Financial Data and Key Metrics Changes - Year-to-date shareholder returns were 20% as of last Friday's close, 23% over the last year, and nearly 72% over the last three years with dividends reinvested [4] - Total economic return for the quarter was 10.3% and 11.5% year-to-date, reflecting disciplined management of Agency RMBS [4] - The common equity market cap is now above $1.8 billion, indicating growth in investor trust [5] Business Line Data and Key Metrics Changes - Net interest income continues to trend upward due to new investments with attractive yields, with over $130 million of gains on the portfolio in the third quarter [8] - The portfolio has grown over 50% larger since the beginning of the year and is 10% larger since the end of the second quarter [9] Market Data and Key Metrics Changes - Agency mortgages offered wide spreads to Treasuries and interest rate swaps, with implied volatility declining early in the quarter [11] - The agency current coupon yield declined from nearly 5.75% to nearly 5%, leading to a sharp increase in the refinance index [12] Company Strategy and Development Direction - The company aims to build a resilient platform at the intersection of capital markets and housing finance, focusing on risk discipline and liquidity management [4] - A new office in New York City is being opened to attract talent and strengthen business partnerships [10] Management's Comments on Operating Environment and Future Outlook - The operating environment remains complex with vulnerabilities due to persistent inflation and geopolitical factors [5] - The Federal Reserve is committed to bringing rates down to more neutral levels, but uncertainty in the rate path is significant [6] - The company is prepared for potential surprises in the market, emphasizing a deliberate growth strategy [7] Other Important Information - The company has raised $254 million in new capital in the third quarter and $776 million year-to-date, allowing for capital growth at a premium to book value [9] - The company is focused on disciplined risk management and liquidity to weather future volatility, with liquidity at over $1 billion [9] Q&A Session Summary Question: Current ROEs and dividend implications - ROEs in Agency RMBS remain in the high teens net of hedging costs, with gross in the mid-20s on a large percentage of the coupon stack [23] Question: Update on book value - Estimated book value is $1,271 net of the dividend accrual as of Friday's close [25] Question: Mortgage spreads and historical context - Mortgage spreads are still in the top quartile of the widest levels when compared to interest rate swaps [29] Question: Demand side outlook for GSEs - GSE holdings of Agency MBS could increase, with the capacity to add as much as $450 billion under current agreements [36] Question: Impact of implied volatility on hedging strategy - The company is looking at pockets of cheap volatility to stabilize the duration of the portfolio [41] Question: Market's reaction to volatility themes - The market has reacted to increased certainty in policy outcomes, but the company remains prepared for unexpected events [45]

Core Insights - Dynex Capital, Inc. is a mortgage real estate investment trust (REIT) that focuses on mortgage-backed securities (MBS) in the U.S. and has been operating since 1987 [1] - The company has a diverse portfolio that includes both agency and non-agency MBS, covering residential and commercial sectors [1] Price Target Trends - The consensus price target for Dynex Capital has increased from $12.92 a year ago to $13.25 in the past month, indicating growing analyst confidence [2] Financial Performance - In Q2 2025, Dynex Capital reported a slight outperformance in book value, aligning closely with projections despite sector volatility [3] - The company experienced a total economic loss of $0.10 per common share, reflecting a 0.8% decline in beginning book value [4] - Dynex Capital's portfolio is valued at $14 billion, with a debt-to-equity ratio of 8.3 and quarter-end liquidity of $891 million, which is 55% of its total equity [4] Strategic Decisions - The management expanded their MBS portfolio and employed prudent hedging strategies, which helped avoid margin calls that affected some peers [3] - Analysts suggest monitoring interest rate changes, economic indicators, and company announcements as these factors could influence Dynex Capital's stock price [5]

