Dynex Capital, Inc. Announces Fourth Quarter and Full Year 2024 Results
Dynex Capital (DX) reported its Q4 and full-year 2024 results, achieving a total economic return of 1.0% for Q4 and 7.4% for the full year. The company posted a book value per share of $12.70 as of December 31, 2024, with comprehensive income of $0.15 per share and net income of $0.61 per share for Q4.
Key financial highlights include $64.4 million raised through ATM stock issuances in Q4, bringing the total capital raised in 2024 to $332.0 million. The company declared dividends of $0.43 per share for Q4 and $1.60 for the full year. Total shareholder return reached 13.7% in 2024 and 27.4% over two years.
The company increased its monthly dividend from $0.13 to $0.15 per share starting November 2024, supported by expected recognition of deferred tax hedge gains of $99.9 million. Interest income continued to rise due to higher coupon investments, while recent Federal Reserve rate cuts benefited comprehensive income by lowering repurchase agreement borrowing costs.
Dynex Capital (DX) ha riportato i risultati del Q4 e dell'intero anno 2024, realizzando un ritorno economico totale dell'1,0% per il Q4 e del 7,4% per l'intero anno. L'azienda ha riportato un valore contabile per azione di $12,70 al 31 dicembre 2024, con un reddito complessivo di $0,15 per azione e un reddito netto di $0,61 per azione per il Q4.
I principali punti finanziari includono $64,4 milioni raccolti attraverso emissioni di azioni ATM nel Q4, portando il totale dei capitali raccolti nel 2024 a $332,0 milioni. L'azienda ha dichiarato dividendi di $0,43 per azione per il Q4 e di $1,60 per l'intero anno. Il ritorno totale per gli azionisti ha raggiunto il 13,7% nel 2024 e il 27,4% in due anni.
L'azienda ha aumentato il proprio dividendo mensile da $0,13 a $0,15 per azione a partire da novembre 2024, sostenuto dal riconoscimento atteso dei guadagni da copertura fiscale differita di $99,9 milioni. Il reddito da interessi ha continuato a crescere grazie a investimenti con cedole più elevate, mentre i recenti tagli ai tassi da parte della Federal Reserve hanno avvantaggiato il reddito complessivo abbassando i costi di prestito degli accordi di riacquisto.
Dynex Capital (DX) reportó sus resultados del Q4 y del año completo 2024, logrando un retorno económico total del 1,0% para el Q4 y del 7,4% para el año completo. La compañía reportó un valor contable por acción de $12,70 a 31 de diciembre de 2024, con un ingreso integral de $0,15 por acción y un ingreso neto de $0,61 por acción para el Q4.
Los principales aspectos financieros incluyen $64,4 millones recaudados a través de emisiones de acciones ATM en el Q4, llevando el capital total recaudado en 2024 a $332,0 millones. La compañía declaró dividendos de $0,43 por acción para el Q4 y de $1,60 para el año completo. El retorno total para los accionistas alcanzó el 13,7% en 2024 y el 27,4% en dos años.
La compañía incrementó su dividendo mensual de $0,13 a $0,15 por acción a partir de noviembre de 2024, apoyado por el reconocimiento esperado de ganancias de cobertura fiscal diferida de $99,9 millones. Los ingresos por intereses continuaron aumentando debido a inversiones con cupones más altos, mientras que los recientes recortes de tasas de la Reserva Federal beneficiaron el ingreso integral al reducir los costos de préstamo de acuerdos de recompra.
다이넥스 캐피탈 (DX)이 2024년 4분기 및 전체 연도 결과를 보고하며, 4분기 동안 1.0%, 전체 연도 동안 7.4%의 총 경제 수익을 달성했습니다. 회사는 2024년 12월 31일 기준으로 주당 장부가치 $12.70를 기록했으며, 4분기 동안 주당 포괄손익 $0.15 및 주당 순이익 $0.61을 보고했습니다.
주요 재무 하이라이트에는 4분기 동안 ATM 주식 발행을 통해 모집한 $64.4백만이 포함되며, 2024년 전체 자본 모집 총액은 $332.0백만입니다. 회사는 4분기 주당 $0.43, 전체 연도에 대해 $1.60의 배당금을 선언했습니다. 2024년 총 주주 수익률은 13.7%에 도달했으며, 2년 동안 27.4%를 기록했습니다.
회사는 2024년 11월부터 주당 배당금을 $0.13에서 $0.15로 인상했으며, 이는 $99.9백만의 이연 세금 헤지 이익의 인정을 뒷받침하고 있습니다. 이자 수익은 높은 이표 투자로 인해 계속 증가했으며, 최근 연방준비제도(Federal Reserve)의 금리 인하는 매입 계약 대출 비용을 낮춰 포괄손익에 긍정적인 영향을 미쳤습니다.
