EX-99.1 2 d65308exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
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4     Capstead Mortgage Corporation, formed in 1985 and based in Dallas, Texas, is a self-managed real estate investment trust for federal income tax purposes. Capstead’s core strategy is managing a leveraged portfolio of residential mortgage pass-through securities consisting almost exclusively of residential ARM securities issued and guaranteed by government-sponsored entities, either Fannie Mae or Freddie Mac, or by an agency of the federal government, Ginnie Mae. Agency-guaranteed residential mortgage securities carry an implied AAA credit rating with limited, if any, credit risk that has been enhanced by the recent conservatorship of Fannie Mae and Freddie Mac by the federal government.
         
EXPERIENCE   STABILITY   STRATEGY
• Oldest mortgage REIT
   • Positions with 17 lending   • Avoid residential credit risk
 
      counterparties      while minimizing, but not
• Top 4 executives with
         eliminating, interest rate risk
   the company since 1994   • Short-duration portfolio    
 
      conservatively leveraged    
 
      and appropriately hedged    
 
      (net duration gap at 5     
 
      months at September 30)    
HISTORICAL DEBT/LONG-TERM INVESTMENT CAPITAL
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•   Debt to long-term investment capital has historically ranged from 8.0 x to 12.0 x through various interest rate cycles and can be quickly adjusted to respond to market conditions.
 
•   Since last fall, we have raised $440 million in new common equity capital and, at times, sold a limited amount of mortgage securities and curtailed replacing portfolio runoff to address deteriorating conditions in the overall credit markets.
 
•   We continue to believe it is appropriate to maintain our leverage near the lower end of our targeted range. However, should market conditions warrant, we may take additional actions similar to those taken since last fall in order to maintain sufficient financial flexibility to address market stresses.


 

 

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COMMON STOCK
INFORMATION
NYSE Ticker:
CMO
Price as of 11/7/08:
$10.16
52-wk. High/Low:
$18.62/$7.52
3Q Dividend:
$0.55
Dividend Yield:
(based on annualized 3Q dividend)
21.7%
3Q Avg. Daily Vol.:
899K shares
SERIES A/SERIES B
PREFERRED STOCK INFO
NYSE Ticker:
CMOPRA/CMOPRB
Price as of 11/7/08:
$16.29/$12.68
Call Price:
$16.40/$12.50
Liquidation Value:
$16.40/$11.38
Conversion Ratio:
1.5684/0.6047
Annual Dividend:
$1.60/$1.26
4    3RD QUARTER 2008 HIGHLIGHTS (CMO LOGO)
  •   Earnings totaled $34.7 million or $0.52 per diluted common share
 
  •   Financing spreads averaged 1.74%
 
  •   Declared and paid dividend of $0.55 per common share
 
  •   Book value per common share ended the third quarter at $10.02
 
  •   Maintained portfolio of agency-guaranteed residential ARM securities at $7.9 billion
 
  •   Maintained portfolio leverage at approximately 8 times long-term investment capital
4    QUARTERLY RESULTS
                                         
    Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,  
(In thousands, except per share amounts)   2008     2008     2008     2007     2007  
 
Net interest margin:
                                        
Residential mortgage investments
   $ 38,198     $ 41,456     $ 36,247     $ 17,505     $ 8,257  
Commercial mortgage investments
     975       857       798       813       396  
 
Net interest margin
     39,173       42,313       37,045       18,318       8,653  
 
                                        
Net income
     34,746       36,728       30,147       15,860       (3,148 )
Income available to common stockholders
     29,684       31,665       25,083       10,796       (8,212 )
Diluted earnings per share
     0.52       0.58       0.53       0.31       (0.43 )
Common dividends per share
     0.55       0.59       0.52       0.24       0.04  
Common equity raises
     25,237       77,143       131,344       205,997       —  
Common shares outstanding (EOQ)
     58,226       56,071       49,918       42,819       19,393  
 
TOP COMMON STOCKHOLDERS*
         
Holder   % O/S
 
Wells Capital Management
     10.00  
Wellington Management Company
     5.06  
Highland Capital Management
     4.81  
Transamerica Investment Management
     3.82  
DePrince Race & Zollo
     3.33  
Barclays Global Investors, N.A.
     3.26  
Robeco Investment Management
     3.21  
Thompson, Siegel & Walmsley
     3.15  
Millennium Management
     2.68  
Vanguard Group, Inc.
     2.06  
 
* % based on shares outstanding as of October 30, 2008
ANALYSTS*
     
Firm   Rating
 
Deutsche Bank
   Buy
FBR Capital Markets
   Outperform
Fox-Pitt Kelton
   Outperform
JMP Securities LLC
   Outperform
Keefe, Bruyette & Woods
   Outperform
RBC Capital Markets
   Outperform
Sterne Agee
   Buy
Stifel Nicolaus
   Buy
 
*  As of November 7, 2008
Capstead Mortgage Corporation / 8401 North Central Expressway, Suite 800, Dallas, TX 75225 PH 800.358.2323 / E invrel@capstead.com / www.capstead.com