2] |
Average Yield (in hundredths) | 1.69% | [2] | 1.59% | [2] |
Agency Securities [Member] | Fixed-Rate [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 1,660 | 2,158 | ||
Investment Premiums | 4 | 6 | ||
Amortized Cost Basis | 1,664 | 2,164 | ||
Carrying Amount | 1,665 | [1] | 2,167 | [1] |
Net WAC (in hundredths) | 6.63% | [2] | 6.67% | [2] |
Average Yield (in hundredths) | 6.45% | [2] | 6.40% | [2] |
Agency Securities [Member] | ARMs [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 10,230,419 | 10,675,620 | ||
Investment Premiums | 328,781 | 343,452 | ||
Amortized Cost Basis | 10,559,200 | 11,019,072 | ||
Carrying Amount | 10,800,332 | [1] | 11,231,057 | [1] |
Net WAC (in hundredths) | 2.51% | [2] | 2.58% | [2] |
Average Yield (in hundredths) | 1.72% | [2] | 1.59% | [2] |
Agency Securities [Member] | Ginnie Mae ARMs [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 2,983,659 | 2,145,639 | ||
Investment Premiums | 103,911 | 74,396 | ||
Amortized Cost Basis | 3,087,570 | 2,220,035 | ||
Carrying Amount | 3,099,168 | [1] | 2,233,495 | [1] |
Net WAC (in hundredths) | 2.63% | [2] | 2.64% | [2] |
Average Yield (in hundredths) | 1.53% | [2] | 1.57% | [2] |
Residential Mortgage Loans [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 4,894 | 6,877 | ||
Investment Premiums | 15 | 21 | ||
Amortized Cost Basis | 4,909 | 6,898 | ||
Carrying Amount | 4,909 | [1] | 6,898 | [1] |
Net WAC (in hundredths) | 4.95% | [2] | 5.03% | [2] |
Average Yield (in hundredths) | 3.97% | [2] | 4.27% | [2] |
Residential Mortgage Loans [Member] | Fixed-Rate [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 1,848 | 2,633 | ||
Investment Premiums | 2 | 3 | ||
Amortized Cost Basis | 1,850 | 2,636 | ||
Carrying Amount | 1,850 | [1] | 2,636 | [1] |
Net WAC (in hundredths) | 6.96% | [2] | 6.99% | [2] |
Average Yield (in hundredths) | 5.46% | [2] | 5.62% | [2] |
Residential Mortgage Loans [Member] | ARMs [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 3,046 | 4,244 | ||
Investment Premiums | 13 | 18 | ||
Amortized Cost Basis | 3,059 | 4,262 | ||
Carrying Amount | 3,059 | [1] | 4,262 | [1] |
Net WAC (in hundredths) | 3.73% | [2] | 3.81% | [2] |
Average Yield (in hundredths) | 3.14% | [2] | 3.46% | [2] |
Collateral For Structured Financings [Member] | ||||
Schedule Of Residential Mortgage Investments [Line Items] | ||||
Unpaid Principal Balance | 1,997 | 2,220 | ||
Investment Premiums | 33 | 37 | ||
Amortized Cost Basis | 2,030 | 2,257 | ||
Carrying Amount | $2,030 | [1] | $2,257 | [1] |
Net WAC (in hundredths) | 8.11% | [2] | 8.09% | [2] |
Average Yield (in hundredths) | 7.62% | [2] | 7.34% | [2] |
[1] | Includes unrealized gains and losses for residential mortgage investments classified as available-for-sale (see NOTE 9). | |||
[2] | Net WAC, or weighted average coupon, is the weighted average interest rate of the mortgage loans underlying the indicated investments net of servicing and other fees as of the indicated balance sheet date. Net WAC is expressed as a percentage calculated on an annualized basis on the unpaid principal balances of the mortgage loans underlying these investments. Average yield is presented for the year then ended, and is based on the cash component of interest income expressed as a percentage calculated on an annualized basis on average amortized cost basis (the "cash yield") less the effects of amortizing investment premiums. Investment premium amortization is determined using the interest method and incorporates actual and anticipated future mortgage prepayments. |
RESIDENTIAL_MORTGAGE_INVESTMEN3
RESIDENTIAL MORTGAGE INVESTMENTS - Narrative (Details) (USD $) | 12 Months Ended |
In Billions, unless otherwise specified | Dec. 31, 2014 |
Schedule Of Residential Mortgage Investments [Line Items] | |
Mortgage securities weighted average contractual maturity, months | 290 months |
Available for sale ARM securities, current-reset | $7.67 |
Available for sale ARM securities, longer-to-reset | $5.98 |
Current-Reset ARMs [Member] | |
Schedule Of Residential Mortgage Investments [Line Items] | |
Agency securities average months to roll, months | 6 months 12 days |
Current-Reset ARMs [Member] | Maximum [Member] | |
Schedule Of Residential Mortgage Investments [Line Items] | |
Agency securities months to roll | 18 months |
Longer-To-Reset ARMs [Member] | |
Schedule Of Residential Mortgage Investments [Line Items] | |
Agency securities average months to roll, months | 39 months 15 days |
Longer-To-Reset ARMs [Member] | Minimum [Member] | |
Schedule Of Residential Mortgage Investments [Line Items] | |
Agency securities months to roll | 18 months |
INVESTMENTS_IN_UNCONSOLIDATED_1
INVESTMENTS IN UNCONSOLIDATED AFFILIATES (Details) (USD $) | Dec. 31, 2013 |
In Millions, unless otherwise specified | |
INVESTMENTS IN UNCONSOLIDATED AFFILIATES [Abstract] | |
Issuance of common securities | $3.10 |
REPURCHASE_ARRANGEMENTS_AND_SI2
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS - Narrative (Details) (Repurchase Arrangements And Similar Borrowings [Member], USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Repurchase Arrangements And Similar Borrowings [Member] | |||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | |||
Interest paid on Repurchase arrangements and similar borrowings | $59.70 | $71.10 | $69.50 |
