Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.24.2
Stockholders' Equity
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
Stockholders' Equity Stockholders’ Equity
Redeemable Preferred Stock
The following is a summary of the Company’s series of cumulative redeemable preferred stock issued and outstanding as of June 30, 2024. In the event of a voluntary or involuntary liquidation, dissolution or winding up of the Company, each series of preferred stock will rank on parity with one another and rank senior to the Company’s common stock with respect to the payment of the dividends and the distribution of assets.
(dollars in thousands)
Class of Stock Issuance Date Shares Issued and Outstanding Carrying Value Contractual Rate
Redemption Eligible Date (1)
Fixed to Floating Rate Conversion Date (2)
Floating Annual Rate (3)
Series A March 14, 2017 5,050,221  $ 121,971  8.125  % April 27, 2027 April 27, 2027
3M Rate + 5.660%
Series B July 19, 2017 10,159,200  245,670  7.625  % July 27, 2027 July 27, 2027
3M Rate + 5.352%
Series C November 27, 2017 9,661,396  233,826  7.250  % January 27, 2025 January 27, 2025
3M Rate + 5.011%
Total 24,870,817  $ 601,467 
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(1)Subject to the Company’s right under limited circumstances to redeem the preferred stock earlier than the redemption eligible date disclosed in order to preserve its qualification as a REIT or following a change in control of the Company.
(2)The dividend rate on the fixed-to-floating rate redeemable preferred stock will remain at an annual fixed rate of the $25.00 per share liquidation preference from the issuance date up to but not including the transition date disclosed within. Effective as of the fixed-to-floating rate conversion date and onward, dividends will accumulate on a floating rate basis according to the terms disclosed in footnote (3) below.
(3)On and after the fixed-to-floating rate conversion date, dividends will accumulate and be payable quarterly at a percentage of the $25.00 per share liquidation preference equal to a floating base rate plus the spread indicated with respect to each series of preferred stock. The original floating base rate applicable to each preferred series was three-month USD-LIBOR, which ceased to be published on June 30, 2023. Under the Adjustable Interest Rate (LIBOR) Act, and the regulations promulgated thereunder, the replacement reference rate for three-month USD-LIBOR is three-month CME Term SOFR plus a tenor spread adjustment of 0.26161%. As a result, based on the terms of the LIBOR Act, the Company expects that the floating base rate with respect to each series of preferred stock, following the applicable conversion date, will be three-month CME SOFR plus a tenor spread of 0.26161%.

For each series of preferred stock, the Company may redeem the stock on or after the redemption eligible date in whole or in part, at any time or from time to time. The Company may also purchase shares of preferred stock from time to time in the open market by tender or in privately negotiated transactions. Each series of preferred stock has a par value of $0.01 per share and a liquidation and redemption price of $25.00, plus any accumulated and unpaid dividends thereon up to, but excluding, the redemption date. Through June 30, 2024, the Company had declared and paid all required quarterly dividends on the Company’s preferred stock.
Preferred Share Repurchase Program
In June 2022, the Company’s board of directors authorized the repurchase of up to an aggregate of 5,000,000 shares of the Company’s preferred stock, which includes each series shown in the table above under the heading Redeemable Preferred Stock. Preferred shares may be repurchased from time to time through privately negotiated transactions or open market transactions, pursuant to trading plans in accordance with Rule 10b5-1 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 preferred share repurchases are subject to a variety of factors, including market conditions and applicable SEC rules. The preferred share repurchase program does not require the purchase of any minimum number of shares, and, subject to SEC rules, purchases may be commenced or suspended at any time without prior notice. The preferred share repurchase program does not have an expiration date. As of June 30, 2024, a total of 699,779 shares of the Company’s 8.125% Series A Cumulative Redeemable Preferred Stock, 1,340,800 shares of the Company’s 7.625% Series B Cumulative Redeemable Preferred Stock and 2,138,604 shares of the Company’s 7.25% Series C Cumulative Redeemable Preferred Stock had been repurchased by the Company under the program for an aggregate cost of $13.3 million, $25.5 million and $38.5 million, respectively, of which 35,047, 280,060 and 170,502 shares were repurchased for a total cost of $0.8 million, $6.4 million and $3.9 million, respectively, during the six months ended June 30, 2024. During both the three and six months ended June 30, 2023, the Company repurchased 225,886 shares of Series A preferred stock, 215,072 shares of Series B preferred stock and 72,860 shares of Series C preferred stock for a total cost of $4.5 million, $4.1 million and $1.4 million, respectively. The difference between the consideration transferred and the carrying value of the preferred stock repurchased resulted in a gain attributable to common stockholders of $0.6 million for the six months ended June 30, 2024 and $2.5 million for both the three and six months ended June 30, 2023. No preferred shares were repurchased during the three months ended June 30, 2024.
Common Stock
Public Offerings
On February 6, 2023, the Company completed a public offering of 10,000,000 shares of its common stock. The underwriters purchased the shares from the Company at a price of $17.59 per share, for net proceeds to the Company of approximately $175.6 million after deducting offering expenses. The underwriters did not exercise any portion of their 30-day overallotment option to purchase up to 1,500,000 additional shares.
As of June 30, 2024, the Company had 103,622,239 shares of common stock outstanding. The following table presents a reconciliation of the common shares outstanding for the six months ended June 30, 2024 and 2023:
Number of common shares
Common shares outstanding, December 31, 2022 86,428,845 
Issuance of common stock 10,125,875 
Repurchase of common stock (593,453)
Non-cash equity award compensation (1)
204,268 
Common shares outstanding, June 30, 2023 96,165,535 
Common shares outstanding, December 31, 2023 103,206,457 
Issuance of common stock 8,025 
Non-cash equity award compensation (1)
407,757 
Common shares outstanding, June 30, 2024 103,622,239 
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(1)See Note 18 - Equity Incentive Plans for further details regarding the Company’s equity incentive plans.
Distributions to Stockholders
The following table presents cash dividends declared by the Company on its preferred and common stock during the three and six months ended June 30, 2024 and 2023:
Three Months Ended Six Months Ended
June 30, June 30,
(dollars in thousands) 2024 2023 2024 2023
Class of Stock Amount Per Share Amount Per Share Amount Per Share Amount Per Share
Series A Preferred Stock $ 2,564  $ 0.51  $ 2,588  $ 0.51  $ 5,129  $ 1.02  $ 5,290  $ 1.02 
Series B Preferred Stock $ 4,842  $ 0.48  $ 5,003  $ 0.48  $ 9,683  $ 0.96  $ 10,109  $ 0.96 
Series C Preferred Stock $ 4,378  $ 0.45  $ 4,524  $ 0.45  $ 8,756  $ 0.90  $ 9,081  $ 0.90 
Common Stock
 $ 46,945  $ 0.45  $ 43,560  $ 0.45  $ 94,026  $ 0.90  $ 101,941  $ 1.05 

