-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJfomXw0BoAHBtCdDYIspD/uOG9yVCMl7xY+noPbpdu2wfBrAG7SotbSWVamRnu/ IPCTko2zIDxhI6/ajuW01Q== 0000930661-95-000459.txt : 19951119 0000930661-95-000459.hdr.sgml : 19951119 ACCESSION NUMBER: 0000930661-95-000459 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPSTEAD MORTGAGE CORP CENTRAL INDEX KEY: 0000766701 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 752027937 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08896 FILM NUMBER: 95591628 BUSINESS ADDRESS: STREET 1: 2711 NORTH HASKELL AVE STREET 2: STE 900 CITY: DALLAS STATE: TX ZIP: 75204 BUSINESS PHONE: 2148742323 MAIL ADDRESS: STREET 1: 2001 BRYAN TOWER STREET 2: STE 3300 CITY: DALLAS STATE: TX ZIP: 75201 FORMER COMPANY: FORMER CONFORMED NAME: LOMAS MORTGAGE CORP DATE OF NAME CHANGE: 19891105 10-Q 1 FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES - ----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1995 OR ______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ______________ COMMISSION FILE NUMBER: 1-8996 CAPSTEAD MORTGAGE CORPORATION (Exact name of Registrant as specified in its Charter) MARYLAND 75-2027937 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2711 NORTH HASKELL AVENUE, DALLAS, TEXAS 75204 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (214) 874-2323 2001 BRYAN TOWER, DALLAS, TEXAS 75201 (Former name, former address and formal fiscal year, if changed from last report) The Registrant meets the conditions set forth in General Instruction H(1)(a) and (b) for Form 10-Q and is therefore filing this Form under the reduced disclosure format. Indicate by check mark whether the Registrant (1) has filed all documents and reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Common Stock ($0.01 par value) 15,528,141 as of November 9, 1995 ================================================================================ CAPSTEAD MORTGAGE CORPORATION FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 INDEX PART I. - FINANCIAL INFORMATION PAGE ---- ITEM 1. Financial Statements Consolidated Balance Sheet - September 30, 1995 and December 31, 1994................................................ 3 Consolidated Statement of Income - Quarter and Nine Months Ended September 30, 1995 and 1994...................................... 4 Consolidated Statement of Cash Flows - Nine Months Ended September 30, 1995 and 1994...................................... 5 Notes to Consolidated Financial Statements........................ 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 12 PART II. - OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K........................... 19 SIGNATURES......................................................... 20 - 2 - PART I. -- FINANCIAL INFORMATION CAPSTEAD MORTGAGE CORPORATION CONSOLIDATED BALANCE SHEET (IN THOUSANDS) ITEM 1. FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 DECEMBER 31, 1994 ------------------- ------------------ (UNAUDITED) ASSETS Mortgage securities collateral $4,971,715 $5,270,103 Mortgage investments 4,208,845 3,305,984 ---------- ---------- 9,180,560 8,576,087 Less allowance for possible losses (5,603) (7,354) ---------- ---------- 9,174,957 8,568,733 Cash and cash equivalents 16,263 21,741 Prepaids, receivable and other 98,117 70,415 Mortgage servicing rights 373,610 282,969 ---------- ---------- $9,662,947 $8,943,858 ========== ========== LIABILITIES Collateralized mortgage securities $4,686,757 $5,102,145 Short-term borrowings 4,256,925 3,190,582 Accounts payable and accrued expenses 16,812 11,568 Mortgage servicing rights acquisitions payable 52,380 75,888 ---------- ---------- 9,012,874 8,380,183 ---------- ---------- STOCKHOLDERS' EQUITY Preferred stock - $0.10 par value; 100,000 shares authorized: $1.60 Cumulative Preferred Stock, Series A, 572 and 623 shares issued and outstanding ($9,381 aggregate liquidation preference) 8,054 8,720 $1.26 Cumulative Convertible Preferred Stock, Series B, 30,558 and 30,277 shares issued and outstanding ($347,750 aggregate liquidation preference) 328,480 324,779 Common stock - $0.01 par value; 100,000 shares authorized; 15,450 and 15,304 shares issued and outstanding 154 153 Paid-in capital 314,098 310,766 Undistributed income (deficit) (2,263) (2,228) Unrealized gain (loss) on debt and equity securities 1,550 (78,515) ---------- ---------- 650,073 563,675 ---------- ---------- $9,662,947 $8,943,858 ========== ==========
See accompanying notes to consolidated financial statements. - 3 - CAPSTEAD MORTGAGE CORPORATION CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 --------------------- --------------------- 1995 1994 1995 1994 --------- --------- --------- --------- INTEREST INCOME: Mortgage securities collateral $ 94,932 $ 89,304 $290,338 $261,436 Mortgage investments 61,611 55,587 171,284 145,008 -------- -------- -------- -------- Total interest income 156,543 144,891 461,622 406,444 -------- -------- -------- -------- INTEREST AND RELATED EXPENSES: Collateralized mortgage securities 89,718 84,646 275,511 247,663 Short-term borrowings 55,526 41,375 154,279 91,002 Mortgage insurance and other 2,847 3,187 8,720 10,436 Provision for possible losses 500 2,000 1,700 3,000 -------- -------- -------- -------- Total interest and related expenses 148,591 131,208 440,210 352,101 -------- -------- -------- -------- Net margin on mortgage assets 7,952 13,683 21,412 54,343 -------- -------- -------- -------- MORTGAGE SERVICING REVENUES: Servicing fees 17,218 8,848 47,780 16,517 Other 5,837 1,241 13,303 1,831 -------- -------- -------- -------- Total mortgage servicing revenues 23,055 10,089 61,083 18,348 -------- -------- -------- -------- MORTGAGE SERVICING EXPENSES: Salaries and related costs 2,005 923 4,615 1,878 General, administrative and other 3,512 975 9,171 1,623 Amortization of mortgage servicing rights 7,809 1,697 17,993 2,856 -------- -------- -------- -------- Total mortgage servicing expenses 13,326 3,595 31,779 6,357 -------- -------- -------- -------- Net margin on mortgage servicing operations 9,729 6,494 29,304 11,991 -------- -------- -------- -------- OTHER REVENUES: Gain on sales 5,131 4,923 8,275 7,080 CMO administration 887 1,019 2,732 3,044 Other 353 198 1,413 800 -------- -------- -------- -------- Total other revenues 6,371 6,140 12,420 10,924 -------- -------- -------- -------- OTHER EXPENSES: Salaries and related costs 1,306 2,067 4,587 6,441 General and administrative 1,449 1,983 4,148 5,051 -------- -------- -------- -------- Total other expenses 2,755 4,050 8,735 11,492 -------- -------- -------- -------- NET INCOME $ 21,297 $ 22,267 $ 54,401 $ 65,766 ======== ======== ======== ======== Net income $ 21,297 $ 22,267 $ 54,401 $ 65,766 Less cash dividends on preferred stock (9,846) (9,729) (29,467) (29,119) -------- -------- -------- -------- Net income available to common stockholders $ 11,451 $ 12,538 $ 24,934 $ 36,647 ======== ======== ======== ======== NET INCOME PER SHARE: Primary $0.74 $0.82 $1.62 $ 2.40 Fully diluted 0.73 0.81 1.61 2.36 CASH DIVIDENDS PAID PER SHARE: Common $0.74 $0.83 $1.62 $ 2.49 Series A preferred 0.40 0.40 1.20 1.20 Series B preferred 0.32 0.32 0.95 0.95
