Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

(a) Preferred Stock

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

On April 15, 2013, 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 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.

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, 2022 through June 30, 2023:

Declaration Date	Record Date	Payment Date	Dividend Per Share
May 22, 2023	June 5, 2023	June 30, 2023	$0.46875
February 21, 2023	March 6, 2023	March 31, 2023	$0.46875

6.50% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”)

On February 28, 2020, the Company amended its charter through the filing of articles supplementary to reclassify 12,650,000 shares of the Company’s authorized but unissued common stock as shares of the Company’s Series C Preferred Stock. On March 2, 2020, the Company completed the issuance of 11.0 million shares of its Series C 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 total net proceeds the Company received from the offering were approximately $266.0 million, after deducting offering expenses and the underwriting discount.

The Company’s Series C Preferred Stock is entitled to receive dividends (i) from and including the original issue date to, but excluding, March 31, 2025, at a fixed rate of 6.50% per year on the $25.00 liquidation preference and (ii) from and including March 31, 2025, at a floating rate equal to three-month LIBOR plus a spread of 5.345% per year of the $25.00 per share 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. In light of the discontinuance of the publication of three-month LIBOR after June 2023 and pursuant to the terms of the Series C Preferred Stock, the Company will, prior to March 31, 2025, appoint a calculation agent to select an industry accepted substitute or successor base rate to the three-month LIBOR rate. The calculation agent may also implement changes to the business day convention, the definition of business day, the dividend determination date, the interest rate spread and the method for obtaining the substitute or successor base rate, in a manner that is consistent with industry accepted practices. In March 2022, Congress enacted a federal statute that provides a safe harbor for those, like the calculation agent, that are contractually responsible for determining LIBOR replacements under certain circumstances, which the Company expects will apply to the Series C Preferred Stock. The Federal Reserve is required to promulgate rules under this statute which, once final, the Company expects will affect the selection of an industry accepted substitute or successor base rate under the terms of the Series C Preferred Stock. Although the Company has not yet appointed a calculation agent and a substitute or successor base rate has not yet been selected, it is the Company’s present expectation that three-month SOFR (Secured Overnight Financing Rate) would be the substitute or successor base rate to three-month LIBOR. Dividends on the Series C Preferred Stock are payable quarterly in arrears on or about March 31, June 30, September 30 and December 31 of each year. The Series C Preferred Stock is not redeemable by the Company prior to March 31, 2025, except under circumstances where it is necessary to preserve the Company’s qualification as a REIT for U.S. federal income tax purposes and upon the occurrence of certain specified change in control transactions. On or after March 31, 2025, the Company may, at its option, subject to certain procedural requirements, redeem any or all of the shares of the Series C Preferred Stock for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends thereon (whether or not authorized or declared) to, but excluding, the redemption date.

The Series C 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 C Preferred Stock will be entitled to vote to elect two additional directors to the Company’s 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 C Preferred Stock cannot be made without the affirmative vote of holders of at least 66 2/3% of the outstanding shares of Series C Preferred Stock.

The following table presents cash dividends declared by the Company on its Series C Preferred Stock from January 1, 2022 through June 30, 2023:

Declaration Date	Record Date	Payment Date	Dividend Per Share
May 22, 2023	June 5, 2023	June 30, 2023	$0.40625
February 21, 2023	March 6, 2023	March 31, 2023	0.40625

(b)  Dividends on Common Stock

The following table presents cash dividends declared by the Company on its common stock from January 1, 2022 through June 30, 2023:

Declaration Date	Record Date	Payment Date	Dividend Per Share
June 15, 2023	June 30, 2023	July 31, 2023	$0.350	(1)
March 10, 2023	March 31, 2023	April 28, 2023	0.350

(1) At June 30, 2023, the Company had accrued dividends and dividend equivalents payable of $35.8 million related to the common stock dividend declared on June 15, 2023.