Financial Data and Key Metrics Changes - Year-to-date shareholder returns were 20% as of last Friday's close, and 23% over the last year, with nearly 72% returns over the last three years when dividends are reinvested [6] - Total economic return for the quarter was 10.3% and 11.5% year-to-date, reflecting disciplined management of Agency RMBS [6] - The common equity market cap surpassed $1.8 billion, indicating broadening trust from individuals and institutions [7] - Estimated book value was $12.71 net of the dividend accrual as of Friday's close [31] Business Line Data and Key Metrics Changes - Net interest income continues to trend upward due to new investments with attractive yields, with over $130 million in gains on the portfolio in the third quarter [12][13] - The portfolio has grown over 50% larger since the beginning of the year and is 10% larger since the end of the second quarter [14] Market Data and Key Metrics Changes - Agency mortgages offered wide spreads to treasuries and interest rate swaps, with nominal spreads remaining wide [16] - The GSEs have the capacity to add up to $450 billion under current stock purchase agreements, which could increase demand for Agency MBS [44] Company Strategy and Development Direction - The company aims to build a resilient platform at the intersection of capital markets and housing finance, focusing on risk discipline and liquidity management [5] - The strategy includes a deliberate bias towards lower coupons, which are expected to outperform as mortgage rates decline [17] - The company is opening a new office in New York City to attract talent and strengthen market position [15] Management's Comments on Operating Environment and Future Outlook - The operating environment remains complex, with vulnerabilities due to persistent inflation and geopolitical factors [7] - The Federal Reserve is committed to bringing rates down to more neutral levels, but uncertainty in the rate path is significant [8] - The company is prepared for potential surprises in the private credit market, emphasizing a deliberate growth strategy [10] Other Important Information - The company has raised $254 million in new common equity capital in the third quarter, bringing year-to-date new capital growth to $776 million [13][17] - The company continues to focus on disciplined risk management and liquidity to weather future volatility [14] Q&A Session Summary Question: Where do you see incremental spreads and current ROEs? - ROEs in agency RMBS remain in the high teens net of hedging costs, with gross in the mid-twenties for a large percentage of the coupon stack [29] Question: Can we get an update on book value quarter to date? - Estimated book value is $12.71 net of the dividend accrual as of Friday's close [31] Question: Can you discuss the demand side outlook for agencies? - GSE holdings of Agency MBS could increase, with the capacity to add significant amounts under current agreements [44] Question: How are you thinking about swap spreads? - The federal deficit is a major factor, and while spreads could go more negative, there is a buffer at current levels [38] Question: What are the implications of lower volatility on your hedging strategy? - Lower volatility allows for the repurchase of options that were short in a levered mortgage position, stabilizing the portfolio's duration [48] Question: Do you see opportunities to pick up alpha within the coupon stack? - There are tremendous opportunities across the coupon stack, allowing for flexibility beyond the current coupon [60]

Financial Data and Key Metrics Changes - Year-to-date shareholder returns were 20% as of last Friday's close, 23% over the last year, and nearly 72% over the last three years with dividends reinvested [4] - Total economic return for the quarter was 10.3% and 11.5% year-to-date, reflecting disciplined management of Agency RMBS [4] - The common equity market cap is now above $1.8 billion, indicating growth in investor trust [5] - Estimated book value is $1,271 net of the dividend accrual as of Friday's close [24] Business Line Data and Key Metrics Changes - Net interest income continues to trend upward due to new investments with attractive yields, with over $130 million of gains on the portfolio in the third quarter [9] - The portfolio has grown over 50% larger since the beginning of the year and is 10% larger since the end of the second quarter [10] Market Data and Key Metrics Changes - Agency mortgages offered wide spreads to Treasuries and interest rate swaps, with nominal spreads remaining wide [12] - The agency current coupon yield declined from