See accompanying notes to consolidated financial statements. - 4 - CAPSTEAD MORTGAGE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30 -------------------------- 1995 1994 ----------- ----------- OPERATING ACTIVITIES: Net income $ 54,401 $ 65,766 Noncash items: Amortization of discount and premium 12,842 5,331 Amortization of mortgage servicing rights 17,993 2,856 Depreciation and other amortization 1,899 1,289 Provision for possible losses 1,700 3,000 Net change in prepaids, receivables, other assets, accounts payable and accrued expenses (14,990) (36,765) Net gain from investing activities (8,275) (7,080) ----------- ----------- Net cash provided by operating activities 65,570 34,397 ----------- ----------- INVESTING ACTIVITIES: Mortgage securities collateral: Principal collections on collateral 356,132 1,031,618 Decrease in accrued interest receivable 3,063 8,143 Decrease in short-term investments 4,587 159,737 Purchases of mortgage loans (93,023) (1,835,687) Originations of mortgage loans (3,875) - Purchases of agency securities (2,066,002) (1,531,873) Purchases of equity securities - (17,808) Purchases of other mortgage securities (114,511) - Purchases of mortgage servicing rights (120,564) (170,114) Principal collections on mortgage investments 323,648 255,276 Purchases of hedge instruments (17,230) - Proceeds from sales of hedge instruments 24,012 - Proceeds from sales and redemptions 1,058,726 39,911 ----------- ----------- Net cash used by investing activities (645,037) (2,060,797) ----------- ----------- FINANCING ACTIVITIES: Collateralized mortgage securities: Issuance of securities - 2,093,822 Principal payments on securities (423,126) (1,226,309) Increase (decrease) in accrued interest payable 2,348 (7,909) Capital stock transactions 6,368 4,852 Dividends paid (54,436) (67,089) (Decrease) increase in mortgage servicing acquisitions payable (23,508) 33,295 Increase in short-term borrowings 1,066,343 1,120,062 ----------- ----------- Net cash provided by financing activities 573,989 1,950,724 ----------- ----------- Net decrease in cash and cash equivalents (5,478) (75,676) Cash and cash equivalents at beginning of period 21,741 87,760 ----------- ----------- Cash and cash equivalents at end of period $ 16,263 $ 12,084 =========== =========== NONCASH INVESTING AND FINANCING ACTIVITIES: Charges to allowance for possible losses $ 3,451 $ 2,044 Transfers from mortgage investments to mortgage securities collateral $ - $ 2,151,695
See accompanying notes to consolidated financial statements. - 5 - CAPSTEAD MORTGAGE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and nine months ended September 30, 1995 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 1995. For further information refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1994. Certain amounts for prior periods have been reclassified to conform to the 1995 presentation. NOTE B - MORTGAGE INVESTMENTS Mortgage investments and the related average effective interest rates (calculated excluding unrealized gains and losses) during the periods indicated were as follows (dollars in thousands):
QUARTER NINE MONTHS ENDED ENDED AS OF SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 ---------------------- --------------------- ---------------------- 1995 1994 1995 1994 1995 1994 ---------- ---------- ---------- --------- ---------- ---------- MORTGAGE LOANS HELD FOR SALE $ 6,880 $ - 8.11% -% 8.06% -% MORTGAGE LOANS 6,387 336,922 8.61 6.99 6.97 6.66 AAA-RATED MORTGAGE PASS- THROUGH SECURITIES PORTFOLIO: Fixed-rate securities 1,910 309,709 8.78 6.69 8.73 6.71 Medium-term securities 431,868 472,988 6.88 6.95 6.95 6.90 Adjustable-rate securities 808,624 794,361 7.06 5.50 6.78 5.27 AGENCY SECURITIES PORTFOLIO: Fixed-rate securities 499,171 504,525 6.31 6.44 6.33 6.44 Adjustable-rate securities 2,405,036 1,012,345 6.24 4.51 6.04 4.52 Notes 48,969 333,660 7.15 7.01 6.99 7.01 ---------- ---------- $4,208,845 $3,764,510 ========== ==========
The Company classifies its mortgage investments by term and interest rate characteristics of the underlying mortgage loans. Fixed-rate mortgage investments (i) have fixed rates of interest for their entire terms, or (ii) have an initial fixed rate period of ten years after origination and then adjust annually based on a specified margin over 1-year United States Treasury Securities ("1-year Treasuries"). Medium-term mortgage investments (i) have an initial fixed-rate period of three or five years after origination and then adjust annually based on a specified margin over 1-year Treasuries or (ii) have initial interest rates that adjust one time, approximately five years following origination of the mortgage loan, based on a specified margin over the Federal National Mortgage Association ("FNMA") yields for 30-year - 6 - fixed-rate commitments at the time of adjustment. Adjustable-rate mortgage investments either (i) adjust semiannually based on a specified margin over the 6-month London Interbank Offered Rate ("LIBOR"), or (ii) adjust annually based on a specified margin over 1-year Treasuries. Fixed-rate and adjustable-rate mortgage agency securities consist of mortgage-backed securities issued by government-sponsored entities, either the Federal Home Loan Mortgage Corporation, FNMA or the Government National Mortgage Association. Agency notes are unsecured, callable, fixed-rate notes issued by the Federal Home Loan Bank Board and mature in 1997. At September 30, 1995 the AAA-rated private mortgage pass-through securities ("Mortgage Pass-Throughs") and the agency securities were pledged to secure short-term borrowings. NOTE C - NET INTEREST INCOME ANALYSIS The following tables summarize interest income and interest expense and average effective interest rates for the periods indicated (dollars in thousands):
