all but $ 2 million of capstead 's residential mortgage investments portfolio and all of its derivatives are recorded at fair value on the company 's balance sheet and are therefore included in the calculation of book value per share of common stock . none of the company 's borrowings are recorded at fair value . fair value is impacted by market conditions , including changes in interest rates , and the availability of financing at reasonable rates and leverage levels , among other factors . see note 8 to the consolidated financial statements for additional disclosures regarding fair values of financial instruments held or issued by the company . residential mortgage investments the following table illustrates the progression of capstead 's portfolio of residential mortgage investments for the indicated periods ( in thousands ) : replace_table_token_3_th capstead 's investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of arm agency securities . agency securities are considered to have limited , if any , credit risk because the timely payment of principal and interest is guaranteed by fannie mae and freddie mac , which are government-sponsored enterprises , or ginnie mae , which is an agency of the federal government . federal government support for fannie mae and freddie mac has largely alleviated market concerns regarding the ability of fannie mae and freddie mac to fulfill their guarantee obligations . by focusing on investing in arm agency securities , changes in fair value caused by changes in interest rates are typically relatively modest compared to changes in fair value of longer-duration fixed-rate assets . declines in fair value caused by increases in interest rates are generally recoverable in a relatively short period of time as coupon interest rates on the underlying mortgage loans reset to rates more reflective of the then-current interest rate environment . this investment strategy positions the company to benefit from potential recoveries in financing spreads that typically contract during periods of rising interest rates . 15 capstead classifies its arm securities based on the average length of time until the loans underlying each security reset to more current rates ( “ months-to-roll ” ) ( less than 18 months for “ current-reset ” arm securities , and 18 months or greater for “ longer-to-reset ” arm securities ) . the company 's arm holdings featured the following characteristics at december 31 , 201 9 ( dollars in thousands ) : replace_table_token_4_th ( a ) amortized cost basis represents the company 's investment ( unpaid principal balance plus unamortized investment premiums ) before unrealized gains and losses . at december 31 , 2019 , the ratio of amortized cost basis to unpaid principal balance for the company 's arm holdings was 103.06. this table excludes $ 1 million in fixed-rate agency-guaranteed mortgage pass-through securities , residential mortgage loans and private residential mortgage pass-through securities held as collateral for structured financings . ( b ) 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 the indicated date . 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 the 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 as of the indicated date . average net margins represent the weighted average levels over the underlying indexes that the portfolio can adjust to upon reset , usually subject to initial , periodic and or lifetime caps on the amount of such adjustments during any single interest rate adjustment period and over the contractual term of the underlying loans . ( c ) arm securities with initial fixed-rate periods of five years or longer typically have either 200 or 500 basis point initial caps with 200 basis point periodic caps . additionally , certain arm securities held by the company are subject only to lifetime caps or are not subject to a cap . for presentation purposes , average periodic caps in the table above reflect initial caps until after an arm security has reached its initial reset date and lifetime caps , less the current net wac , for arm securities subject only to lifetime caps . at year-end , 74 % of current-reset arm securities were subject to periodic caps averaging 1.77 % ; 19 % were subject to initial caps averaging 2.60 % ; 6 % were subject to lifetime caps averaging 6.40 % ; and less than 1 % were uncapped . all longer-to-reset arm securities at december 31 , 2019 were subject to initial caps . ( d ) 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 the indicated date . arm securities held by capstead are backed by mortgage loans that have coupon interest rates that adjust at least annually to more current interest rates or begin doing so after an initial fixed-rate period . these coupon interest rate adjustments are usually subject to periodic and lifetime limits , or caps , on the amount of such adjustments during any single interest rate adjustment period and over the contractual term of the underlying loans . story_separator_special_tag interest income on residential mortgage investments was higher by $ 45 million in 2019 compared to 2018. the increase is attributable to $ 75 million in increases related to higher average yields , net of $ 30 million in decreases related to lower average portfolio balances during 