DX

GLEN ALLEN, Va., October 19, 2026--(BUSINESS WIRE)--Dynex Capital, Inc. (NYSE: DX; "Dynex" or the "Company"), a REIT with a long track record of generating dividends from high-quality mortgage assets, reported its third quarter financial results today. Management will host a call today at 10:00 a.m. Eastern Time to discuss the results and business outlook. Details to access the call can be found below under "Earnings Conference Call." Third Quarter 2026 Financial Highlights - Total economic return of $(1.48) per common share, or (11.5)% of beginning book value - Book value per common share of $10.91 as of September 30, 2026, a decrease of $(1.99) from $12.90 as of June 30, 2026 - Comprehensive loss of $(1.49) per common share and net loss of $(1.34) per common share - Dividends declared of $0.51 per common share - Liquidity of $1.3 billion of cash and unpledged securities, representing 42% of total equity, as of September 30, 2026 - Leverage including to-be-announced ("TBA") securities at cost was 9.0 times shareholders' equity as of September 30, 2026, compared to 8.1 times shareholders' equity as of June 30, 2026 Third Quarter 2026 Portfolio and Capital Highlights - Total investment portfolio of $28.3 billion, an increase of 3% relative to June 30, 2026 driven by $3.2 billion of MBS purchases: - Agency RMBS portfolio, including TBAs, increased approximately 3% to $26.8 billion - Agency CMBS portfolio increased approximately 3% to $1.4 billion - 99.99% of investment portfolio is in highly liquid Agency securities - Agency RMBS represents 95% of total portfolio; Agency CMBS represents 5% of total portfolio - Raised $384 million of capital, net of commissions, during the quarter, including $268 million of common equity through the Company's at-the-market ("ATM") program and $116 million through the issuance of 9.375% Series D fixed-rate cumulative redeemable preferred stock Management Remarks "We believe today's Agency mortgage market presents a compelling forward investment opportunity," said Smriti Laxman Popenoe, Co-Chief Executive Officer and President. "Late-quarter volatility and wider mortgage spreads reduced our reported book value, and that repricing has created an attractive forward return opportunity. Importantly, the mortgage market remains fundamentally solid, technical conditions are strong, and financing remains stable. We are managing for the long term, prepared for a range of market scenarios, and positioned to capitalize on opportunities as they develop." 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 by dialing (800) 330-6710 and providing the Conference Code 3227135 or by live audio webcast by clicking the "Webcast" button on the Investors page of the Company's website (www.dynexcapital.com/investors), which also includes a slide presentation. To listen to the live conference call via telephone, please dial in at least 10 minutes before the call begins. As an alternative, participants can click here to enter their details and be connected to join the conference. The link becomes active 15 minutes prior to the scheduled start time. A full replay of the conference call will be available on the Company's website shortly after the conclusion of the live presentation. Summary of Third Quarter 2026 Results Total economic return for the third quarter of 2026 reflected a decline in book value per common share to $10.91, inclusive of dividends declared of $0.51 per common share. Book value declined primarily due to wider Agency MBS spreads, which drove a net decrease in the fair value of the Company's investment portfolio. Gains on the Company's interest rate hedging portfolio partially offset these losses. While the Company's active management of its hedges mitigated a portion of the impact from changing interest rates and broader market volatility, spread widening remained the primary driver of pressure on asset valuations and book value during the quarter. The Company grew its capital base by $384 million during the third quarter through a combination of common and preferred equity raises, using the net proceeds to opportunistically add $3.2 billion of Agency MBS. As a result, the total investment portfolio grew approximately 3% to $28.3 billion compared to $27.6 billion as of June 30, 2026. Leverage, including the implied cost of TBAs, increased to 9.0 times shareholders' equity, primarily due to lower book value related to the investment portfolio's performance. Interest income increased from the prior quarter, driven by the Company's continued capital deployment into Agency MBS. The average balance of interest-earning assets grew 10% during the third quarter of 2026. Operating expenses decreased by $4 million quarter over