Capstead Mortgage Corporation Announces First Quarter Net Income and Declares First Quarter Common Dividend

Apr 19, 2001, 01:00 ET from Capstead Mortgage Corporation

    DALLAS, April 19 /PRNewswire/ -- Capstead Mortgage Corporation
 (NYSE:   CMO) today reported net income of $24,649,000, or $0.69 per diluted
 common share, for the quarter ended March 31, 2001, compared to net income for
 the quarter ended March 31, 2000 of $11,670,000, or $0.22 per diluted common
 share, and net income of $11,329,000, or $0.21 per diluted common share, for
 the quarter ended December 31, 2000.  The Company also announced that the
 Board of Directors declared a first quarter dividend of $0.49 per common
 share, payable on May 21 to stockholders of record as of May 7, 2001.
 
     First Quarter Earnings and Related Discussion
     Income before gain on sale of mortgage assets for the first quarter of
 2001 increased to $18,786,000, or $0.49 per diluted common share, from
 $11,329,000, or $0.21 per diluted common share for the fourth quarter of 2000
 and $11,670,000, or $0.22 per diluted common share for the first quarter of
 2000.  Current quarter financing spreads (the difference between the yield
 earned on mortgage investments and the rate charged on related borrowings)
 improved over fourth quarter 2000 spreads as a result of actions taken by the
 Federal Reserve during the first quarter to lower short-term interest rates by
 a total of 150 basis points.  Current quarter spreads improved over first
 quarter 2000 spreads because of higher yields earned on the mortgage
 investment portfolio, which currently consists largely of adjustable-rate
 mortgage ("ARM") Fannie Mae, Freddie Mac and Ginnie Mae securities.  Yields on
 ARM securities steadily increased over the past year as coupon interest rates
 on the underlying mortgage loans reset higher reflecting the rising interest
 rate environment experienced during 2000.
     The overall yield earned on the mortgage investment portfolio averaged
 7.06% during the first quarter of 2001, compared to 7.09% during the fourth
 quarter of 2000 and 6.20% during the first quarter of 2000.  As expected,
 yields on ARM securities peaked during the first quarter of 2001 and then
 began declining, reflecting the current trend of declining interest rates that
 has been evident since the Federal Reserve began lowering short-term interest
 rates in January 2001.  Yields on ARM securities are expected to continue to
 decline in the coming quarters.  For example, if interest rates stabilize at
 current levels, yields on the Company's current holdings of ARM securities
 could decline a total of 90 basis points by year-end.  Actual yields on the
 ARM securities will depend on fluctuations in, and market expectations for
 fluctuations in, interest rates and levels of mortgage prepayments.
     With its most recent action on April 18, 2001, the Federal Reserve has
 reduced the Federal Funds Rate by a total of 200 basis points since the
 beginning of this year in response to concerns over economic weakness.  The
 50 basis point reductions on each of January 3, January 31 and March 20, 2001
 contributed to a 76 basis point decline in the Company's average borrowing
 rates to 5.81% during the first quarter.  Average borrowing rates were
 6.57% during the fourth quarter of 2000 and 5.85% during the first quarter of
 2000.  The Company's borrowing rates are expected to decline another 113 basis
 points in the second quarter of 2001 as the full effect of the first quarter
 interest rate reductions and most of the effect of the April rate reduction
 are realized.  Any further changes in the Company's borrowing rates will
 depend on future actions by the Federal Reserve to change short-term interest
 rates, market expectations of future changes in short-term interest rates and
 the extent of any financial market liquidity concerns.
     The principal prepayment rates on holdings of ARM securities increased
 during the first quarter and are anticipated to increase further during the
 second quarter.  Currently, coupon interest rates on most of the mortgage
 loans underlying these ARM securities are above prevailing fixed-rate mortgage
 interest rates, which is expected to prompt higher levels of prepayments until
 such time as these loans reset to lower levels as discussed above.  Annualized
 prepayment rates on Ginnie Mae ARM securities averaged 28.2% during the first
 quarter of 2001, significantly higher than the 18.4% annualized rate during
 the fourth quarter of 2000 and the 14.9% level experienced in the first
 quarter of 2000.  Annualized prepayment rates on Fannie Mae and Freddie Mac
 ARM securities averaged 24.6% during the first quarter of 2001, compared to
 23.5% during the prior quarter and 18.3% for the same period of 2000.  While
 lower prepayment levels improve mortgage investment yields by allowing related
 purchase premiums to be recognized in operating results over a longer period,
 higher prepayment levels shorten the period over which the premiums are
 amortized thus reducing investment yields.  As a result of the increased
 prepayments, net amortization of purchase premiums on holdings of ARM
 securities increased to $4.9 million during the first quarter, from
 $3.1 million during the fourth quarter of 2000.  As of March 31, 2001, the net
 premium on holdings of ARM securities was 1.15% of principal, or
 $50.7 million.
     The Company's mortgage investment portfolio declined during the first
 quarter of 2001 to $4.7 billion from $5.4 billion at year-end 2000 as a result
 of portfolio runoff and the previously announced first quarter sale of over
 $400 million of medium-term securities.  Purchases were limited to $87 million
 of ARM securities.  Although acquisitions of credit-sensitive mortgage assets
 have been limited, the Company continues to actively evaluate such investments
 which, when combined with the prudent use of leverage, can provide attractive
 returns.  The future size and composition of the Company's mortgage-related
 investments will depend on market conditions, including the availability of
 suitable investments at attractive pricing.
 