2019. yields on residential mortgage investments were 63 basis points higher , averaging 2.75 % during 2019 , compared to 2.12 % reported for 2018 , primarily due to higher cash yields . this was largely due to arm loan coupon interest rates resetting higher to more current rates and higher coupon interest rates on acquisitions . yields also benefited from smaller adjustments for investment premium amortization in 2019 compared to 2018 as a result of lower portfolio basis , lower premiums on acquisitions and changes in prepayment estimates . interest expense on secured borrowings was higher by $ 39 million in 2019 compared to 2018. the increase is attributable to $ 60 million in increases related to higher average borrowing rates , net of $ 21 million in decreases related to lower average borrowings during 2019. secured borrowing rates adjusted for currently-paying interest rate swap agreements held for hedging purposes were 48 basis points higher , averaging 2.22 % in 2019 , compared to 1.74 % reported for 2018. market conditions contributed to higher borrowing rates , including four 25 basis point increases in the federal funds rate in 2018 that were partially offset by three 25 basis point decreases since july 2019. hedging costs were impacted by the expiration of older , lower-rate swaps and the addition of new higher-rate swaps . resulting higher rates were partially offset by higher variable rate swap receipts as a result of higher average short-term libor rates and the use of more 3-month libor-receive swap agreements . average fixed-rate swap payments were 2.07 % in 2019 compared to 1.56 % in 2018. efforts to reposition the swap portfolio to take advantage of declining market interest rates over the course of 2019 helped mitigate the increase in average fixed rates . swap balances were higher , averaging $ 7.46 billion in 2019 compared to $ 6.75 billion reported for 2018. future secured borrowing rates will be dependent on market conditions , including overall levels of market interest rates as well as the availability of longer-maturity borrowings and interest rate swap agreements at attractive rates . other interest expense ( net ) during 2019 benefited from a 34 basis point increase in rates on overnight investments and cash collateral receivable from derivative counterparties and $ 37 million in higher average balances . borrowing costs on the company 's $ 100 million face amount of outstanding unsecured borrowings are effectively fixed utilizing $ 100 million in swap agreements with matching terms . operating costs were higher in 2019 compared to 2018 by $ 405,000 , primarily due to adjustments made to finalize 2018 short-term incentive program results . capstead remains a highly efficient investment platform , particularly compared to other mortgage reits . key components of the company 's operating efficiency include its internally-managed structure and agency-focused investment strategy . 23 story_separator_special_tag assumptions include mortgage prepayment speeds , adequate levels of market liquidity , current market conditions , and portfolio leverage levels . these assumptions are inherently uncertain and , as a result , modeling can not precisely estimate the impact of higher or lower interest rates . actual results will differ from simulated results due to the timing , magnitude and frequency of interest rate changes , other changes in market conditions , changes in management strategies and other factors . 25 the table below reflects the estimated impact of instantaneous parallel shifts in the yield curve on net interest margins and the fair value of capstead 's portfolio of residential mortgage investments and related derivative financial instruments at december 31 , 201 9 and 201 8 , subject to the modeling parameters described above . replace_table_token_11_th ( a ) sensitivity of net interest margins as well as portfolio and related derivative values to changes in interest rates is determined relative to the actual rates at the applicable date . note that the projected 12-month net interest margin change is predicated on acquisitions of similar assets sufficient to replace runoff . there can be no assurance that suitable investments will be available for purchase at attractive prices , if investments made will behave in the same fashion as assets currently held or if management will choose to replace runoff with such assets . 26 c ritical accounting policies management 's discussion and analysis of financial condition and results of operations is based upon capstead 's consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires the use of estimates and judgments that can affect the reported amounts of assets , liabilities ( including contingencies ) , revenues and expenses , as well as related disclosures . these estimates are based on available internal and market information and appropriate valuation methodologies believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the expected useful lives and carrying values of assets and liabilities which can materially affect the determination of net income and book value per common share . actual results may differ from these estimates under different assumptions or conditions . management believes the following are critical accounting policies in the preparation of capstead 's consolidated financial statements that involve the use of estimates requiring considerable judgment : amortization of investment premiums on residential mortgage investments – investment premiums on residential mortgage investments are recognized in earnings as adjustments to interest income by the interest method over the estimated lives of the related assets . amortization is affected by actual portfolio runoff ( scheduled and unscheduled principal paydowns ) and by estimates and judgments related to future levels of mortgage prepayments that