Dynex Capital (DX) a publié ses résultats pour le Q4 et l'année complète 2024, atteignant un rendement économique total de 1,0 % pour le Q4 et de 7,4 % pour l'année complète. L'entreprise a rapporté un valeur comptable par action de 12,70 $ au 31 décembre 2024, avec un revenu global de 0,15 $ par action et un revenu net de 0,61 $ par action pour le Q4.
Les faits financiers clés incluent 64,4 millions de dollars levés par le biais d'émissions d'actions ATM au Q4, ce qui porte le capital total levé en 2024 à 332,0 millions de dollars. L'entreprise a déclaré des dividendes de 0,43 $ par action pour le Q4 et de 1,60 $ pour l'année entière. Le rendement total pour les actionnaires a atteint 13,7 % en 2024 et 27,4 % en deux ans.
L'entreprise a augmenté son dividende mensuel de 0,13 $ à 0,15 $ par action à partir de novembre 2024, soutenu par la reconnaissance attendue des gains de couverture fiscale différée de 99,9 millions de dollars. Les revenus d'intérêts ont continué à augmenter grâce à des investissements à coupon plus élevé, tandis que les récentes baisses de taux de la Réserve fédérale ont bénéficié au revenu global en réduisant les coûts d'emprunt des accords de rachat.
Dynex Capital (DX) hat seine Q4- und Gesamtjahresergebnisse für 2024 bekannt gegeben und dabei eine Gesamtwirtschaftsrendite von 1,0 % für das Q4 und 7,4 % für das gesamte Jahr erzielt. Das Unternehmen meldete einen Buchwert pro Aktie von $12,70 zum 31. Dezember 2024, mit einem Gesamtergebnis von $0,15 pro Aktie und einem Nettoeinkommen von $0,61 pro Aktie für das Q4.
Wichtige finanzielle Höhepunkte umfassen $64,4 Millionen, die durch ATM-Aktienemissionen im Q4 gesammelt wurden, was das Gesamtkapital 2024 auf $332,0 Millionen bringt. Das Unternehmen erklärte Dividenden von $0,43 pro Aktie für das Q4 und $1,60 für das gesamte Jahr. Die Gesamtrendite für die Aktionäre erreichte 2024 13,7 % und über zwei Jahre 27,4 %.
Das Unternehmen erhöhte seine monatliche Dividende von $0,13 auf $0,15 pro Aktie ab November 2024, unterstützt durch die erwartete Anerkennung von aufgeschobenen Steuerabsicherungserträgen in Höhe von $99,9 Millionen. Die Zinseinnahmen stiegen weiterhin aufgrund höherer Kuponanlagen, während die jüngsten Zinssenkungen der Federal Reserve das Gesamteinkommen begünstigten, indem sie die Kosten für Rückkaufvereinbarungen senkten.
- Total shareholder return of 13.7% in 2024 and 27.4% over two years
- Monthly dividend increase from $0.13 to $0.15 per share
- Successful capital raise of $332.0 million in 2024
- 36% increase in average balance of interest-earning assets during 2024
- Strong liquidity position of $658.3 million as of December 31, 2024
- Book value per share declined from $13.31 to $12.70 year-over-year
- Fair value of MBS and TBA investments declined $332.4 million in Q4
- Negative net interest spread of -0.34% in Q4 2024
Insights
A detailed examination of Dynex Capital's Q4 2024 results reveals a carefully executed strategy in a challenging market environment. The company's performance demonstrates strong risk management through several key metrics:
Their investment portfolio shows strategic adaptation, with significant positions in 5.0% and 5.5% coupon RMBS comprising
The company's financial health is evidenced by:
- A substantial liquidity position of
$658.3 million - Strategic capital raising of
$332.0 million through ATM issuances - An estimated
$96 million in REIT taxable income for 2024
Particularly noteworthy is their hedging portfolio's performance, with
Their leverage ratio of 7.9x remains within prudent levels while allowing for opportunistic growth. The declining financing costs and improved net interest spread in Q4 (
Financial Performance Summary
-
Total economic return of
$0.13 1.0% of beginning book value, for the fourth quarter of 2024, and$0.99 7.4% of beginning book value, for the full year 2024
-
Book value per common share of
$12.70
-
Comprehensive income of
$0.15 $0.61 $1.30 $1.50
-
REIT taxable income for 2024 is estimated at
$96 million
-
Dividends declared of
$0.43 $1.60
-
Raised equity capital of
$64.4 million $332.0 million
-
Average balance of interest-earning assets increased
36% during 2024
-
Liquidity of
$658.3 million
- Leverage including to-be-announced ("TBA") securities at cost was 7.9 times shareholders' equity as of December 31, 2024
Executive Promotion
T.J. Connelly has been promoted to Chief Investment Officer, after serving as the Company’s Senior Vice President of Strategy and Research since 2023. Connelly brings more than 25 years of experience in mortgage-backed securities trading, economic research and strategy, which will be instrumental as he oversees and drives the company's investment, financing and hedging portfolios to deliver value for stakeholders. He will report to Smriti Popenoe, Co-CEO and President.
