cmo-8k_20200318.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: March 18, 2020

(Date of Earliest Event Reported)

CAPSTEAD MORTGAGE CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland

001-08896

75-2027937

(State of Incorporation)

(Commission File No.)

(I.R.S. Employer

Identification No.)

8401 North Central Expressway

Suite 800

Dallas, Texas

75225

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (214) 874-2323

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 230.14a-12).
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock ($0.01 par value)	CMO	New York Stock Exchange
7.50% Series E Cumulative Redeemable Preferred Stock ($0.10 par value)	CMOPRE	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 7.01.regulation FD Disclosure

Capstead Mortgage Corporation (“Capstead”, or the “Registrant”) has issued a press release providing estimates of certain key financial metrics in light of the high levels of market volatility experienced in recent weeks. This release is attached hereto as Exhibit 99.1 and is incorporated herein by reference and is also available on our website at www.capstead.com.

The information referenced in this Current Report on Form 8-K (including the Exhibits referenced in Item 9.01 below) is being “furnished” under “Item 7.01. Regulation FD Disclosure” and, as such, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be incorporated by reference into any registration statement or other document filed by Capstead pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS

(d)

Exhibits.

Exhibit No.	Description
99.1	Press release issued by Capstead Mortgage Corporation dated March 18, 2020 providing a financial update in light of market conditions.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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 hereunto duly authorized.

CAPSTEAD MORTGAGE CORPORATION

March 19, 2020	By:	/s/ Lance J. Phillips
		Lance J. Phillips
		Senior Vice President, Chief Financial Officer
		and Secretary

cmo-ex991_7.htm

Exhibit 99.1

CONTACT: Lindsey Crabbe

(214) 874-2339

CAPSTEAD MORTGAGE CORPORATION

PROVIDES FINANCIAL UPDATE IN LIGHT OF MARKET CONDITIONS

DALLAS – March 18, 2020 – Capstead Mortgage Corporation (NYSE: CMO) (“Capstead” or the “Company”) today provided estimates of certain key financial metrics in light of the high levels of market volatility experienced in recent weeks.

The Company’s unaudited book value per common share has decreased an estimated 10% to 12% since year-end, in large part due to increased market volatility that has contributed to lower interest rates, negatively affecting mortgage security pricing relative to interest rate swap valuations. This spike in volatility is largely attributable to market reactions to the spread of the COVID-19 virus and how efforts to contain it are expected to impact the economy.

The Federal Reserve has taken a number of actions recently to support the financial system, including reducing the Fed Funds rate by 150 basis points to a current range of 0% to 0.25%. These actions are broadly supportive to the funding markets and to lower future funding costs. The Company expects its core earnings for the first quarter of 2020 to be at or above our recently announced first quarter dividend of $0.15 per common share.

About Capstead

Capstead is a self-managed real estate investment trust, or REIT, for federal income tax purposes. The Company earns income from investing in a leveraged portfolio of residential adjustable-rate mortgage pass-through securities, referred to as ARM securities, issued and guaranteed by government-sponsored enterprises, either Fannie Mae, Freddie Mac, or by an agency of the federal government, Ginnie Mae.

Capstead’s investment strategy attempts to mitigate risks to book value by focusing on investments in agency-guaranteed residential mortgage pass-through securities, which are considered to have little, if any, credit risk and are collateralized by ARM loans with interest rates that reset periodically to more current levels.

Statement Concerning Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “will be,” “will likely continue,” “will likely result,” or words or phrases of similar meaning. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, without limitation, fluctuations in interest rates, the availability of suitable qualifying investments, changes in mortgage prepayments, the availability and terms of financing, changes in market conditions as a result of federal corporate and individual tax law changes, changes in legislation or regulation affecting the mortgage and banking industries or Fannie Mae, Freddie Mac or Ginnie Mae securities, the availability of new investment capital, the liquidity of secondary markets and funding markets, our ability to maintain our qualification as a REIT for U.S. federal tax purposes, our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended, and other changes in general

economic conditions. These and other applicable uncertainties, factors and risks are described more fully in the Company’s filings with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement is made and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, readers of this document are cautioned not to place undue reliance on any forward-looking statements included herein.

Document And Entity Information	Mar. 18, 2020
Document And Entity Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Mar. 18, 2020
Entity Registrant Name	CAPSTEAD MORTGAGE CORPORATION
Entity Central Index Key	0000766701
Entity Emerging Growth Company	false
Entity File Number	001-08896
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	75-2027937
Entity Address, Address Line One	8401 North Central Expressway
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75225
City Area Code	214
Local Phone Number	874-2323
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Common Stock ($0.01 par value) [Member]
Document And Entity Information [Line Items]
Title of each class	Common Stock ($0.01 par value)
Trading Symbols	CMO
Name of each exchange on which registered	NYSE
7.50% Series E Cumulative Redeemable Preferred Stock ($0.10 par value) [Member]
Document And Entity Information [Line Items]
Title of each class	7.50% Series E Cumulative Redeemable Preferred Stock ($0.10 par value)
Trading Symbols	CMOPRE
Name of each exchange on which registered	NYSE