quarter due to lower stock-based compensation. The following tables summarize the changes in the Company's financial position during the third quarter of 2026: ($s in thousands) | | Net Changes inFair Value | | Components ofComprehensiveIncome | | CommonEquityRollforward Balance as of June 30, 2026 (1) | | | | | | $ | 3,063,567 | Net interest income | | | | $ | 101,562 | | | Net periodic interest from interest rate swaps | | | | | 82 | | | Operating expenses | | | | | (12,594 | ) | | Preferred stock dividends | | | | | (2,769 | ) | | Changes in fair value: | | | | | | MBS and other | | $ | (1,502,120 | ) | | | | TBAs | | | (124,902 | ) | | | | U.S. Treasury futures | | | 377,310 | | | | | Options on U.S. Treasury futures | | | 743 | | | | | Interest rate swaps | | | 790,435 | | | | | Interest rate swaptions | | | (2,581 | ) | | | | Total net change in fair value | | | | | (461,115 | ) | | Comprehensive loss to common shareholders | | | | | | | (374,834 | ) Capital transactions: | | | | | | Net proceeds from stock issuance (2) | | | | | | | 260,984 | Common dividends declared | | | | | | | (129,162 | ) Balance as of September 30, 2026 (3) | | | | | | $ | 2,820,555 | (1) | | Amount represents total shareholders' equity less the aggregate liquidation preference of the Company's Series C preferred stock of $111.5 million as of June 30, 2026. (2) | | Amount includes net proceeds of approximately $268 million from common stock issuances through the Company's at-the-market ("ATM") program, $(4) million of stock issuance costs related to the Company's Series D preferred stock offering, and $(3) million from reversal of previously accrued share-based compensation expenses and forfeitures. (3) | | Amount represents total shareholders' equity less the aggregate liquidation preference of the Company's Series C and Series D preferred stocks of $231.5 million as of September 30, 2026. Investment Portfolio and Financing The following table provides detail on the Company's MBS investments, including TBA securities, as of the periods indicated: | | September 30, 2026 | | June 30, 2026 ($ in thousands) | | AmortizedCost/ImpliedCostBasis | | UnrealizedGain (Loss) | | Fair Value | | % ofPortfolio | | AmortizedCost/ImpliedCostBasis | | UnrealizedGain (Loss) | | Fair Value | | % of Portfolio Fixed rate Agency RMBS: | | | | | | | | | | | | | | 2.0% coupon | | $ | 1,439,531 | | $ | (213,063 | ) | | $ | 1,226,468 | | 4 | % | | $ | 1,467,013 | | $ | (125,450 | ) | | $ | 1,341,563 | | 5 | % 2.5% coupon | | | 801,131 | | | (136,745 | ) | | | 664,386 | | 2 | % | | | 728,917 | | | (91,725 | ) | | | 637,192 | | 2 | % 4.0% coupon | | | 1,483,955 | | | (92,278 | ) | | | 1,391,677 | | 5 | % | | | 1,065,039 | | | (7,546 | ) | | | 1,057,493 | | 4 | % 4.5% coupon (1) | | | 2,426,164 | | | (153,056 | ) | | | 2,273,108 | | 8 | % | | | 2,147,675 | | | (1,055 | ) | | | 2,146,620 | | 8 | % 5.0% coupon | | | 7,973,568 | | | (504,783 | ) | | | 7,468,785 | | 26 | % | | | 7,969,870 | | | (27,255 | ) | | | 7,942,615 | | 29 | % 5.5% coupon | | | 10,162,745 | | | (515,698 | ) | | | 9,647,047 | | 34 | % | | | 9,028,071 | | | (545 | ) | | | 9,027,526 | | 33 | % 6.0% coupon | | | 1,812,455 | | | (69,451 | ) | | | 1,743,004 | | 6 | % | | | 1,459,407 | | | 1,280 | | | | 1,460,687 | | 5 | % TBA 4.0% | | | 5,386 | | | (162 | ) | | | 5,224 | | — | % | | | 11,259 | | | (28 | ) | | | 11,231 | | — | % TBA 4.5% (2) | | | 225,881 | | | (9,715 | ) | | | 216,166 | | 1 | % | | | 1,039,010 | | | 5,571 | | | | 1,044,581 | | 4 | % TBA 5.0% | | | 1,021,997 | | | (29,966 | ) | | | 992,031 | | 4 | % | | | 856,769 | | | 2,181 | | | | 858,950 | | 3 | % TBA 5.5% | | | 508,784 | | | (18,086 | ) | | | 490,698 | | 2 | % | | | 602,276 | | | 255 | | | | 602,531 | | 2 | % TBA 6.0% | | | 733,328 | | | (20,172 | ) | | | 713,156 | | 3 | % | | | — | | | — | | | | — | | — | % Total Agency RMBS | | $ | 28,594,925 | | $ | (1,763,175 | ) | | $ | 26,831,750 | | 95 | % | | $ | 26,375,306 | | $ | (244,317 | ) | | $ | 26,130,989 | | 95 | % | | | | | | | | | | | | | | | | Agency CMBS/CMBS IO (3) | | $ | 1,577,545 | | $ | (79,414 | ) | | $ | 1,498,131 | | 5 | % | | $ | 1,463,111 | | $ | (10,610 | ) | | $ | 1,452,501 | | 5 | % Total | | $ | 30,172,470 | | $ | (1,842,589 | ) | | $ | 28,329,881 | | 100 | % | | $ | 27,838,417 | | $ | (254,927 | ) | | $ | 27,583,490 | | 100 | % (1) Includes a par value of $8.6 million of 4.5% 15-year Agency RMBS as of September 30, 2026 and June 30, 2026. (2) Includes a notional amount of $0 and $440 million of 4.5% 15-year TBAs as of September 30, 2026 and June 30, 2026, respectively. (3) CMBS IO ("Interest only") includes Agency and non-Agency issued securities. The amortized cost and fair value of the