     Book Value per Common Share
     At March 31, 2001 book value per common share was $14.09, compared to
 $13.11 at December 31, 2000, (calculated excluding the first quarter 2001
 common dividend declared today, and assuming redemption of the Series A and B
 preferred shares and conversion of the Series C preferred shares).  The
 increase in book value reflects the positive impact on the market value of the
 mortgage investment portfolio from lower prevailing interest rates.  The
 market value of the mortgage investment portfolio will continue to fluctuate
 with changes in interest rates and market liquidity, and such changes will be
 reflected in book value per common share.
     The completion of a previously announced tender offer on March 19, 2001
 resulted in the repurchase of 551,690 common shares at a purchase price of
 $13.25 (after transaction costs).  The offer did not have a significant
 immediate impact on book value per common share, although remaining
 outstanding common shares will participate to a greater extent in future
 earnings and changes in market value of the Company's mortgage assets.
 
     Capstead Mortgage Corporation, a real estate investment trust with assets
 of over $7.7 billion, earns income from investing in mortgage assets and other
 investment strategies.
     This document contains "forward-looking statements" (within the meaning of
 the Private Securities Litigation Reform Act of 1995) that inherently involve
 risks and uncertainties.  The Company's actual results and liquidity can
 differ materially from those anticipated in these forward-looking statements
 because of changes in the level and composition of the Company's investments
 and unforeseen factors.  As discussed in the Company's filings with the
 Securities and Exchange Commission, these factors may include, but are not
 limited to, changes in general economic conditions, the availability of
 suitable investments, fluctuations in and market expectations for fluctuations
 in interest rates and levels of mortgage prepayments, deterioration in credit
 quality and ratings, the effectiveness of risk management strategies, the
 impact of leverage, the liquidity of secondary markets and credit markets,
 increases in costs and other general competitive factors.
 
