Note 12—Equity

Preferred Stock

In February 2014, we completed an underwritten public offering of 900,000 shares of 8.50% Series C cumulative redeemable preferred stock with a liquidation preference of $25.00 per share, generating net proceeds of $21.6 million after deducting the underwriting discount and other offering expenses.

The Series A, B and C preferred stock may not be redeemed by us before February 2018, May 2018 and February 2019, respectively.

Common Stock

In February 2014, we entered into an "At-The-Market" ("ATM") equity offering sales agreement with JMP Securities LLC ("JMP") whereby, in accordance with the terms of the agreement, from time to time we may issue and sell through JMP up to 7,500,000 shares of our common stock. Sales of the shares are made by means of ordinary brokers' transactions or otherwise at market prices prevailing at the time of sale, or at negotiated prices. During the year ended December 31, 2014, we sold 1,000,000 shares for net proceeds of $6.5 million. As of December 31, 2015, 6,500,000 shares are available for sale under this offering.

We used the net proceeds from our preferred and common offerings to make investments, to repurchase or pay liabilities and for general corporate purposes.

As of February 26, 2016, we have $330.4 million available under our $500.0 million shelf registration statement that was declared effective by the SEC in August 2013.

Distributions

The following table presents dividends declared (on a per share basis) for the year ended December 31, 2015:

Common Stock			Preferred Stock
				Dividend(1)
Declaration Date	Dividend		Declaration Date	Series A		Series B		Series C
February 11, 2015	$	0.13	February 2, 2015	$	0.515625	$	0.484375	$	0.53125
April 29, 2015	$	0.15	April 29, 2015	$	0.515625	$	0.484375	$	0.53125
July 29, 2015	$	0.15	July 29, 2015	$	0.515625	$	0.484375	$	0.53125
November 4, 2015	$	0.15	November 2, 2015	$	0.515625	$	0.484375	$	0.53125


(1)	Preferred Stock—The dividend declared on February 2, 2015 was for the period December 1, 2014 through February 28, 2015. The dividend declared on April 29, 2015 was for the period March 1, 2015 through May 31, 2015. The dividend declared on July 29, 2015 was for the period June 1, 2015 through August 31, 2015. The dividend declared on November 2, 2015 was for the period September 1, 2015 through November 30, 2015.

Common Stock—On February 24, 2016, the Board of Directors declared a cash dividend of $0.15 per share of common stock. The dividend is payable on March 15, 2016 to common stockholders of record as the close of business on March 10, 2016.

Preferred Stock—On February 1, 2016, the Board of Directors declared a cash dividend of $0.515625 per share of 8.25% Series A preferred stock; a cash dividend of $0.484375 per share of 7.75% Series B preferred stock; and a cash dividend of $0.53125 per share of 8.50% Series C preferred stock. These amounts reflect dividends from December 1, 2015 through February 29, 2016 and are payable on February 29, 2016 to preferred stockholders of record on February 15, 2016.

We declared and paid distributions of $14,459, $14,698 and $14,500 for the years ended December 31, 2015, 2014 and 2013, respectively, representing the 12.5% return on the preferred shares issued to third parties by our subsidiary REIT.

We must currently distribute at least 90% of our taxable income in order to qualify as a REIT and must distribute 100% of our taxable income in order not to be subject to corporate federal income taxes on retained income. We anticipate we will distribute all of our taxable income to our stockholders. Because taxable income differs from cash flow from operations due to non-cash revenues or expenses (such as depreciation or provision for loan losses), in certain circumstances, we may generate operating cash flow in excess of our distributions or, alternatively, may be required to borrow to make sufficient distribution payments. We were in compliance with all REIT requirements as of December 31, 2015, 2014 and 2013.

The following table presents the tax treatment for dividends paid by us on our common and preferred stock for the years presented:

