Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) (USD $)
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income
Cumulative Earnings
Cumulative Distributions to Stockholders
Balance at Dec. 31, 2008 $ 184,161,000 $ 2,000 $ 181,150,000 $ 0 $ 3,009,000 $ 0
Balance, shares at Dec. 31, 2008   32,811,257        
Initial Capital Issuance and Contribution from Formation of Two Harbors Investment Corp 1,000 0 1,000 0 0 0
Accretion of trust account income relating to common stock subject to conversion (92,872) 0 (93,000) 0 0 0
Cancellation of Capitol Founders' Shares, shares   (6,562,257)        
Cancellation of Capitol Founders' Shares 77,833,000 0 77,833,000 0 0 0
Shares Converted to Cash by Capitol Stockholders   (6,875,130)        
Shares Converted to Cash by Capitol Stockholders (67,858,000) 1,000 67,857,000 0 0 0
Shares Acquired by Capitol as part of Forward Sales Agreements   (5,994,661)        
Shares Acquired by Capitol as part of Forward Sales Agreements (59,167,000) 0 59,167,000 0 0 0
Conversion of Stock, Amount Converted 0 133,000 (133,000) 0 0 0
Net income (8,744,000) 0 0 0 (8,744,000) 0
Net change in unrealized gain on available-for-sale securities (950,000) 0 0 (950,000) 0 0
Total other comprehensive income (950,000) 0 0 (950,000) 0 0
Total comprehensive income (9,694,000)          
Net proceeds from issuance of common stock, net of offering costs 1,000          
Common dividends declared (3,484,000) 0 0 0 0 (3,484,000)
Common dividends declared, shares   0        
Non-cash equity award compensation 21,644 0 21,644 0 0 0
Non-cash equity award compensation, shares   22,159        
Balance at Dec. 31, 2009 121,721,000 134,000 131,756,000 (950,000) (5,735,000) (3,484,000)
Balance, shares at Dec. 31, 2009   13,401,368        
Accretion of trust account income relating to common stock subject to conversion 0          
Shares Converted to Cash by Capitol Stockholders 0          
Shares Acquired by Capitol as part of Forward Sales Agreements 0          
Net income 35,755,000 0 0 0 35,755,000 0
Net change in unrealized gain on available-for-sale securities 23,569,000 0 0 23,569,000 0 0
Total other comprehensive income 23,569,000 0 0 23,569,000 0 0
Total comprehensive income 59,324,000          
Net proceeds from issuance of common stock, net of offering costs 235,275,000 271,000 235,004,000 0 0 0
Net proceeds from issuance of common stock, net of offering costs, shares   27,063,381        
Common dividends declared (34,086,000) 0 0 0 0 (34,086,000)
Common dividends declared, shares   0        
Non-cash equity award compensation 213,545 0 213,545 0 0 0
Non-cash equity award compensation, shares   36,463        
Balance at Dec. 31, 2010 382,448,000 405,000 366,974,000 22,619,000 30,020,000 (37,570,000)
Balance, shares at Dec. 31, 2010 40,501,212 40,501,212        
Accretion of trust account income relating to common stock subject to conversion 0          
Shares Converted to Cash by Capitol Stockholders 0          
Shares Acquired by Capitol as part of Forward Sales Agreements 0          
Net income 127,432,000 0 0 0 127,432,000 0
Net change in unrealized gain on available-for-sale securities (81,335,000) 0 0 (81,335,000) 0 0
Total other comprehensive income (81,335,000) 0 0 (81,335,000) 0 0
Total comprehensive income 46,097,000          
Net proceeds from issuance of common stock, net of offering costs 1,006,847,000 1,001,000 1,005,846,000 0 0 0
Net proceeds from issuance of common stock, net of offering costs, shares   100,075,746        
Common dividends declared (165,585,000) 0 0 0 0 (165,585,000)
Common dividends declared, shares   0        
Non-cash equity award compensation 278,784 0 278,784 0 0 0
Non-cash equity award compensation, shares   19,750        
Balance at Dec. 31, 2011 $ 1,270,086,000 $ 1,406,000 $ 1,373,099,000 $ (58,716,000) $ 157,452,000 $ (203,155,000)
Balance, shares at Dec. 31, 2011 140,596,708 140,596,708