REPURCHASE_ARRANGEMENTS_AND_SI3
REPURCHASE ARRANGEMENTS AND SIMILAR BORROWINGS - Collateral and Rates (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Collateral Carrying Amount | $13,480,000 | $13,120,000 | ||
Borrowings Outstanding | 12,806,843 | 12,482,900 | ||
Average borrowings adjusted amount | 12,651,061 | 12,702,941 | ||
Average borrowings rates adjusted for effects related cash flow derivatives (in hundredths) | 0.52% | 0.52% | ||
Year-End Borrowing Rates Adjusted For Effects Of Related Derivatives Held As Cash Flow Hedges [Member] | ||||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Average Borrowing Rates (in hundredths) | 0.58% | 0.49% | ||
Agency Securities [Member] | ||||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Collateral Carrying Amount | 13,483,572 | 13,123,757 | ||
Accrued Interest Receivable | 30,933 | 30,263 | ||
Borrowings Outstanding | 12,806,843 | 12,482,900 | ||
Average Borrowing Rates (in hundredths) | 0.38% | 0.38% | ||
Agency Securities [Member] | Borrowings With Maturities Of 30 Days Or Less [Member] | ||||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Collateral Carrying Amount | 10,401,080 | 12,169,534 | ||
Accrued Interest Receivable | 24,045 | 28,195 | ||
Borrowings Outstanding | 9,878,889 | 11,578,211 | ||
Average Borrowing Rates (in hundredths) | 0.35% | 0.38% | ||
Agency Securities [Member] | Borrowings With Maturities of 31 to 90 Days [Member] | ||||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Collateral Carrying Amount | 1,205,570 | 951,966 | ||
Accrued Interest Receivable | 2,248 | 2,068 | ||
Borrowings Outstanding | 1,150,924 | 902,432 | ||
Average Borrowing Rates (in hundredths) | 0.35% | 0.38% | ||
Agency Securities [Member] | Borrowings With Maturities Greater Than 90 Days [Member] | ||||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Collateral Carrying Amount | 1,874,892 | |||
Accrued Interest Receivable | 4,640 | |||
Borrowings Outstanding | 1,775,000 | |||
Average Borrowing Rates (in hundredths) | 0.56% | |||
Collateral For Structured Financings [Member] | Similar Borrowings [Member] | ||||
Repurchase Arrangements And Similar Borrowings, Including Interest Rate Hedging Activity [Line Items] | ||||
Collateral Carrying Amount | 2,030 | [1] | 2,257 | [1] |
Accrued Interest Receivable | 0 | [1] | 0 | [1] |
Borrowings Outstanding | $2,030 | [1] | $2,257 | [1] |
Average Borrowing Rates (in hundredths) | 8.11% | [1] | 8.09% | [1] |
[1] | The maturity of structured financings is directly affected by prepayments on the related mortgage pass-through securities pledged as collateral and these financings are subject to redemption by the residual bondholders. |
USE_OF_DERIVATIVE_FINANCIAL_IN2
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT - Schedule of Swap Agreements (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2010 | Dec. 31, 2013 | |
Notional Disclosures [Abstract] | |||
Derivative instruments unrealized losses to be recognized | $12,200,000 | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 7,200,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.51% | ||
Derivative, average remaining maturity | 12 months | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | First Quarter 2015 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 1,100,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.50% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | Second Quarter 2015 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 200,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.43% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | Third Quarter 2015 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 400,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.47% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | Fourth Quarter 2015 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 1,200,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.45% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | First Quarter 2016 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 1,700,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.51% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | Second Quarter 2016 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 1,100,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.47% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | Third Quarter 2016 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 700,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.56% | ||
Interest Rate SWAP Currently-Paying Contracts [Member] | Fourth Quarter 2016 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 800,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.66% | ||
Interest Rate SWAP Forward-Starting Contracts [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 7,700,000,000 | ||
Derivative, average remaining maturity | 12 months | ||
Interest Rate SWAP Forward-Starting Contracts [Member] | First quarter 2017 [Member] | |||
Notional Disclosures [Abstract] | |||
Notional Amount | 500,000,000 | ||
Average Fixed Rate Payment Requirement (in hundredths) | 0.72% | ||
Derivative, average remaining maturity | 24 months | ||
Interest Rate Swap Agreements [Member] | |||
