ABCDE  Information as of December 31, 2015      Investor Presentation 

 changes in legislation or regulation affecting Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Home Loan Bank system and similar federal government agencies and related guarantees; other changes in legislation or regulation affecting the mortgage and banking industries;changes in market conditions as a result of Federal Reserve monetary policy or federal government fiscal challenges;deterioration in credit quality and ratings of existing or future issuances of Fannie Mae, Freddie Mac or Ginnie Mae securities; changes in legislation or regulation affecting exemptions for mortgage REITs from regulation under the Investment Company Act of 1940; andincreases in costs and other general competitive factors.  Safe Harbor Statement - Private Securities Litigation Reform Act of 1995  Cautionary Statement Concerning Forward-looking StatementsThis document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “will be,” “will likely continue,” “will likely result,” or words or phrases of similar meaning. Forward-looking statements are based largely on the expectations of management and are subject to a number of risks and uncertainties including, but not limited to, the following:  In addition to the above considerations, actual results and liquidity are affected by other risks and uncertainties which could cause actual results to be significantly different from those expressed or implied by any forward-looking statements included herein. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-looking events and circumstances discussed herein may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Forward-looking statements speak only as of the date the statement is made and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, readers of this document are cautioned not to place undue reliance on any forward-looking statements included herein.    changes in general economic conditions;fluctuations in interest rates and levels of mortgage prepayments; the effectiveness of risk management strategies; the impact of differing levels of leverage employed; liquidity of secondary markets and credit markets; the availability of financing at reasonable levels and terms to support investing on a leveraged basis;the availability of new investment capital;the availability of suitable qualifying investments from both an investment return and regulatory perspective;  2 

 Company Summary  Proven Strategy of Efficiently Managing a Leveraged Portfolio of Short-Duration Agency-Guaranteed ARM Securities  Experienced Management TeamAligned with Stockholders  Overview of Capstead Mortgage Corporation  Founded in 1985, Capstead is the oldest publicly-traded residential mortgage REIT. Our sole focus is on managing a leveraged portfolio of short-duration* agency-guaranteed (i.e. Fannie Mae, Freddie Mac and Ginnie Mae) residential ARM securities that is appropriately hedged and can earn attractive risk-adjusted returns over the long term, with little, if any, credit risk.      At December 31, 2015, our agency-guaranteed ARM securities portfolio stood at $14.15 billion, supported by $1.40 billion in long-term investment capital levered 9.28 times. Our short-duration strategy differentiates us from our peers because the adjustable-rate mortgages underlying our portfolio reset to more current interest rates within a relatively short period of time:allowing us to benefit from a potential recovery in financing spreads that typically contract during periods of rising interest rates, andresulting in smaller fluctuations in portfolio values from changes in interest rates compared to portfolios containing a significant amount of longer-duration ARM or fixed-rate mortgage securities.By virtue of being internally-managed and with our sole focus on agency-guaranteed securities, we are the most efficient mortgage REIT in the industry.  Our top four executive officers have over 100 years of combined mortgage finance industry experience.We are internally-managed with low operating costs and a strong focus on performance-based compensation for our executive officers. This structure greatly enhances the alignment of management interests with those of our stockholders.  3    This singular and straight-forward investment strategy, together with our use of cash flow hedge accounting allows for easily understood, transparent financial reporting, with limited use of non-GAAP financial measures.Additional transparency is evident by virtue of our internally-managed structure – our compensation-related decisions and costs are fully disclosed and subject to annual say-on-pay approvals.We make every effort to provide additional analysis in our earnings reports, SEC filings and analyst presentations that tells our story in a complete and straight-forward fashion.  Straight-forward Investment Strategy and Transparent Reporting  * Duration is a measure of market price sensitivity to interest rate movements. A shorter duration generally indicates less interest rate risk. 

 Capstead’s Economic Returns  We anticipate outperforming most of our peers on an economic return basis in 2015 in part due to the relatively low interest rate risk inherent in our short-duration agency-guaranteed ARM portfolio. Our strategy has led to outperformance over both trailing 2 ¾ year and 3 ¾ year time periods relative to other mortgage REITs. Comparisons through year-end are not yet available for all of our peers.  4  (a) Excludes $(0.28) per share one-time effect of preferred capital redemption and issuance transactions on book value in 2013. Including this nonportfolio-related charge, our economic returns were 1.0% in 2013, and 5.4% and 9.4% for the 2.75 and 3.75 year averages, respectively. (b) Agency Peers: (AGNC, ANH, ARR, CYS, HTS, NLY)(c) All Peers: (Agency peers + AMTG, CIM, DX, IVR, JMI, MFA, MITT, MTGE, NYMT, OAKS, RWT, STAR, TWO, WMC, ZFC)  Our economic return slipped in the 4th quarter to end the year at 0.32%. A disappointing result – except perhaps when compared to our peers. 

