Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity (Notes)

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Stockholders' Equity (Notes)
 9 Months Ended
Sep. 30, 2014
Stockholders' Equity Attributable to Parent [Abstract]  
Stockholders' Equity
Stockholders’ Equity
Distributions to Stockholders
The following table presents cash dividends declared by the Company on its common stock during the three months ended September 30, 2014, and the four immediately preceding quarters:
Declaration Date
 
Record Date
 
Payment Date
 
Cash Dividend Per Share
September 16, 2014
 
September 30, 2014
 
October 21, 2014
 
$
0.26

June 17, 2014
 
July 2, 2014
 
July 22, 2014
 
$
0.26

March 17, 2014
 
March 31, 2014
 
April 21, 2014
 
$
0.26

December 17, 2013
 
December 27, 2013
 
December 31, 2013
 
$
0.26

September 11, 2013
 
September 26, 2013
 
October 23, 2013
 
$
0.28



Special Dividend of Silver Bay Common Stock
On March 18, 2013, the Company’s board of directors declared a special dividend pursuant to which the Company distributed 17,824,647 shares of Silver Bay common stock the Company received in exchange for the contribution of its equity interests in Two Harbors Property Investment LLC to Silver Bay on December 19, 2012, on a pro rata basis, to the Company’s stockholders of record as of April 2, 2013. The final distribution ratio for the stock dividend was determined to be 0.048825853 shares of Silver Bay common stock for each share of the Company’s common stock outstanding as of April 2, 2013. The dividend was distributed on or about April 24, 2013.
Accumulated Other Comprehensive Income
Accumulated other comprehensive income at September 30, 2014 and December 31, 2013 was as follows:
(in thousands)
September 30,
2014
 
December 31,
2013
Available-for-sale securities, at fair value
 
 
 
Unrealized gains
$
843,052

 
$
697,779

Unrealized losses
(66,404
)
 
(253,044
)
Accumulated other comprehensive income
$
776,648

 
$
444,735



Reclassifications out of Accumulated Other Comprehensive Income
The following table summarizes reclassifications out of accumulated other comprehensive income for the three and nine months ended September 30, 2014 and 2013:
(in thousands)
 
Affected Line Item in the Condensed Consolidated Statements of Comprehensive Income
 
Amount Reclassified out of Accumulated Other Comprehensive Income
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
 
2014
 
2013
 
2014
 
2013
Other-than-temporary-impairments on AFS securities
 
Total other-than-temporary impairment losses
 
$
—

 
$
—

 
$
212

 
$
1,662

Realized (gains) losses on sales of AFS securities
 
Gain (loss) on investment securities
 
(54,553
)
 
187,007

 
(32,325
)
 
123,089

 
 
 
 
$
(54,553
)
 
$
187,007

 
$
(32,113
)
 
$
124,751



Public Offering
On March 22, 2013, the Company completed a public offering of 50,000,000 shares of its common stock and issued an additional 7,500,000 shares of common stock pursuant to the underwriters’ over-allotments at a price of $13.46 per share, for gross proceeds of approximately $774.0 million. Net proceeds to the Company were approximately $762.9 million, net of issuance costs of approximately $11.1 million.
Dividend Reinvestment and Direct Stock Purchase Plan
The Company sponsors a dividend reinvestment and direct stock purchase plan through which stockholders may purchase additional shares of the Company’s common stock by reinvesting some or all of the cash dividends received on shares of the Company’s common stock. Stockholders may also make optional cash purchases of shares of the Company’s common stock subject to certain limitation detailed in the plan prospectus. An aggregate of 7.5 million shares of the Company’s common stock were originally reserved for issuance under the plan. As of September 30, 2014, 194,990 shares have been issued under the plan for total proceeds of approximately $2.1 million, of which 15,268 and 38,742 shares were issued for total proceeds of $158,567 and $399,359 during the three and nine months ended September 30, 2014, respectively. During the three and nine months ended September 30, 2013, 12,085 and 53,749 shares were issued under the plan for total proceeds of $119,994 and $628,063, respectively.
Share Repurchase Program
On October 5, 2011, the Company’s board of directors authorized a share repurchase program, which allows the Company to repurchase up to 10,000,000 shares of its common stock. On November 14, 2012, the board of directors authorized an increase in the share repurchase program of 15,000,000, for a total of 25,000,000 shares. Shares may be repurchased from time to time through privately negotiated transactions or open market transactions, pursuant to a trading plan in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, or by any combination of such methods. The manner, price, number and timing of share repurchases will be subject to a variety of factors, including market conditions and applicable SEC rules. As of September 30, 2014, 2,450,700 shares had been repurchased by the Company under the program for a total cost of $23.9 million; however, no shares were repurchased during the three and nine months ended September 30, 2014. During the three and nine months ended September 30, 2013, 1,450,700 and 2,450,700 shares were repurchased by the Company for a total cost of $13.4 million and $23.9 million, respectively.
At-the-Market Offering
On May 25, 2012, the Company entered into an equity distribution agreement under which the Company may sell up to an aggregate of 20,000,000 shares of its common stock from time to time in any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act. As of September 30, 2014, 7,585,869 shares of common stock have been sold under the equity distribution agreement for total accumulated net proceeds of approximately $77.6 million; however, no shares were sold during the three and nine months ended September 30, 2014 and 2013.
Warrants
From January 1, 2013 to April 2, 2013, warrant holders exercised 8,720,690 warrants to purchase 8,720,690 shares of the Company’s common stock, at an exercise price of $11.00 per share.
On April 2, 2013, the exercise price of the warrants was lowered to $10.25 per warrant share and the number of shares of the Company’s common stock issuable for each warrant share exercised was increased to 1.0727 shares. These adjustments were required under the terms of the warrant agreement as a result of the special dividend of Silver Bay common stock. Calculation of the adjustments was determined based on, among other things, the closing price of the Company’s common stock on the business day immediately preceding the ex-dividend date for the stock dividend and the fair market value of the stock dividend to be received for each share of the Company’s common stock on the ex-dividend date.
From April 3, 2013 to the warrant expiration date, November 7, 2013, warrant holders exercised 1,130,460 warrants to purchase 1,212,607 shares of the Company’s common stock, at an exercise price of $10.25 per share. Total proceeds to the Company for warrant exercises during the year ended December 31, 2013 were approximately $107.5 million.
Additionally, certain Capitol founders holding warrants containing cashless exercise provisions exercised 100,000 warrants on a cashless basis, resulting in the surrender of 93,649 shares of common stock and the issuance of 6,351 shares of common stock during the year ended December 31, 2013. No proceeds were received by the Company as a result of the cashless exercises.
At 5:00 p.m. EST on November 7, 2013, 3,580,279 warrants expired pursuant to the terms of the warrant agreement. No warrants remained outstanding as of September 30, 2014.