Dynex Capital(DX) - 2025 Q1 - Quarterly Report

Financial Performance - Total economic return for Q1 2025 was $0.33 per common share, representing 2.6$(4,999), a decrease from $49,163 in the previous quarter[129] - The company reported a total net gain of$11.299 million for the three months ended March 31, 2025, after accounting for realized and unrealized gains and losses[145] - The company’s comprehensive income to common shareholders was $14,391,000 for the three months ended March 31, 2025, compared to$12,562,000 in the previous quarter[129] - Economic net interest income for the three months ended March 31, 2025, was $27.984 million, compared to$18.813 million for the three months ended December 31, 2024[155] Investment Portfolio - The investment portfolio increased approximately 13% from December 31, 2024, with 74% in Agency RMBS, 24% in TBA securities, and 2% in Agency CMBS and CMBS IO[117] - Agency RMBS purchases during Q1 2025 amounted to approximately $895.1 million, with$325.4 million pending settlement as of March 31, 2025[117] - The fair value of the investment portfolio increased by $171.6 million during the three months ended March 31, 2025, primarily due to a decline of 36 basis points in the 10-year U.S. Treasury rate[141] - The unrealized gain on investments for the three months ended March 31, 2025, was$109,997, compared to a loss of $223,225 in the previous quarter[129] - The company experienced a realized gain of$17.3 million and an unrealized gain of $134.8 million in its investment portfolio for the three months ended March 31, 2025[145] Income and Expenses - Net interest income increased by$17.1 million due to newer investments in MBS with more attractive yields, while financing costs continued to decline[111] - The total interest income for the three months ended March 31, 2025, was $95,059, an increase from$88,496 in the previous quarter[131] - Operating expenses for the three months ended March 31, 2025, increased by $2.9 million compared to the previous quarter, driven by higher bonus accruals and stock-based compensation[148] - Total operating expenses for Q1 2025 were$12.1 million, compared to $9.2 million in Q4 2024[155] - The company reported net losses on its hedging portfolio of$(171.1) million during the same period, largely due to declines in U.S. Treasury rates and SOFR rates[142] Capital and Liquidity - Capital raised through the ATM program totaled $239.7 million in Q1 2025, with an additional$38.7 million raised by April 24, 2025[115] - As of March 31, 2025, the company's liquidity was $789.9 million, consisting of$327.4 million in unrestricted cash, $450.3 million in unencumbered Agency MBS, and$12.2 million in noncash collateral pledged by counterparties, an increase from $658.3 million as of December 31, 2024[161] - The company issued 17,604,999 shares of common stock through its ATM program, resulting in proceeds of$239.7 million, which were partially deployed into Agency RMBS and margin requirements for a larger hedge portfolio[160] - The company's leverage was 7.4 times shareholders' equity as of March 31, 2025, with repurchase agreement leverage at 5.2 times shareholders' equity[163][164] - The balance outstanding for repurchase agreements as of March 31, 2025, was $7,234.7 million, an increase from$6,563.1 million as of December 31, 2024[166] Market Conditions and Risks - The company expects continued volatility in the market and is focused on maintaining a portfolio of high-quality liquid securities[113] - The company is actively monitoring prepayment risk and the evolving structure of GSEs in response to policy changes[114] - The company anticipates potential impacts from geopolitical events, including the wars between Russia and Ukraine and Israel and Hamas, on macroeconomic conditions[186] - Future competition for investments and financing is a concern, along with the availability and cost of financing[186] - The company is subject to risks related to changes in interest rates and credit spreads, which may affect its investment portfolio performance[189] Tax and Dividend Policy - The company is required to distribute at least 90% of its REIT taxable income to shareholders for each taxable year[173] - Dividend distributions are generally funded through portfolio cash flows, with excess distributions funded from existing cash balances or return of principal from investments[176] - The projected amortization of the company's net deferred tax hedge gains to be recognized as taxable income totals $719.0 million, with$100.1 million expected in fiscal year 2025[175] - The company had $566.3 million in capital loss carryforwards as of March 31, 2025, the majority of which will expire by December 31, 2028[175] Miscellaneous - The company utilizes various channels for material information dissemination, including SEC filings and public conference calls[190] - Forward-looking statements include expectations regarding future operating results, capital management, and dividend policy[185]