Stockholders’ Equity

(a) Preferred Stock

Redemption of 8.50% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”)

On May 16, 2013 (the “Redemption Date”), the Company redeemed all 3,840,000 outstanding shares of its Series A Preferred Stock at an aggregate redemption price of approximately $97.0 million, or $25.27153 per share, including all accrued and unpaid dividends to the Redemption Date. The redemption value of the Series A Preferred Stock exceeded its carrying value by $3.9 million, which represents the original offering costs for the Series A Preferred Stock. This amount was included in the determination of net income available to common stock and participating securities from the Redemption Date through the year ended December 31, 2013. In addition, as part of the redemption price on its Series A Preferred Stock, the Company paid a dividend of $0.27153 per share, which reflected accrued and unpaid dividends for the period from April 1, 2013 through and including the Redemption Date.

Issuance of 7.50% Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”)

On April 15, 2013, the Company filed articles supplementary amending its charter to reclassify 8,050,000 shares of the Company’s authorized but unissued common stock as shares of the Company’s Series B Preferred Stock. On the same date, the Company completed the issuance of 8.0 million shares of its Series B Preferred Stock with a par value of $0.01 per share, and a liquidation preference of $25.00 per share plus accrued and unpaid dividends, in an underwritten public offering. The aggregate net proceeds to the Company from the offering of the Series B Preferred Stock were approximately $193.3 million, after deducting the underwriting discount and related offering expenses. The Company used a portion of the net proceeds to redeem all of its outstanding Series A Preferred Stock (as discussed above), and used the remaining net proceeds of the offering for general corporate purposes, including, without limitation, to acquire additional MBS consistent with its investment policy, and for working capital, which included, among other things, the repayment of its repurchase agreements.

The Company’s Series B Preferred Stock is entitled to receive a dividend at a rate of 7.50% per year on the $25.00 liquidation preference before the Company’s common stock is paid any dividends and is senior to the Company’s common stock with respect to distributions upon liquidation, dissolution or winding up. Dividends on the Series B Preferred Stock are payable quarterly in arrears on or about March 31, June 30, September 30 and December 31 of each year. The Series B Preferred Stock is redeemable at $25.00 per share plus accrued and unpaid dividends (whether or not authorized or declared) exclusively at the Company’s option commencing on April 15, 2018 (subject to the Company’s right, under limited circumstances, to redeem the Series B Preferred Stock prior to that date in order to preserve its qualification as a REIT and upon certain specified change in control transactions in which the Company’s common stock and the acquiring or surviving entity common securities would not be listed on the New York Stock Exchange (the “NYSE”), the NYSE MKT or NASDAQ, or any successor exchanges).

On May 20, 2013, the Company declared the first dividend payable on the Series B Preferred Stock, which was paid on July 1, 2013 to preferred stockholders of record as of June 3, 2013. The amount of such dividend payable was $0.39583 per share, and was paid in respect of the partial period commencing on April 15, 2013, the date of original issue of the Series B Preferred Stock, and ending on, and including, June 30, 2013.

The Series B Preferred Stock generally does not have any voting rights, subject to an exception in the event the Company fails to pay dividends on such stock for six or more quarterly periods (whether or not consecutive). Under such circumstances, the Series B Preferred Stock will be entitled to vote to elect two additional directors to the Company’s Board of Directors (the “Board”), until all unpaid dividends have been paid or declared and set apart for payment. In addition, certain material and adverse changes to the terms of the Series B Preferred Stock cannot be made without the affirmative vote of holders of at least 66 2/3% of the outstanding shares of Series B Preferred Stock.