Derivative Instruments And Hedging Activities [Line Items] | |||
SWAP agreement notional amount during period | 2,300,000,000 | 100,000,000 | |
SWAP agreement average interest rate during period (in hundredths) | 0.62% | 4.09% | |
Swap agreement notional amount expiring during period | 1,300,000,000 | ||
SWAP agreement average interest rate expiring during period (in hundredths) | 0.55% | ||
Notional Disclosures [Abstract] | |||
Payment term of LIBOR interest rate agreement | 2 years | 20 years | |
Accrued interest | 9,500,000 | 5,500,000 | |
Interest Rate Swap Expired One [Member] | |||
Notional Disclosures [Abstract] | |||
Payment term of LIBOR interest rate agreement | 2 years | ||
Interest Rate Swap Expired Two [Member] | |||
Derivative Instruments And Hedging Activities [Line Items] | |||
SWAP agreements notional amount beginning during the period | 4,300,000,000 | ||
SWAP agreements average interest rate beginning during period (in hundredths) | 0.54% | ||
Repurchase Arrangements And Similar Borrowings [Member] | |||
Notional Disclosures [Abstract] | |||
Accrued interest | $6,100,000 | $4,700,000 |
USE_OF_DERIVATIVE_FINANCIAL_IN3
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT - Balance Sheet and Income Statement Location (Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Balance sheet-related [Abstract] | ||||||
Interest rate swap agreements at fair value, net assets (liability) | ($34,893) | ($11,792) | ||||
Income statement-related [Abstract] | ||||||
Amount of loss reclassified from Accumulated other comprehensive income related to the effective portion of active positions | 22,055 | 16,914 | 19,882 | |||
Other Comprehensive Income (Loss) [Member] | ||||||
Other comprehensive income related [Abstract] | ||||||
Amount of gain (loss) recognized in Other comprehensive income (loss) (effective portion) | -41,059 | 9,320 | -22,262 | |||
Interest Expense [Member] | ||||||
Income statement-related [Abstract] | ||||||
Amount of loss reclassified from Accumulated other comprehensive income related to the effective portion of active positions | -22,055 | -16,914 | -19,882 | |||
Amount of gain (loss) recognized (ineffective portion) | -473 | 24 | -542 | |||
Increase in interest expense and decrease in Net income as a result of the use of Derivatives | -22,528 | [1] | -16,890 | [1] | -20,424 | [1] |
Other Assets [Member] | ||||||
Balance sheet-related [Abstract] | ||||||
Related net interest payable | -9,516 | [2] | -5,493 | [2] | ||
Borrowings Under Repurchase Arrangements [Member] | Other Assets [Member] | ||||||
Balance sheet-related [Abstract] | ||||||
Interest rate swap agreements in a gain position (an asset) | 1,657 | [3] | 1,094 | [3] | ||
Interest rate swap agreements in a loss position (a liability) | -6,332 | [3] | -11,304 | [3] | ||
Unsecured Borrowings [Member] | Other Assets [Member] | ||||||
Balance sheet-related [Abstract] | ||||||
Interest rate swap agreements in a gain position (an asset) | 0 | [3] | 3,911 | [3] | ||
Interest rate swap agreements in a loss position (a liability) | ($20,702) | [3] | $0 | [3] | ||
[1] | Included in Interest expense: Repurchase arrangements and similar borrowings on the face of the Statements of Income. | |||||
[2] | Included in "Accounts payable and accrued expenses" on the face of the Balance Sheets. | |||||
[3] | The fair value of Derivatives with realized and unrealized gains are aggregated and recorded as an asset on the face of the Balance Sheets separately from the fair value of Derivatives with realized and unrealized losses that are recorded as a liability. The amount of unrealized losses scheduled to be recognized in the Statements of Income over the next twelve months primarily in the form of fixed-rate swap payments in excess of current market rates totaled $12.2 million at December 31, 2014. |
USE_OF_DERIVATIVE_FINANCIAL_IN4
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT - Offsetting Assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Offsetting of derivative assets [Abstract] | ||||
Gross Amounts of Recognized Assets | $1,657 | $5,005 | ||
Net Amounts of Assets Presented in the Balance Sheet | -34,893 | -11,792 | ||
Cash Collateral Received | 53,139 | 25,502 | ||
Offsetting Derivatives Assets [Member] | Counterparty 1 [Member] | ||||
Offsetting of derivative assets [Abstract] | ||||
Gross Amounts of Recognized Assets | 3,911 | |||
Gross Amounts Offset in the Balance Sheet | 0 | |||
Net Amounts of Assets Presented in the Balance Sheet | 3,911 | |||
Financial Instruments | -3,911 | [1] | ||
Cash Collateral Received | 0 | [1] | ||
Net Amount | 0 | |||
Offsetting Derivatives Assets [Member] | Counterparty 2 [Member] | ||||
Offsetting of derivative assets [Abstract] | ||||
Gross Amounts of Recognized Assets | 0 | 634 | ||
Gross Amounts Offset in the Balance Sheet | 95 | 0 | ||
Net Amounts of Assets Presented in the Balance Sheet | 95 | 634 | ||
Financial Instruments | -95 | [1] | -634 | [1] |
Cash Collateral Received | 0 | [1] | 0 | [1] |
Net Amount | 0 | 0 | ||
Offsetting Derivatives Assets [Member] | Counterparty 4 [Member] | ||||
Offsetting of derivative assets [Abstract] | ||||
Gross Amounts of Recognized Assets | 1,128 | 460 | ||
Gross Amounts Offset in the Balance Sheet | 434 | 0 | ||
Net Amounts of Assets Presented in the Balance Sheet | 1,562 | 460 | ||