Management Remarks
"Our shareholders have earned a total shareholder return of
"The Dynex team continued to deliver solid results last year while executing on our strategy to build a resilient and sustainable business," said Byron Boston, Chairman and Co-CEO. "The global environment is evolving rapidly and policy changes are likely to have a significant impact on financial markets. Our team remains focused on preparation and flexibility."
“We’re also excited to welcome T.J. to our executive leadership team and are confident that his extensive experience and knowledge of Dynex’s strategy will continue to drive industry-leading returns. T.J. has been instrumental to our growth since he joined Dynex, and I’m looking forward to working closely with him as we continue to manage our portfolio and optimize value for shareholders,” said Smriti Popenoe, Co-CEO and President.
Earnings Conference Call
As previously announced, the Company's conference call to discuss these results is today at 10:00 a.m. Eastern Time and may be accessed via telephone in
Consolidated Balance Sheets |
|
|
|
||||
($s in thousands except per share data) |
December 31, 2024 |
|
December 31, 2023 |
||||
ASSETS |
|
|
audited |
||||
Cash and cash equivalents |
$ |
377,099 |
|
|
$ |
119,639 |
|
Cash collateral posted to counterparties |
|
244,440 |
|
|
|
118,225 |
|
Mortgage-backed securities (including pledged of |
|
7,512,087 |
|
|
|
6,038,948 |
|
Due from counterparties |
|
10,445 |
|
|
|
1,313 |
|
Derivative assets |
|
133 |
|
|
|
54,361 |
|
Accrued interest receivable |
|
32,841 |
|
|
|
28,727 |
|
Other assets, net |
|
7,534 |
|
|
|
8,537 |
|
Total assets |
$ |
8,184,579 |
|
|
$ |
6,369,750 |
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
Liabilities: |
|
|
|
||||
Repurchase agreements |
$ |
6,563,120 |
|
|
$ |
5,381,104 |
|
Due to counterparties |
|
341,924 |
|
|
|
95 |
|
Derivative liabilities |
|
22,814 |
|
|
|
— |
|
Cash collateral posted by counterparties |
|
— |
|
|
|
46,001 |
|
Accrued interest payable |
|
44,672 |
|
|
|
53,194 |
|
Accrued dividends payable |
|
16,501 |
|
|
|
10,320 |
|
Other liabilities |
|
10,612 |
|
|
|
8,301 |
|
Total liabilities |
|
6,999,643 |
|
|
|
5,499,015 |
|
|
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Preferred stock |
$ |
107,843 |
|
|
|
107,843 |
|
Common stock |
|
845 |
|
|
|
570 |
|
Additional paid-in capital |
|
1,742,471 |
|
|
|
1,404,431 |
|
Accumulated other comprehensive loss |
|
(172,489 |
) |
|
|
(158,502 |
) |
Accumulated deficit |
|
(493,734 |
) |
|
|
(483,607 |
) |
Total shareholders' equity |
|
1,184,936 |
|
|
|
870,735 |
|
Total liabilities and shareholders’ equity |
$ |
8,184,579 |
|
|
$ |
6,369,750 |
|
|
|
|
|
||||
Preferred stock aggregate liquidation preference |
$ |
111,500 |
|
|
$ |
111,500 |
|
Book value per common share |
$ |
12.70 |
|
|
$ |
13.31 |
|
Common shares outstanding |
|
84,491,800 |
|
|
|
57,038,247 |
|
Consolidated Comprehensive Statements of Income (unaudited) |
|
Year Ended |
|||||||||
|
Three Months Ended |
|
|||||||||
($s in thousands except per share data) |
December 31, 2024 |
|
September 30, 2024 |
|
December 31, 2024 |
||||||
INTEREST INCOME |
|
|
|
|
|
||||||
Interest income |
$ |
88,496 |
|
|
$ |
83,458 |
|
|
$ |
319,534 |
|
Interest expense |
|
(81,609 |
) |
|
|
(82,564 |
) |
|
|
(313,657 |
) |
Net interest income |
|
6,887 |
|
|
|
894 |
|
|
|
5,877 |
|
|
|
|
|
|
|
||||||
OTHER GAINS (LOSSES) |
|
|
|
|
|
||||||
Realized loss on sales of investments, net |
|
— |
|
|
|
— |
|
|
|
(1,506 |
) |
Unrealized (loss) gain on investments, net |