QUARTER ENDED SEPTEMBER 30 -------------------------------------- 1995 1994 ------------------ ------------------ AMOUNT AVERAGE AMOUNT AVERAGE -------- -------- -------- -------- Interest income: Mortgage securities collateral $ 94,932 7.61% $ 89,304 7.55% Mortgage investments 61,611 6.58 55,587 5.94 -------- -------- Total interest income 156,543 144,891 -------- -------- Interest expense: Collateralized mortgage securities 89,718 7.65 84,646 7.44 Short-term borrowings 55,526 5.90 41,375 4.69 -------- -------- Total interest expense 145,244 126,021 -------- -------- Net interest $ 11,299 $ 18,870 ======== ========
NINE MONTHS ENDED SEPTEMBER 30 -------------------------------------- 1995 1994 ------------------ ------------------ AMOUNT AVERAGE AMOUNT AVERAGE -------- -------- -------- -------- Interest income: Mortgage securities collateral $290,338 7.60% $261,436 7.65% Mortgage investments 171,284 6.49 145,008 6.06 -------- -------- Total interest income 461,622 406,444 -------- -------- Interest expense: Collateralized mortgage securities 275,511 7.60 247,663 7.52 Short-term borrowings 154,279 6.01 91,002 4.25 -------- -------- Total interest expense 429,790 338,665 -------- -------- Net interest $ 31,832 $ 67,779 ======== ========
- 7 - The following tables summarize the amount of change in interest income and interest expense due to changes in interest rates versus changes in volume for the quarter and nine months ended September 30, 1995, compared to the same periods in 1994 (in thousands):
QUARTER ENDED SEPTEMBER 30, 1995 ----------------------------------- RATE* VOLUME* TOTAL ----------- ---------- ---------- Interest income: Mortgage securities collateral $ 703 $ 4,925 $ 5,628 Mortgage investments 6,027 (3) 6,024 -------- ------- -------- Total interest income 6,730 4,922 11,652 -------- ------- -------- Interest expense: Collateralized mortgage securities 2,423 2,649 5,072 Short-term borrowings 11,272 2,879 14,151 -------- ------- -------- Total interest expense 13,695 5,528 19,223 -------- ------- -------- Net interest $ (6,965) $ (606) $ (7,571) ======== ======= ========
NINE MONTHS ENDED SEPTEMBER 30, 1995 ------------------------------------ RATE* VOLUME* TOTAL ------------ ---------- ---------- Interest income: Mortgage securities collateral $ (1,995) $30,897 $ 28,902 Mortgage investments 10,648 15,628 26,276 -------- ------- -------- Total interest income 8,653 46,525 55,178 -------- ------- -------- Interest expense: Collateralized mortgage securities 2,897 24,951 27,848 Short-term borrowings 42,679 20,598 63,277 -------- ------- -------- Total interest expense 45,576 45,549 91,125 -------- ------- -------- Net interest $(36,923) $ 976 $(35,947) ======== ======= ========
* THE CHANGE IN INTEREST DUE TO BOTH VOLUME AND RATE HAS BEEN ALLOCATED TO VOLUME AND RATE CHANGES IN PROPORTION TO THE RELATIONSHIP OF THE ABSOLUTE DOLLAR AMOUNTS OF THE CHANGE IN EACH. NOTE D - DISCLOSURES REGARDING FAIR VALUES OF DEBT AND EQUITY SECURITIES The estimated fair values of debt and equity securities have been determined using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop these estimates. In addition, fair values fluctuate on a daily basis. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that could be realized in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair values. - 8 - The following tables summarize available-for-sale and held-to-maturity debt and equity securities as of September 30, 1995 and December 31, 1994 (in thousands):
SEPTEMBER 30, 1995: AVAILABLE-FOR-SALE SECURITIES ---------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ---------- ---------- ---------- ---------- Mortgage Pass-Throughs: Fixed-rate mortgage securities $ 1,879 $ 32 $ 1 $ 1,910 Medium-term mortgage securities* 27,923 116 8,159 19,880 Adjustable-rate mortgage securities 799,719 8,905 - 808,624 Adjustable-rate mortgage agency securities 2,404,590 534 88 2,405,036 Other mortgage securities 114,286 1,189 978 114,497 ---------- ------- ------- ---------- $3,348,397 $10,776 $ 9,226 $3,349,947 ========== ======= ======= ==========
HELD-TO-MATURITY SECURITIES ---------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ---------- ---------- ---------- ---------- Medium-term Mortgage Pass- Throughs* $ 411,988 $ 7,600 $ - $ 419,588 Agency securities: Fixed-rate mortgage securities 499,171 - 19,993 479,178 Notes 48,969 52 - 49,021 Mortgage securities collateral 170,461 5,143 56,831 118,773 ---------- ------- ------- ---------- $1,130,589 $12,795 $76,824 $1,066,560 ========== ======= ======= ==========
DECEMBER 31, 1994: AVAILABLE-FOR-SALE SECURITIES ---------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ---------- ---------- ---------- ---------- Debt securities: Mortgage Pass-Throughs: Fixed-rate mortgage securities $ 427 $ - $ 18 $ 409 Medium-term mortgage securities* 9,054 - 9,054 - Adjustable-rate mortgage securities 780,224 - 24,601 755,623 Adjustable-rate mortgage agency securities 1,088,252 - 45,391 1,042,861 Other mortgage securities 10,369 1,734 810 11,293 ---------- ------- ------- ---------- Total debt securities 1,888,326 1,734 79,874 1,810,186 Equity securities 1,113 - 375 738 ---------- ------- ------- ---------- $1,889,439 $ 1,734 $80,249 $1,810,924 ========== ======= ======= ==========
- 9 -
HELD-TO-MATURITY SECURITIES ---------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ---------- ---------- ---------- ---------- Medium-term Mortgage Pass-Throughs* $ 459,874 $ - $ 12,342 $ 447,532 Agency securities: Fixed-rate mortgage securities 504,023 - 62,586 441,437 Notes 333,687 - 9,690 323,997 Mortgage securities collateral 5,258,810 7,159 61,700 5,204,269 ---------- ---------- -------- ---------- $6,556,394 $7,159 $146,318 $6,417,235 ========== ========== ======== ==========