Financial Instruments | -1,562 | [1] | -460 | [1] |
Cash Collateral Received | 0 | [1] | 0 | [1] |
Net Amount | 0 | 0 | ||
Offsetting Derivatives Assets [Member] | Derivative Counterparties [Member] | ||||
Offsetting of derivative assets [Abstract] | ||||
Gross Amounts of Recognized Assets | 1,128 | 5,005 | ||
Gross Amounts Offset in the Balance Sheet | 529 | 0 | ||
Net Amounts of Assets Presented in the Balance Sheet | 1,657 | 5,005 | ||
Financial Instruments | -1,657 | [1] | -5,005 | [1] |
Cash Collateral Received | 0 | [1] | 0 | [1] |
Net Amount | $0 | $0 | ||
[1] | Amounts presented are limited to recognized liabilities and cash collateral received associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. |
USE_OF_DERIVATIVE_FINANCIAL_IN5
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT, Offsetting Liabilities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | $27,034 | $11,304 | ||
Offsetting Financial Liabilities and Derivative Liabilities [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 12,848,968 | [1] | 12,504,401 | [1] |
Gross Amounts Offset in the Balance Sheet | 529 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 12,849,497 | [2] | 12,504,401 | [2] |
Financial Instruments | -12,814,604 | [3] | -12,492,609 | [3] |
Cash Collateral Pledged | -34,893 | [3] | -11,792 | [3] |
Net Amount | 0 | 0 | ||
Offsetting Financial Liabilities and Derivative Liabilities [Member] | Counterparty 1 [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 24,533 | [1] | 6,002 | [1] |
Gross Amounts Offset in the Balance Sheet | 0 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 24,533 | [2] | 6,002 | [2] |
Financial Instruments | 0 | [3] | -3,911 | [3] |
Cash Collateral Pledged | -24,533 | [3] | -2,091 | [3] |
Net Amount | 0 | 0 | ||
Offsetting Financial Liabilities and Derivative Liabilities [Member] | Counterparty 2 [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 4,042 | [1] | 6,352 | [1] |
Gross Amounts Offset in the Balance Sheet | 95 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 4,137 | [2] | 6,352 | [2] |
Financial Instruments | -95 | [3] | -634 | [3] |
Cash Collateral Pledged | -4,042 | [3] | -5,718 | [3] |
Net Amount | 0 | 0 | ||
Offsetting Financial Liabilities and Derivative Liabilities [Member] | Counterparty 3 [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 736 | [1] | 1,581 | [1] |
Gross Amounts Offset in the Balance Sheet | 0 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 736 | [2] | 1,581 | [2] |
Financial Instruments | 0 | [3] | 0 | [3] |
Cash Collateral Pledged | -736 | [3] | -1,581 | [3] |
Net Amount | 0 | 0 | ||
Offsetting Financial Liabilities and Derivative Liabilities [Member] | Counterparty 4 [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 6,710 | [1] | 2,862 | [1] |
Gross Amounts Offset in the Balance Sheet | 434 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 7,144 | [2] | 2,862 | [2] |
Financial Instruments | -1,562 | [3] | -460 | [3] |
Cash Collateral Pledged | -5,582 | [3] | -2,402 | [3] |
Net Amount | 0 | 0 | ||
Offsetting Financial Liabilities and Derivative Liabilities [Member] | Derivative Counterparties [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 36,021 | [1] | 16,797 | [1] |
Gross Amounts Offset in the Balance Sheet | 529 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 36,550 | [2] | 16,797 | [2] |
Financial Instruments | -1,657 | [3] | -5,005 | [3] |
Cash Collateral Pledged | -34,893 | [3] | -11,792 | [3] |
Repurchase Arrangements and Similar Borrowings [Member] | Offsetting Financial Liabilities and Derivative Liabilities [Member] | ||||
Offsetting of financial liabilities and derivative liabilities [Abstract] | ||||
Gross Amounts of Recognized Liabilities | 12,812,947 | [1] | 12,487,604 | [1] |
Gross Amounts Offset in the Balance Sheet | 0 | 0 | ||
Net Amounts of Liabilities Presented in the Balance Sheet | 12,812,947 | [2] | 12,487,604 | [2] |
Financial Instruments | -12,812,947 | [3] | -12,487,604 | [3] |
Cash Collateral Pledged | 0 | [3] | 0 | [3] |
Net Amount | $0 | $0 | ||
[1] | Amounts include accrued interest of $9.5 million and $5.5 million on interest rate swap agreements and $6.1 million and $4.7 million on repurchase arrangements and similar borrowings, included in "Accounts payable and accrued expenses" on the face of the Balance Sheets as of December 31, 2014 and December 31, 2013, respectively. | |||
[2] | Amounts presented are limited to recognized liabilities and cash collateral received associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. | |||
[3] | Amounts presented are limited to recognized assets and collateral pledged associated with the indicated counterparty sufficient to reduce the related Net Amount to zero in accordance with ASU No. 2011-11, as amended by ASU No. 2013-01. |
USE_OF_DERIVATIVE_FINANCIAL_IN6
USE OF DERIVATIVE FINANCIAL INSTRUMENTS, OFFSETTING DISCLOSURES AND CHANGES IN OTHER COMPREHENSIVE INCOME BY COMPONENT - Changes in AOCI (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accumulated other comprehensive income (loss) [Line Items] | |||
Beginning Balance | $219,143 | $293,910 | $204,540 |
Other comprehensive income (loss) before reclassifications | -13,776 | -91,681 | 69,488 |