liquidity and capital resources capstead 's primary sources of funds are secured borrowings and monthly principal and interest payments on its investments . other sources of funds may include proceeds from debt and equity offerings and asset sales . the timing , manner , price and amount of any future common and preferred issuances and any common stock repurchases will be made in the open market at the company 's discretion , subject to economic and market conditions , stock price , compliance with federal securities laws and tax regulations as well as blackout periods associated with the dissemination of important company-specific news . the company generally uses its liquidity to pay down secured borrowings to reduce borrowing costs and otherwise efficiently manage its long-term investment capital . because the level of these borrowings can generally be adjusted on a daily basis , the company 's potential liquidity inherent in its unencumbered residential mortgage investments is as important as the level of cash and cash equivalents carried on the balance sheet . the table included under “ utilization of long-term investment capital and potential liquidity ” illustrates management 's estimate of additional funds potentially available to the company at december 31 , 2019 and the accompanying discussion provides insight into the company 's perspective on what level of portfolio leverage to employ under current market conditions . the company currently believes that it has sufficient liquidity and capital resources available for the acquisition of additional investments , repayments on borrowings and the payment of cash dividends as required for the company 's continued qualification as a reit . capstead finances its residential mortgage investments primarily by borrowing under repurchase arrangements , the terms and conditions of which are negotiated on a transaction-by-transaction basis , when each such borrowing is initiated or renewed . future borrowings are dependent upon the willingness of lenders to participate in the financing of agency securities , lender collateral requirements and the lenders ' determination of the fair value of the securities pledged as collateral , which fluctuates with changes in interest rates and liquidity conditions within the commercial banking and mortgage finance industries .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources capstead 's primary sources of funds are secured borrowings and monthly principal and interest payments on its investments . other sources of funds may include proceeds from debt and equity offerings and asset sales . the timing , manner , price and amount of any future common and preferred issuances and any common stock repurchases will be made in the open market at the company 's discretion , subject to economic and market conditions , stock price , compliance with federal securities laws and tax regulations as well as blackout periods associated with the dissemination of important company-specific news . the company generally uses its liquidity to pay down secured borrowings to reduce borrowing costs and otherwise efficiently manage its long-term investment capital . because the level of these borrowings can generally be adjusted on a daily basis , the company 's potential liquidity inherent in its unencumbered residential mortgage investments is as important as the level of cash and cash equivalents carried on the balance sheet . the table included under “ utilization of long-term investment capital and potential liquidity ” illustrates management 's estimate of additional funds potentially available to the company at december 31 , 2019 and the accompanying discussion provides insight into the company 's perspective on what level of portfolio leverage to employ under current market conditions . the company currently believes that it has sufficient liquidity and capital resources available for the acquisition of additional investments , repayments on borrowings and the payment of cash dividends as required for the company 's continued qualification as a reit . capstead finances its residential mortgage investments primarily by borrowing under repurchase arrangements , the terms and conditions of which are negotiated on a transaction-by-transaction basis , when each such borrowing is initiated or renewed . future borrowings are dependent upon the willingness of lenders to participate in the financing of agency securities , lender collateral requirements and the lenders ' determination of the fair value of the securities pledged as collateral , which fluctuates with changes in interest rates and liquidity conditions within the commercial banking and mortgage finance industries .