                         CAPSTEAD MORTGAGE CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                    (In thousands, except per share amounts)
 
                                        March 31, 2001     December 31, 2000
                                         (unaudited)
     Assets
      Mortgage investments               $4,682,937            $5,394,459
      CMO collateral and investments      3,020,161             3,126,878
                                          7,703,098             8,521,337
      Prepaids, receivables and other        70,599                67,399
      Cash and cash equivalents              13,373                21,761
                                         $7,787,070            $8,610,497
     Liabilities
      Borrowings under repurchase
       arrangements                      $4,168,018            $4,904,632
      Collateralized mortgage
       obligations ("CMOs")               2,998,224             3,103,874
      Accounts payable and accrued
       expenses                              17,604                31,112
                                          7,183,846             8,039,618
     Preferred stock subject to
      repurchase $0.56 Cumulative
      Convertible Preferred Stock,
      Series C, $0.10 par value;
      5,378 shares authorized, issued
      and outstanding March 31, 2001
      and December 31, 2000,
      respectively ($26,368 aggregate
      repurchase amount)                     25,210                25,210
     Stockholders' equity
      Preferred stock - $0.10 par
       value; 94,622 shares authorized:
        $1.60 Cumulative Preferred Stock,
         Series A, 374 shares issued
         and outstanding at both
         March 31, 2001 and
         December 31, 2000, respectively
         ($6,134 aggregate liquidation
         preference)                          5,228                 5,228
        $1.26 Cumulative Convertible
         Preferred Stock, Series B,
         15,845 shares issued and
         outstanding at March 31, 2001
         and December 31, 2000,
         respectively ($180,316 aggregate
         liquidation preference)            177,012               177,012
      Common stock - $0.01 par value;
       100,000 shares authorized; 24,725
       and 25,282 shares issued and
       outstanding at March 31, 2001
       and December 31, 2000, respectively      247                   253
      Paid-in capital                       733,340               740,613
      Accumulated deficit                  (378,127)             (396,882)
      Accumulated other comprehensive
       income                                40,314                19,445
                                            578,014               545,669
                                         $7,787,070            $8,610,497
     Book value per common share
      outstanding (A)                        $14.09                $13.11
 
     (A)  Calculated excluding the first quarter 2001 common dividend declared
          today, and assuming redemption of the Series A and B preferred shares
          and conversion of the Series C preferred shares.
 
 
                         CAPSTEAD MORTGAGE CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                                            Quarter Ended March 31
                                               2001        2000
 
     Interest income:
         Mortgage investments              $  87,542   $  84,900
         CMO collateral and investments       55,785      57,929
                 Total interest income       143,327     142,829
     Interest and related expense:
         Borrowings under repurchase
          arrangements                        65,162      71,908
         CMO borrowings                       55,615      57,903
         Mortgage insurance and other            328         403
             Total interest and related
              expense                        121,105     130,214
               Net margin on mortgage
                assets                        22,222      12,615
     Other revenue (expense):
         Gain on sale of mortgage assets       5,863         ---
         CMO administration and other            719         784
         Other operating expense              (4,155)     (1,729)
             Total other operating
              revenue (expense)                2,427        (945)
     Net income                            $  24,649   $  11,670
 
     Net income                            $  24,649   $  11,670
     Less cash dividends on preferred
      stock                                   (5,894)     (6,271)
     Net income available to common
      stockholders                         $  18,755   $   5,399
     Net income per common share:
         Basic                             $    0.75   $    0.22
         Diluted                                0.69        0.22
     Cash dividends declared per share:
         Common                            $   0.490   $   0.220
         Series A Preferred                    0.400       0.400
         Series B Preferred                    0.315       0.315
         Series C Preferred                    0.140       0.140
         Series D Preferred (converted
          into common shares
          December 28, 2000)                     ---       0.100
 
 
                         CAPSTEAD MORTGAGE CORPORATION
                             MARKET VALUE ANALYSIS
                                 (In thousands)
                                  (Unaudited)
 
                                   March 31, 2001                  December 31,
                                                                       2000
                                                         Unrealized Unrealized
      Mortgage      Principal Premium              Market   Gains      Gains
     Investments    Balance  (Discount)  Basis     Value  (Losses)   (Losses)
 