|
(223,225 |
) |
|
|
192,874 |
|
|
|
(142,352 |
) |
Gain (loss) on derivatives, net |
|
276,670 |
|
|
|
(154,064 |
) |
|
|
288,377 |
|
Total other gains, net |
|
53,445 |
|
|
|
38,810 |
|
|
|
144,519 |
|
|
|
|
|
|
|
||||||
EXPENSES |
|
|
|
|
|
||||||
General and administrative expenses |
|
(8,799 |
) |
|
|
(8,271 |
) |
|
|
(34,593 |
) |
Other operating expense, net |
|
(447 |
) |
|
|
(436 |
) |
|
|
(1,905 |
) |
Total operating expenses |
|
(9,246 |
) |
|
|
(8,707 |
) |
|
|
(36,498 |
) |
|
|
|
|
|
|
||||||
Net income |
|
51,086 |
|
|
|
30,997 |
|
|
|
113,898 |
|
Preferred stock dividends |
|
(1,923 |
) |
|
|
(1,923 |
) |
|
|
(7,694 |
) |
Net income to common shareholders |
$ |
49,163 |
|
|
$ |
29,074 |
|
|
$ |
106,204 |
|
|
|
|
|
|
|
||||||
Other comprehensive income: |
|
|
|
|
|
||||||
Unrealized (loss) gain on available-for-sale investments, net |
|
(36,601 |
) |
|
|
41,667 |
|
|
|
(13,987 |
) |
Total other comprehensive (loss) income |
|
(36,601 |
) |
|
|
41,667 |
|
|
|
(13,987 |
) |
Comprehensive income to common shareholders |
$ |
12,562 |
|
|
$ |
70,741 |
|
|
$ |
92,217 |
|
|
|
|
|
|
|
||||||
Weighted average common shares-basic |
|
81,145,733 |
|
|
|
75,792,527 |
|
|
|
70,766,410 |
|
Weighted average common shares-diluted |
|
81,705,477 |
|
|
|
76,366,487 |
|
|
|
71,260,358 |
|
Net income per common share-basic |
$ |
0.61 |
|
|
$ |
0.38 |
|
|
$ |
1.50 |
|
Net income per common share-diluted |
$ |
0.60 |
|
|
$ |
0.38 |
|
|
$ |
1.49 |
|
Dividends declared per common share |
$ |
0.43 |
|
|
$ |
0.39 |
|
|
$ |
1.60 |
|
Discussion of Fourth Quarter Results
The Company's interest income continues to increase as a result of its purchases of higher coupon investments in the past year. In addition, the Federal Reserve's recent interest rate cuts benefited the Company's comprehensive income to common shareholders for the fourth quarter of 2024 by lowering its interest expense related to repurchase agreement borrowings. The Company's interest rate swaps used to hedge its interest rate risk resulted in a net periodic interest benefit of
As the 10-year
Beginning in November 2024, the Company increased its monthly dividend from
The following table summarizes the changes in the Company's financial position during the fourth quarter of 2024:
($s in thousands except per share data) |
|
Net Changes
|
|
Components of
|
|
Common
|
||||||
Balance as of September 30, 2024 (1) |
|
|
|
|
|
$ |
1,031,059 |
|
||||
Net interest income |
|
|
|
$ |
6,887 |
|
|
|
||||
Net periodic interest from interest rate swaps |
|
|
|
|
11,926 |
|
|
|
||||
Operating expenses |
|
|
|
|
(9,246 |
) |
|
|
||||
Preferred stock dividends |
|
|
|
|
(1,923 |
) |
|
|
||||
Changes in fair value: |
|
|
|
|
|
|
||||||
MBS and loans |
|
$ |
(259,826 |
) |
|
|
|
|
||||
TBAs |
|
|
(72,543 |
) |
|
|
|
|
||||
|
|
|
186,277 |
|
|
|
|
|
||||
Interest rate swaps |
|
|
151,010 |
|
|
|
|
|
||||
Total net change in fair value |
|
|
|
|
4,918 |
|
|
|
||||
Comprehensive income to common shareholders |
|
|
|
|
|
|
12,562 |
|
||||
Capital transactions: |
|
|
|
|
|
|
||||||
Net proceeds from stock issuance (2) |
|
|
|
|
|
|
65,462 |
|
||||
Common dividends declared |
|
|
|
|
|
|
(35,647 |
) |
||||
Balance as of December 31, 2024 (1) |
|
|
|
|
|
$ |
1,073,436 |
|
||||
|
|
|
|
|
|
|
|
|
||||
(1) Amounts represent total shareholders' equity less the aggregate liquidation preference of the Company's preferred stock of |
||||||||||||
(2) Net proceeds from common stock issuances includes |
||||||||||||
Investment Portfolio and Financing