* MEDIUM-TERM MORTGAGE PASS-THROUGHS HELD-TO-MATURITY WERE HELD AVAILABLE- FOR-SALE UNTIL THE THIRD QUARTER OF 1994. AN UNREALIZED LOSS AT THE TRANSFER DATE REMAINS A COMPONENT OF THE RECORDED MARK TO MARKET FOR AVAILABLE-FOR-SALE SECURITIES AND IS BEING AMORTIZED OVER THE LIFE OF THESE INVESTMENTS. AT SEPTEMBER 30, 1995 THE UNAMORTIZED BALANCE OF THIS UNREALIZED LOSS WAS $8.1 MILLION. The fair value of debt and equity securities was estimated using either (i) quoted market prices when available, including quotes made by lenders in connection with designating collateral for repurchase arrangements, (ii) offer prices by the Company for similar mortgage assets, or (iii) expected securitization results. Mortgage securities collateral has been permanently financed through the issuance of collateralized mortgage securities and, as a result, the exposure to changes in the fair value of the underlying assets (and liabilities) is limited. For this reason, the table above presents the fair value of the net projected cash flows of the mortgage securities collateral after payments on the related collateralized mortgage securities using market discount rates and prepayment assumptions. The maturity of the Company's mortgage assets is directly affected by the rate of principal prepayments by mortgagors and redemptions by issuers, including the Company, of remaining debt securities outstanding (referred to as "clean-up calls"). As a result, the actual maturity of the Company's mortgage assets usually occurs well in advance of stated maturities. The Company anticipates that through prepayments and exercising clean-up calls, a significant portion of its higher cost collateralized mortgage securities will be retired within the next several years and a residual amount of high coupon mortgage securities collateral will be released and can be sold or continued to be held as investments. Included in mortgage securities collateral is $35.1 million and $4.6 million of collateral released from the related indentures at September 30, 1995 and December 31, 1994, respectively. During the first quarter of 1995, $36 million of mortgage securities collateral previously released from the related indentures pursuant to clean-up calls was sold at gross realized gains of $966,000. No such sales have occurred since March. Similar sales aggregating $21 million, which resulted in gross realized gains of $2,157,000, occurred during the nine months ended September 30, 1994. During the quarter and nine months ended September 30, 1995, debt and equity securities held available-for-sale aggregating $431 million and $606 million, respectively, were sold for gains aggregating $4,960,000 and $6,752,000, respectively. During the quarter ended September 30, 1994, available-for-sale equity securities totaling $12 million were sold for gains aggregating $4,923,000. No other sales of debt and equity securities held available-for- sale occurred in the nine months ended September 30, 1994. The net unrealized gains (losses) on available-for-sale securities included as a separate component of stockholders' equity improved by $3.5 million and $80 million during the quarter and nine months ended September 30, 1995, respectively. - 10 - NOTE E - STOCK SPLIT On October 20, 1995 the Company declared a 3-for-2 split of the $0.01 par value common stock, payable on November 15, 1995 to stockholders of record on October 30, 1995. The accompanying consolidated balance sheets, consolidated statements of income, and notes to consolidated financial statements have not been restated to reflect the stock split. - 11 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION - ------------------- The jumbo mortgage loan market has changed dramatically over the last several years. Mortgage loan originations reached all time highs in 1992 and 1993 because of steadily declining mortgage interest rates which made refinancing increasingly attractive to mortgagors. In the meantime, more competitors for the acquisition of jumbo product entered the marketplace. Mortgage interest rates reached 20 year lows by the fall of 1993; however, by early 1994 rates began a steady rise. As rising rates choked off the 1992/1993 refinancing boom, competition to acquire remaining originations intensified. Additionally, the securitization of mortgage loans (typically through publicly offered collateralized mortgage obligations or "CMOs") became increasingly less advantageous due to the increasing cost of credit enhancements such as mortgage pool insurance and lower investor appetite for CMO bonds, particularly the more esoteric derivative securities such as certain forms of interest-only strips and other residual interests. In an attempt to meet these challenges, the Company implemented a strategy of selling individual mortgage loans purchased through our jumbo mortgage loan conduit operation to private investors shortly after the commitment to purchase, instead of accumulating $100 million or more of similar mortgage loans for an efficient securitization. This strategy allowed the Company to reduce market risk associated with accumulating and securitizing jumbo mortgage loans but did not enable the Company to compete successfully in a more competitive environment. In November 1995 the Company reached a decision to exit the jumbo mortgage loan conduit business altogether. This does not represent a fundamental shift in the direction of the Company, although in the past the mortgage conduit has been an important source of mortgage investments. Rather, the Company is continuing to build its mortgage securities and mortgage servicing portfolio with the goal of producing reasonably balanced results in a rising or falling interest rate environment. During the quarter ended September 30, 1995, the Company purchased 161 mortgage loans totaling $32 million. During the nine months ended September 30, 1995, 387 mortgage loans were purchased totaling $92 million. This compares to purchases of 819 mortgage loans totaling $214 million, and 6,459 mortgage loans totaling $1.8 billion during the same periods in 1994, respectively. During the quarter and nine months ended September 30, 1995, $33 million and $127 million of mortgage loans were sold, respectively. These sales, low purchase volume, and the first quarter 1995 formation of $160 million of