Amounts reclassified from accumulated other comprehensive income | 22,055 | 16,914 | 19,882 |
Other comprehensive income (loss) | 8,279 | -74,767 | 89,370 |
Ending Balance | 227,422 | 219,143 | 293,910 |
Gains and Losses on Cash Flow Hedges [Member] | |||
Accumulated other comprehensive income (loss) [Line Items] | |||
Beginning Balance | -6,305 | -32,539 | -30,159 |
Other comprehensive income (loss) before reclassifications | -41,059 | 9,320 | -22,262 |
Amounts reclassified from accumulated other comprehensive income | 22,055 | 16,914 | 19,882 |
Other comprehensive income (loss) | -19,004 | 26,234 | -2,380 |
Ending Balance | -25,309 | -6,305 | -32,539 |
Unrealized Gains and Losses on Available-for-sale Securities [Member] | |||
Accumulated other comprehensive income (loss) [Line Items] | |||
Beginning Balance | 225,448 | 326,449 | 234,699 |
Other comprehensive income (loss) before reclassifications | 27,283 | -101,001 | 91,750 |
Amounts reclassified from accumulated other comprehensive income | 0 | 0 | 0 |
Other comprehensive income (loss) | 27,283 | -101,001 | 91,750 |
Ending Balance | $252,731 | $225,448 | $326,449 |
UNSECURED_BORROWINGS_Narrative
UNSECURED BORROWINGS - Narrative (Details) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Instrument [Line Items] | |||
Junior subordinated notes maturity term | 30 years | ||
Issuance of common securities | $3.10 | ||
Remaining issue costs | 2.1 | ||
Capstead Mortgage Trust I [Member] | |||
Debt Instrument [Line Items] | |||
Junior subordinated notes, maturity period | 31-Oct-35 | ||
Capstead Mortgage Trust II [Member] | |||
Debt Instrument [Line Items] | |||
Junior subordinated notes, maturity period | 31-Dec-35 | ||
Junior subordinated notes, earliest redemption option exercise date | 15-Dec-15 | ||
Capstead Mortgage Trust III [Member] | |||
Debt Instrument [Line Items] | |||
Junior subordinated notes, maturity period | 30-Sep-36 | ||
Junior subordinated notes, earliest redemption option exercise date | 15-Sep-16 | ||
Interest paid on outstanding borrowings | 8.4 | 8.6 | 8.6 |
Special-Purpose Statutory Trusts [Member] | |||
Debt Instrument [Line Items] | |||
Issuance of common securities | 3.1 | ||
Proceeds from private placement of preferred securities | $100 |
UNSECURED_BORROWINGS_Schedule_
UNSECURED BORROWINGS - Schedule of Subordinated Note Balances and Related Weighted Average Interest Rate (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Debt Instrument [Line Items] | ||||
Borrowings Outstanding | 100,000 | $100,000 | ||
For Final 20 Years [Member] | ||||
Debt Instrument [Line Items] | ||||
Effective borrowing rate considering cash flow hedges | 7.56% | |||
Capstead Mortgage Trust I [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowings Outstanding | 35,000 | 35,000 | ||
Average Rate (in hundredths) | 8.31% | [1] | 8.31% | [1] |
Capstead Mortgage Trust II [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowings Outstanding | 40,000 | 40,000 | ||
Average Rate (in hundredths) | 8.46% | [1] | 8.46% | [1] |
Capstead Mortgage Trust III [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowings Outstanding | 25,000 | 25,000 | ||
Average Rate (in hundredths) | 8.78% | [1] | 8.78% | [1] |
Junior Subordinated Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Borrowings Outstanding | 100,000 | $100,000 | ||
Average Rate (in hundredths) | 8.49% | [1] | 8.49% | [1] |
[1] | The indicated weighted average rates have been in effect since issuance. After considering cash flow hedges that coincide with the floating rate terms of these borrowings that begin October 30, and December 15, 2015 for the notes associated with Capstead Mortgage Trusts I and II and September 15, 2016 for the notes associated with Capstead Mortgage Trust III, the effective borrowing rate will average 7.56% beginning September 15, 2016 through maturity, subject to certain adjustments for the effects of measured hedge ineffectiveness, if any. |
DISCLOSURES_REGARDING_FAIR_VAL2
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS - Narrative (Details) (Maximum [Member]) | 12 Months Ended |
Dec. 31, 2014 | |
Maximum [Member] | |
Fair value, balance sheet grouping [Line Items] | |
Repurchase arrangements with initial terms in days | 120 days |
DISCLOSURES_REGARDING_FAIR_VAL3
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS - Balance Sheet Location (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Financial assets [Abstract] | ||
Residential mortgage loans | $13,908,104 | $13,475,874 |
Interest rate swap agreements at fair value | 1,657 | 5,005 |
Carrying Amount [Member] | ||
Financial assets [Abstract] | ||
Residential mortgage loans | 4,909 | 6,898 |
Interest rate swap agreements at fair value | 1,657 | 5,005 |
Financial liabilities [Abstract] | ||
Repurchase arrangements with initial terms of greater than 120 days, Fair Value | 2,128,517 | 36,299 |
Unsecured borrowings | 100,000 | 100,000 |
Interest rate swap agreements | 27,034 | 11,304 |
Fair Value [Member] | ||
Financial assets [Abstract] | ||
Residential mortgage loans | 5,000 | 7,000 |
Interest rate swap agreements at fair value | 1,657 | 5,005 |
Financial liabilities [Abstract] | ||
Repurchase arrangements with initial terms of greater than 120 days, Fair Value | 2,128,400 | 36,300 |
Unsecured borrowings | 100,500 | 101,000 |