During the fourth quarter of 2024, the Company purchased approximately
|
December 31, 2024 |
|
September 30, 2024 |
||||||||||||||||
($ in millions) |
Par Value |
|
Fair Value |
|
% of
|
|
Par Value |
|
Fair Value |
|
% of
|
||||||||
30-year fixed rate RMBS: |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
$ |
655,356 |
|
|
$ |
516,541 |
|
5.3 |
% |
|
$ |
668,416 |
|
|
$ |
559,167 |
|
6.0 |
% |
|
|
561,625 |
|
|
|
463,402 |
|
4.7 |
% |
|
|
571,513 |
|
|
|
499,128 |
|
5.4 |
% |
|
|
324,615 |
|
|
|
299,774 |
|
3.0 |
% |
|
|
331,722 |
|
|
|
321,575 |
|
3.5 |
% |
|
|
1,323,371 |
|
|
|
1,252,219 |
|
12.7 |
% |
|
|
1,354,851 |
|
|
|
1,337,957 |
|
14.4 |
% |
|
|
2,356,262 |
|
|
|
2,284,613 |
|
23.2 |
% |
|
|
2,062,913 |
|
|
|
2,074,274 |
|
22.2 |
% |
|
|
2,193,064 |
|
|
|
2,178,180 |
|
22.1 |
% |
|
|
1,950,064 |
|
|
|
1,987,567 |
|
21.3 |
% |
|
|
303,470 |
|
|
|
307,509 |
|
3.1 |
% |
|
|
315,455 |
|
|
|
325,422 |
|
3.5 |
% |
TBA |
|
462,000 |
|
|
|
421,796 |
|
4.3 |
% |
|
|
462,000 |
|
|
|
443,447 |
|
4.8 |
% |
TBA |
|
383,000 |
|
|
|
359,837 |
|
3.7 |
% |
|
183,000 |
|
|
|
179,819 |
1.9 |
% |
||
TBA |
|
710,000 |
|
|
|
684,706 |
|
7.0 |
% |
|
|
767,000 |
|
|
|
766,161 |
|
8.2 |
% |
TBA |
|
864,000 |
|
|
852,053 |
|
8.7 |
% |
|
|
592,000 |
|
|
598,752 |
6.4 |
% |
|||
Total Agency RMBS |
$ |
10,136,763 |
|
$ |
9,620,630 |
|
97.8 |
% |
$ |
9,258,934 |
|
$ |
9,093,269 |
97.6 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Agency CMBS |
$ |
99,636 |
|
|
$ |
95,463 |
|
1.0 |
% |
|
$ |
100,957 |
|
|
$ |
98,026 |
1.1 |
% |
|
Agency CMBS IO |
|
(1 |
) |
|
|
103,606 |
|
1.1 |
% |
|
|
(1 |
) |
|
|
111,774 |
1.2 |
% |
|
Non-Agency CMBS IO |
|
(1 |
) |
|
|
10,780 |
|
0.1 |
% |
|
|
(1 |
) |
|
|
12,754 |
|
0.1 |
% |
Total |
$ |
10,236,399 |
|
|
$ |
9,830,479 |
|
100.0 |
% |
|
$ |
9,359,891 |
|
|
$ |
9,315,823 |
100.0 |
% |
|
|
|||||||||||||||||||
(1) CMBS IO do not have underlying par values. |
|||||||||||||||||||
The following table provides detail on the Company's repurchase agreement borrowings outstanding as of the dates indicated:
|
|
December 31, 2024 |
|
September 30, 2024 |
||||||||||||
Remaining Term to Maturity |
|
Balance |
|
Weighted
|
|
WAVG
|
|
Balance |
|
Weighted
|
|
WAVG Original
|
||||
($s in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less than 30 days |
|
$ |
1,742,440 |
|
4.83 |
% |
|
68 |
|
$ |
4,403,523 |
|
5.39 |
% |
|
59 |
30 to 90 days |
|
|
4,820,680 |
|
4.78 |
% |
|
83 |
|
|
2,020,367 |
|
5.40 |
% |
|
89 |
Total |
|
$ |
6,563,120 |
|
4.80 |
% |
|
79 |
|
$ |
6,423,890 |
|
5.40 |
% |
|
68 |
The following table provides details on the performance of the Company's MBS, repurchase agreement financing, and interest rate swaps for the fourth quarter of 2024 compared to the prior quarter:
|
Three Months Ended |
||||||||||||||||||
|
December 31, 2024 |
|
September 30, 2024 |
||||||||||||||||
($s in thousands) |
Interest
|
|
Average
|
|
Effective Yield/
|
|
Interest
|
|
Average
|
|
Effective Yield/
|
||||||||
Agency RMBS |
$ |
82,490 |
|
|
$ |
7,181,923 |
|
4.59 |
% |
|
$ |
75,083 |
|
|
$ |
6,627,198 |
|
4.53 |
% |
Agency CMBS |
|
760 |
|
|
|
100,308 |
|
2.96 |
% |
|
|
770 |
|
|
|
101,771 |
|
2.96 |
% |
CMBS IO(5) |
|
2,605 |
|
|
|
122,097 |
|
8.00 |
% |
|
|
2,902 |
|
|
|
133,172 |
|
8.20 |
% |
Non-Agency MBS and other |
|
19 |
|
|
|
1,082 |
|
6.23 |
% |
|
|
17 |
|
|
|
1,298 |
|
5.05 |
% |
|
|
85,874 |
|
|
|
7,405,410 |
|
4.63 |
% |
|
|
78,772 |
|
|
|
6,863,439 |
|
4.58 |
% |
Cash equivalents |
|
2,622 |
|
|
|
|
|
|
|
4,686 |
|
|
|
|
|
||||
Total interest income |
$ |
88,496 |
|
|
|
|
|
|
$ |