AAA-rated private mortgage pass-through securities ("Mortgage Pass-Throughs") substantially reduced holdings of mortgage loans. Of the $160 million of Mortgage Pass-Throughs formed during the first quarter of 1995, $137 million were backed by adjustable-rate mortgage ("ARM") loans. No additional Mortgage Pass-Throughs have been formed in 1995. In addition to reducing exposure to fraud and credit risk, a primary benefit of pooling mortgage loans into Mortgage Pass-Throughs is the improved liquidity of AAA- rated securities over that of individual loans. As a result, when securing short-term borrowings, the Company is able to negotiate more favorable terms. The Company acquired $1.6 billion and $1.9 billion of ARM agency securities during the quarter and nine months ended September 30, 1995, respectively. Sales during the third quarter included $431 million of ARM agency securities. After considering these sales and run-off of existing portfolio, the Company's holdings of ARM investments increased $1.0 billion during the quarter to - 12 - $3.2 billion. The Company's investment in agency notes has declined to $49 million as of September 30, 1995 due to redemptions by issuers totaling $285 million during the quarter. In past years, the Company has been an active issuer of CMOs and other securities backed by jumbo mortgage loans from the conduit operation. In the issuance of CMOs, the Company generally retained residual interests in the securities issued consisting primarily of interest-only and principal-only strips. During the quarter and nine months ended September 30, 1995, the Company did not issue any CMOs; however, the Company did acquire $23 million and $115 million of FNMA trust interest-only securities, respectively, thus increasing the CMO investment portfolio to $285 million at September 30, 1995, compared to a portfolio of $168 million at December 31, 1994 and $151 million at September 30, 1994. Interest-only securities have characteristics similar to investments in mortgage servicing in that these securities are subject to prepayment risk in that if the underlying loans prepay faster than anticipated, it becomes necessary to accelerate amortization of the costs of the securities and, if high prepayments continue for an extended period, such costs may not be fully recovered. Derivative financial instruments, specifically 10-year U.S. Treasury interest rate floors, are held as a partial hedge against prepayment exposure (see "Effects of Interest Rate Changes"). Open hedge positions with a $1.0 billion notional amount carried a $507,000 unrealized gain at September 30, 1995. The mortgage servicing portfolio (excluding pending transfers) increased during the quarter to $22.0 billion with a weighted average interest rate of 7.34% and earning an average annual service fee excluding ancillary revenue and earnings on escrows (the "Average Service Fee") of 30.3 basis points. The September 30, 1995 balance of mortgage servicing rights related to this portfolio was $313 million (142 basis points, or a 4.7 multiple of the Average Service Fee). Another $3.7 billion of servicing had been acquired as of September 30, 1995 that was pending transfer into our portfolio and is being subserviced by the sellers. Additional mortgage servicing has been acquired subsequent to quarter- end. As of November 6, 1995, pending transfers of mortgage servicing totaled $7.6 billion with a weighted average interest rate of 7.52% and earning an Average Service Fee of 31.6 basis points. At an average cost of 165 basis points, these servicing assets are being acquired at a 5.2 multiple of the Average Service Fee. By early 1996 the mortgage servicing portfolio is expected to total over $29 billion. Annualized portfolio run-off, consisting of prepayments and scheduled payments on mortgage loans serviced, was 10.86% for the quarter, up from 8.35% in the second quarter due to lower prevailing interest rates and seasonal factors. Derivative financial instruments, specifically 10-year U.S. Treasury interest rate floors and 3-month London Interbank Offered Rate ("LIBOR") interest rate floors, are held as a partial hedge against prepayment exposure (see "Effects of Interest Rate Changes"). Open hedge positions with a $3.2 billion notional amount carried a $2.6 million unrealized gain at September 30, 1995. In an effort to capture as much run-off of our servicing portfolio as possible, the Company formed the "Home Loan Center," a centralized mortgage origination unit that offers a variety of loan programs including first mortgage loans and home equity loans. The Home Loan Center relies heavily on outsourcing labor intensive aspects of the loan origination process in an effort to remain as efficient as possible. The Home Loan Center closed its first loan in April 1995 and has originated $3.9 million in first mortgage loans and home equity loans year-to-date, $2.7 million of which closed in the third quarter. Loans originated by the Home Loan Center are sold to FNMA, FHLMC or private investors shortly after the commitment to purchase. - 13 - The following table summarizes the Company's utilization of capital as of September 30, 1995 (in thousands):
CAPITAL ASSETS BORROWINGS EMPLOYED ---------- -------------- --------- Mortgage loans $ 13,267 $ - $ 13,267 Mortgage Pass-Through portfolio: Fixed-rate mortgage securities 1,910 1,839 71 Medium-term mortgage securities 431,868 420,064 11,804 Adjustable-rate mortgage securities 808,624 783,622 25,002 Agency securities portfolio: Fixed-rate mortgage securities 499,171 476,855 22,316 Adjustable-rate mortgage securities 2,405,036 2,348,866 56,170 Notes 48,969 49,093 (124) CMO investment portfolio 4,971,715 4,855,343/(A)/ 116,372 Mortgage servicing rights 373,610 60,380/(B)/ 313,230 ---------- ---------- -------- $9,554,170 $8,996,062 558,108 ========== ========== Other assets, net of other liabilities 91,965 -------- Total stockholders' equity $650,073 ========