     Held available
     -for-sale: (A)
     Agency securities:
      FNMA/FHLMC:
       Fixed-rate    $3,353     $16     $3,369     $3,586     $217       $219
       Medium-term  101,674     226    101,900    103,145    1,245      4,159
       ARMs:
        LIBOR/CMT 2,106,777  37,088  2,143,865  2,159,667   15,802      8,918
        COFI        203,353  (4,745)   198,608    205,514    6,906      3,908
      GNMA ARMs   2,018,225  18,312  2,036,537  2,048,611   12,074       (632)
                  4,433,382  50,897  4,484,279  4,520,523   36,244     16,572
 
     Non-agency
      securities     85,304      23     85,327     86,958    1,631      1,852
 
     CMBS -
      adjustable-
      rate           74,058    (589)    73,469     74,265      796        996
 
     CMO
      collateral and
      investments    67,864   2,935     70,799     71,462      663         25
                 $4,660,608 $53,266 $4,713,874 $4,753,208  $39,334 (B)$19,445
 
     Held-to-maturity: (C)
      Non-agency
       securities    $1,201    $(10)    $1,191     $1,275      $84       $---
      CMO
       collateral 2,920,090  28,609  2,948,699  2,936,370  (12,329)   (13,122)
                 $2,921,291 $28,599 $2,949,890 $2,937,645 $(12,245)  $(13,122)
 
     (A)  Investments held available-for-sale are marked to market through
          stockholders' equity as a component of "Accumulated other
          comprehensive income."  Gains or losses are recognized in operating
          results only if sold.
 
     (B)  "Accumulated other comprehensive income" at March 31, 2001 also
          includes a $980,000 adjustment for call right derivatives recorded as
          cash flow hedges with the January 1, 2001 adoption of new derivative
          accounting rules.
 
     (C)  Investments held-to-maturity are carried on the balance sheet at
          amortized cost.
 
 
                         CAPSTEAD MORTGAGE CORPORATION
                         PORTFOLIO YIELD/COST ANALYSIS
                             (Dollars in thousands)
                                  (Unaudited)
 
                                                             Proj-     Life-
                        1st Quarter         As of March 31,  ected     time
                          Average                 2001        2nd      Pre-
                          Actual   Actual   Premiums        Quarter   payment
                                                             Yield/ Assumptions
                  Basis   Yield/   Runoff  (Discounts)  Basis Cost
                          Cost
                   (A)                                   (A)   (B)      (B)
 
     Agency
      securities:
      FNMA/FHLMC:
       Fixed-
        rate       $3,395  9.89%      7%        $16     $3,369  9.60%    25%
       Medium-
        term      227,721  6.94      20         226    101,900  6.11     25
       ARMs:
        LIBOR
        /CMT    2,214,537  7.08      25      37,088  2,143,865  6.80      40
        COFI      202,308  7.36      12      (4,745)   198,608  6.72      15
      GNMA
       ARMs     2,140,864  6.93      28      18,312  2,036,537  6.56      26
                4,788,825  7.02      26      50,897  4,484,279  6.67      32
 
     Non-agency
      securities   90,531  8.23      33          13     86,518  7.99      30
 
     CMBS -
      adjustable
      -rate        73,595  8.35       4        (589)    73,469  7.39     ---
                4,952,951  7.06      26%    $50,321  4,644,266  6.71      32%
 
     Borrowings 4,534,101  5.81                     (4,168,018) 4.68
     Capital
      employed/
      financing
      spread     $418,850  1.25%                      $476,248  2.03%
     Return on
      assets (C)           1.80%                                2.49%
 
     (A)  Basis represents the Company's investment before mark-to-market.
 
     (B)  Projected yields reflect ARM coupon resets and lifetime prepayment
          assumptions as adjusted for expected prepayments over the next
          3 months, as of the date of this press release.  Actual yields
          realized in future periods will largely depend upon (i) changes in
          portfolio composition, (ii) ARM coupon resets, (iii) actual
          prepayments and (iv) any changes in lifetime prepayment assumptions.
 
     (C)  The Company uses its liquidity to pay down borrowings.  Return on
          assets is calculated assuming the use of this liquidity to reduce
          borrowing costs.
 