The following table presents cash dividends declared by the Company on its Series B Preferred Stock from January 1, 2013 through December 31, 2015:



Year	Declaration Date	Record Date	Payment Date	Dividend Per Share
2015	November 19, 2015	December 3, 2015	December 31, 2015	$0.46875
	August 24, 2015	September 9, 2015	September 30, 2015	0.46875
	May 18, 2015	June 2, 2015	June 30, 2015	0.46875
	February 13, 2015	February 27, 2015	March 31, 2015	0.46875

2014	November 21, 2014	December 5, 2014	December 31, 2014	$0.46875
	August 25, 2014	September 8, 2014	September 30, 2014	0.46875
	May 19, 2014	June 10, 2014	June 30, 2014	0.46875
	February 14, 2014	February 28, 2014	March 31, 2014	0.46875

2013	November 19, 2013	December 3, 2013	December 31, 2013	$0.46875
	August 22, 2013	September 5, 2013	September 30, 2013	0.46875
	May 20, 2013	June 3, 2013	July 1, 2013	0.39583

(b) Dividends on Common Stock

The following table presents cash dividends declared by the Company on its common stock from January 1, 2013 through December 31, 2015:



Year	Declaration Date	Record Date	Payment Date	Dividend Per Share
2015	December 9, 2015	December 28, 2015	January 29, 2016	$0.20	(1)
	September 17, 2015	September 29, 2015	October 30, 2015	0.20
	June 15, 2015	June 29, 2015	July 31, 2015	0.20
	March 13, 2015	March 27, 2015	April 30, 2015	0.20

2014	December 9, 2014	December 26, 2014	January 30, 2015	$0.20
	September 17, 2014	September 29, 2014	October 31, 2014	0.20
	June 13, 2014	June 27, 2014	July 31, 2014	0.20
	March 10, 2014	March 28, 2014	April 30, 2014	0.20

2013	December 11, 2013	December 31, 2013	January 31, 2014	$0.20
	September 26, 2013	October 11, 2013	October 31, 2013	0.22
	August 1, 2013	August 12, 2013	August 30, 2013	0.28	(2)
	June 28, 2013	July 12, 2013	July 31, 2013	0.22
	March 28, 2013	April 12, 2013	April 30, 2013	0.22
	March 4, 2013	March 18, 2013	April 10, 2013	0.50	(3)

(1) At December 31, 2015, the Company had accrued dividends and dividend equivalents payable of $74.6 million related to the common stock dividend declared on December 9, 2015.

(2) Reflects the special cash dividend on common stock declared on August 1, 2013.

(3) Reflects the special cash dividend on common stock declared on March 4, 2013.

In general, the Company’s common stock dividends have been characterized as ordinary income to its stockholders for income tax purposes. However, a portion of the Company’s common stock dividends may, from time to time, be characterized as capital gains or return of capital. For the year ended December 31, 2015, a portion of the Company’s common stock dividends were deemed to be capitalized gains. For the years ended December 31, 2014 and 2013, our common stock dividends were characterized as ordinary income to stockholders.

On August 8, 2013, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “1933 Act”), for the purpose of registering additional common stock for sale through its DRSPP. Pursuant to Rule 462(e) of the 1933 Act, this shelf registration statement became effective automatically upon filing with the SEC and, when combined with the unused portion of the Company’s previous DRSPP shelf registration statements, registered an aggregate of 15 million shares of common stock. The Company’s DRSPP is designed to provide existing stockholders and new investors with a convenient and economical way to purchase shares of common stock through the automatic reinvestment of dividends and/or optional cash investments. At December 31, 2015, 6.8 million shares of common stock remained available for issuance pursuant to the DRSPP shelf registration statement.

During the years ended December 31, 2015, 2014 and 2013, the Company issued 162,373, 4,526,855 and 9,511,739 shares of common stock through the DRSPP, raising net proceeds of approximately $1.2 million, $35.6 million and $77.6 million, respectively. From the inception of the DRSPP in September 2003 through December 31, 2015, the Company issued 30,728,992 shares pursuant to the DRSPP, raising net proceeds of $258.3 million.