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 Suspicious Activity Report : all but $ 2 million of capstead 's residential mortgage investments portfolio and all of its derivatives are recorded at fair value on the company 's balance sheet and are therefore included in the calculation of book value per share of common stock . none of the company 's borrowings are recorded at fair value . fair value is impacted by market conditions , including changes in interest rates , and the availability of financing at reasonable rates and leverage levels , among other factors . see note 8 to the consolidated financial statements for additional disclosures regarding fair values of financial instruments held or issued by the company . residential mortgage investments the following table illustrates the progression of capstead 's portfolio of residential mortgage investments for the indicated periods ( in thousands ) : replace_table_token_3_th capstead 's investment strategy focuses on managing a portfolio of residential mortgage investments consisting almost exclusively of arm agency securities . agency securities are considered to have limited , if any , credit risk because the timely payment of principal and interest is guaranteed by fannie mae and freddie mac , which are government-sponsored enterprises , or ginnie mae , which is an agency of the federal government . federal government support for fannie mae and freddie mac has largely alleviated market concerns regarding the ability of fannie mae and freddie mac to fulfill their guarantee obligations . by focusing on investing in arm agency securities , changes in fair value caused by changes in interest rates are typically relatively modest compared to changes in fair value of longer-duration fixed-rate assets . declines in fair value caused by increases in interest rates are generally recoverable in a relatively short period of time as coupon interest rates on the underlying mortgage loans reset to rates more reflective of the then-current interest rate environment . this investment strategy positions the company to benefit from potential recoveries in financing spreads that typically contract during periods of rising interest rates . 15 capstead classifies its arm securities based on the average length of time until the loans underlying each security reset to more current rates ( “ months-to-roll ” ) ( less than 18 months for “ current-reset ” arm securities , and 18 months or greater for “ longer-to-reset ” arm securities ) . the company 's arm holdings featured the following characteristics at december 31 , 201 9 ( dollars in thousands ) : replace_table_token_4_th ( a ) amortized cost basis represents the company 's investment ( unpaid principal balance plus unamortized investment premiums ) before unrealized gains and losses . at december 31 , 2019 , the ratio of amortized cost basis to unpaid principal balance for the company 's arm holdings was 103.06. this table excludes $ 1 million in fixed-rate agency-guaranteed mortgage pass-through securities , residential mortgage loans and private residential mortgage pass-through securities held as collateral for structured financings . ( b ) 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 the indicated date . 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 the 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 as of the indicated date . average net margins represent the weighted average levels over the underlying indexes that the portfolio can adjust to upon reset , usually subject to initial , periodic and or lifetime caps on the amount of such adjustments during any single interest rate adjustment period and over the contractual term of the underlying loans . ( c ) arm securities with initial fixed-rate periods of five years or longer typically have either 200 or 500 basis point initial caps with 200 basis point periodic caps . additionally , certain arm securities held by the company are subject only to lifetime caps or are not subject to a cap . for presentation purposes , average periodic caps in the table above reflect initial caps until after an arm security has reached its initial reset date and lifetime caps , less the current net wac , for arm securities subject only to lifetime caps . at year-end , 74 % of current-reset arm securities were subject to periodic caps averaging 1.77 % ; 19 % were subject to initial caps averaging 2.60 % ; 6 % were subject to lifetime caps averaging 6.40 % ; and less than 1 % were uncapped . all longer-to-reset arm securities at december 31 , 2019 were subject to initial caps . ( d ) 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 the indicated date . arm securities held by capstead are backed by mortgage loans that have coupon interest rates that adjust at least annually to more current interest rates or begin doing so after an initial fixed-rate period . these coupon interest rate adjustments are usually subject to periodic and lifetime limits , or caps , on the amount of such adjustments during any single interest rate adjustment period and over the contractual term of the underlying loans . story_separator_special_tag interest income on residential mortgage investments was higher by $ 45 million in 2019 compared to 2018. the increase is attributable to $ 75 million in increases related to higher average yields , net of $ 30 million in decreases related to lower average portfolio balances during 2019. yields on residential mortgage investments were 63 basis points higher , averaging 2.75 % during 2019 , compared to 2.12 % reported for 2018 , primarily due to higher cash yields . this was largely due to arm loan coupon interest rates resetting higher to more current rates and higher coupon interest rates on