Company's CMBS IO represent less than 0.1% of its total investment portfolio as of the dates presented. The following table provides detail on the Company's repurchase agreement borrowings outstanding as of the dates indicated: | | September 30, 2026 | | June 30, 2026 Remaining Term to Maturity | | Balance | | WeightedAverageRate | | WAVGOriginalTerm toMaturity | | Balance | | WeightedAverageRate | | WAVGOriginalTerm toMaturity ($s in thousands) | | | | | | | | | | | | Less than 30 days | | $ | 10,662,438 | | 3.88 | % | | 79 | | $ | 9,949,865 | | 3.78 | % | | 76 30 to 90 days | | | 12,563,547 | | 3.93 | % | | 88 | | | 9,852,555 | | 3.78 | % | | 91 91 to 180 days | | | 964,291 | | 4.00 | % | | 179 | | | 2,842,322 | | 3.79 | % | | 181 Total | | $ | 24,190,276 | | 3.91 | % | | 87 | | $ | 22,644,742 | | 3.79 | % | | 96 | | | | | | | | | | | | The following table provides details on the performance of the Company's MBS, net of financing for the third quarter of 2026 compared to the prior quarter: | | Three Months Ended | | September 30, 2026 | | June 30, 2026 ($s in thousands) | | InterestIncome/Expense | | AverageBalance (1)(2) | | EffectiveYield/FinancingCost(3)(4) | | InterestIncome/Expense | | AverageBalance (1)(2) | | EffectiveYield/FinancingCost(3)(4) Agency RMBS | | $ | 311,244 | | | $ | 24,761,556 | | 5.03 | % | | $ | 280,970 | | | $ | 22,581,412 | | 4.98 | % Agency CMBS/CMBS IO(5) | | | 16,958 | | | | 1,456,850 | | 4.55 | % | | | 15,270 | | | | 1,333,481 | | 4.52 | % Other investments | | | 5 | | | | 431 | | 3.71 | % | | | 6 | | | | 445 | | 3.89 | % Subtotal | | | 328,207 | | | | 26,218,837 | | 5.00 | % | | | 296,246 | | | | 23,915,338 | | 4.95 | % Cash equivalents | | | 4,290 | | | | | | | | 6,505 | | | | | Total interest income | | $ | 332,497 | | | | | | | $ | 302,751 | | | | | | | | | | | | | | | | | Repurchase agreement financing | | | (230,935 | ) | | | 23,626,939 | | (3.82 | )% | | | (208,968 | ) | | | 21,803,737 | | (3.79 | )% Net interest income/net interest spread | | $ | 101,562 | | | | | 1.18 | % | | $ | 93,783 | | | | | 1.16 | % | | | | | | | | | | | | Net periodic interest from interest rate swaps | | | 82 | | | | | — | % | | | 542 | | | | | 0.01 | % Economic net interest income (6) | | $ | 101,644 | | | | | 1.18 | % | | $ | 94,325 | | | | | 1.17 | % (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 repurchase agreement borrowings outstanding during the period. (3) | | Effective yield is calculated by dividing annualized 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. The amortized cost and fair value of the Company's CMBS IO represent less than 0.1% of its investment portfolio and interest income from CMBS IO comprised less than 1% of the Company's interest income for the periods presented. (6) | | Represents a non-GAAP measure. See "Non-GAAP Financial Measures" below for a reconciliation to the most comparable GAAP financial measure. Hedging Portfolio The following tables provide details on the Company's interest rate hedging portfolio as of the dates indicated: | | September 30, 2026 | | June 30, 2026 Derivative Type - Short Positions | | NotionalAmount | | WAVG FixedPay Rate | | NotionalAmount | | WAVG FixedPay Rate ($s in thousands) | | | | | | | | 1-3 year pay-fixed interest rate swaps | | $ | 1,925,000 | | | 3.63% | | $ | — | | | —% 3-5 year pay-fixed interest rate swaps | | | 4,080,000 | | | 3.63% | | | 4,375,000 | | | 3.45% 5-7 year pay-fixed interest rate swaps | | | 4,820,000 | | | 3.85% | | | 4,060,000 | | | 3.65% 7-10 year pay-fixed interest rate swaps | | | 5,845,000 | | | 3.93% | | | 5,065,000 | | | 3.86% 10-15 year pay-fixed interest rate swaps | | | 142,000 | | | 4.79% | | | — | | | —% 15-20 year pay-fixed interest rate swaps | | | 785,000 | | | 4.39% | | | 590,000 | | | 4.40% | | $ | 17,597,000 | | | 3.83% | | $ | 14,090,000 | | | 3.70% | | | | | | | | 5-year U.S. Treasury futures | | $ | (650,000 | ) | | n/a | | $ | (750,000 | ) | | n/a 10-year U.S. Treasury futures | | | (2,893,700 | ) | | n/a | | | (2,516,500 | ) | | n/a 30-year U.S. Treasury futures | | | (3,132,800 | ) | | n/a | | | (991,800 | ) | | n/a | | $ | (6,676,500 | ) | | | | $ | (4,258,300 | ) | | | | September 30, 2026 | | June 30, 2026 Derivative Type - Long Positions | | NotionalAmount | | Average FixedReceive Rate | | NotionalAmount | | Average FixedReceive Rate ($s in thousands) | | | | | | | | Interest rate swaptions | | $ | 750,000 | | 3.25% | | $ | 750,000 | | 3.25% The following table provides detail on the performance of the Company's derivative instruments during the periods indicated: | | | | Three Months Ended Type of Derivative Instrument | | Purpose | | September 30, 2026 | | June 30, 2026 | | | | ($s in thousands) Unrealized