(A) INCLUDES $169 MILLION OF RELATED SHORT-TERM BORROWINGS. (B) REPRESENTS AMOUNTS OWED UNDER CONTRACTS FOR BULK PURCHASES OF MORTGAGE SERVICING RIGHTS AND $8 MILLION DRAWN ON A $200 MILLION LINE OF CREDIT SECURED BY EXISTING MORTGAGE SERVICING RIGHTS. EFFECTIVE OCTOBER 14, 1995 THIS LINE OF CREDIT WAS INCREASED TO $300 MILLION. A significant impact of the rise in mortgage interest rates in 1994 was a corresponding decline in value of most of the Company's mortgage assets (excluding servicing rights). The decline in intermediate- and long-term interest rates since early February 1995 has restored much of the value to these assets. The effect is most apparent on the $3.3 billion of mortgage securities held available-for-sale at September 30, 1995 where the unrealized loss of $78.5 million at December 31, 1994 has improved to a net unrealized gain of $1.5 million. Changes in value and ongoing market value risk associated with remaining mortgage securities will not have a direct impact on the earnings of the Company as these assets are classified as held-to-maturity and can only be sold under very limited circumstances. RESULTS OF OPERATIONS - --------------------- Operating results for the current quarter improved markedly from results for the second quarter of 1995. Net income per common share increased 42% to 74 cents on net income of $21.2 million from 52 cents on net income of $17.7 million in the second quarter. Current quarter earnings benefited from slightly lower borrowing costs, improved interest spreads on mortgage investments and gains on sales of mortgage assets. Asset sales became attractive as values on mortgage assets improved during the year due to declines in interest rates. Offsetting these increases in value were higher prepayment rates on mortgage loans, also due to declining interest rates. These higher prepayments resulted in increased amortization costs in the mortgage servicing portfolio and interest-only securities as well as increased amortization of premiums paid on adjustable-rate mortgage investments. - 14 - Comparative net operating results (interest income or fee revenues, net of related interest expense or direct operating costs), by source, was as follows (in thousands, except percentages and per share amounts):
QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------ ------------------- 1995 1994 1995 1994 -------- -------- -------- --------- Mortgage loans $ 248 $ 4,579 $ 1,139 $ 25,053 Mortgage Pass-Throughs 1,718 5,112 4,730 14,159 Agency securities 3,109 3,430 8,605 11,759 CMO investments 3,377 2,562 8,638 6,372 Mortgage servicing 9,729 6,494 29,304 11,991 Gain on sales 5,131 4,923 8,275 7,080 CMO administration 887 1,019 2,732 3,044 Other income 353 198 1,413 800 ------- ------- ------- -------- Contribution to income 24,552 28,317 64,836 80,258 General and administrative expenses (2,755) (4,050) (8,735) (11,492) Provision for possible losses (500) (2,000) (1,700) (3,000) ------- ------- ------- -------- Net income $21,297 $22,267 $54,401 $ 65,766 ======= ======= ======= ======== Net income per share*: Primary $ 0.74 $ 0.82 $ 1.62 $ 2.40 Fully diluted 0.73 0.81 1.61 2.36 Return on average total stockholders' equity 13.11% 13.83% 11.21% 13.61%
* NOT ADJUSTED FOR THE 3-FOR-2 COMMON STOCK SPLIT PAYABLE ON NOVEMBER 15, 1995 TO STOCKHOLDERS OF RECORD ON OCTOBER 30, 1995. Operating results for the quarter and nine months ended September 30, 1995 declined 4.4% and 17.3%, respectively, from those achieved in the same periods of 1994. Results were significantly affected by a series of moves by the Federal Reserve beginning in February 1994 raising short-term interest rates a total of three percentage points by February of 1995. These increases resulted in corresponding increases in the Company's borrowing costs that had the effect of substantially reducing net interest spreads on mortgage investments. Since February 1995, intermediate- and long-term interest rates have declined considerably. While this significant decrease in rates has had little effect on borrowing costs, the Federal Reserve did reduce short-term interest rates 0.25 of 1% in early July. This reduction in short-term rates reduced borrowing costs in the third quarter. Any further short-term interest rate cuts by the Federal Reserve will serve to improve already widening net interest spreads on mortgage investments. The net interest spread earned from mortgage loans contributed significantly less to net operating results than in 1994, due primarily to significantly lower average holdings of mortgage loans during 1995. Average holdings for the quarter and nine months ended September 30, 1995, were $13 million and $59 million, respectively, compared to the $662 million and $972 million held during the same periods in 1994. Lower mortgage loan purchase volume, in the latter part of 1994 and in 1995, along with 1994 CMO issuances, the formation of Mortgage Pass-Throughs and $127 million of sales in 1995 has substantially reduced holdings of mortgage loans. This reflects the Company's efforts to reduce market risk associated with aggregating and securitizing jumbo mortgage loans culminating in the decision in November 1995 to exit the jumbo mortgage loan conduit business (see the discussion above under "Financial Condition"). Mortgage Pass-Throughs contributed less to net operating results compared to the same periods in 1994 primarily due to substantially higher borrowing costs - 15 - offset somewhat by higher yields. Borrowing costs for this portfolio averaged 6.08% and 6.19% for the quarter and nine months ended September 30, 1995, respectively, compared to 4.79% and 4.31% for the same periods in 1994. Mortgage Pass-Through yields were higher at 7.00% and 6.84% for the quarter and nine months ended September 30, 1995, respectively, compared to 6.22% and 6.08% for the same periods in 1994. The rise in yields is due primarily to the periodic resetting of coupon rates on underlying ARM loans (see "Effects of Interest Rate Changes"). The average portfolio outstanding was $1.3 billion for both the quarter and nine months ended September 30, 1995, compared to $1.5 billion and $1.2 billion, respectively, for the same periods in 1994. Agency securities contributed less to net operating results compared to the same periods in 1994 because of substantially higher borrowing costs despite sizable increases in average portfolio outstanding and higher agency security yields. Borrowing costs were 5.82% and 5.86%, in the quarter and nine months ended September 30, 1995, respectively, compared to 4.50% and 