					For Tax Purposes
																Dividend Classified as Return of Capital
					Dividend Classified as Ordinary Income							Capital Gain Distribution
	Total Dividends Paid(1) (in thousands)				Dividend Classified as Ordinary Income							Capital Gain Distribution
Year	Total Dividends Paid(1) (in thousands)		Dividend Paid Per Share		Percent			Dividend Paid Per Share		Qualified Dividend Income(2)		Percent		Dividend Paid Per Share		Percent		Dividend Paid Per Share
Common Stock:
2015	$	29,495	$	0.580		100	%	$	0.580		—		—		—		—		—
2014	$	26,030	$	0.520		100	%	$	0.520		—		—		—		—		—
2013	$	21,327	$	0.500		100	%	$	0.500		—		—		—		—		—
8.25% Series A Preferred Stock:
2015	$	3,200	$	2.063		100	%	$	2.063		—		—		—		—		—
2014	$	3,200	$	2.063		100	%	$	2.063		—		—		—		—		—
2013	$	2,667	$	1.719		100	%	$	1.719		—		—		—		—		—
7.75% Series B Preferred Stock:
2015	$	2,441	$	1.938		100	%	$	1.938		—		—		—		—		—
2014	$	2,441	$	1.938		100	%	$	1.938		—		—		—		—		—
2013	$	1,370	$	1.087		100	%	$	1.087		—		—		—		—		—
8.50% Series C Preferred Stock:
2015	$	1,913	$	2.125		100	%	$	2.125		—		—		—		—		—
2014	$	1,456	$	1.617		100	%	$	1.617		—		—		—		—		—


(1)	2014 is the initial year for the Series C preferred stock dividend.
(2)	Qualified dividend income is eligible for reduced dividend rates.

Pursuant to Internal Revenue Code Section 59(d), alternative minimum tax ("AMT") could be apportioned between a REIT and its stockholders to the extent that the REIT distributes it regular taxable income. Since we have distributed our taxable income, the AMT adjustments are being apportioned to our stockholders. As such, we have determined that 11.296% of each distribution to our stockholders for the tax year ended December 31, 2015 consists of an AMT adjustment (i.e., for each $1 of dividend reportable by a stockholder, $0.11296 represents an AMT adjustment).

Deferred Compensation

We have a stock incentive plan under which the Board of Directors has the authority to issue shares of stock to certain directors, officers and employees of ours and our Manager.

In May 2015, we issued 20,430 shares of fully vested common stock to certain independent members of the Board of Directors under the 2014 Plan and recorded $0.1 million to selling and administrative expense in our consolidated statements of income.

In March 2015, we issued 328,400 shares of restricted common stock under the 2014 Plan to certain employees of ours and our Manager, inclusive of 105,000 shares granted to our chief executive officer, Mr. Ivan Kaufman, with a total grant date fair value of $2.3 million and recorded $0.4 million to employee compensation and benefits and $0.4 million to selling and administrative expense in our consolidated statements of income. One third of the shares vested as of the date of grant, one third will vest in March 2016, and the remaining third will vest in March 2017. In March 2015, we also issued 63,000 shares of fully vested common stock to the independent members of the Board of Directors under the 2014 Plan and recorded $0.4 million to selling and administrative expense in our consolidated statements of income.

During the first quarter of 2015, we issued 74,294 shares of restricted common stock to Mr. Kaufman under his 2015 annual incentive agreement with a grant date fair value of $0.5 million and recorded $0.1 million to employee compensation and benefits in our consolidated statements of income. One quarter of the shares vest as of the date of grant and one quarter will vest on each of the first, second and third anniversaries of the date of grant. Mr. Kaufman was also granted up to 445,765 performance-based restricted stock units that vest at the end of a four-year performance period based on the our achievement of certain total stockholder return objectives. The restricted stock units had a grant date fair value of $1.2 million and we recorded $0.3 million to employee compensation and benefits in our consolidated statements of income for the year ended December 31, 2015.

As of December 31, 2015, unvested restricted stock consisted of 212,241 shares granted to our employees with a grant date fair value of $1.5 million and 154,169 shares granted to employees of our Manager with a grant date fair value of $1.1 million, which is subject to remeasurement each reporting period. Expense is recognized ratably over the vesting period in our consolidated statements of income in selling and administrative expense and employee compensation and benefits expense, respectively. During the year ended December 31, 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.9 million and for non-employees to selling and administrative expense for $0.8 million. During the second quarter of 2015, 916 shares of unvested restricted stock with a grant date value of less than $0.1 million were forfeited.

In May 2014, we issued 278,000 shares of restricted common stock under the 2014 Plan to certain employees of ours and our Manager with a total grant date fair value of $2.0 million and recorded $0.3 million to employee compensation and benefits and $0.3 million to selling and administrative expense in our consolidated statements of income. One third of the shares vested as of the date of grant, one third vested in May 2015, and the remaining third will vest in May 2016. In May 2014, we also issued 63,000 shares of fully vested common stock to the independent members of the Board of Directors under the 2014 Plan and recorded $0.4 million to selling and administrative expense in our consolidated statements of income. As of December 31, 2014, unvested restricted stock consisted of 138,584 shares granted to employees of our Manager with a grant date fair value of $1.0 million, which is subject to remeasurement each reporting period, and 110,666 shares granted to our employees with a grant date fair value of $0.8 million. Expense is recognized ratably over the vesting period in our consolidated statements of income in selling and administrative expense and employee compensation and benefits expense, respectively. During the year ended December 31, 2014 we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.4 million and for non-employees to selling and administrative expense for $0.5 million in our consolidated statements of income.