gains (losses): | | | | | | TBA securities | | Investment | | $ | (86,079 | ) | | $ | 17,024 | U.S. Treasury futures | | Interest rate hedge | | | 278,275 | | | | (96,155 | ) Options on U.S. Treasury futures | | Interest rate hedge | | | — | | | | — | Interest rate swaps | | Interest rate hedge | | | 782,825 | | | | 135,175 | Interest rate swaptions | | Interest rate hedge | | | (2,581 | ) | | | (4,275 | ) Total net unrealized gains | | | | | 972,440 | | | | 51,769 | | | | | | | Realized gains (losses) upon settlement, maturity or termination: | | | | | | TBA securities | | Investment | | | (38,823 | ) | | | (36,253 | ) U.S. Treasury futures | | Interest rate hedge | | | 99,035 | | | | 112,723 | Options on U.S. Treasury futures | | Interest rate hedge | | | 743 | | | | — | Interest rate swaps | | Interest rate hedge | | | 7,610 | | | | 64 | Total net realized gains | | | | | 68,565 | | | | 76,534 | | | | | | | Net periodic interest from interest rate swaps | | Interest rate hedge | | | 82 | | | | 542 | Gain on derivative instruments, net | | | | $ | 1,041,087 | | | $ | 128,845 | | | | | | | 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. These hedge gains are not included in the Company's current or future earnings available for distribution ("EAD"), a non-GAAP measure, but will be part of the Company's future distribution requirements. 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 September 30, 2026; 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 Tax Hedge Gains, Net | | September 30, 2026 | | ($ in thousands) Fiscal year 2026 | | $ | 97,989 Fiscal year 2027 | | | 96,449 Fiscal year 2028 | | | 90,414 Fiscal year 2029 | | | 91,733 Fiscal year 2030 and thereafter | | | 249,014 | | $ | 625,599 | | Third Quarter 2026 Preliminary Financial Statements and Other Supplemental Information Consolidated Balance Sheets ($s in thousands except per share data) | | September 30, 2026 | | June 30, 2026 | | December 31, 2025 ASSETS | | (unaudited) | | (unaudited) | | (audited) Cash and cash equivalents | | $ | 993,008 | | | $ | 607,562 | | | $ | 531,043 | Cash collateral posted to counterparties | | | 834,736 | | | | 570,020 | | | | 399,344 | Mortgage-backed securities (including pledged of $25,239,341; $23,669,753; and $14,593,470, respectively) | | | 25,912,607 | | | | 25,066,198 | | | | 16,306,988 | Due from counterparties | | | 61,439 | | | | 53,446 | | | | 17,425 | Derivative assets | | | — | | | | 8,441 | | | | 10,498 | Accrued interest receivable | | | 113,913 | | | | 104,272 | | | | 67,940 | Other assets, net | | | 9,503 | | | | 9,663 | | | | 8,940 | Total assets | | $ | 27,925,206 | | | $ | 26,419,602 | | | $ | 17,342,178 | | | | | | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | Liabilities: | | | | | | Repurchase agreements | | $ | 24,190,276 | | | $ | 22,644,742 | | | $ | 13,904,231 | Due to counterparties | | | 389,511 | | | | 380,947 | | | | 811,656 | Derivative liabilities | | | 89,336 | | | | 9,117 | | | | 4,830 | Cash collateral posted by counterparties | | | — | | | | 15,500 | | | | 8,373 | Accrued interest payable | | | 137,153 | | | | 135,194 | | | | 95,196 | Accrued dividends payable | | | 50,580 | | | | 46,943 | | | | 37,171 | Other liabilities | | | 16,295 | | | | 12,092 | | | | 18,577 | Total liabilities | | | 24,873,151 | | | | 23,244,535 | | | | 14,880,034 | | | | | | | Shareholders' equity: | | | | | | Preferred stock | | $ | 223,593 | | | $ | 107,843 | | | $ | 107,843 | Common stock | | | 2,584 | | | | 2,374 | | | | 1,748 | Additional paid-in capital | | | 4,025,147 | | | | 3,760,123 | | | | 2,921,551 | Accumulated other comprehensive loss | | | (164,603 | ) | | | (128,074 | ) | | | (127,061 | ) Accumulated deficit | | | (1,034,666 | ) | | | (567,199 | ) | | | (441,937 | ) Total shareholders' equity | | | 3,052,055 | | | | 3,175,067 | | | | 2,462,144 | Total liabilities and shareholders' equity | | $ | 27,925,206 | | | $ | 26,419,602 | | | $ | 17,342,178 | | | | | | | Preferred stock aggregate liquidation preference | | $ | 231,500 | | | $ | 111,500 | | | $ | 111,500 | Book value per common share | | $ | 10.91 | | | $ | 12.90 | | | $ | 13.45 | Common shares outstanding | | | 258,430,745 | | | | 237,414,259 | | | | 174,814,912 | Consolidated Statements of Comprehensive Income (Loss) | | | | Three Months Ended | | Nine Months Ended ($s in thousands except per share data) | | September 30, 2026 | | June 30, 2026 | | September 30, 2026 | | (unaudited) | | (unaudited) | | (unaudited) INTEREST INCOME | | | | | | Interest income | | $ | 332,497 | | | $ | 302,751 | | | $ | 892,637 | Interest expense | | | (230,935 | ) | | | (208,968 | ) | | | (618,039 | ) Net interest income | | | 101,562 | | | | 93,783 | | | | 