Dynex Capital(DX) - 2025 Q2 - Quarterly Results

Dynex Capital, Inc. Second Quarter 2025 Results Financial Performance and Highlights Dynex Capital reported a total economic loss of $(0.10) per common share, with book value at $11.95, and raised $282 million in equity capital Q2 2025 Key Metrics | Metric | Value | | :--- | :--- | | Total Economic Loss per Common Share | $(0.10) | | Book Value per Common Share (as of June 30, 2025) | $11.95 | | Comprehensive Loss per Common Share | $(0.11) | | Net Loss per Common Share | $(0.14) | | Dividends Declared per Common Share | $0.51 | | Net Equity Capital Raised (ATM) | $282 million | | Agency RMBS Purchased | $1.9 billion | | Agency CMBS Purchased | $364 million | | Leverage (including TBA) | 8.3x | - Management emphasized a strategy of raising and deploying capital into compelling mortgage-backed securities, focusing on highly liquid and transparent investments to ensure stability and effective risk management[3] Financial Statements Financial statements show total assets grew to $11.3 billion, funded by increased repurchase agreements, with a net loss of $(13.6) million Consolidated Balance Sheets Total assets reached $11.3 billion, funded by $8.6 billion in repurchase agreements, with book value per share at $11.95 Balance Sheet Summary (in thousands) | Account | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :--- | :--- | :--- | | Total Assets | $11,311,265 | $9,044,836 | | Mortgage-backed securities | $10,510,006 | $8,399,925 | | Total Liabilities | $9,701,272 | $7,648,921 | | Repurchase agreements | $8,600,143 | $7,234,723 | | Total Shareholders' Equity | $1,609,993 | $1,395,915 | | Book value per common share | $11.95 | $12.56 | Consolidated Comprehensive Statements of Income (Loss) The company reported a net loss of $(13.6) million and a comprehensive loss of $(12.2) million to common shareholders for Q2 2025 Income Statement Summary (Three Months Ended, in thousands) | Account | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :--- | :--- | :--- | | Net Interest Income | $23,128 | $17,133 | | Total Other Losses, Net | $(24,441) | $(8,091) | | Net Loss | $(13,606) | $(3,076) | | Net Loss to Common Shareholders | $(16,286) | $(4,999) | | Comprehensive (Loss) Income to Common Shareholders | $(12,222) | $14,391 | | Net Loss per Common Share | $(0.14) | $(0.06) | Common Equity Rollforward Common equity increased to $1.50 billion, primarily driven by $285.6 million in stock issuance proceeds, offsetting losses and dividends - The primary driver of the increase in common equity during Q2 2025 was capital raising activities, with net proceeds from stock issuance totaling approximately $285.6 million[9][10] - The comprehensive loss to common shareholders of $(12.2) million and common dividends of $(59.3) million were the main detractors from common equity during the quarter[9] Investment Portfolio and Financing Investment portfolio expanded to $14.2 billion, financed by $8.6 billion in repurchase agreements, with net interest spread improving to 0.33% Investment Portfolio Total investment portfolio fair value grew to $14.2 billion, primarily driven by an increase in Agency RMBS to $13.6 billion Investment Portfolio Fair Value (in thousands) | Investment Type | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :--- | :--- | :--- | | Total Agency RMBS | $13,619,653 | $10,916,133 | | Agency CMBS | $472,426 | $106,429 | | Total Investments | $14,192,825 | $11,130,226 | Repurchase Agreement Financing Repurchase agreement borrowings increased to $8.6 billion, with a stable weighted average interest rate of 4.47% Repurchase Agreement Summary | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :--- | :--- | :--- | | Balance | $8,600,143 | $7,234,723 | | Weighted Average Rate | 4.47% | 4.46% | | WAVG Original Term | 88 Days | 83 Days | Portfolio Performance Effective yield on assets was 4.79%, leading to a net interest spread of 0.33%, and economic net interest income of $35.5 million Quarterly Performance Metrics | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Average Earning Assets (in thousands) | $8,959,507 | $7,927,223 | | Effective Yield on Assets (%) | 4.79% | 4.71% | | Cost of Repo Financing (%) | (4.45)% | (4.56)% | | Net Interest Spread (%) | 0.33% | 0.15% | | Economic Net Interest Income (in thousands) | $35,477 | $27,984 | | Economic Net Interest Spread (%) | 0.96% | 0.79% | Hedging Portfolio Hedging portfolio expanded with $2.48 billion in Treasury futures and $7.16 billion in interest rate swaps, resulting in a $(58.1) million net loss on derivatives Hedging Instruments Notional Amounts (in thousands) | Derivative Type | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :--- | :--- | :--- | | U.S. Treasury futures (Short) | $(2,475,000) | $(1,561,500) | | Interest rate swaps (Short) | $(7,160,000) | $(6,335,000) | | Interest rate swaption | $500,000 | $500,000 | - The net loss on derivatives for Q2 2025 was $(58.1) million, primarily due to $(84.6) million in unrealized losses on interest rate swaps and $(52.0) million on U.S. Treasury futures[16] - As of June 30, 2025, the company projects it will recognize approximately $719 million in net deferred tax hedge gains as taxable income in fiscal year 2025 and beyond[17][18] Non-GAAP Financial Measures Non-GAAP measures like EAD show $25.3 million for common shareholders, or $0.22 per share, reconciled from a GAAP comprehensive loss - Management believes non-GAAP measures like EAD are useful for investors as they measure the investment portfolio's return based on effective yield, net of financing costs and recurring operating expenses[19] EAD Reconciliation and Per Share Data (in thousands, except per share) | Metric | Q2 2025 (in thousands, except per share) | Q1 2025 (in thousands, except per share) | | :--- | :--- | :--- | | Comprehensive (Loss) Income (GAAP) | $(12,222) | $14,391 | | EAD to Common Shareholders (non-GAAP) | $25,262 | $18,728 | | EAD per Common Share (non-GAAP) | $0.22 | $0.21 | Net Interest Spread Reconciliation | Metric | Q2 2025 (%) | Q1 2025 (%) | | :--- | :--- | :--- | | Net Interest Spread (GAAP) | 0.33% | 0.15% | | Economic Net Interest Spread (non-GAAP) | 0.96% | 0.79% | Forward Looking Statements Forward-looking statements caution that actual results may differ due to risks including interest rate changes, economic conditions, and Federal Reserve policy - The report includes a disclaimer that forward-looking statements are subject to risks and uncertainties, and actual results could differ materially[26] - Key risk factors cited include changes in interest rates and credit spreads, Federal Reserve monetary policy, availability of financing, and geopolitical events[26][27] Company Description Dynex Capital is an internally managed REIT investing in mortgage-backed securities to generate dividend income and long-term shareholder returns - Dynex Capital is an internally managed REIT focused on financing real estate assets to provide shareholders with attractive risk-adjusted returns[29]