83,458 |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Repurchase agreement financing |
|
(81,609 |
) |
|
|
6,431,743 |
|
(4.97 |
)% |
|
|
(82,564 |
) |
|
|
5,943,805 |
|
(5.44 |
)% |
Net interest income/net interest spread |
$ |
6,887 |
|
|
|
|
(0.34 |
)% |
|
$ |
894 |
|
|
|
|
(0.86 |
)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net periodic interest |
|
11,926 |
|
|
|
|
0.74 |
% |
|
|
4,162 |
|
|
|
|
0.28 |
% |
||
Economic net interest income (6) |
$ |
18,813 |
|
|
|
|
0.41 |
% |
|
$ |
5,056 |
|
|
|
|
(0.58 |
)% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
(1) Average balance for assets is calculated as a simple average of the daily amortized cost and excludes securities pending settlement if applicable. |
|||||||||||||||||||
(2) Average balance for liabilities is calculated as a simple average of the daily borrowings outstanding during the period. |
|||||||||||||||||||
(3) Effective yield is calculated by dividing interest income by the average balance of asset type outstanding during the reporting period. Unscheduled adjustments to premium/discount amortization/accretion, such as for prepayment compensation, are not annualized in this calculation. |
|||||||||||||||||||
(4) Financing cost is calculated by dividing annualized interest expense by the total average balance of borrowings outstanding during the period with an assumption of 360 days in a year. |
|||||||||||||||||||
(5) CMBS IO ("Interest only") includes Agency and non-Agency issued securities. |
|||||||||||||||||||
(6) Represents a non-GAAP measure. |
|||||||||||||||||||
The Company's effective yield earned on its investment portfolio has continued to increase in recent quarters due to its purchases of higher yielding Agency RMBS. Although the Company's balance of borrowings has increased as a result of using repurchase agreements to partially financing these purchases, its cost of financing as a percentage of average borrowings has continued to decline in recent periods, further benefiting the Company's net interest spread. In addition, the Company has increased its use of interest rate swap agreements, which added a benefit of
Hedging Portfolio
The Company uses certain derivative instruments ("interest rate hedges") to hedge exposure to interest rate risk arising from its investment and financing portfolio. The following table provides details on the Company's interest rate hedging portfolio as of the dates indicated:
|
|
December 31, 2024 |
|
September 30, 2024 |
||||||||
Derivative Type |
Notional Amount |
|
WAVG Fixed
|
|
Notional Amount |
|
WAVG Fixed
|
|||||
($s in thousands) |
|
|
|
|
|
|
|
|||||
10-year |
|
$ |
(735,000 |
) |
|
n/a |
|
$ |
(3,850,000 |
) |
|
n/a |
30-year |
|
(516,500 |
) |
|
n/a |
|
|
(505,000 |
) |
|
n/a |
|
4-5 year interest rate swaps |
|
(1,275,000 |
) |
|
|
|
|
(1,275,000 |
) |
|
|
|
6-7 year interest rate swaps |
|
(3,085,000 |
) |
|
|
|
|
(260,000 |
) |
|
|
|
9-10 year interest rate swaps |
|
(1,025,000 |
) |
|
|
|
|
— |
|
|
— |
|
Total |
$ |
(6,636,500 |
) |
|
|
$ |
(5,890,000 |
) |
|
|||
The following table provides detail on the Company's "gain (loss) on derivatives, net" recognized in the Company's consolidated statements of comprehensive income (loss) during the periods indicated:(2)
|
Three Months Ended |
|
Year Ended
|
||||||||
|
December 31, 2024 |
|
September 30, 2024 |
|
|||||||
Unrealized gain (loss): |
|
|
|
|
|
||||||
TBA securities |
$ |
(23,158 |
) |
|
$ |
(5,953 |
) |
|
$ |
(77,042 |
) |
U. S. Treasury futures |
|
(4,462 |
) |
|
|
39,808 |
|
|
|
221,063 |
|