nearly 5.75% to nearly 5%, leading to a sharp increase in the refinance index [13] - GSE holdings of Agency MBS could potentially increase, with the capacity to add as much as $450 billion under current agreements [32] Company Strategy and Development Direction - The company focuses on building a resilient platform at the intersection of capital markets and housing finance, emphasizing risk discipline and liquidity management [4] - The strategy includes opportunistic investing and focused value creation, with a deliberate bias towards lower coupons expected to outperform [12][15] - The company is opening a new office in New York City to attract talent and enhance business partnerships [11] Management's Comments on Operating Environment and Future Outlook - The operating environment remains complex, with vulnerabilities due to persistent inflation and geopolitical factors [5] - The Federal Reserve is committed to bringing rates down to more neutral levels, but uncertainty in the rate path is significant [6] - The company is prepared for potential surprises in the market and remains focused on strengthening its market position [8] Other Important Information - The company raised $254 million in new capital in the third quarter, bringing year-to-date new capital growth to $776 million [10] - The liquidity at quarter end was over $1 billion, representing over 50% of total equity [10] Q&A Session Summary Question: Where do you see incremental spreads and current ROEs? - ROEs in Agency RMBS remain in the high teens net of hedging costs, with gross in the mid-20s on a large percentage of the coupon stack [22] Question: Can we get an update on book value quarter to date? - Estimated book value is $1,271 net of the dividend accrual as of Friday's close [24] Question: Can you elaborate on mortgage spreads being wide relative to history? - Mortgage spreads are still in the top quartile of the widest levels when compared to interest rate swaps [27] Question: What is the potential for GSEs as a player on the demand side? - GSE holdings of Agency MBS could increase, with a capacity to add as much as $450 billion under current agreements [32] Question: How are you thinking about the hedging strategy with lower volatility? - The company is looking to repurchase options that are inherently short in a levered mortgage position, focusing on pockets of cheap volatility [36] Question: Why has the market shrugged off volatility themes? - There is more certainty in the market due to policy commitments from the Fed and clearer policy outcomes from the administration [40]

Core Insights - Dynex Capital reported quarterly earnings of $0.25 per share, missing the Zacks Consensus Estimate of $0.44 per share, and compared to a loss of $0.1 per share a year ago, representing an earnings surprise of -43.18% [1] - The company posted revenues of $30.61 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 4.62%, compared to year-ago revenues of $0.89 million [2] - Dynex Capital shares have increased by approximately 5.8% since the beginning of the year, while the S&P 500 has gained 13.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.48 on revenues of $39.23 million, and for the current fiscal year, it is $1.84 on revenues of $108.75 million [7] - The estimate revisions trend for Dynex Capital was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The REIT and Equity Trust industry, to which Dynex Capital belongs, is currently in the bottom 38% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - The company's portfolio fair value reached $158 billion as of September 30, 2025[14, 25] - The company's market capitalization is $18 billion[14] - The annualized dividend yield is 166%[14] - The book value per common share increased to $1267 in Q3 2025 from $1195 in Q2 2025[23] - The total economic return for Q3 2025 was 103% compared to (08)% in Q2 2025[23] - Comprehensive income was $120 per common share in Q3 2025, compared to $(011) in Q2 2025[23] Portfolio Composition - Approximately 93% of the portfolio is in Agency RMBS[13] - Agency RMBS and TBAs constitute 93% of the portfolio, with Agency CMBS at 6% and CMBS IO less than 1%[15] Macroeconomic Themes - The company is monitoring global power shifts, government policy, fiscal policy, Fed policy, system liquidity, and demographics & tech[32, 33, 34, 35, 36, 37]