274,598 | | | | | | | GAINS (LOSSES) | | | | | | Realized (loss) gain on sales of investments, net | | | (544 | ) | | | — | | | | 8,177 | Unrealized loss on investments, net | | | (1,465,047 | ) | | | (25,622 | ) | | | (1,742,480 | ) Gain on derivative instruments, net | | | 1,041,087 | | | | 128,845 | | | | 1,274,659 | Total (losses) gains, net | | | (424,504 | ) | | | 103,223 | | | | (459,644 | ) | | | | | | EXPENSES | | | | | | General and administrative expenses | | | (11,062 | ) | | | (15,206 | ) | | | (46,745 | ) Other operating expense, net | | | (1,532 | ) | | | (1,007 | ) | | | (3,315 | ) Total operating expenses | | | (12,594 | ) | | | (16,213 | ) | | | (50,060 | ) | | | | | | Net (loss) income | | | (335,536 | ) | | | 180,793 | | | | (235,106 | ) Preferred stock dividends | | | (2,769 | ) | | | (2,650 | ) | | | (8,076 | ) Net (loss) income to common shareholders | | $ | (338,305 | ) | | $ | 178,143 | | | $ | (243,182 | ) | | | | | | Unrealized loss on available-for-sale investments, net | | | (36,529 | ) | | | (865 | ) | | | (37,542 | ) Total other comprehensive loss | | | (36,529 | ) | | | (865 | ) | | | (37,542 | ) Comprehensive (loss) income to common shareholders | | $ | (374,834 | ) | | $ | 177,278 | | | $ | (280,724 | ) | | | | | | Weighted average common shares-basic | | | 251,842,414 | | | | 222,220,145 | | | | 224,905,226 | Weighted average common shares-diluted | | | 251,842,414 | | | | 223,603,596 | | | | 224,905,226 | Net (loss) income per common share-basic | | $ | (1.34 | ) | | $ | 0.80 | | | $ | (1.08 | ) Net (loss) income per common share-diluted | | $ | (1.34 | ) | | $ | 0.80 | | | $ | (1.08 | ) Dividends declared per common share | | $ | 0.51 | | | $ | 0.51 | | | $ | 1.53 | Non-GAAP Financial Measures In addition to reporting the Company's financial results determined in accordance with GAAP, management of the Company believes that investors' understanding of our operating results may be enhanced by the use of non-GAAP financial measures, which are used by management internally, along with GAAP measures, to evaluate our performance. Our non-GAAP financial measures 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 additional measures of the investment portfolio's return. Drop income 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 as the economic equivalent of net interest income (interest income less implied financing cost) on the underlying Agency security from trade date to settlement date. However, drop income does not represent the total realized gain/loss from the Company's investments in TBA securities. Management also includes net periodic interest from its interest rate swaps, which is included in "gain (loss) on derivatives instruments, net," in EAD and economic net interest income 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 measures and may be different from non-GAAP measures used by other companies. In addition, other companies, including in our industry, may calculate comparable measures differently, which reduces their usefulness as comparative measures. Investors should not rely on any single financial measure when evaluating our business. These non-GAAP measures should be considered as supplemental in nature and not as a substitute for our operating results in accordance with GAAP. Reconciliations of each non-GAAP measure to certain GAAP financial measures are provided below. | | Three Months Ended ($s in thousands except per share data) | | September 30, 2026 | | June 30, 2026 Comprehensive income (loss) to common shareholders (GAAP) | | $ | (374,834 | ) | | $ | 177,278 | Less: | | | | Change in fair value of investments, net (1) | | | 1,502,120 | | | | 26,487 | Change in fair value of derivative instruments, net (2) | | | (1,032,611 | ) | | | (123,082 | ) EAD to common shareholders (non-GAAP) | | $ | 94,675 | | | $ | 80,683 | | | | | Weighted average common shares | | | 251,842,414 | | | | 222,220,145 | EAD per common share (non-GAAP) | | $ | 0.38 | | | $ | 0.36 | | | | | Net interest income (GAAP) | | $ | 101,562 | | | $ | 93,783 | Net periodic interest from interest rate swaps | | | 82 | | | | 542 | Economic net interest income | | | 101,644 | | | | 94,325 | TBA drop income (3) | | | 8,394 | | | | 5,221 | Operating expenses | | | (12,594 | ) | | | (16,213 | ) Preferred stock dividends | | | (2,769 | ) | | | (2,650 | ) EAD to common shareholders (non-GAAP) | | $ | 94,675 | | | $ | 80,683 | | | | | Net interest spread (GAAP) | | | 1.18 | % | | | 1.16 | % Net periodic interest as a percentage of average repurchase borrowings | | | — | % | | | 0.01 | % Economic net interest spread (non-GAAP) | | | 1.18 | % | | | 1.17 | % | | | | (1) | | Amounts include realized and unrealized gains and