Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity

Stockholders' Equity

11.    Stockholders’ Equity

(a) Dividends on Preferred Stock

At March 31, 2013, the Company had issued and outstanding 3.8 million shares of 8.50% Series A Cumulative Preferred Stock (“Series A Preferred Stock”), with a par value of $0.01 per share and a liquidation preference of $25.00 per share.  Beginning April 27, 2009, the Company’s Series A Preferred Stock became redeemable at $25.00 per share plus accrued and unpaid dividends (whether or not declared) exclusively at the Company’s option.  The Series A Preferred Stock is entitled to receive a dividend at a rate of 8.50% per year on the $25.00 liquidation preference before the Company’s common stock is paid any dividends and is senior to the common stock with respect to distributions upon liquidation, dissolution or winding up.  The Series A 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 A 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 A Preferred Stock cannot be made without the affirmative vote of holders of at least 66 2/3% of the outstanding shares of Series A Preferred Stock.

From the time of original issuance of the Series A Preferred Stock through March 31, 2013, the Company has declared and paid all required quarterly dividends on such stock.  The following table presents the relevant dates with respect to such quarterly cash dividends, of $0.53125 per share, from January 1, 2012 through March 31, 2013:

Declaration Date	Record Date	Payment Date
February 15, 2013	March 1, 2013	April 1, 2013
November 20, 2012	December 3, 2012	December 31, 2012
August 22, 2012	September 4, 2012	October 1, 2012
May 18, 2012	June 1, 2012	July 2, 2012
February 17, 2012	March 1, 2012	April 2, 2012

On April 16, 2013, the Company announced that it will redeem all 3.8 million outstanding shares of its Series A Preferred Stock on May 16, 2013.  (See Note 16 for further information regarding such redemption.)

(b)  Dividends on Common Stock

The following table presents cash dividends declared by the Company on its common stock from January 1, 2012 through March 31, 2013:

Declaration Date	Record Date	Payment Date	Dividend Per  Share (1)
March 28, 2013	April 12, 2013	April 30, 2013	$	0.22
March 4, 2013	March 18, 2013	April 10, 2013	0.50
December 12, 2012	December 28, 2012	January 31, 2013	0.20
September 28, 2012	October 12, 2012	October 31, 2012	0.21
June 27, 2012	July 13, 2012	July 31, 2012	0.23
March 23, 2012	April 4, 2012	April 30, 2012	0.24

(1)  At March 31, 2013, the Company had accrued dividends and DERs payable of $79.2 million related to the common stock dividend declared on March 28, 2013 and $180.1 million of accrued dividends payable related to the special cash dividend on common stock  declared on March 4, 2013.

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

On November 22, 2011, the Company filed a shelf registration statement on Form S-3 with the 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 10 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 March 31, 2013, 7.2 million shares of common stock remained available for issuance pursuant to the DRSPP shelf registration statement.

During the three months ended March 31, 2013, the Company issued 834,038 shares of common stock through the DRSPP, raising net proceeds of $7,367,194.  From the inception of the DRSPP in September 2003 through March 31, 2013, the Company issued 17,362,063 shares pursuant to the DRSPP, raising net proceeds of $151.2 million.

(d) Controlled Equity Offering Program

On August 20, 2004, the Company initiated a controlled equity offering program (the “CEO Program”) through which it may, from time to time, publicly offer and sell shares of common stock through Cantor Fitzgerald & Co. (“Cantor”) in privately negotiated and/or at-the-market transactions.  During the three months ended March 31, 2013, the Company did not issue any shares through the CEO Program.  From inception of the CEO Program through March 31, 2013, the Company issued 30,144,815 shares of common stock in at-the-market transactions through the CEO Program, raising net proceeds of $194,908,570.  In connection with such transactions, the Company paid Cantor aggregate fees and commissions of $4,189,247.  Shares for the CEO Program are issued through the automatic shelf registration statement on Form S-3 that was filed on October 22, 2010, as amended by Post-Effective Amendment No. 1 thereto, which was filed on April 2, 2012.

On December 12, 2008, the Company entered into its most recent Sales Agreement (the “Agreement”) with Cantor, as sales agent.  In accordance with the terms of the Agreement, the Company may offer and sell up to 40 million shares of common stock (the “CEO Shares”) from time to time through Cantor.  Sales of the CEO Shares, if any, may be made in privately negotiated transactions and/or by any other method permitted by law, including, but not limited to, sales at other than a fixed price made on or through the facilities of the New York Stock Exchange (the “NYSE”), or sales made to or through a market maker or through an electronic communications network, or in any other manner that may be deemed to be an “at-the-market offering” as defined in Rule 415 of the 1933 Act.  Cantor will make all sales on a best efforts basis using commercially reasonable efforts consistent with its normal trading and sales practices on mutually agreed terms between the Company and Cantor.

(e)  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 under the Repurchase Program.  The Board reaffirmed such authorization in May 2010.  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, 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.  During the three months ended March 31, 2013, the Company did not repurchase any shares of its common stock under the Repurchase Program.  At March 31, 2013, 2,759,709 shares remained authorized for repurchase.

(f)  Accumulated Other Comprehensive Income/(Loss)

The following table presents changes in the balances of each component of the Company’s AOCI for the three months ended March 31, 2013:

(In Thousands)	Net Unrealized Gain on Available-for-Sale MBS			Net Unrealized (Loss)/Gain on Swaps			Total AOCI
Balance at the beginning of the period	$	824,808		$	(62,831	)	$	761,977
OCI before reclassifications	119,439			12,316			131,755
Amounts reclassified from AOCI (1)	(1,360		)	—			(1,360		)
Net current period OCI (2)	118,079			12,316			130,395
Balance at end of period	$	942,887		$	(50,515	)	$	892,372

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

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

The following table presents information about the significant amounts reclassified out of the Company’s AOCI for the three months ended March 31, 2013:

Details about	Amounts Reclassified			Affected Line Item in the Statement
AOCI Components	from AOCI			Where Net Income is Presented
(In Thousands)
Available-for-sale MBS:
Realized gain on sale of securities	$	(1,360	)	Gain on sales of MBS and U.S. Treasury securities, net
Total reclassifications for period	$	(1,360	)

At March 31, 2013 and December 31, 2012, the Company had OTTI recognized in AOCI of $979,000 and $2.6 million, respectively.