Core Viewpoint - Dynex Capital reported Q3 earnings that increased from the previous quarter, driven by higher interest income and lower operating expenses, although the EPS available for distribution fell short of analyst expectations [1] Financial Performance - Q3 EPS available for distribution was $0.25, which missed the average analyst estimate of $0.26 [1] - This EPS increased from $0.22 in Q2, indicating a positive trend in earnings [1] - The rise in earnings was attributed to an increase in interest income and a decline in operating expenses [1]

[Press Release Information](index=1&type=section&id=Press%20Release%20Information) This section details the official contact information and announcement regarding the company's third quarter 2025 financial results and upcoming conference call [Contact Information and Date](index=1&type=section&id=Contact%20Information%20and%20Date) This section provides the contact details for media inquiries and the official release date of the financial results - The **press release** was issued on **October 20, 2025**, with **Alison Griffin** as the contact person[2](index=2&type=chunk) [Company Announcement](index=1&type=section&id=Company%20Announcement) **Dynex Capital, Inc.** announced its **third quarter 2025** financial results and details for an upcoming conference call to discuss these results and the business outlook - **Dynex Capital, Inc.** (**NYSE: DX**) reported its **third quarter 2025** financial results[3](index=3&type=chunk) - Management will host a call to discuss the results and business outlook[3](index=3&type=chunk) [Third Quarter Financial Performance and Other Highlights](index=1&type=section&id=Third%20Quarter%20Financial%20Performance%20and%20Other%20Highlights) This section outlines management's strategic execution, conference call details, and key financial achievements for the **third quarter of 2025** [Management Remarks](index=1&type=section&id=Management%20Remarks) Management emphasized the successful execution of their strategy, opportunistic positioning, and expert risk management, highlighting investments in highly liquid securities and a disciplined investment process - The company continued to execute its strategy of raising and deploying capital, reflecting opportunistic positioning and expert risk management[4](index=4&type=chunk) - Investments are focused on highly liquid, transparent, and readily valued securities, maintaining effective risk management and a disciplined investment process[4](index=4&type=chunk) [Earnings Conference Call Details](index=1&type=section&id=Earnings%20Conference%20Call%20Details) This section provides instructions for accessing the company's conference call, including dial-in numbers for **North America** and **International** participants, a conference **ID**, and details for the **live audio webcast** and archived recording - The conference call is scheduled for **10:00 a.m. Eastern Time** and can be accessed via telephone (**1-888-330-2022** for **North America**, **1-646-960-0690** for **International**, **ID 1957092**) or **live audio webcast** on the Company's website[5](index=5&type=chunk)[6](index=6&type=chunk) - An **archive of the webcast** will be available approximately **2 hours** after the live call[6](index=6&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company reported strong **third-quarter** financial performance, including a significant **economic return**, an increase in **book value**, positive **comprehensive** and **net income per common share**, and substantial capital raising and investment activities Third Quarter 2025 Key Financial Highlights | Metric | Value | | :-------------------------------- | :-------------------------------- | | **Total economic return per common share** | **$1.23** | | **Total economic return** (% of **beginning book value**) | **10.3%** | | Increase in **book value per common share** | **$0.72** | | **Dividends declared per common share** | **$0.51** | | **Book value per common share** (**Sept 30, 2025**) | **$12.67** | | **Comprehensive income per common share** | **$1.20** | | **Net income per common share** | **$1.09** | | **Equity capital raised** (net of issuance costs) | **$254 million** | | **Agency RMBS** purchased | **$2.4 billion** | | **Agency CMBS** purchased | **$464 million** | | **Liquidity** (**Sept 30, 2025**) | **Over $1 billion** | | **Leverage** (including **TBA securities** at cost) | **7.5 times shareholders' equity** | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the company's unaudited **consolidated balance sheets** and **comprehensive statements of income (loss)** for the **third quarter of 2025** [Consolidated Balance Sheets (unaudited)](index=2&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) The **consolidated balance sheets** show a significant increase in **total assets** and **shareholders' equity** from **June 30, 2025**, to **September 30, 2025**, driven by growth in **mortgage-backed securities** and additional paid-in capital Consolidated Balance Sheets (unaudited) - Key Figures | Metric | September 30, 2025 ($ in thousands) | June 30, 2025 ($ in thousands) | Change (QoQ) | | :-------------------------------- | :-------------------------------- | :------------------------------- | :-------------------------------- | | **Total assets** | **$14,158,694** | **$11,311,265** | **+$2,847,429** | | **Mortgage-backed securities** | **$13,230,145** | **$10,510,006** | **+$2,720,139** | | **Total liabilities** | **$12,201,146** | **$9,701,272** | **+$2,499,874** | | **Repurchase agreements** | **$11,753,522** | **$8,600,143** | **+$3,153,379** | | **Total shareholders' equity** | **$1,957,548** | **$1,609,993** | **+$347,555** | | **Book value per common share** | **$12.67** | **$11.95** | **+$0.72** | | **Common shares outstanding** | **145,714,136** | **125,358,375** | **+20,355,761** | [Consolidated Comprehensive Statements of Income (Loss) (unaudited)](index=3&type=section&id=Consolidated%20Comprehensive%20Statements%20of%20Income%20(Loss)%20(unaudited)) The company reported a significant turnaround in **Q3 2025**, moving from a **net loss** in **Q2 2025** to substantial **net income** and **comprehensive income**, driven by increased **net interest income** and a large **unrealized gain on investments** Consolidated Comprehensive Statements of Income (Loss) - Key Figures | Metric | Three Months Ended Sep 30, 2025 ($ in thousands) | Three Months Ended Jun 30, 2025 ($ in thousands) | Change (QoQ) | | :-------------------------------- | :-------------------------------- | :------------------------------- | :-------------------------------- | | **Interest income** | **$149,679** | **$111,746** | **+$37,933** | | **Net interest income** | **$30,611** | **$23,128** | **+$7,483** | | **Unrealized gain on investments, net** | **$142,469** | **$33,652** | **+$108,817** | | **Loss on derivatives, net** | **$(10,694)** | **$(58,093)** | **+$47,399** | | **Net income (loss)** | **$150,388** | **$(13,606)** | **+$163,994** | | **Net income (loss) to common shareholders** | **$147,561** | **$(16,286)** | **+$163,847** | | **Comprehensive income (loss) to common shareholders** | **$162,527** | **$(12,222)** | **+$174,749** | | **Net income (loss) per common share-basic** | **$1.09** | **$(0.14)** | **+$1.23** | | **Dividends declared per common share** | **$0.51** | **$0.51** | **$0.00** | [Summary of Third Quarter 2025 Results](index=4&type=section&id=Summary%20of%20Third%20Quarter%202025%20Results) This section details the changes in the company's financial position, including **book value**, **net interest income**, and **common equity rollforward** for **Q3 2025** [Financial Position Changes](index=4&type=section&id=Financial%20Position%20Changes) The company's **book value** increased due to asset appreciation from declining **Treasury rates** and tightening **mortgage spreads**. **Net interest income** and **spread** improved from higher-yielding investments, with further financing rate improvements expected from the **Federal Funds rate** cut - **Book value** increased by **$0.72 per common share**, primarily due to asset appreciation from a decline in the **10-year U.S. Treasury rate** and tightening **mortgage spreads**[9](index=9&type=chunk) - **Net interest income** and **net interest spread** improved due to higher yielding investments, with financing costs remaining steady[9](index=9&type=chunk) - Management anticipates continued improvement in the financing rate in **Q4 2025** following a **25 basis point** reduction in the **Federal Funds rate** in **September 2025**[9](index=9&type=chunk) Common Equity Rollforward (Q3 2025) | Component | Amount ($ in thousands) | | :-------------------------------- | :---------------------- | | **Balance as of June 30, 2025** | **$1,498,493** | | **Comprehensive income to common shareholders** | **$162,527** | | **Net proceeds from stock issuance** | **$256,347** | | **Common dividends declared** | **$(71,319)** | | **Balance as of September 30, 2025** | **$1,846,048** | [Investment Portfolio and Financing](index=5&type=section&id=Investment%20Portfolio%20and%20Financing) This section provides an overview of the company's **MBS