 

SOURCE Capstead Mortgage Corporation
    DALLAS, April 19 /PRNewswire/ -- Capstead Mortgage Corporation
 (NYSE:   CMO) today reported net income of $24,649,000, or $0.69 per diluted
 common share, for the quarter ended March 31, 2001, compared to net income for
 the quarter ended March 31, 2000 of $11,670,000, or $0.22 per diluted common
 share, and net income of $11,329,000, or $0.21 per diluted common share, for
 the quarter ended December 31, 2000.  The Company also announced that the
 Board of Directors declared a first quarter dividend of $0.49 per common
 share, payable on May 21 to stockholders of record as of May 7, 2001.
 
     First Quarter Earnings and Related Discussion
     Income before gain on sale of mortgage assets for the first quarter of
 2001 increased to $18,786,000, or $0.49 per diluted common share, from
 $11,329,000, or $0.21 per diluted common share for the fourth quarter of 2000
 and $11,670,000, or $0.22 per diluted common share for the first quarter of
 2000.  Current quarter financing spreads (the difference between the yield
 earned on mortgage investments and the rate charged on related borrowings)
 improved over fourth quarter 2000 spreads as a result of actions taken by the
 Federal Reserve during the first quarter to lower short-term interest rates by
 a total of 150 basis points.  Current quarter spreads improved over first
 quarter 2000 spreads because of higher yields earned on the mortgage
 investment portfolio, which currently consists largely of adjustable-rate
 mortgage ("ARM") Fannie Mae, Freddie Mac and Ginnie Mae securities.  Yields on
 ARM securities steadily increased over the past year as coupon interest rates
 on the underlying mortgage loans reset higher reflecting the rising interest
 rate environment experienced during 2000.
     The overall yield earned on the mortgage investment portfolio averaged
 7.06% during the first quarter of 2001, compared to 7.09% during the fourth
 quarter of 2000 and 6.20% during the first quarter of 2000.  As expected,
 yields on ARM securities peaked during the first quarter of 2001 and then
 began declining, reflecting the current trend of declining interest rates that
 has been evident since the Federal Reserve began lowering short-term interest
 rates in January 2001.  Yields on ARM securities are expected to continue to
 decline in the coming quarters.  For example, if interest rates stabilize at
 current levels, yields on the Company's current holdings of ARM securities
 could decline a total of 90 basis points by year-end.  Actual yields on the
 ARM securities will depend on fluctuations in, and market expectations for
 fluctuations in, interest rates and levels of mortgage prepayments.
     With its most recent action on April 18, 2001, the Federal Reserve has
 reduced the Federal Funds Rate by a total of 200 basis points since the
 beginning of this year in response to concerns over economic weakness.  The
 50 basis point reductions on each of January 3, January 31 and March 20, 2001
 contributed to a 76 basis point decline in the Company's average borrowing
 rates to 5.81% during the first quarter.  Average borrowing rates were
 6.57% during the fourth quarter of 2000 and 5.85% during the first quarter of
 2000.  The Company's borrowing rates are expected to decline another 113 basis
 points in the second quarter of 2001 as the full effect of the first quarter
 interest rate reductions and most of the effect of the April rate reduction
 are realized.  Any further changes in the Company's borrowing rates will
 depend on future actions by the Federal Reserve to change short-term interest
 rates, market expectations of future changes in short-term interest rates and
 the extent of any financial market liquidity concerns.
     The principal prepayment rates on holdings of ARM securities increased
 during the first quarter and are anticipated to increase further during the
 second quarter.  Currently, coupon interest rates on most of the mortgage
 loans underlying these ARM securities are above prevailing fixed-rate mortgage
 interest rates, which is expected to prompt higher levels of prepayments until
 such time as these loans reset to lower levels as discussed above.  Annualized
 prepayment rates on Ginnie Mae ARM securities averaged 28.2% during the first
 quarter of 2001, significantly higher than the 18.4% annualized rate during
 the fourth quarter of 2000 and the 14.9% level experienced in the first
 quarter of 2000.  Annualized prepayment rates on Fannie Mae and Freddie Mac
 ARM securities averaged 24.6% during the first quarter of 2001, compared to
 23.5% during the prior quarter and 18.3% for the same period of 2000.  While
 lower prepayment levels improve mortgage investment yields by allowing related
 purchase premiums to be recognized in operating results over a longer period,
 higher prepayment levels shorten the period over which the premiums are
 amortized thus reducing investment yields.  As a result of the increased
 prepayments, net amortization of purchase premiums on holdings of ARM
 securities increased to $4.9 million during the first quarter, from
 $3.1 million during the fourth quarter of 2000.  As of March 31, 2001, the net
 premium on holdings of ARM securities was 1.15% of principal, or
 $50.7 million.
     The Company's mortgage investment portfolio declined during the first
 quarter of 2001 to $4.7 billion from $5.4 billion at year-end 2000 as a result
 of portfolio runoff and the previously announced first quarter sale of over
 $400 million of medium-term securities.  Purchases were limited to $87 million
 of ARM securities.  Although acquisitions of credit-sensitive mortgage assets
 have been limited, the Company continues to actively evaluate such investments
 which, when combined with the prudent use of leverage, can provide attractive
 returns.  The future size and composition of the Company's mortgage-related
 investments will depend on market conditions, including the availability of
 suitable investments at attractive pricing.
 