losses from the Company's MBS. (2) | | Amounts include 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. Amounts exclude TBA drop income and net periodic interest from interest rate swaps. (3) | | TBA drop income 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 Ms. Popenoe's quote, may include, without limitation, statements regarding the Company's financial performance in future periods, future interest rates, future market credit spreads, management's views on expected characteristics of future investment and macroeconomic environments, central bank strategies, prepayment rates and investment risks, future investment strategies, future leverage levels and financing strategies, the use of specific financing and hedging instruments and the future impacts of these strategies, future actions by the Federal Reserve, and the expected performance of the Company's investments. The Company's actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements as a result of unforeseen external factors. These factors may include, but are not limited to, the Company's ability to find suitable investment opportunities; changes in domestic economic conditions; geopolitical events and instability, including the conflict in the Middle East, and the related impacts on macroeconomic conditions as a result of such related uncertainty; tariffs that the U.S. imposes on trading partners or tariffs imposed on the U.S. from trading partners, including the legality of any such tariff measures; global and domestic government policy changes and the ability or inability to react to rapidly changing economic policies; changes in interest rates and credit spreads, including the repricing of interest-earning assets and interest-bearing liabilities; the Company's investment portfolio performance, particularly as it relates to cash flow, prepayment rates, and credit performance; the impact on markets and asset prices from changes in the Federal Reserve's policies regarding purchases of Agency RMBS, Agency CMBS, and U.S. Treasuries; actual or anticipated changes in Federal Reserve monetary policy or the monetary policy of other central banks; adverse reactions in U.S. financial markets related to actions of foreign central banks or the economic performance of foreign economies, including in particular China, Japan, the European Union, and the United Kingdom; the cost and availability of financing, including the future availability of financing due to changes to regulation of, and capital requirements imposed upon, financial institutions; the cost and availability of new equity capital; changes in the Company's leverage and use of leverage; changes to the Company's investment strategy, operating policies, dividend policy, or asset allocations; the quality of performance of third-party servicer providers, including the Company's sole third-party service provider for our critical operations and trade functions; the loss, unavailability, or security of the Company's third-party service providers' service and technology that support critical functions of the Company's business, including those related to the Company's trading and borrowing activities, due to outages, interruptions, or other failures; the level of defaults by borrowers on loans underlying MBS; impacts from emerging technologies, such as artificial intelligence, including the development of applications utilizing such technologies; changes in the Company's industry; increased competition; changes in government policy or regulations affecting the Company's business; changes or volatility in the repurchase agreement financing markets and other credit markets; changes to the market for interest rate swaps and other derivative instruments, including changes to margin requirements on derivative instruments; uncertainty regarding continued government support of the U.S. financial system and U.S. housing and real estate markets, or to reform the U.S. housing finance system including the resolution of the conservatorship of Fannie Mae and Freddie Mac; the composition of the Board of Governors of the Federal Reserve; the political environment in the U.S.; systems failures or cybersecurity incidents; and exposure to current and future claims and litigation. For additional information on risk factors that could affect the Company's forward-looking statements, see the Company's Annual Report on Form 10-K for the year ended December 31, 2025, and other reports filed with and furnished to the Securities and Exchange Commission. 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. 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. 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. About Dynex Capital Dynex Capital, Inc. (NYSE: DX) is a leading internally managed REIT with a long track record of delivering attractive dividends through the disciplined risk management of investments in high-quality mortgage assets backed by U.S. residential and commercial real estate. For more information on Dynex, please visit our website at www.dynexcapital.com or connect with us on LinkedIn. View source version on businesswire.com: https://www.businesswire.com/news/home/20261019160083/en/ Contacts Investor Relations Contact Email: [email protected] Phone Number: 804-217-5897