Interest rate swaps |
|
151,010 |
|
|
|
(14,228 |
) |
|
|
136,676 |
|
|
|
123,390 |
|
|
|
19,627 |
|
|
|
280,697 |
|
|
|
|
|
|
|
||||||
Realized gain (loss) upon settlement, maturity or termination: |
|
|
|
|
|
||||||
TBA securities |
|
(49,385 |
) |
|
|
78,144 |
|
|
|
38,530 |
|
U. S. Treasury futures |
|
190,739 |
|
|
|
(255,997 |
) |
|
|
(46,955 |
) |
|
|
141,354 |
|
|
|
(177,853 |
) |
|
|
(8,425 |
) |
|
|
|
|
|
|
||||||
Net periodic interest: |
|
|
|
|
|
||||||
Interest rate swaps |
|
11,926 |
|
|
|
4,162 |
|
|
|
16,105 |
|
Gain (loss) on derivatives, net |
$ |
276,670 |
|
|
$ |
(154,064 |
) |
|
$ |
288,377 |
|
The Company typically designates certain of its interest rate derivatives as hedges for tax purposes. Gains and losses realized upon maturity or termination of derivatives designated as hedges for tax purposes are amortized into the Company's REIT taxable income over the original periods hedged by those derivatives. The benefit expected to be recognized in taxable income for the year ended December 31, 2024 is estimated to be
The table below provides the projected amortization of the Company's net deferred tax hedge gains that may be recognized as taxable income over the periods indicated, given conditions known as of December 31, 2024; however, uncertainty inherent in the forward interest rate curve makes future realized gains and losses difficult to estimate, and as such, these projections are subject to change for any given period.
Projected Period of Recognition for Remaining Tax Hedge Gains, Net |
|
December 31, 2024 |
|
|
|
($ in thousands) |
|
Fiscal year 2025 |
|
$ |
100,144 |
Fiscal year 2026 |
|
|
100,420 |
Fiscal year 2027 |
|
|
95,831 |
Fiscal year 2028 and thereafter |
|
|
422,643 |
|
$ |
719,038 |
|
Non-GAAP Financial Measures
In evaluating the Company’s financial and operating performance, management considers book value per common share, total economic return to common shareholders, and other operating results presented in accordance with GAAP as well as certain non-GAAP financial measures, which include earnings available for distribution (“EAD”) to common shareholders (including per common share) and economic net interest income (and the related metric economic net interest spread). Management believes these non-GAAP financial measures may be useful to investors because they are viewed by management as a measure of the investment portfolio’s return based on the effective yield of its investments, net of financing costs and, with respect to EAD, net of other normal recurring operating income/expenses.
Drop income/loss generated by TBA dollar roll positions, which is included in "gain (loss) on derivatives instruments, net" on the Company's consolidated statements of comprehensive income, is included in EAD because management views drop income/loss as the economic equivalent of net interest income on the underlying Agency security from trade date to settlement date. However, drop income/loss does not represent the total realized gain/loss from the Company’s TBA securities.
Management also includes net periodic interest from its interest rate swaps, which is included in "gain (loss) on derivatives instruments, net", in each of these non-GAAP measures because interest rate swaps are used by the Company to economically hedge the impact of changing interest rates on its borrowing costs from repurchase agreements, and including net periodic interest from interest rate swaps is a helpful indicator of the Company’s total financing cost in addition to GAAP interest expense.
