• Economic Return: 7% for the quarter.

• Dividend Increase: 15% increase from $0.13 to $0.15 per share.

• Book Value: Ended the quarter at $13 per share.

• Leverage: Slightly down from the second quarter.

• Capital Raised: $56 million of new capital.

• Interest Income: Increased due to higher-yielding assets.

• Borrowing Rates: Trending down following the Fed's interest rate cut.

• Expenses: Increased due to performance-based compensation.

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Release Date: October 21, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dynex Capital Inc (NYSE:DX) reported a 7% economic return for the quarter, showcasing strong performance in a challenging market environment.

• The company announced a 15% increase in its common dividend, reflecting confidence in its ability to deliver shareholder value.

• Dynex Capital Inc (NYSE:DX) is strategically positioned to capitalize on favorable market conditions, with declining funding costs and a steeper yield curve.

• The company has a disciplined investment process, leveraging deep expertise in managing mortgage-backed securities and adapting to market changes.

• Dynex Capital Inc (NYSE:DX) raised $56 million in new capital, maintaining ample liquidity to take advantage of market opportunities.

Negative Points

• Mark-to-market book value decreased by about 1% at the quarter's end, indicating some pressure on asset valuations.

• The company faces near-term event risks, including potential market volatility from the US elections and geopolitical developments.

• There is ongoing volatility in the repo market, which could impact financing costs and liquidity management.

• Prepayment speeds in higher coupon mortgages could affect leverage and hedging strategies, requiring careful management.

• The company must navigate potential challenges from the Federal Reserve's quantitative tightening and regulatory capital constraints affecting repo rates.

Q & A Highlights

Q: Can I get an update on mark-to-market book value? A: Smriti Popenoe, President and Co-Chief Investment Officer, stated that the mark-to-market book value is down about 1% this quarter end.

Q: What factors are you focused on for potentially increasing leverage? A: Smriti Popenoe explained that the primary considerations include near-term event risks such as the election season and market volatility. Economic considerations like marginal ROE and spread levels are also important.