     Book Value per Common Share
     At March 31, 2001 book value per common share was $14.09, compared to
 $13.11 at December 31, 2000, (calculated excluding the first quarter 2001
 common dividend declared today, and assuming redemption of the Series A and B
 preferred shares and conversion of the Series C preferred shares).  The
 increase in book value reflects the positive impact on the market value of the
 mortgage investment portfolio from lower prevailing interest rates.  The
 market value of the mortgage investment portfolio will continue to fluctuate
 with changes in interest rates and market liquidity, and such changes will be
 reflected in book value per common share.
     The completion of a previously announced tender offer on March 19, 2001
 resulted in the repurchase of 551,690 common shares at a purchase price of
 $13.25 (after transaction costs).  The offer did not have a significant
 immediate impact on book value per common share, although remaining
 outstanding common shares will participate to a greater extent in future
 earnings and changes in market value of the Company's mortgage assets.
 
     Capstead Mortgage Corporation, a real estate investment trust with assets
 of over $7.7 billion, earns income from investing in mortgage assets and other
 investment strategies.
     This document contains "forward-looking statements" (within the meaning of
 the Private Securities Litigation Reform Act of 1995) that inherently involve
 risks and uncertainties.  The Company's actual results and liquidity can
 differ materially from those anticipated in these forward-looking statements
 because of changes in the level and composition of the Company's investments
 and unforeseen factors.  As discussed in the Company's filings with the
 Securities and Exchange Commission, these factors may include, but are not
 limited to, changes in general economic conditions, the availability of
 suitable investments, fluctuations in and market expectations for fluctuations
 in interest rates and levels of mortgage prepayments, deterioration in credit
 quality and ratings, the effectiveness of risk management strategies, the
 impact of leverage, the liquidity of secondary markets and credit markets,
 increases in costs and other general competitive factors.
 
                         CAPSTEAD MORTGAGE CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                    (In thousands, except per share amounts)
 
