Capstead Mortgage Corporation Declares Second Quarter 2006 Common Dividend.

DALLAS -- Capstead Mortgage Corporation (NYSE:CMO) announced today that it will pay a second quarter 2006 dividend of 2 cents per common share payable on July 20, 2006 to stockholders of record as of June 30, 2006.

Commenting on current market conditions and earnings prospects, Andrew F. Jacobs, President and Chief Executive Officer, said, "The current interest rate environment remains a challenge to earnings and dividends in the near-term. It is increasingly likely that the Federal Reserve will increase the federal funds rate another 25 basis points to 5.25% at its next meeting in late June for a total of 100 basis points during 2006. The cumulative effect of these increases is resulting in higher rates on our borrowings and further reducing financing spreads (the difference between investment yields and rates charged on related borrowings) on our core portfolio of adjustable-rate mortgage ("ARM") securities. Looking forward, yields on our ARM portfolio will continue resetting higher throughout the rest of 2006 and into 2007 as the underlying mortgages reset to more current rates and our borrowing rates should eventually begin to stabilize leading to recovering financing spreads and improving financial results. Accordingly, we are confident our core investment strategy of maintaining a large portfolio of ARM securities has put us in an excellent position to generate attractive returns for our stockholders over the longer term."

About Capstead

Capstead Mortgage Corporation operates as a real estate investment trust for federal income tax purposes (a "REIT") and is based in Dallas, Texas. Capstead earns income from investing in real estate-related assets on a leveraged basis. These investments currently consist primarily of residential ARM securities issued and guaranteed by government-sponsored entities, either Fannie Mae or Freddie Mac, or by an agency of the federal government, Ginnie Mae. Capstead also seeks to opportunistically invest a portion of its equity in credit-sensitive commercial real estate-related assets, including subordinate commercial real estate loans.

Forward-Looking Statements

This document contains "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) that inherently involve risks and uncertainties. Capstead'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 from both an investment return and regulatory perspective, the availability of new long-term investment capital, 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, liquidity of secondary markets and credit markets, increases in costs and other general competitive factors. In addition to the above considerations, actual results and liquidity related to investments in loans secured by commercial real estate are affected by lessee performance under lease agreements, changes in general as well as local economic conditions and real estate markets, increases in competition and inflationary pressures, changes in the tax and regulatory environment including zoning and environmental laws, uninsured losses or losses in excess of insurance limits and the availability of adequate insurance coverage at reasonable costs, among other factors.