acquisitions . yields also benefited from smaller adjustments for investment premium amortization in 2019 compared to 2018 as a result of lower portfolio basis , lower premiums on acquisitions and changes in prepayment estimates . interest expense on secured borrowings was higher by $ 39 million in 2019 compared to 2018. the increase is attributable to $ 60 million in increases related to higher average borrowing rates , net of $ 21 million in decreases related to lower average borrowings during 2019. secured borrowing rates adjusted for currently-paying interest rate swap agreements held for hedging purposes were 48 basis points higher , averaging 2.22 % in 2019 , compared to 1.74 % reported for 2018. market conditions contributed to higher borrowing rates , including four 25 basis point increases in the federal funds rate in 2018 that were partially offset by three 25 basis point decreases since july 2019. hedging costs were impacted by the expiration of older , lower-rate swaps and the addition of new higher-rate swaps . resulting higher rates were partially offset by higher variable rate swap receipts as a result of higher average short-term libor rates and the use of more 3-month libor-receive swap agreements . average fixed-rate swap payments were 2.07 % in 2019 compared to 1.56 % in 2018. efforts to reposition the swap portfolio to take advantage of declining market interest rates over the course of 2019 helped mitigate the increase in average fixed rates . swap balances were higher , averaging $ 7.46 billion in 2019 compared to $ 6.75 billion reported for 2018. future secured borrowing rates will be dependent on market conditions , including overall levels of market interest rates as well as the availability of longer-maturity borrowings and interest rate swap agreements at attractive rates . other interest expense ( net ) during 2019 benefited from a 34 basis point increase in rates on overnight investments and cash collateral receivable from derivative counterparties and $ 37 million in higher average balances . borrowing costs on the company 's $ 100 million face amount of outstanding unsecured borrowings are effectively fixed utilizing $ 100 million in swap agreements with matching terms . operating costs were higher in 2019 compared to 2018 by $ 405,000 , primarily due to adjustments made to finalize 2018 short-term incentive program results . capstead remains a highly efficient investment platform , particularly compared to other mortgage reits . key components of the company 's operating efficiency include its internally-managed structure and agency-focused investment strategy . 23 story_separator_special_tag assumptions include mortgage prepayment speeds , adequate levels of market liquidity , current market conditions , and portfolio leverage levels . these assumptions are inherently uncertain and , as a result , modeling can not precisely estimate the impact of higher or lower interest rates . actual results will differ from simulated results due to the timing , magnitude and frequency of interest rate changes , other changes in market conditions , changes in management strategies and other factors . 25 the table below reflects the estimated impact of instantaneous parallel shifts in the yield curve on net interest margins and the fair value of capstead 's portfolio of residential mortgage investments and related derivative financial instruments at december 31 , 201 9 and 201 8 , subject to the modeling parameters described above . replace_table_token_11_th ( a ) sensitivity of net interest margins as well as portfolio and related derivative values to changes in interest rates is determined relative to the actual rates at the applicable date . note that the projected 12-month net interest margin change is predicated on acquisitions of similar assets sufficient to replace runoff . there can be no assurance that suitable investments will be available for purchase at attractive prices , if investments made will behave in the same fashion as assets currently held or if management will choose to replace runoff with such assets . 26 c ritical accounting policies management 's discussion and analysis of financial condition and results of operations is based upon capstead 's consolidated financial statements , which have been prepared in accordance with accounting principles generally accepted in the united states . the preparation of these financial statements requires the use of estimates and judgments that can affect the reported amounts of assets , liabilities ( including contingencies ) , revenues and expenses , as well as related disclosures . these estimates are based on available internal and market information and appropriate valuation methodologies believed to be reasonable under the circumstances , the results of which form the basis for making judgments about the expected useful lives and carrying values of assets and liabilities which can materially affect the determination of net income and book value per common share . actual results may differ from these estimates under different assumptions or conditions . management believes the following are critical accounting policies in the preparation of capstead 's consolidated financial statements that involve the use of estimates requiring considerable judgment : amortization of investment premiums on residential mortgage investments – investment premiums on residential mortgage investments are recognized in earnings as adjustments to interest income by the interest method over the estimated lives of the related assets . amortization is affected by actual portfolio runoff ( scheduled and unscheduled principal paydowns ) and by estimates and judgments related to future levels of mortgage prepayments that