Interest rate swap agreements | $27,034 | $11,304 |
DISCLOSURES_REGARDING_FAIR_VAL4
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS - Fair Value and Related Disclosures for Debt Securities (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Residential Mortgage Securities Classified as held-to-Maturity [Member] | ||
Held-to-maturity securities disclosure [Abstract] | ||
Held-to-maturities, Amortized Cost Basis | $3,663 | $4,376 |
Held-to-maturities, Gross Unrealized Gains | 124 | 211 |
Held-to-maturities, Gross Unrealized Losses | 0 | 0 |
Held-to-maturities, Fair Value | 3,787 | 4,587 |
Agency Securities Classified as Available-for-sale [Member] | Fannie Mae/Freddie Mac [Member] | ||
Available-for-sale securities disclosure Items [Abstract] | ||
Available-for-sale securities, Amortized Cost Basis | 10,559,231 | 11,019,116 |
Available-for-sale securities, Gross Unrealized Gains | 243,351 | 224,456 |
Available-for-sale securities, Gross Unrealized Losses | 2,218 | 12,468 |
Available-for-sale securities, Fair Value | 10,800,364 | 11,231,104 |
Agency Securities Classified as Available-for-sale [Member] | Ginnie Mae [Member] | ||
Available-for-sale securities disclosure Items [Abstract] | ||
Available-for-sale securities, Amortized Cost Basis | 3,087,570 | 2,220,035 |
Available-for-sale securities, Gross Unrealized Gains | 16,755 | 18,384 |
Available-for-sale securities, Gross Unrealized Losses | 5,157 | 4,924 |
Available-for-sale securities, Fair Value | $3,099,168 | $2,233,495 |
DISCLOSURES_REGARDING_FAIR_VAL5
DISCLOSURES REGARDING FAIR VALUES OF FINANCIAL INSTRUMENTS - Securities in Unrealized Loss Position (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Continuous unrealized loss position, fair value [Abstract] | ||
One year or greater | $706,839 | $39,030 |
Less than one year | 1,095,724 | 2,857,724 |
Continuous unrealized loss position, Fair Value, Total | 1,802,563 | 2,896,754 |
Continuous unrealized loss position, aggregate loss [Abstract] | ||
One year or greater | 5,320 | 380 |
Less than one year | 2,055 | 17,012 |
Unrealized Losses, Total | $7,375 | $17,392 |
INCOME_TAXES_Schedule_of_Effec
INCOME TAXES - Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
INCOME TAXES [Abstract] | |||
Income taxes computed at the federal statutory rate | $49,287 | $44,270 | $57,269 |
Benefit of REIT status | -49,283 | -44,270 | -57,268 |
Income taxes computed on income of Capstead's sole taxable REIT subsidiary | 4 | 0 | 1 |
Change in net deferred income tax assets | -4 | 1 | -1 |
Other | 0 | -1 | 0 |
Income tax provision | $0 | $0 | $0 |
INCOME_TAXES_Narrative_Details
INCOME TAXES - Narrative (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
INCOME TAXES [Abstract] | |||
Income taxes paid | $0 | $0 | $0 |
INCOME_TAXES_Components_of_Def
INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
INCOME TAXES [Abstract] | ||||
Alternative minimum tax credit | $1,941 | [1] | $1,942 | [1] |
Net operating loss carryforwards | 58 | [2] | 60 | [2] |
Other | 20 | 21 | ||
Deferred tax assets, gross, Total | 2,019 | 2,023 | ||
Deferred income tax liabilities | 0 | 0 | ||
Net deferred tax assets | 2,019 | 2,023 | ||
Valuation allowance | 2,019 | [3] | 2,023 | [3] |
Operating loss carryforwards subject to expiration amount | $3,500 | |||
Operating loss carryforwards, expiration date | 31-Dec-19 | |||
[1] | Alternative minimum tax credit carryforwards can be utilized to offset payment of federal income taxes on future taxable income, if any, earned by this subsidiary, subject to certain limitations. | |||
[2] | Excludes $3.5 million in remaining net operating loss carryforwards which expire beginning after 2019. To the extent these carryforwards are utilized in future periods, the benefit will reduce actual taxes payable. | |||
[3] | Because this subsidiary is not expected to earn significant amounts of taxable income, related net deferred tax assets are fully reserved at December 31, 2014. |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended | 2 Months Ended | ||
Jan. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 31-May-13 | Feb. 27, 2015 | |
Stockholders' Equity [Line Items] | ||||||
Redemption preference premiums paid | $0 | $19,924,000 | $0 | |||
Proceeds from issuance of common stock | 0 | 0 | 142,035,000 | |||
Preferred equity shares capital | 18,180,000 | 165,756,000 | 4,479,000 | |||
Common stock repurchase program | 100,000,000 | |||||
Shares repurchased (in shares) | 3,600,000 | |||||
Value of stock repurchased | 42,400,000 | |||||
Cumulative Redeemable Preferred Stock, Series E [Member] | ||||||
Stockholders' Equity [Line Items] | ||||||
Redeemable preferred stock, shares issued (in shares) | 6,800,000 | |||||
Redeemable preferred stock, face value | 170,000,000 | |||||
Preferred stock dividend rate (in hundredths) | 7.50% | |||||
Redeemable preferred stock, liquidation preference per share (in dollars per share) | $25 | |||||
Cash on hand used in capital transactions | 42,700,000 | |||||
Net proceeds | 164,300,000 | |||||
Convertible Preferred Stock [Member] | ||||||
Stockholders' Equity [Line Items] | ||||||
Cash used for redemption of preferred stock | 207,000,000 | |||||
Redemption preference premiums paid | 19,900,000 | |||||