investments**, **repurchase agreement borrowings**, and the performance of these financial instruments [MBS Investments](index=5&type=section&id=MBS%20Investments) The company's **MBS investment portfolio**, including **Agency RMBS**, **TBA securities**, **Agency CMBS**, and **CMBS IO**, saw an increase in **total fair value** and a significant reduction in overall **unrealized losses** from **Q2** to **Q3 2025** MBS Investments Overview | Investment Type | Sep 30, 2025 Fair Value ($ in thousands) | Jun 30, 2025 Fair Value ($ in thousands) | Sep 30, 2025 Unrealized Gain (Loss) ($ in thousands) | Jun 30, 2025 Unrealized Gain (Loss) ($ in thousands) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | **Total Agency RMBS** | **$14,726,494** | **$13,619,653** | **$(77,401)** | **$(203,472)** | | **Agency CMBS** | **$933,839** | **$472,426** | **$4,566** | **$1,544** | | **CMBS IO** | **$93,112** | **$100,746** | **$(1,115)** | **$(924)** | | **Total** | **$15,753,445** | **$14,192,825** | **$(73,950)** | **$(202,852)** | - **Total Agency RMBS unrealized loss** decreased significantly from **$(203,472) thousand** in **Q2 2025** to **$(77,401) thousand** in **Q3 2025**[12](index=12&type=chunk) - **Agency CMBS fair value** increased from **$472,426 thousand** to **$933,839 thousand**, with an increase in **unrealized gain**[12](index=12&type=chunk) [Repurchase Agreement Borrowings](index=5&type=section&id=Repurchase%20Agreement%20Borrowings) **Repurchase agreement borrowings** increased substantially from **Q2** to **Q3 2025**, with a slight decrease in the **weighted average interest rate** and an extension of the **weighted original term to maturity** Repurchase Agreement Borrowings Outstanding | Metric | September 30, 2025 ($ in thousands) | June 30, 2025 ($ in thousands) | | :-------------------------------- | :-------------------------------- | :------------------------------- | | **Total Balance** | **$11,753,522** | **$8,600,143** | | **Weighted Average Rate** | **4.44%** | **4.47%** | | **Weighted Original Term to Maturity (days)** | **100** | **88** | - **Total repurchase agreement borrowings** increased by **over $3.1 billion** quarter-over-quarter[14](index=14&type=chunk) - The **weighted average rate** for **repurchase agreements** slightly decreased from **4.47%** to **4.44%**[14](index=14&type=chunk) [Performance of MBS, Repurchase Agreements, and Swaps](index=6&type=section&id=Performance%20of%20MBS,%20Repurchase%20Agreements,%20and%20Swaps) The company experienced improved performance in **Q3 2025**, with increased **total interest income**, **net interest income**, and **economic net interest spread**, despite higher **interest expense** from **repurchase agreements** Performance Metrics (QoQ) | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Jun 30, 2025 | Change (QoQ) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | **Total interest income** | **$149,679** | **$111,746** | **+$37,933** | | **Repurchase agreement financing (interest expense)** | **$(119,068)** | **$(88,618)** | **$(30,450)** | | **Net interest income** | **$30,611** | **$23,128** | **+$7,483** | | **Net interest spread** | **0.46%** | **0.33%** | **+0.13%** | | **Net periodic interest from interest rate swaps** | **$14,265** | **$12,349** | **+$1,916** | | **Economic net interest income** | **$44,876** | **$35,477** | **+$9,399** | | **Economic net interest spread** | **1.00%** | **0.96%** | **+0.04%** | - **Net interest income** increased by **$7.483 million**, and **net interest spread** improved by **0.13%** quarter-over-quarter[15](index=15&type=chunk) - **Economic net interest income** increased by **$9.399 million**, and **economic net interest spread** improved by **0.04%** quarter-over-quarter[15](index=15&type=chunk) [Hedging Portfolio](index=6&type=section&id=Hedging%20Portfolio) This section details the company's **interest rate hedging portfolio**, including derivatives, and projected **tax hedge gains** [Interest Rate Hedging Portfolio Details](index=7&type=section&id=Interest%20Rate%20Hedging%20Portfolio%20Details) The company adjusted its **hedging portfolio** in **Q3 2025**, reducing short positions in **U.S. Treasury futures** while increasing short positions in **interest rate swaps** and introducing new **options on U.S. Treasury futures** Interest Rate Hedging Portfolio (Notional Amounts) | Derivative Type | Sep 30, 2025 Notional Amount Long (Short) ($ in thousands) | Jun 30, 2025 Notional Amount Long (Short) ($ in