                                        March 31, 2001     December 31, 2000
                                         (unaudited)
     Assets
      Mortgage investments               $4,682,937            $5,394,459
      CMO collateral and investments      3,020,161             3,126,878
                                          7,703,098             8,521,337
      Prepaids, receivables and other        70,599                67,399
      Cash and cash equivalents              13,373                21,761
                                         $7,787,070            $8,610,497
     Liabilities
      Borrowings under repurchase
       arrangements                      $4,168,018            $4,904,632
      Collateralized mortgage
       obligations ("CMOs")               2,998,224             3,103,874
      Accounts payable and accrued
       expenses                              17,604                31,112
                                          7,183,846             8,039,618
     Preferred stock subject to
      repurchase $0.56 Cumulative
      Convertible Preferred Stock,
      Series C, $0.10 par value;
      5,378 shares authorized, issued
      and outstanding March 31, 2001
      and December 31, 2000,
      respectively ($26,368 aggregate
      repurchase amount)                     25,210                25,210
     Stockholders' equity
      Preferred stock - $0.10 par
       value; 94,622 shares authorized:
        $1.60 Cumulative Preferred Stock,
         Series A, 374 shares issued
         and outstanding at both
         March 31, 2001 and
         December 31, 2000, respectively
         ($6,134 aggregate liquidation
         preference)                          5,228                 5,228
        $1.26 Cumulative Convertible
         Preferred Stock, Series B,
         15,845 shares issued and
         outstanding at March 31, 2001
         and December 31, 2000,
         respectively ($180,316 aggregate
         liquidation preference)            177,012               177,012
      Common stock - $0.01 par value;
       100,000 shares authorized; 24,725
       and 25,282 shares issued and
       outstanding at March 31, 2001
       and December 31, 2000, respectively      247                   253
      Paid-in capital                       733,340               740,613
      Accumulated deficit                  (378,127)             (396,882)
      Accumulated other comprehensive
       income                                40,314                19,445
                                            578,014               545,669
                                         $7,787,070            $8,610,497
     Book value per common share
      outstanding (A)                        $14.09                $13.11
 
     (A)  Calculated excluding the first quarter 2001 common dividend declared
          today, and assuming redemption of the Series A and B preferred shares
          and conversion of the Series C preferred shares.
 
 
                         CAPSTEAD MORTGAGE CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                  (Unaudited)
 
                                            Quarter Ended March 31
                                               2001        2000
 
     Interest income:
         Mortgage investments              $  87,542   $  84,900
         CMO collateral and investments       55,785      57,929
                 Total interest income       143,327     142,829
     Interest and related expense:
         Borrowings under repurchase
          arrangements                        65,162      71,908
         CMO borrowings                       55,615      57,903
         Mortgage insurance and other            328         403
             Total interest and related
              expense                        121,105     130,214
               Net margin on mortgage
                assets                        22,222      12,615
     Other revenue (expense):
         Gain on sale of mortgage assets       5,863         ---
         CMO administration and other            719         784
         Other operating expense              (4,155)     (1,729)
             Total other operating
              revenue (expense)                2,427        (945)
     Net income                            $  24,649   $  11,670
 
     Net income                            $  24,649   $  11,670
     Less cash dividends on preferred
      stock                                   (5,894)     (6,271)
     Net income available to common
      stockholders                         $  18,755   $   5,399
     Net income per common share:
         Basic                             $    0.75   $    0.22
         Diluted                                0.69        0.22
     Cash dividends declared per share:
         Common                            $   0.490   $   0.220
         Series A Preferred                    0.400       0.400
         Series B Preferred                    0.315       0.315
         Series C Preferred                    0.140       0.140
         Series D Preferred (converted
          into common shares
          December 28, 2000)                     ---       0.100
 
 
                         CAPSTEAD MORTGAGE CORPORATION
                             MARKET VALUE ANALYSIS
                                 (In thousands)
                                  (Unaudited)
 
                                   March 31, 2001                  December 31,
                                                                       2000
                                                         Unrealized Unrealized
      Mortgage      Principal Premium              Market   Gains      Gains
     Investments    Balance  (Discount)  Basis     Value  (Losses)   (Losses)
 
