Dynex Capital Q2: ~$3M Net Interest Expense, Unprecedented Global Environment & More

Dynex Capital Inc DX reported Q2 earnings available for distribution (EAD) of $(0.27) compared to the consensus of $0.03.

Sales stood at $(2.93) million vs. the street estimate of $6.39 million.

The company reported an economic return of $0.79 per common share.

As of June 30, 2023, book value per common share stood at $14.20 (vs $13.80 as of March 31, 2023).

The company benefited from increased interest rates, which led to a gain of $170.0 million from its interest rate hedges, primarily its 5-year U.S. Treasury futures, which negated the impact of higher interest rates on its investment portfolio. 

As of June 30, 2023, DX held short positions of $4.0 billion notional in 10-year U.S.

In Q2, the company bought $2.2 billion of higher coupon Agency residential mortgage-backed securities (RMBS).

DX's average balance of interest-earning assets rose 20% Q/Q, while the average balance of to-be-announced (TBA) securities fell 28% Q/Q.

As of June 30, 2023, the company had liquidity in excess of $561.5 million in cash and unencumbered assets.

Dividend: DX declared a dividend per share of $0.39 for Q2 2023. 

“In today's financial markets, knowing and trusting who is managing your money is critically important. We manage our business for the long term, and we are leaning into our experience and discipline to guide Dynex Capital through an unprecedented global environment. Our strong liquidity position gives us the flexibility to act swiftly on potential opportunities as they arise. We remain diligent in managing our balance sheet, and we are positioned to capitalize on the great return opportunities available in this environment,” said Byron L. Boston, CEO.

Price Action: DX shares are trading higher by 1.19% at $12.73 on the last check Monday.