Reduction in income per share (in dollars per share) | $0.21 | |||||
Shares (in shares) | 309,000 | |||||
Additional shares issued (in shares) | 309,000 | |||||
Preferred equity shares capital | 4,500,000 | |||||
Continuous Offering Program [Member] | ||||||
Stockholders' Equity [Line Items] | ||||||
Shares (in shares) | 10,500,000 | |||||
Proceeds from issuance of common stock | 142,000,000 | |||||
Additional shares issued (in shares) | 10,500,000 | |||||
Continuous Offering Program [Member] | Cumulative Redeemable Preferred Stock, Series E [Member] | ||||||
Stockholders' Equity [Line Items] | ||||||
Shares (in shares) | 757,000 | 61,000 | ||||
Net Issue Price (In dollars per share) | $24.01 | $23.78 | ||||
Net proceeds | 18,180,000 | 1,447,000 | ||||
Additional shares issued (in shares) | 757,000 | 61,000 | ||||
Continuous Offering Program [Member] | Cumulative Redeemable Preferred Stock, Series E [Member] | Subsequent Event [Member] | ||||||
Stockholders' Equity [Line Items] | ||||||
Shares (in shares) | 222,000 | |||||
Net Issue Price (In dollars per share) | $24.65 | |||||
Net proceeds | 5,465,000 | |||||
Additional shares issued (in shares) | 222,000 | |||||
Directors And Employees [Member] | ||||||
Stockholders' Equity [Line Items] | ||||||
Additions to common equity capital related to equity-based awards | $1,900,000 | $1,800,000 | $4,400,000 |
COMPENSATION_PROGRAMS_Other_Co
COMPENSATION PROGRAMS - Other Compensation Programs (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share Based Compensation Programs [Line Items] | |||
Short-term incentive compensation program accruals | $1,400,000 | ||
Annual incentive compensation expense | 1,200,000 | 2,800,000 | 4,100,000 |
DER issued and outstanding (in shares) | 654 | ||
Dividend Equivalent Rights Payable | 222,000 | ||
DER expense for the period | 889,000 | 811,000 | 914,000 |
Stock Options [Member] | |||
Share Based Compensation Programs [Line Items] | |||
Share awards contractual term | 10 years | ||
Options exercisable, weighted average remaining contractual term | 3 years 6 months | ||
Options exercisable, intrinsic value | 26,000 | ||
Intrinsic value of option awards exercised | $67,000 | $26,000 | $620,000 |
Long-Term Equity-Based Awards [Member] | |||
Share Based Compensation Programs [Line Items] | |||
Issuance of common shares pursuant to future equity-based awards (in shares) | 5,000,000 | ||
Common shares available for future issuance | 4,927,763 | ||
Share awards contractual term | 3 years | ||
Share awards vesting period | 3 years |
COMPENSATION_PROGRAMS_Schedule
COMPENSATION PROGRAMS - Schedule of Restricted Stock Awards (Details) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 1 Months Ended | |
Dec. 31, 2014 | Jan. 31, 2014 | Dec. 31, 2013 | Jul. 31, 2014 | Apr. 30, 2014 | Dec. 31, 2012 | Jan. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 72,237 | ||||||
Grant date fair value per share (in dollars per share) | $12.80 | ||||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Unvested stock awards outstanding at beginning of period (in shares) | 528,931 | 528,931 | |||||
Grants (in shares) | 72,237 | ||||||
Vestings (in shares) | -164,587 | ||||||
Unvested stock awards outstanding at end of period (in shares) | 436,581 | ||||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Unvested stock awards outstanding at beginning of year (in dollars per share) | $12.51 | 12.51 | |||||
Grants (in dollars per share) | $12.80 | ||||||
Vestings (in dollars per share) | $13.23 | ||||||
Unvested stock awards outstanding at end of year (in dollars per share) | $12.29 | ||||||
Common stock dividend payable | $34,054,000 | $30,872,000 | |||||
Service-Based Stock Awards [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 37,237 | 22,164 | 35,703 | ||||
Grant date fair value per share (in dollars per share) | $12.47 | $12.34 | |||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 37,237 | 22,164 | 35,703 | ||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $12.47 | $12.34 | |||||
Service-Based Stock Awards [Member] | Director Stock Award [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 35,000 | 28,000 | |||||
Grant date fair value per share (in dollars per share) | $13.16 | $13.02 | |||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 35,000 | 28,000 | |||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $13.16 | $13.02 | |||||
Stock Awards Activity [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 114,423 | 121,026 | 67,599 | ||||
Grant date fair value per share (in dollars per share) | $13.31 | $12.01 | $10.18 | ||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 114,423 | 121,026 | 67,599 | ||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $13.31 | $12.01 | $10.18 | ||||
Long term incentive compensation expense | 1,500,000 | 1,800,000 | 1,900,000 | ||||
Other general and administrative expense | 315,000 | 387,000 | 362,000 | ||||
Common stock dividend payable | 1,400,000 | 1,200,000 | |||||
Total of unrecognized compensation expense for unvested stock award | 2,200,000 | ||||||
Compensation cost not yet recognized, period for recognition | 1 year 6 months | ||||||
Long Term Equity Based Awards [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 242,505 | ||||||