- Interested in Dynex Capital, Inc.? Here are five stocks we like better. - Book value fell sharply: Dynex Capital's book value per common share declined 15.4% to $10.91 in Q3, producing a negative 11.5% total economic return as Treasury yields rose and Agency MBS spreads widened. - Capital and liquidity remained strong: The company raised $384 million, ended the quarter with a $3.1 billion equity base and held $1.3 billion in cash and unencumbered securities, while maintaining leverage at 9.0 times equity. - Management sees attractive opportunities ahead: Wider mortgage spreads and reduced refinancing risk improved the outlook for Agency MBS, with estimated static returns on newly purchased, hedged assets of about 20% to 25% at roughly 10 times leverage. - Will the SpaceX IPO Put These 5 Public Space Stocks Into a Higher Orbit? Dynex Capital (NYSE:DX) reported a decline in third-quarter book value as higher Treasury yields and wider Agency mortgage-backed securities spreads pressured results, while management said the market repricing has created what it views as an attractive forward investment opportunity. Book value per common share fell 15.4% during the quarter to $10.91 as of Sept. 30, from $12.90 at June 30. Including the company's $0.51 common dividend, Chief Financial Officer Mike Sartori said total economic return was negative 11.5%. Comprehensive loss was $1.49 per common share, compared with comprehensive income of $0.80 per share in the second quarter. → ManpowerGroup Stock Sinks on Q3 Results, But Fundamentals Stay Solid Co-Chief Executive Officer and President Smriti Popenoe said the company's liquidity, financing and hedging framework functioned as intended during a volatile period for fixed-income markets. Ten-year Treasury yields rose above 5% during the quarter, while Agency MBS spreads widened. Chief Investment Officer T.J. Connelly said current-coupon mortgage yields rose nearly 100 basis points in the third quarter, while the 10-year Treasury yield increased by more than 80 basis points. Mortgage spreads widened by nearly 20 basis points, largely during the final two weeks of September. At quarter-end, current-coupon spreads to seven-year swaps were about 162 basis points, near the wider end of this year's range, he said. → Does the AI Selloff Put Alphabet's Breakout in Doubt? Connelly said spread widening accounted for more than 80% of the company's quarterly return impact. Dynex added hedges as rates rose, which he said limited the effect of the rate move, while the company's liquidity covered margin needs in the ordinary course of business. The company maintained its exposures and did not de-lever during the repricing. Popenoe attributed the broader rise in yields to increased capital demand associated with artificial intelligence investment and related infrastructure, along with geopolitical uncertainty and rising government borrowing needs. She said Agency MBS were not the origin of the market stress, despite choppy and at times illiquid trading conditions. → 3 Stocks Delivering Bigger Dividends Despite Market Uncertainty Dynex raised $384 million of capital during the quarter, net of fees, including $268 million of common equity through its at-the-market program. It also raised $116 million of net proceeds from a Series D preferred stock offering completed in late September, its first preferred equity offering since 2020. Sartori said the preferred issuance increased preferred equity to approximately 7% of the company's total equity base, from roughly 3%, and diversified the capital structure. Popenoe said the company sees room for preferred equity to become a larger part of its capital mix, though future issuance would remain opportunistic and depend on factors including the cost of capital and potential uses of proceeds. The company ended the quarter with a $3.1 billion equity capital base, up 24% year to date. It reported $1.3 billion of cash and unencumbered securities, representing more than 42% of total equity. That liquidity level was about 9% lower than the prior quarter, which Sartori said reflected its intended use as a buffer against book-value declines and to preserve