In May 2013, we issued 70,000 shares of fully vested common stock to the independent members of the Board of Directors under the 2003 Stock Incentive Plan, as amended and restated in 2009 (the "2003 Plan"), and recorded $0.5 million to selling and administrative expense in our consolidated statements of income. In February 2013, we issued 192,750 shares of restricted common stock under the 2003 Plan to certain employees of ours and our Manager with a total grant date fair value of $1.5 million and recorded $0.2 million to employee compensation and benefits and $0.4 million to selling and administrative expense in our consolidated statements of income. One third of the shares vested as of the date of grant, one third vested in February 2014, and the remaining third vested in February 2015. During the third quarter of 2013, 667 shares of unvested restricted stock with a grant date fair value of less than $0.1 million were forfeited. As of December 31, 2013, unvested restricted stock consisted of 82,500 shares granted to non-employees with a grant date fair value of $0.7 million, which is subject to remeasurement each reporting period, and 45,333 shares granted to our employees with a grant date fair value of $0.4 million. Expense is recognized ratably over the vesting period in our consolidated statements of income in selling and administrative expense and employee compensation and benefits expense, respectively. During the year ended December 31, 2013, we recorded the ratable portion of the unvested restricted stock to employee compensation and benefits for $0.2 million and to selling and administrative expense for $0.3 million in our consolidated statements of income.

Vesting of restricted shares is dependent on a service requirement. Dividends paid on restricted shares are recorded as dividends on shares of our common stock whether or not they are vested. For accounting purposes, we measure the compensation costs for these shares as of the date of the grant, with subsequent remeasurement for any unvested shares granted to non-employees of ours with such amounts expensed against earnings, at the grant date (for the portion that vest immediately) or ratably over the respective vesting periods.

Warrants

In connection with a debt restructuring with Wachovia Bank in 2009, we issued Wachovia 1,000,000 warrants at an average strike price of $4.00 and an expiration date in July 2015. On July 1, 2014, we acquired and canceled all of the warrants in return for the payment of $2.6 million, recorded to additional paid in capital, which reflects a 5% discount to the prior day closing price of our common stock of $6.95.

Accumulated Other Comprehensive Loss

At December 31, 2015, accumulated other comprehensive loss was $4.8 million and consisted of $4.7 million of net unrealized losses on derivatives designated as cash flow hedges, and $0.6 million of net deferred losses on terminated interest swaps, less a $0.4 million unrealized gain related to available-for-sale securities. At December 31, 2014, accumulated other comprehensive loss was $14.7 million and consisted of $13.9 million of net unrealized losses on derivatives designated as cash flow hedges, and $1.1 million of net deferred losses on terminated interest swaps, less a $0.3 million unrealized gain related to available-for-sale securities.

Reclassifications out of accumulated other comprehensive loss is as follows:

	Year Ended December 31,
	2015			2014			Statement of Income Caption
Net realized losses on derivatives designated as cash flow hedges:
Interest Rate Swaps	$	(6,149,090	)	$	(10,706,246	)	Interest expense(1)


Termination of Interest Rate Swaps	$	(4,626,192	)	$	—		Loss on termination of swaps(1)


Net realized gain on sale of available-for-sale investments:
RMBS investment	$	—		$	431,476		Other income(2)


(1)	See Note 8—"Derivative Financial Instruments" for additional details.
(2)	See Note 4—"Securities" for additional details.

Noncontrolling Interest

We had a noncontrolling interest representing a third party's one third interest in the equity of a consolidated subsidiary that owns an investment that carried a note payable related to the exchange of a profits interest transaction. In the fourth quarter of 2013, the entity's operating agreement was amended to provide joint control to the members of the entity, and therefore, the entity was deconsolidated. Upon completion of this transaction, we deconsolidated the entity and noncontrolling interest was reduced to zero. For the year ended December 31, 2013, we recorded income of $0.1 million as well as distributions of $2.1 million attributable to the noncontrolling interest.