Dynex Capital delivered a resilient quarter with a modest decline in book value amid a volatile macro environment, leveraging strategic portfolio management and capital deployment to position for potential spread tightening.

• Book value declined 2.5% to $12.60 per share, mainly due to mark-to-market impacts, while net interest income increased to $0.40 per share driven by lower financing costs.
• The company grew its capital base by 18% this quarter, deploying $442 million into assets amidst widened MBS spreads, with liquidity remaining robust at $1.3 billion.
• Portfolio positioning capitalized on technical opportunities created by spread volatility, with a view to long-term spread compression supported by favorable policy and supply-demand dynamics.
• Leverage remained elevated at 8.6x, emphasizing a focus on scaling while maintaining disciplined expense management aimed at flat or lower full-year costs.
• Market environment remains supportive, with GSE buying activity and regulatory developments poised to underpin tighter mortgage spreads and enhanced investment opportunities.