Capstead Mortgage Corporation Declares Third Quarter 2003 Common Dividend.

Business Editors

DALLAS--(BUSINESS WIRE)--Sept. 11, 2003

Capstead Mortgage Corporation (NYSE:CMO) announced today that it will pay a third quarter 2003 dividend of 75 cents per common share payable on October 21, 2003 to stockholders of record as of September 30, 2003.

Commenting on expected third quarter results and the dividend, Andrew F. Jacobs, President and Chief Executive Officer said, "Mortgage prepayments on the Company's portfolio of adjustable-rate mortgage ("ARM") securities remained at elevated levels during the third quarter resulting in continued pressure on portfolio balances and yields. That said, with recent increases in interest rates on fixed-rate mortgage loans and the continued reset to lower interest rates on mortgages underlying our ARM securities portfolio, we expect prepayments to moderate in the fourth quarter. Additionally, interest rates on the Company's short-term borrowings are at historic lows, which should allow Capstead to earn financing spreads on its mortgage investments in excess of 260 basis points during the third quarter, in line with previously announced expectations. In establishing the dividend, we took into account approximately 11 cents per common share in gains expected to be realized during the third quarter from the redemption of certain collateralized mortgage obligations previously issued by the Company."

In conclusion, Mr. Jacobs cautioned, "We expect Capstead's operating income will continue to benefit from excellent financing spreads for the immediate future; however, opportunities to reinvest capital made available by maturing investments over the near term will likely not be of the size or have the return profile capable of generating sufficient returns to offset declining earnings from our existing portfolios. As a result, we anticipate that quarterly operating income and common dividends will continue trending lower from current levels."

Capstead Mortgage Corporation, a real estate investment trust, earns income from investing in real estate-related 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, liquidity of secondary markets and credit markets, increases in costs and other general competitive factors. Relative to direct investments in real estate, these factors may include, but are not limited to, 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.