 Quarterly Earnings, Dividends and Change in Book Value  5  In 2013 we moved from declaring common dividends pegged to each quarter’s expected earnings to establishing a more stable dividend policy. To this end, we paid a $0.31 dividend over the course of 2013, a $0.34 dividend during 2014, and a $0.31 dividend for the 1st and 2nd quarters of 2015. With higher than anticipated levels of mortgage prepayments during the 2nd and 3rd quarters of 2015, and with the first Fed rate hike since June 2006 on the horizon, our board reduced the common dividend to $0.26 for the 3rd and 4th quarters.Declines in our book value were relatively modest in Q2 and Q3 2015 and during the 2013 bond market ‘taper tantrum’ compared to other mortgage REITs with longer-duration portfolios. Q4 2015 book value declines were more pronounced, even as our earnings recovered due largely to lower levels of mortgage prepayments. Much of this quarter’s book value decline resulted from steepening of the short end of the yield curve.  For presentation purposes, we adjusted our diluted EPS and related change in book value for Q2 2013 to exclude certain one-time effects of preferred capital redemption and issuance transactions totaling $(0.23) and $(0.28), respectively. These transactions replaced higher-cost preferred equity to the benefit of future earnings. See page 19 for further information and a reconciliation of diluted EPS to this presentation. 

 Authorized $100 Million Stock Repurchase Program  6  On January 27, 2016 Capstead’s board of directors authorized the repurchase of up to $100 million in common stock when such repurchases are deemed to be appropriate relative to portfolio reinvestment options and liquidity needs.   CMO Multiple of Trailing Book Value 

 Market Snapshot(dollars in thousands, except per share amounts)  7  In 2005 and 2006 we issued $100 million face amount of 10-year fixed, 20-year variable-rate, unsecured borrowings in three separate transactions. Utilizing forward-starting 20-year swaps, we have hedged the average cost of this capital down to a fixed cost of 7.77% by the fall of 2016, when the last of the three offerings begins paying variable. Unsecured borrowings are presented net of deferred issuance costs.As of December 31, 2015. 

 Capstead’s Prudent Use of Leverage  8  Portfolio and Portfolio Leverage  Portfolio leverage (secured borrowings divided by long-term investment capital) increased to 9.28 to one at year-end from 8.60 to one at December 31, 2014 primarily due to book value declines during the year. In our view, borrowing at current levels represents an appropriate and prudent use of leverage for a short-duration, agency-guaranteed ARM securities portfolio in today’s market conditions.   Long-term Investment Capital 

 Capstead’s Proven Short-Duration Investment Strategy  9  As of December 31, 2015  At December 31, 2015 we financed our agency-guaranteed residential ARM securities with a combination of 30-90 day and longer-dated secured borrowings augmented with relatively low-cost two-year interest rate swap agreements for hedging purposes. At December 31, 2015, secured borrowings consisted of “repo” borrowings and advances from the Federal Home Loan Bank (“FHLB”) of Cincinnati.   Residential ARM Securities Portfolio  Secured Borrowings & Swap Notional Amounts(by quarter of borrowing maturities / contract expirations)  Total: $14.00 Billion (cost basis)  Our portfolio of agency-guaranteed ARM securities have little, if any, credit risk and are either currently resetting to more current rates at least annually or will begin doing so in five years or less. With an asset duration* of approximately 11¾ months at year-end, the value of our portfolio is naturally less exposed to changes in interest rates than portfolios containing longer duration ARM or fixed-rate securities. This relative stability affords us more flexibility in managing through periods of market stress. For instance, during 2013 our longer-duration peers were forced to sell assets to reduce leverage or otherwise reposition their portfolios in response to sharply higher rates, and suffered significant declines in book value. We actually increased our leverage during this period and did not sell any assets, strongly outperforming our peers.We have long-term relationships with a variety of domestic and foreign lending counterparties. At year-end we had borrowings outstanding with 22 counterparties, including $2.88 billion in FHLB advances. In January 2016 the FHLB system regulator issued a ruling that requires mortgage REITs like Capstead to forfeit FHLB membership by February 2017. In response we have migrated over half of our balances back to our repo counterparties and anticipated migrating remaining balances by November 2016. We routinely borrow for 30 to 90 days and extend the duration of our borrowings using relatively low-cost two-year pay-fixed interest rate swap agreements. When available at attractive levels, we also enter into longer-maturity secured borrowings. Together with portfolio-related swaps, our secured borrowings had a duration of 8 months at year-end, resulting in a net duration gap of approximately 3¾ months.  Longer-to-ResetARMs$6.04 Billion(cost basis)  Current-ResetARMs$7.96 Billion(cost basis)      * Duration is a common measure of market price sensitivity to interest rate movements. A shorter duration generally indicates less interest rate risk. 