Non-GAAP financial measures are not a substitute for GAAP earnings and may not be comparable to similarly titled measures of other REITs because they may not be calculated in the same manner. Furthermore, though EAD is one of several factors our management considers in determining the appropriate level of distributions to common shareholders, it should not be utilized in isolation, and it is not an accurate indication of the Company’s REIT taxable income or its distribution requirements in accordance with the Tax Code.
Reconciliations of each non-GAAP measure to certain GAAP financial measures are provided below.
|
Three Months Ended |
|
Year Ended |
||||||||
($s in thousands except per share data) |
December 31, 2024 |
|
September 30, 2024 |
|
December 31, 2024 |
||||||
Comprehensive income to common shareholders (GAAP) |
$ |
12,562 |
|
|
$ |
70,741 |
|
|
$ |
92,217 |
|
Less: |
|
|
|
|
|
||||||
Change in fair value of investments, net (1) |
|
259,826 |
|
|
|
(234,541 |
) |
|
|
157,845 |
|
Change in fair value of derivative instruments, net (2) |
|
(264,285 |
) |
|
|
156,572 |
|
|
|
(274,966 |
) |
EAD to common shareholders (non-GAAP) |
$ |
8,103 |
|
|
$ |
(7,228 |
) |
|
$ |
(24,904 |
) |
|
|
|
|
|
|
||||||
Weighted average common shares |
|
81,145,733 |
|
|
|
75,792,527 |
|
|
|
70,766,410 |
|
EAD per common share (non-GAAP) |
$ |
0.10 |
|
|
$ |
(0.10 |
) |
|
$ |
(0.35 |
) |
|
|
|
|
|
|
||||||
Net interest income (GAAP) |
$ |
6,887 |
|
|
$ |
894 |
|
|
$ |
5,877 |
|
Net periodic interest from interest rate swaps |
|
11,926 |
|
|
|
4,162 |
|
|
|
16,105 |
|
Economic net interest income |
|
18,813 |
|
|
|
5,056 |
|
|
|
21,982 |
|
TBA drop loss (3) |
|
459 |
|
|
|
(1,654 |
) |
|
|
(2,694 |
) |
Operating expenses |
|
(9,246 |
) |
|
|
(8,707 |
) |
|
|
(36,498 |
) |
Preferred stock dividends |
|
(1,923 |
) |
|
|
(1,923 |
) |
|
|
(7,694 |
) |
EAD to common shareholders (non-GAAP) |
$ |
8,103 |
|
|
$ |
(7,228 |
) |
|
$ |
(24,904 |
) |
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Net interest spread (GAAP) |
|
(0.34 |
)% |
|
|
(0.86 |
)% |
|
|
(0.81 |
)% |
Net periodic interest as a percentage of average repurchase borrowings |
|
0.75 |
% |
|
|
0.28 |
% |
|
|
0.28 |
% |
Economic net interest spread (non-GAAP) |
|
0.41 |
% |
|
|
(0.58 |
)% |
|
|
(0.53 |
)% |
(1) Amount includes realized and unrealized gains and losses from the Company's MBS. |
|||||||||||
(2) Amount includes unrealized gains and losses from changes in fair value of derivatives (including TBAs accounted for as derivative instruments) and realized gains and losses on terminated derivatives and excludes TBA drop income and net periodic interest from interest rate swaps. |
|||||||||||
(3) TBA drop income/loss is calculated by multiplying the notional amount of the TBA dollar roll positions by the difference in price between two TBA securities with the same terms but different settlement dates. |
|||||||||||
Forward Looking Statements
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “forecast,” “anticipate,” “estimate,” “project,” “plan,” "may," "could," "will," "continue" and similar expressions identify forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Forward-looking statements in this release, including statements made in Mr.
All forward-looking statements are qualified in their entirety by these and other cautionary statements that the Company makes from time to time in its filings with the Securities and Exchange Commission and other public communications. The Company cannot assure the reader that it will realize the results or developments the Company anticipates or, even if substantially realized, that they will result in the consequences or affect the Company or its operations in the way the Company expects. Forward-looking statements speak only as of the date made. The Company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances arising after the date on which they were made, except as otherwise required by law. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, the Company.
Company Description
Dynex Capital, Inc. is a financial services company committed to ethical stewardship of stakeholders' capital, employing comprehensive risk management and disciplined capital allocation to generate dividend income and long-term total returns through the diversified financing of real estate assets in
(1) Source: Bloomberg.
(2) Please refer to the section "Non-GAAP Financial Measures" for information on which of these amounts are recognized within the Company's non-GAAP measures.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250127805902/en/
Alison Griffin
(804) 217-5897
Source: Dynex Capital, Inc.
FAQ
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