4.01% during the same periods in 1994. The average agency securities portfolio outstanding was $2.4 billion and $2.2 billion for the quarter and nine months ended September 30, 1995, respectively, compared to $1.6 billion and $1.1 billion for the same periods in 1994. The increase in average portfolio outstanding was primarily the result of substantial acquisitions of ARM securities in 1994 and 1995. Agency security yields were 6.35% and 6.26% during the quarter and nine months ended September 30, 1995, respectively, compared to 5.21% and 5.46% during the same periods in 1994. The rise in yields is due primarily to the periodic resetting of coupon rates on underlying ARM loans and the acquisition of higher yielding ARM securities (see "Effects of Interest Rate Changes"). CMO investments contributed more to net operating results during the quarter and nine months ended September 30, 1995, than in the same periods in 1994 due primarily to investments made in FNMA trust interest-only securities during 1995. Additionally, prepayments on mortgage securities collateral were still relatively high in the first quarter of 1994, the end of the last major refinancing boom. During the quarter and nine months ended September 30, 1995, the Company received principal collections on mortgage securities collateral totaling $145 million and $356 million, respectively, compared to $172 million and $1.0 billion of run-off in the same periods in 1994. Lower levels of prepayments have the effect of lowering amortization of bond discounts and improving operating results (see "Effects of Interest Rate Changes"). Higher mortgage servicing results reflect growth in this operation. Revenues increased to $23 million and $61 million for the quarter and nine months ended September 30, 1995, respectively, compared to $10 million and $18 million during the same periods in 1994. Operating costs also increased, but not to the same extent as revenues, which reflects efficiencies gained in the servicing process as the servicing portfolio continues to grow. Amortization of mortgage servicing rights amounted to nearly $8 million during the current quarter and $18 million year-to-date, significantly higher than in the same periods in 1994 due to portfolio growth and higher levels of prepayments caused by lower interest rates. During the quarter and nine months ended September 30, 1995, the Company sold $464 million and $767 million, respectively, of mortgage assets consisting of agency securities, mortgage loans and mortgage securities collateral previously released from CMOs pursuant to "clean-up calls." General and administrative expenses were lower for the quarter and nine months ended September 30, 1995 compared to the same periods in 1994 due primarily to - 16 - additional allocations of costs to the mortgage servicing operation in light of this operation's growth relative to that of the rest of the Company. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company's primary sources of funds include monthly principal and interest payments on mortgage loans and mortgage securities, short-term borrowings, excess cash flows on CMO investments, proceeds from securitizations and sales of mortgage assets, servicing fees and other revenue from the mortgage servicing portfolio, and equity offerings when available. The Company currently believes that these funds are sufficient for the acquisition of mortgage assets, repayments on short-term borrowings, growth of the mortgage servicing portfolio and the payment of cash dividends as required for Capstead's continued qualification as a Real Estate Investment Trust ("REIT"). It is the Company's policy to remain strongly capitalized and conservatively leveraged. The Company may, from time to time, sell mortgage assets which may increase quarterly income volatility because of the recognition of transactional gains or losses. Sales in 1995 were related to reducing holdings of mortgage loans and collateral released from CMOs pursuant to clean-up calls and sales of certain agency securities made attractive as values on our mortgage investments improved during the year because of declines in interest rates. Short-term borrowings are primarily made under repurchase arrangements. The Company has uncommitted repurchase facilities with investment banking firms to finance mortgage loan holdings and the Mortgage Pass-Through portfolio, subject to certain conditions. Interest rates on borrowings under these facilities are based on overnight to 30-day LIBOR rates. The Company also enters into repurchase and dollar repurchase arrangements with investment banking firms to whom the Company pledges agency securities and other mortgage assets as collateral. The terms and conditions of these arrangements, including interest rates, are negotiated on a transaction-by-transaction basis. At September 30, 1995 the Company had available $192 million of a $200 million line of credit with an investment banking firm to be secured by servicing assets, $120 million of which is committed. Effective October 14, 1995 this line of credit was increased to $300 million. Advances have separate maturities and rates of interest with interest due monthly. Interest rates on advances under this facility are based on LIBOR rates related to the term of the advance. EFFECTS OF INTEREST RATE CHANGES Changes in interest rates may impact the Company's earnings in various ways. The Company's earnings depend, in part, on the difference between the interest received on mortgage investments and the interest paid on related short-term borrowings (primarily repurchase arrangements). The resulting spread may be reduced in a rising interest rate environment. For ARM loans the risk of rising short-term interest rates is offset to some extent by increases in the rates of interest earned on these loans. Since ARM loans generally limit the amount of such increase during any single interest rate adjustment period and over the life of the loan, the interest rates on the repurchase arrangements can rise to levels that may exceed the interest rates on the underlying ARM loans resulting in a negative interest spread. Changes in interest rates also impact earnings recognized from CMO investments, which consist primarily of fixed-rate