 Financing Spread AnalysisAs of December 31, 2015 (unaudited)  10  Cash yields on our portfolio of residential mortgage securities began increasing during 2015 (after years of declines) primarily due to increases in the underlying indexes (principally one-year LIBOR) in anticipation of Federal Reserve action to increase short-term interest rates. For example, one-year LIBOR increased 55 basis points during 2015 to 1.18% at December 31, 2015. Mortgage prepayment levels directly impact our financing spreads because purchased investment premiums are amortized to earnings as portfolio yield adjustments. Mortgage prepayments are impacted by housing market conditions, including prevailing mortgage interest rates, as well as seasonal factors, in particular the summer home selling season.Unhedged repo borrowing rates increased three basis points during the 4th quarter, largely attributable to market conditions, most notably the mid-December Federal Reserve action to raise the Federal Funds Rate by 25 basis points. Fixed swap rates continue trending higher as older, lower-rate swaps are replaced at higher rates.  

 * Net WAC, or weighted average coupon, is the weighted average interest rate of the mortgage loans underlying the indicated investments, net of servicing and other fees, as of December 31, 2015. Net WAC is expressed as a percentage calculated on an annualized basis on the unpaid principal balances of the mortgage loans underlying these investments. As such it is similar to cash yield on the portfolio which is calculated using amortized cost basis. Fully indexed WAC represents the weighted average coupon upon one or more resets using interest rate indexes and net margins in effect, as of December 31, 2015. Gross WAC is the weighted average interest rate of the mortgage loans underlying the indicated investments, including servicing and other fees paid by borrowers, as of December 31, 2015.   Key Elements of Capstead’s ARM PortfolioAs of December 31, 2015 (dollars in thousands, unaudited)  11  NOTE: Excludes $4 million legacy portfolio of fixed-rate investments.  The Net WAC* on our current-reset ARMs increased eight basis points during 2015 while the related year-end Fully Indexed WAC* increased 56 basis points, primarily reflecting increases in underlying six and 12 month indexes during this period. As a result, ARM loans underlying the current-reset component of our portfolio can be expected to continue increasing in coupon reflecting higher prevailing six and 12 month interest rates. 

 Agency Mortgage Prepayment Speeds versus Capstead Prepayment Speeds  12  Published Agency Prepayment Speeds vs. CMO Prepayment Speeds (in CPR)  Mortgage prepayment levels are influenced by the availability of mortgage financing with attractive terms and the overall health of the housing markets, as well as routine seasonal factors. Generic agency ARM speeds increased from March through July of 2015 before beginning to recede in August, reflecting low mortgage interest rates available earlier in 2015. Higher prevailing interest rates during the latter half of the year and seasonal factors allowed for significantly lower prepayment speeds in the fourth quarter and into the new year. However, the dramatic decline in Treasury rates experienced since year-end could spark higher prepays this spring. 

 Capstead’s Stockholder Friendly Structure   13   * Expressed on an annualized basis as a percentage of average long-term investment capital.  Capstead is a clear leader among our mortgage REIT peers in terms of operating cost efficiency.We are internally-managed with lower operating costs than our mortgage REIT peers. Our executives’ pay structure is variable through compensation elements that focus on “pay for performance” as opposed to fees paid to an external manager that are based solely on capital under management. Additionally, our board of directors and our senior executives are required to hold a significant amount of Capstead stock.As a result, we are incented to grow the Company by raising capital only when it is accretive to book value and earnings rather than for the purpose of increasing compensation or external management fees. Conversely, we are also not conflicted regarding whether or not to repurchase shares when appropriate. 