(c) Discount Waiver, Direct Stock Purchase and Dividend Reinvestment Plan (“DRSPP”)

On September 27, 2022, the Company filed a shelf registration statement on Form S-3 with the SEC under the Securities Act of 1933, as amended (the “Securities Act”), for the purpose of registering common stock for sale through its DRSPP.  Pursuant to Rule 462(e) under the Securities Act, this shelf registration statement became effective automatically upon filing with the SEC and registered an aggregate of 2.0 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 June 30, 2023, approximately 2.0 million shares of common stock remained available for issuance pursuant to the DRSPP shelf registration statement.

During the three and six months ended June 30, 2023, the Company issued 3,440 and 6,666 shares of common stock through the DRSPP, raising net proceeds of approximately $37,000 and $74,000, respectively.  From the inception of the DRSPP in September 2003 through June 30, 2023, the Company issued 8,848,219 shares pursuant to the DRSPP, raising net proceeds of $290.8 million.

(d)  Stock Repurchase Program

On March 11, 2022, the Company’s Board authorized a stock repurchase program under which the Company may repurchase up to $250 million of its common stock through the end of 2023. The Board’s authorization superseded and replaced the authorization under a prior stock repurchase program that had been adopted in November 2020, which also authorized the Company to repurchase up to $250 million.

The stock repurchase program does not require the purchase of any minimum number of shares. The timing and extent to which the Company repurchases its shares will depend upon, among other things, market conditions, share price, liquidity, regulatory requirements and other factors, and repurchases may be commenced or suspended at any time without prior notice. Acquisitions under the stock repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means, in accordance with applicable securities laws (including, in the Company’s discretion, through the use of one or more plans adopted under Rule 10b5-1 promulgated under the Exchange Act of 1934, as amended (the “Exchange Act”)).

The Company did not repurchase any shares of its common stock during the six months ended June 30, 2023. During the three and six months ended June 30, 2022, the Company repurchased 3,280,977 and 6,476,746 shares of its common stock through the stock repurchase program at an average cost of $14.48 and $15.80 per share and a total cost of approximately $47.5 million and $102.1 million, net of fees and commissions paid to the sales agent of approximately $33,000 and $161,000,

respectively. As of June 30, 2023, approximately $202.5 million remained available under the current authorization for the purchase of common stock under the stock 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 three and six months ended June 30, 2023:

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
(In Thousands)	Net Unrealized Gain/(Loss) on AFS Securities		Net Unrealized Gain/(Loss) on Financing Agreements (1)		Total  AOCI		Net Unrealized Gain/(Loss) on AFS Securities		Net Unrealized Gain/(Loss) on Financing Agreements (1)		Total  AOCI
Balance at beginning of period	$	20,225	$	—	$	20,225	$	21,341	$	—	$	21,341
OCI before reclassifications	(6,805)		—		(6,805)		(7,921)		—		(7,921)
Amounts reclassified from AOCI	—		—		—		—		—		—
Net OCI during the period (2)	(6,805)		—		(6,805)		(7,921)		—		(7,921)
Balance at end of period	$	13,420	$	—	$	13,420	$	13,420	$	—	$	13,420

(1)Net Unrealized Gain/(Loss) on Financing Agreements at Fair Value due to changes in instrument-specific credit risk.

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

The following table presents changes in the balances of each component of the Company’s AOCI for the three and six months ended June 30, 2022:

	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
(In Thousands)	Net Unrealized Gain/(Loss) on AFS Securities		Net Unrealized Gain/(Loss) on Financing Agreements (1)		Total AOCI		Net Unrealized Gain/(Loss) on AFS Securities		Net Unrealized Gain/(Loss) on Financing Agreements (1)		Total AOCI
Balance at beginning of period	$	41,856	$	—	$	41,856	$	46,833	$	(1,255)	$	45,578
OCI before reclassifications	(4,937)		—		(4,937)		(9,914)		1,255		(8,659)
Amounts reclassified from AOCI	—		—		—		—		—		—
Net OCI during the period (2)	(4,937)		—		(4,937)		(9,914)		1,255		(8,659)
Balance at end of period	$	36,919	$	—	$	36,919	$	36,919	$	—	$	36,919

(1)  Net Unrealized Gain/(Loss) on Financing Agreements at Fair Value due to changes in instrument-specific credit risk.

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