Exhibit 99.2
About Us
We invest in a leveraged portfolio of almost exclusively residential adjustable-rate mortgage (“ARM”) securities issued and guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
Our investment strategy differentiates us from our peers because ARM securities reset to more current interest rates with in a relatively short period of time allowing for:
| • | the recovery of financing spreads diminished during periods of rising interest rates, and |
| • | smaller fluctuations in portfolio values from changes in interest rates compared to fixed-rate mortgage securities. |
Experienced Management
Formed in 1985, Capstead’s experienced management team has over 80 years of combined mortgage finance industry experience.
Quality Assets
Agency-guaranteed residential mortgage securities are considered to have little, if any, credit risk, particularly given federal government support for Fannie Mae and Freddie Mac. These mortgage investments are highly liquid and can be financed with multiple funding providers through standard repurchase arrangements.
Proven Strategy
We prudently leverage our portfolio to provide the financial flexibility needed to successfully manage through periods of changing market conditions.
First Quarter Highlights
| • | Reported earnings of $34.7 million, or $0.41 per diluted common share. |
| • | Increased book value by $0.13 to $12.15 per common share at March 31, 2011. |
| • | Increased investment portfolio by $1.91 billion to $10.43 billion at March 31, 2011. |
| • | Increased portfolio leverage one full multiple to 7.91 times long-term investment capital at March 31, 2011. |
| • | Total financing spreads decreased 9 basis points to average 1.62%. |
| • | Raised $60 million in new common equity capital during the first quarter and another $30 million through May 4, 2011. |
Quarterly Results
(In thousands, except per share data) | March 31, 2011 | Dec. 31, 2010 | Sept. 30, 2010 | June 30, 2010 | March 31, 2010 | |||||||||||||||
Interest income: | ||||||||||||||||||||
Mortgage securities and similar investments | $ | 53,141 | $ | 50,902 | $ | 40,614 | $ | 47,634 | $ | 60,150 | ||||||||||
Overnight investments and swap recievables | 113 | 140 | 111 | 135 | 92 | |||||||||||||||
| 53,254 | 51,042 | 40,725 | 47,769 | 60,242 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Repurchase arrangements and similar borrowings | (12,322 | ) | (11,892 | ) | (11,096 | ) | (11,146 | ) | (13,368 | ) | ||||||||||
Unsecured borrowings | (2,187 | ) | (2,187 | ) | (2,186 | ) | (2,187 | ) | (2,187 | ) | ||||||||||
Other | (4 | ) | (2 | ) | — | — | — | |||||||||||||
| (14,513 | ) | (14,081 | ) | (13,282 | ) | (13,333 | ) | (15,555 | ) | |||||||||||
Net interest margins | 38,741 | 36,961 | 27,443 | 34,436 | 44,687 | |||||||||||||||
Net income | 34,692 | 33,027 | 23,673 | 29,759 | 40,437 | |||||||||||||||
Income available to common stockholders | 29,634 | 27,969 | 18,615 | 24,700 | 35,379 | |||||||||||||||
Diluted earnings per common share | 0.41 | 0.40 | 0.27 | 0.35 | 0.51 | |||||||||||||||
Common dividends per share | 0.41 | 0.39 | 0.26 | 0.36 | 0.50 | |||||||||||||||
Common equity raises | 60,071 | — | — | — | 10,423 | |||||||||||||||
Common shares outstanding (EOQ) | 74,994 | 70,259 | 70,129 | 70,129 | 70,116 | |||||||||||||||
Analysts
Firm | Rating* | |||
Cantor Fitzgerald | Buy | |||
Deutsche Bank | Hold | |||
FBR Capital Markets | Outperform | |||
JMP Securities LLC | Buy | |||
Keefe, Bruyette & Woods | Outperform | |||
Lazard Capital | Hold | |||
Macquarie | Outperform | |||
RBC Capital Markets | Outperform | |||
Sandler O’Neill | Hold | |||
Sterne Agee | Neutral | |||
Stifel Nicolaus | Buy | |||
Wunderlich | Buy | |||
Ownership
Institution | % of shares Outstanding** | |||
Wells Capital Management Inc. | 8.07 | |||
BlackRock Fund Advisors | 4.99 | |||
Vanguard Group Inc. | 3.74 | |||
GW Capital Inc | 2.80 | |||
Highland Capital Management LP | 2.32 | |||
Thompson Siegel & Walmsley LLC | 2.25 | |||
Clough Capital Partners LP | 2.19 | |||
Jennison Associates LLC | 2.14 | |||
State Street Global Advisors Inc. | 2.14 | |||
Wellington Management Co. LLP | 2.07 | |||
Common Stock Information
NYSE Ticker: CMO | ||
Price as of 5/4/11: | $13.23 | |
52-wk High/Low: | $13.48/$8.12 | |
1Q Dividend: | $0.41 | |
Dividend yield: | 12.4% | |
(based on annualized 1Q dividend) | ||
1Q Avg Daily Vol: | 666,640 shares |
Series A/Series B
Preferred Stock Info
NYSE Ticker: CMOPRA / CMOPRB
Prices as of 5/4/11: $22.00/$14.50
Call Price: $16.40 / $12.50
Liquidation Value: $16.40 / $11.38
Conversion Ratio: 1.6497 / 0.6373
Annualized Dividend: $1.60 / $1.26
| * | As of May 4, 2011 |
| ** | % based on available filings as of May 4, 2011 and shares outstanding as of March 31, 2011. |
Capstead Mortgage Corporation
8401 North Central Expressway • Suite 800 • Dallas, Texas 75225-4410
800.358.2323 • invrel@capstead.com • www.capstead.com