(d) Stock Repurchase Program

As previously disclosed, in August 2005, the Company’s Board authorized a stock repurchase program (the “Repurchase Program”) to repurchase up to 4.0 million shares of its outstanding common stock. The Board reaffirmed such authorization in May 2010. In December 2013, the Board increased the number of shares authorized under the Repurchase Program to an aggregate of 10.0 million. Such authorization does not have an expiration date and, at present, there is no intention to modify or otherwise rescind such authorization. Subject to applicable securities laws, repurchases of common stock under the Repurchase Program are made at times and in amounts as the Company deems appropriate, (including, in our discretion, through the use of one or more plans adopted under Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as amended (the “1934 Act”)) using available cash resources. Shares of common stock repurchased by the Company under the Repurchase Program are cancelled and, until reissued by the Company, are deemed to be authorized but unissued shares of the Company’s common stock. The Repurchase Program may be suspended or discontinued by the Company at any time and without prior notice. The Company did not repurchase any shares of its common stock during the years ended December 31, 2015 and 2014. During the year ended December 31, 2013, the Company repurchased 2,143,354 shares of its common stock at a total cost of approximately $15.4 million and an average cost of $7.20 per share. At December 31, 2015, 6,616,355 shares remained authorized for repurchase under the Repurchase Program.

(e) Accumulated Other Comprehensive Income/(Loss)

The following table presents changes in the balances of each component of the Company’s AOCI for the years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31,
	2015									2014									2013
(In Thousands)	Net Unrealized Gain/(Loss) on AFS Securities			Net Unrealized Gain/(Loss) on Swaps			Total AOCI			Net Unrealized Gain/(Loss) on AFS Securities			Net Unrealized Gain/(Loss) on Swaps			Total AOCI			Net Unrealized Gain/(Loss) on AFS Securities			Net Unrealized Gain/(Loss) on Swaps			Total AOCI
Balance at beginning of period	$	813,515		$	(59,062	)	$	754,453		$	752,912		$	(15,217	)	$	737,695		$	824,808		$	(62,831	)	$	761,977
OCI before reclassifications	(194,890		)	(10,337		)	(205,227		)	95,551			(44,292		)	51,259			(52,063		)	47,614			(4,449		)
Amounts reclassified from AOCI (1)	(37,912		)	—			(37,912		)	(34,948		)	447			(34,501		)	(19,833		)	—			(19,833		)
Cumulative effect adjustment on adoption of revised accounting standard for repurchase agreement financing	4,537			—			4,537			—			—			—			—			—			—
Net OCI during period (2)	(228,265		)	(10,337		)	(238,602		)	60,603			(43,845		)	16,758			(71,896		)	47,614			(24,282		)
Balance at end of period	$	585,250		$	(69,399	)	$	515,851		$	813,515		$	(59,062	)	$	754,453		$	752,912		$	(15,217	)	$	737,695

(1) See separate table below for details about these reclassifications.

(2) For further information regarding changes in OCI, see the Company’s consolidated statements of comprehensive income/(loss).

The following table presents information about the significant amounts reclassified out of the Company’s AOCI for the years ended December 31, 2015, 2014, and 2013:



	For the Year Ended December 31,
	2015			2014			2013
Details about AOCI Components	Amounts Reclassified from AOCI									Affected Line Item in the Statement Where Net Income is Presented
(In Thousands)
AFS Securities:
Realized gain on sale of securities	$	(37,207	)	$	(34,948	)	$	(19,833	)	Gain on sales of MBS and U.S. Treasury securities, net
OTTI recognized in earnings	(705		)	—			—			Net impairment losses recognized in earnings
Total AFS Securities	(37,912		)	(34,948		)	(19,833		)

Swaps designated as cash flow hedges:
De-designated Swaps	—			447			—			Other, net
Total Swaps designated as cash flow hedges	—			447			—
Total reclassifications for period	$	(37,912	)	$	(34,501	)	$	(19,833	)

At December 31, 2015, and 2014 the Company had unrealized losses recorded in AOCI of $1.3 million, and $629,000, respectively, on securities for which OTTI had been recognized in earnings in prior periods.