     Held available
     -for-sale: (A)
     Agency securities:
      FNMA/FHLMC:
       Fixed-rate    $3,353     $16     $3,369     $3,586     $217       $219
       Medium-term  101,674     226    101,900    103,145    1,245      4,159
       ARMs:
        LIBOR/CMT 2,106,777  37,088  2,143,865  2,159,667   15,802      8,918
        COFI        203,353  (4,745)   198,608    205,514    6,906      3,908
      GNMA ARMs   2,018,225  18,312  2,036,537  2,048,611   12,074       (632)
                  4,433,382  50,897  4,484,279  4,520,523   36,244     16,572
 
     Non-agency
      securities     85,304      23     85,327     86,958    1,631      1,852
 
     CMBS -
      adjustable-
      rate           74,058    (589)    73,469     74,265      796        996
 
     CMO
      collateral and
      investments    67,864   2,935     70,799     71,462      663         25
                 $4,660,608 $53,266 $4,713,874 $4,753,208  $39,334 (B)$19,445
 
     Held-to-maturity: (C)
      Non-agency
       securities    $1,201    $(10)    $1,191     $1,275      $84       $---
      CMO
       collateral 2,920,090  28,609  2,948,699  2,936,370  (12,329)   (13,122)
                 $2,921,291 $28,599 $2,949,890 $2,937,645 $(12,245)  $(13,122)
 
     (A)  Investments held available-for-sale are marked to market through
          stockholders' equity as a component of "Accumulated other
          comprehensive income."  Gains or losses are recognized in operating
          results only if sold.
 
     (B)  "Accumulated other comprehensive income" at March 31, 2001 also
          includes a $980,000 adjustment for call right derivatives recorded as
          cash flow hedges with the January 1, 2001 adoption of new derivative
          accounting rules.
 
     (C)  Investments held-to-maturity are carried on the balance sheet at
          amortized cost.
 
 
                         CAPSTEAD MORTGAGE CORPORATION
                         PORTFOLIO YIELD/COST ANALYSIS
                             (Dollars in thousands)
                                  (Unaudited)
 
                                                             Proj-     Life-
                        1st Quarter         As of March 31,  ected     time
                          Average                 2001        2nd      Pre-
                          Actual   Actual   Premiums        Quarter   payment
                                                             Yield/ Assumptions
                  Basis   Yield/   Runoff  (Discounts)  Basis Cost
                          Cost
                   (A)                                   (A)   (B)      (B)
 
     Agency
      securities:
      FNMA/FHLMC:
       Fixed-
        rate       $3,395  9.89%      7%        $16     $3,369  9.60%    25%
       Medium-
        term      227,721  6.94      20         226    101,900  6.11     25
       ARMs:
        LIBOR
        /CMT    2,214,537  7.08      25      37,088  2,143,865  6.80      40
        COFI      202,308  7.36      12      (4,745)   198,608  6.72      15
      GNMA
       ARMs     2,140,864  6.93      28      18,312  2,036,537  6.56      26
                4,788,825  7.02      26      50,897  4,484,279  6.67      32
 
     Non-agency
      securities   90,531  8.23      33          13     86,518  7.99      30
 
     CMBS -
      adjustable
      -rate        73,595  8.35       4        (589)    73,469  7.39     ---
                4,952,951  7.06      26%    $50,321  4,644,266  6.71      32%
 
     Borrowings 4,534,101  5.81                     (4,168,018) 4.68
     Capital
      employed/
      financing
      spread     $418,850  1.25%                      $476,248  2.03%
     Return on
      assets (C)           1.80%                                2.49%
 
     (A)  Basis represents the Company's investment before mark-to-market.
 
     (B)  Projected yields reflect ARM coupon resets and lifetime prepayment
          assumptions as adjusted for expected prepayments over the next
          3 months, as of the date of this press release.  Actual yields
          realized in future periods will largely depend upon (i) changes in
          portfolio composition, (ii) ARM coupon resets, (iii) actual
          prepayments and (iv) any changes in lifetime prepayment assumptions.
 
     (C)  The Company uses its liquidity to pay down borrowings.  Return on
          assets is calculated assuming the use of this liquidity to reduce
          borrowing costs.
 
 SOURCE  Capstead Mortgage Corporation