CMO residuals and interest-only and principal-only securities. The amount of income that may be - 17 - generated from the typical CMO residual is dependent upon the rate of principal prepayments on the underlying mortgage collateral. If mortgage interest rates fall significantly below the interest rate on the collateral, principal prepayments will increase, reducing or even eliminating the overall return on the investment in the CMO residual. This is due primarily to the acceleration of the amortization of bond discounts, a noncash item, as bond classes are repaid more rapidly than originally anticipated. Conversely, if mortgage interest rates rise significantly above the interest rate on the collateral, principal prepayments will typically diminish, resulting in a greater overall return on the investment in the fixed-rate CMO residual because of an increase in the period of time over which the Company receives the larger positive interest spread. Similarly, in a falling interest rate environment, prepayments on the mortgage collateral underlying investments in interest-only securities generally will be high and the Company could incur losses on these securities. Conversely, in periods of rising interest rates, interest-only securities will tend to perform favorably because the underlying mortgage collateral will generally prepay at slower rates. Principal-only securities react differently to changes in interest rates. Lower interest rates result in the recovery of these investments more rapidly thus increasing yields. During periods of rising rates, it takes longer for the Company to recover its investments thus lowering yields. Principal-only securities owned by the Company represent a much smaller investment than interest-only investments. Another effect of changes in interest rates is that when interest rates decrease the rate of prepayment of mortgage loans underlying mortgage investments generally increases. To the extent the proceeds of prepayments on mortgage investments cannot be reinvested at a rate of interest at least equal to the rate previously earned on such investments, earnings may be adversely affected. In addition, the rates of interest earned on ARM loans generally will decline during periods of falling interest rates. The above discussion regarding how changes in interest rates impact mortgage investments also applies to the Company's growing investment in mortgage servicing rights. When interest rates rise, mortgage servicing rights become more valuable since the average lives of the related mortgage loans tend to be longer and earnings from large, temporarily held cash balances will be greater. Conversely, lower interest rates will spur prepayments thus reducing the period of time the Company can service the related loans. The Company's business plan is to build its mortgage securities and mortgage servicing portfolios with the goal of producing reasonably balanced results in a rising or falling interest rate environment. The Company expects to continue to supplement its business plan with interest rate hedges from time to time; however, hedging of interest rate risks is imprecise and costly. To fully protect income from every interest rate scenario would be cost prohibitive. - 18 - PART II. - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits: The following Exhibit is presented herewith: -------- Exhibit 11 - Computation of Earnings Per Share for the quarter and nine months ended September 30, 1995 and 1994. Exhibit 27 - Financial Data Schedule (electronic filing only). (b) Reports on Form 8-K: None. ------------------- - 19 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPSTEAD MORTGAGE CORPORATION Date: November 10, 1995 By /s/ RONN K. LYTLE ------------------------------------ Ronn K. Lytle Chairman and Chief Executive Officer Date: November 10, 1995 By /s/ ANDREW F. JACOBS ------------------------------------ Andrew F. Jacobs Senior Vice President - Control and Treasurer - 20 - EX-11 2 COMPUTATION OF EARNINGS EXHIBIT 11 CAPSTEAD MORTGAGE CORPORATION COMPUTATION OF NET INCOME PER SHARE* (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ---------------------- 1995 1994 1995 1994 --------- ---------- ---------- ---------- PRIMARY: Average number of common shares outstanding 15,384 15,266 15,337 15,236 Incremental shares calculated using the Treasury Stock method 24 11 11 34 ------- ------- -------- -------- 15,408 15,277 15,348 15,270 ======= ======= ======== ======== Net income $21,297 $22,267 $ 54,401 $ 65,766 Less cash dividends paid on convertible preferred stock: Series A ($0.40 per share) (230) (254) (718) (796) Series B ($0.315 per share) (9,616) (9,475) (28,749) (28,323) ------- ------- -------- -------- Net income available to common stockholders $11,451 $12,538 $ 24,934 $ 36,647 ======= ======= ======== ======== Primary net income per share $0.74 $0.82 $1.62 $2.40 ===== ===== ===== ===== FULLY DILUTED: Average number of common shares outstanding 15,384 15,266 15,337 15,236 Assumed conversion of convertible preferred stock: Series A 526 587 544 608 Series B ** ** ** ** Incremental shares calculated using the Treasury Stock method 82 11 82 34 ------- ------- -------- -------- 15,992 15,864 15,963 15,878 ======= ======= ======== ======== Net income $21,297 $22,267 $ 54,401 $ 65,766 Less cash dividends paid on the Series B Preferred Stock (9,616) (9,475) (28,749) (28,323) ------- ------- -------- -------- Net income $11,681 $12,792 $ 25,652 $ 37,443 ======= ======= ======== ======== Fully diluted net income per share $0.73 $0.81 $1.61 $2.36 ===== ===== ===== =====
* NOT ADJUSTED FOR THE 3-FOR-2 COMMON STOCK SPLIT PAYABLE ON NOVEMBER 15, 1995 TO STOCKHOLDERS OF RECORD ON OCTOBER 30, 1995. ** THE SERIES B PREFERRED STOCK IS NOT CONSIDERED CONVERTIBLE FOR PURPOSES OF CALCULATING FULLY DILUTED NET INCOME PER SHARE AS IT IS CURRENTLY ANTIDILUTIVE. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CAPSTEAD MORTGAGE CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLAR 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1 16,263 0 0 0 0 0 0 0 9,662,947 4,326,117 4,686,757 154 0 336,534 313,539 9,662,947 0 535,125 0 0 49,234 1,700 429,790 54,401 0 54,401 0 0 0 54,401 1.62 1.61
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