     Appendix  CAPSTEAD    14 

 Capstead’s Fourth Quarter 2015 Highlights  Generated earnings of $28.4 million or $0.26 per diluted common Paid common dividend of $0.26 per common shareBook value decreased 4.5%, or $0.54 to $11.42 per common shareFinancing spreads on residential mortgage investments increased 16 basis points to 0.90% primarily reflecting lower mortgage prepayment levelsAgency-guaranteed ARM portfolio and leverage ended the quarter at $14.15 billion and 9.28 times long-term investment capital, respectivelyBoard authorized up to $100 million in common stock repurchasesSelect comments from our January 27, 2016 earnings press release:Our fourth quarter earnings reflect the benefit of lower mortgage prepayment levels due to receding refinancing activity and seasonal factors. This has resulted in lower investment premium amortization and has contributed to higher portfolio yields. Portfolio yields are also benefiting from higher coupon interest rate resets as mortgage loans underlying our portfolio of agency-guaranteed ARM securities reset to higher rates reflecting higher prevailing six and 12-month interest rate indices. Most of these loans reset annually based on margins over indices such as the 12-month London Interbank Offered Rate, which increased nearly 33 basis points during the fourth quarter. With the Federal Reserve acting in mid-December to increase the Federal Funds Rate for the first time in nine years, rates on 30- to 90-day secured borrowings entered into in December increased correspondingly. However, our overall borrowing rates are fairly insulated for most of 2016 through interest rate swap agreements and longer-maturity borrowings which we believe will allow time for yields on our portfolio to improve with ongoing coupon interest rate resets. This illustrates how our strategy of investing in agency-guaranteed ARM securities is intended to operate to the benefit of our stockholders over the longer term.  15 

 Capstead’s Condensed Quarterly Income Statements(dollars in thousands, except per share amounts, unaudited)  16  Consists principally of interest on unsecured borrowings.See page 19 for further information regarding this non-GAAP financial measure. 

 Capstead’s Annual Income Statements – Five Years Ended 2015(dollars in thousands, except per share amounts, unaudited)  17     See page 19 for further information regarding these non-GAAP financial measures. 

 Capstead’s Comparative Balance Sheets(dollars in thousands, except per share amounts, unaudited)  18 

 Non-GAAP Financial MeasuresAs of December 31, 2015 (unaudited)  19  Financing spreads on residential mortgage investments, a non-GAAP financial measure, differs from total financing spreads, an all-inclusive GAAP measure, that is based on all interest-earning assets and all interest-paying liabilities. We believe presenting financing spreads on residential mortgage investments provides useful information for evaluating the performance of the Company’s portfolio.Core earnings per diluted common share is a non-GAAP financial measure that differs from the related GAAP measure of net income per diluted common share by excluding certain one-time effects of second quarter 2013 transactions to redeem then-outstanding high-cost convertible preferred capital and issue our 7.50% Series E preferred shares. We believe presenting this metric on a core earnings basis provides useful, comparative information for evaluating the Company’s performance.   Other interest-earning assets consist of overnight investments and cash collateral receivable from interest rate swap counterparties. Other interest-paying liabilities consist of long-term unsecured borrowings that the Company considers a component of its long-term investment capital and cash collateral payable to interest rate swap counterparties.  

 Experienced Management Team    20  Over 100 years of combined mortgage finance industry experience.  Andrew F. Jacobs – President and Chief Executive Officer, DirectorHas served as president and chief executive officer since 2003 and has held various executive positions at Capstead since 1988Previously served as a member of the Executive Board of the National Association of Real Estate Investment Trusts (“NAREIT”) and as chairman of NAREIT’s Council of Mortgage REITs; is a member of the Executive Committee of the Chancellor’s Council of the University of Texas System; and is a member of the Advisory Council of the McCombs School of Business, the Advisory Council to the Department of Accounting at the McCombs School of Business, and the Executive Council of the Real Estate Finance and Investment Center, each at the University of Texas at Austin. Mr. Jacobs is a Certified Public Accountant (“CPA”).Phillip A. Reinsch – Executive Vice President and Chief Financial Officer, Treasurer and SecretaryHas held various financial accounting and reporting positions at Capstead since 1993Formerly employed by Ernst & Young LLP as an audit senior manager focusing on mortgage banking and asset securitizationCPA, Member AICPA, FEI, NACDRobert A. Spears – Executive Vice President, Chief Investment OfficerHas served in asset and liability management positions at Capstead since 1994Formerly Vice President of secondary marketing with NationsBanc Mortgage CorporationRoy S. Kim – Senior Vice President, Asset and Liability ManagementJoined Capstead in April 2015 augmenting our asset and liability management capabilities with primary responsibility for liability managementHas over 20 years experience in the mortgage finance industry, primarily in trading capacities with JP Morgan and Bank of America