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 limitations detailed in the plan prospectus. The plan allows for the issuance of up to an aggregate of 937,500 shares of the Company’s common stock. As of June 30, 2024, 138,655 shares have been issued under the plan for total proceeds of approximately $6.4 million, of which 3,967 and 8,025 shares were issued for total proceeds of $0.1 million and $0.1 million during the three and six months ended June 30, 2024, respectively. During the three and six months ended June 30, 2023, 4,768 and 8,448 shares were issued for a total proceeds of $0.1 million and $0.1 million, respectively.
Common Share Repurchase Program
The Company’s common share repurchase program allows for the repurchase of up to an aggregate of 9,375,000 shares of the Company’s common stock. Common 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 Exchange Act, or by any combination of such methods. The manner, price, number and timing of common share repurchases are subject to a variety of factors, including market conditions and applicable SEC rules. The common share repurchase program does not require the purchase of any minimum number of shares, and, subject to SEC rules, purchases may be commenced or suspended at any time without prior notice. The common share repurchase program does not have an expiration date. As of June 30, 2024, a total of 3,637,028 shares of common stock had been repurchased by the Company under the program for an aggregate cost of $208.5 million, of which 593,453 shares were repurchased for a total cost of $7.1 million during both the three and six months ended June 30, 2023. No shares of common stock were repurchased during the three and six months ended June 30, 2024.
At-the-Market Offerings
The Company is party to an equity distribution agreement under which the Company is authorized to sell 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 June 30, 2024, 3,819,406 shares of the Company’s common stock remained available for issuance under the equity distribution agreement. On July 30, 2024, the Company entered into an amendment to the equity distribution agreement, which increased the maximum number of shares of common stock available for sale under the agreement to 15,000,000. As of June 30, 2024, 7,180,594 shares of common stock had been sold under the current equity distribution agreement for total accumulated net proceeds of approximately $100.6 million, of which 117,427 shares were sold for net proceeds of $2.1 million during the six months ended June 30, 2023. No shares were sold under the “at the market” equity distribution agreements during the three and six months ended June 30, 2024 or the three months ended June 30, 2023.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss at June 30, 2024 and December 31, 2023 was as follows:
(in thousands) June 30,
2024		 December 31,
2023
Available-for-sale securities:
Unrealized gains $ 4,461  $ 23,305 
Unrealized losses (328,041) (199,734)
Accumulated other comprehensive loss
 $ (323,580) $ (176,429)

Reclassifications out of Accumulated Other Comprehensive Loss
The Company reclassifies unrealized gains and losses on AFS securities in accumulated other comprehensive loss to net income upon the recognition of any realized gains and losses on sales as individual securities are sold. For the three and six months ended June 30, 2024 the Company reclassified $9.4 million and $16.0 million, respectively, in unrealized losses on sold AFS securities from accumulated other comprehensive loss to (loss) gain on investment securities on the condensed consolidated statements of comprehensive income (loss). For the six months ended June 30, 2023 the Company reclassified $63.2 million in unrealized losses on sold AFS securities from accumulated other comprehensive loss to (loss) gain on investment securities on the condensed consolidated statements of comprehensive income (loss). The Company did not sell any AFS securities with unrealized gains and losses included in accumulated other comprehensive loss during the three months ended June 30, 2023.