thousands) | | :-------------------------- | :------------------------------------------------------- | :------------------------------------------------------- | | **Total U.S. Treasury futures** | **$(2,173,500)** | **$(2,475,000)** | | **Total interest rate swaps** | **$(7,860,000)** | **$(7,160,000)** | | **1-2 year interest rate swaption** | **$750,000** | **$500,000** | | **3-month options on U.S. Treasury futures** | **$1,000,000** | **$0** | - The company reduced its short position in **U.S. Treasury futures** by **$301.5 million** but increased its short position in **interest rate swaps** by **$700 million** quarter-over-quarter[20](index=20&type=chunk) - New positions in **3-month options on U.S. Treasury futures** with a **notional amount** of **$1 billion** were added in **Q3 2025**[20](index=20&type=chunk) [Gain (Loss) on Derivatives, Net](index=7&type=section&id=Gain%20(Loss)%20on%20Derivatives,%20Net) The company significantly reduced its **net loss on derivatives** in **Q3 2025** compared to **Q2 2025**, primarily due to a substantial decrease in **unrealized losses**, despite a shift from **realized gains** to **losses** Gain (Loss) on Derivatives, Net (QoQ) | Component | Three Months Ended Sep 30, 2025 ($ in thousands) | Three Months Ended Jun 30, 2025 ($ in thousands) | Change (QoQ) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | **Unrealized gain (loss)** | **$(19,474)** | **$(107,698)** | **+$88,224** | | **Realized gain (loss)** | **$(5,485)** | **$37,256** | **$(42,741)** | | **Net periodic interest (swaps)** | **$14,265** | **$12,349** | **+$1,916** | | **Loss on derivatives, net** | **$(10,694)** | **$(58,093)** | **+$47,399** | - **Unrealized losses on derivatives** decreased significantly from **$(107,698) thousand** in **Q2 2025** to **$(19,474) thousand** in **Q3 2025**[20](index=20&type=chunk) [Projected Period of Recognition for Tax Hedge Gains, Net](index=9&type=section&id=Projected%20Period%20of%20Recognition%20for%20Tax%20Hedge%20Gains,%20Net) The company projects a total of **$687.5 million** in **net deferred tax hedge gains** to be recognized as **taxable income** over future **fiscal years**, with the largest portion expected in **2028 and thereafter** Projected Tax Hedge Gains, Net | Fiscal Year | Amount ($ in thousands) | | :------------------------ | :---------------------- | | **2025** | **$99,310** | | **2026** | **$97,916** | | **2027** | **$93,327** | | **2028 and thereafter** | **$396,988** | | **Total** | **$687,541** | - **Total projected net deferred tax hedge gains** as of **September 30, 2025**, amount to **$687,541 thousand**[22](index=22&type=chunk) [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) This section explains management's use of **non-GAAP financial measures** and provides reconciliations to **GAAP** figures for **comprehensive income** and **net interest income** [Management's Perspective on Non-GAAP Measures](index=9&type=section&id=Management's%20Perspective%20on%20Non-GAAP%20Measures) Management utilizes **non-GAAP financial measures**, such as **Earnings Available for Distribution (EAD)** and **economic net interest income**, to assess the investment portfolio's return and total financing costs, including **TBA drop income** and **net periodic interest from interest rate swaps** - Management uses **non-GAAP measures** like **EAD** and **economic net interest income** to evaluate the investment portfolio's return and total financing costs[23](index=23&type=chunk) - **TBA dollar roll positions' drop income/loss** is included in **EAD** as it's considered the economic equivalent of **net interest income** on the underlying **Agency security**[24](index=24&type=chunk) - **Net periodic interest from interest rate swaps** is included in **non-GAAP measures** to reflect the total financing cost, as swaps hedge borrowing costs[25](index=25&type=chunk) [Reconciliations of Non-GAAP Measures](index=10&type=section&id=Reconciliations%20of%20Non-GAAP%20Measures) The company provides detailed reconciliations showing the adjustments from **GAAP comprehensive income** to **EAD**, and from **GAAP net interest income** to **economic net interest income** and **EAD**, highlighting the impact of **fair value changes** and **derivative instruments** Reconciliation of Comprehensive Income (Loss) to EAD | Metric | Three Months Ended Sep 30, 2025 ($ in thousands) | Three Months Ended Jun 30, 2025 ($ in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | **Comprehensive income (loss) to common shareholders (GAAP)** | **$162,527** | **$(12,222)** | | Less: **Change in fair value of investments, net** | **$(157,435)** | **$(37,716)** | | Less: **Change in fair value of derivative instruments, net** | **$28,507** | **$75,200** | | **EAD to common shareholders (non-GAAP)** | **$33,599** | **$25,262** | | **EAD per common share (non-GAAP)** | **$0.25** | **$0.22** | Reconciliation of Net Interest Income to Economic Net Interest Income and EAD | Metric | Three Months Ended Sep 30, 2025 ($ in thousands) | Three Months Ended Jun 30, 2025 ($ in thousands) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | **Net interest income (GAAP)** | **$30,611** | **$23,128** | | **Net periodic interest from interest rate swaps** | **$14,265** | **$12,349** | | **Economic net interest income** | **$44,876** | **$35,477** | | **TBA drop income** | **$3,548** | **$4,758** | | **Operating expenses** | **$(11,998)** | **$(12,293)** | | **Preferred stock dividends** | **$(2,827)** | **$(2,680)** | | **EAD to common shareholders (non-GAAP)** | **$33,599** | **$25,262** | | **Net interest spread (GAAP)** | **0.46%** | **0.33%** | | **Net periodic interest as a percentage of average repurchase borrowings** | **0.54%** | **0.63%** | | **Economic net interest spread (non-GAAP)** | **1.00%** | **0.96%** | [Forward Looking Statements](index=10&type=section&id=Forward%20Looking%20Statements) This section provides a cautionary disclaimer regarding **forward-looking statements**, highlighting inherent risks and the company's policy on updates [Forward Looking Statements Disclaimer](index=10&type=section&id=Forward%20Looking%20Statements%20Disclaimer) This section serves as a cautionary statement, indicating that the release contains **forward-looking statements** subject to various risks and uncertainties that could cause actual results to differ materially from projections. It also states that the company does not undertake to update these statements - The release contains **forward-looking statements**, identified by words like '**believe**,' '**expect**,' and '**anticipate**,' which are subject to **inherent risks and uncertainties**[30](index=30&type=chunk) - Actual results could differ materially due to factors including **economic conditions**, **geopolitical events**, **changes in interest rates**, **Federal Reserve policies**, **financing availability**, and **regulatory changes**[31](index=31&type=chunk) - The company undertakes no obligation to **update or revise** any **forward-looking statements**, except as required by law[32](index=32&type=chunk) [Company Description](index=11&type=section&id=Company%20Description) This section describes **Dynex Capital, Inc.** as an **internally managed REIT** focused on generating **shareholder returns** through **real estate asset financing** [Dynex Capital Overview](index=11&type=section&id=Dynex%20Capital%20Overview) **Dynex Capital, Inc.** is an **internally managed real estate investment trust (REIT)** that generates **dividend income** and long-term **total returns** by **financing real estate assets**, focusing on **ethical stewardship**, **expert risk management**, and **disciplined capital allocation** - **Dynex Capital** delivers value by transforming **residential real estate** into long-term yields for **shareholders**, operating as an **internally managed REIT**[33](index=33&type=chunk) - The company is committed to **ethical stewardship**, **expert risk management**, **disciplined capital allocation**, and **social responsibility**[33](index=33&type=chunk) - It supports **housing communities in the United States** through the **financing of real estate assets**[33](index=33&type=chunk)

Group 1 - Dynex Capital is a real estate investment trust (REIT) that specializes in residential mortgage-backed securities (MBS) [1] - The company currently pays a monthly distribution of 17 cents per share, which highlights its attractive yield for investors seeking high income [1] - Dynex Capital has shown rising price performance, earning an upgrade to its IBD Relative Strength Rating [3] Group 2 - Dynex Capital has improved its Relative Strength (RS) Rating to 88, indicating strong market leadership [3] - The company meets the benchmark of an 80-plus Relative Strength Rating, showcasing its technical strength in the market [3] - Dynex Capital is recognized for generating improved relative strength, reflecting its positive performance trends [3]

Group 1 - The document does not contain any relevant information regarding company or industry insights [1]