Grant date fair value per share (in dollars per share) | $7.21 | $12.45 | |||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 242,505 | ||||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $7.21 | $12.45 | |||||
Long term incentive compensation expense | 582,000 | ||||||
Common stock dividend payable | 213,000 | 75,000 | |||||
Total estimated compensation expense for restricted stock units | 1,700,000 | 3,000,000 | |||||
Long Term Equity Based Awards [Member] | Subsequent Event [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 247,512 | ||||||
Grant date fair value per share (in dollars per share) | $8.83 | ||||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 247,512 | ||||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $8.83 | ||||||
Total of unrecognized compensation expense for unvested stock award | $2,200,000 | ||||||
Long Term Equity Based Awards [Member] | February 2015 [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 125,221 | ||||||
Grant date fair value per share (in dollars per share) | $12.58 | ||||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 125,221 | ||||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $12.58 | ||||||
Long Term Equity Based Awards [Member] | January 2016 [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 133,571 | ||||||
Grant date fair value per share (in dollars per share) | $12.17 | ||||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 133,571 | ||||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $12.17 | ||||||
Long Term Equity Based Awards [Member] | January 2017 [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total original grants (in shares) | 69,849 | ||||||
Grant date fair value per share (in dollars per share) | $11.67 | ||||||
Equity instruments other than options, nonvested, number of shares [Roll Forward] | |||||||
Grants (in shares) | 69,849 | ||||||
Equity instruments other than options, nonvested, weighted average grant date fair value [Abstract] | |||||||
Grants (in dollars per share) | $11.67 |
COMPENSATION_PROGRAMS_Schedule1
COMPENSATION PROGRAMS - Schedule of Stock Option Award Activity (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
COMPENSATION PROGRAMS [Abstract] | |
Option awards outstanding at beginning of year (in shares) | 77,500 |
Expirations (in shares) | -10,000 |
Exercises (in shares) | -27,500 |
Option awards outstanding at end of year (in shares) | 40,000 |
Weighted Average Exercise Price, option awards outstanding at beginning of year (in dollars per share) | $11.75 |
Weighted Average Exercise Price, expirations (in dollars per share) | $14.41 |
Weighted Average Exercise Price, exercises (in dollars per share) | $10.63 |
Weighted Average Exercise Price, option awards outstanding at end of year (in dollars per share) | $11.86 |
COMPENSATION_PROGRAMS_Defined_
COMPENSATION PROGRAMS - Defined Contribution Plans (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Defined Contribution Plan Disclosure [Abstract] | |||
Defined contribution plan voluntary contribution based on compensation (in hundredths) | 50.00% | ||
Defined contribution plan, maximum annual contributions per employee (in hundredths) | 6.00% | ||
Defined contribution plan, employer matching contribution (in hundredths) | 3.00% | ||
Defined contribution plan, cost recognized | $258,000 | $320,000 | $406,000 |
QUARTERLY_RESULTS_UNAUDITED_Su
QUARTERLY RESULTS (UNAUDITED) - Summarized Quarterly Results of Operations (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||
QUARTERLY RESULTS (UNAUDITED) [Abstract] | |||||||||||||||||||
Interest income on residential mortgage investments (before investment premium amortization) | $82,509 | $82,146 | $82,233 | $81,733 | $83,254 | $85,674 | $85,214 | $86,867 | |||||||||||
Investment premium amortization | -26,159 | -28,284 | -25,141 | -22,288 | -24,800 | -39,031 | -33,642 | -28,399 | -101,872 | -125,872 | -96,677 | ||||||||
Related interest expense | -18,107 | -16,099 | -15,542 | -15,407 | -15,392 | -15,759 | -16,749 | -18,468 | -65,155 | -66,368 | -69,101 | ||||||||
Net interest income (expense) | 38,243 | 37,763 | 41,550 | 44,038 | 43,062 | 30,884 | 34,823 | 40,000 | 153,421 | 140,355 | 178,781 | ||||||||
Other interest income (expense) | -2,023 | [1] | -2,044 | [1] | -2,045 | [1] | -2,061 | [1] | -2,066 | [1] | -2,074 | [1] | -2,015 | [1] | -2,010 | [1] | |||
Other revenue (expense) | -2,746 | -3,328 | -2,941 | -3,586 | -4,023 | -4,108 | -2,914 | -3,072 | -12,601 | -14,117 | -15,414 | ||||||||
Net income | $33,474 | $32,391 | $36,564 | $38,391 | $36,973 | $24,702 | $29,894 | $34,918 | $140,820 | $126,487 | $163,626 | ||||||||
Basic and diluted net income per common share | $0.31 | $0.30 | $0.35 | $0.37 | $0.35 | [2] | $0.23 | [2] | $0.04 | [2] | $0.31 | [2] | $1.33 | $0.93 | $1.50 | ||||
Redemption preference premiums paid and other one-time effects of the preferred capital transactions (in dollars per share) | $0.23 | ||||||||||||||||||
[1] | Consists principally of interest on unsecured borrowings and is presented net of earnings of related statutory trusts. These affiliates were dissolved in December 2013. | ||||||||||||||||||
[2] | Includes $0.23 associated with redemption preference premiums paid and other one-time effects of the second quarter's preferred capital transactions. |