capacity for future investments. Dynex maintained more than $24 billion of repo financing across more than 25 counterparties. Sartori said funding markets remained "deep and supportive," while Connelly said mortgage repo spreads to SOFR stayed in a 12- to 15-basis-point range and quarter-end passed without noticeable market pressure. - Asset yields increased to 5.0% from 4.9% in the prior quarter. - Effective financing costs rose modestly to 3.82% from 3.79%. - Economic net interest spread remained approximately 1.18%. - Leverage ended the quarter at 9.0 times shareholders' equity. Management said wider mortgage spreads, limited refinancing incentives and a more stable duration profile have improved the prospective return outlook for Agency MBS. Connelly said only about 1% of the outstanding mortgage universe has more than a 25-basis-point refinance incentive, while most Agency mortgages trade below par. He said the reduced refinancing incentive and substantial extension that has already occurred across the mortgage universe have lowered the remaining extension risk if interest rates rise further. Dynex's modeled impact from an instantaneous 50-basis-point increase in rates as of Sept. 30 was a roughly 0.5% reduction in common equity, compared with 3.5% at June 30, according to Connelly. Dynex increased portfolio spread sensitivity to approximately 5.7% of common equity per 10 basis points of spread at quarter-end, from about 4.6% at June 30. Connelly said a 20-basis-point tightening in spreads, equal to roughly the quarter's widening, would imply an approximately 11.5% gain to book value, all else equal. The company cited demand from money managers, potential GSE buying and prospective foreign investor demand as supportive market factors. Connelly said supply dynamics at current rates mean the sector does not require substantial incremental demand to support prices. He also pointed to the growth of central clearing and sponsored repo, potential bank-capital-rule changes and Federal Reserve liquidity facilities as possible long-term supports for financing-market depth. At prevailing spreads, Connelly said Dynex estimates static returns on equity for newly purchased Agency MBS hedged with interest-rate swaps at around 20% in lower coupons and roughly 25% in current coupons. Those estimates were based on approximately 10 times leverage. He said the company had net purchased assets since quarter-end. Popenoe said Dynex's decision not to de-lever preserved the portfolio's earnings power despite the decline in book value. She said management remained confident in dividend coverage based on the portfolio's existing earnings capacity, though she did not provide a new dividend outlook. Dynex's estimated book value, net of the accrued dividend, was $10.95 as of the Friday before the earnings call, Connelly said. Meanwhile, annualized general and administrative expense was 2% of total equity during the quarter. Sartori said G&A as a percentage of equity was about 40% lower than in the same period of 2025, reflecting operating leverage as the company has grown. Dynex Capital, Inc (NYSE: DX) is a mortgage real estate investment trust that invests in mortgage-related assets. Its portfolio primarily consists of agency mortgage-backed securities, including securities backed by residential and commercial mortgages, as well as other mortgage assets. The company uses financing arrangements, including repurchase agreements, to support its investment activities and seeks to generate income from the spread between the returns on its investments and its financing and operating costs. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Dynex Capital Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

This article first appeared on GuruFocus. - Book Value Per Common Share: $10.91 at September 30, down from $12.90 at June 30 (a 15.4% decline). - Total Economic Return: Negative 11.4% (negative 11.5% including the $0.51 common dividend). - Comprehensive Loss: $1.49 per common share, versus comprehensive income of $0.80 per share in Q2. - Capital Raised: $384 million accretive capital net of fees, including $268 million of common equity via ATM and $116 million of net proceeds from the Series D preferred offering. - Preferred Equity: Increased from ~3% to ~7% of total equity base following the offering. - Repo Financing: More than $24 billion across over 25 counterparties. - Asset Yields: Rose from 4.9% to 5.0%. - Effective Financing Cost: Increased modestly from 3.79% to 3.82%. - Economic Net Interest Spread: Stable at approximately 1.18%. - Liquidity: $1.3 billion of cash and unencumbered securities, over 42% of total equity (down ~9% from prior quarter). - Total Equity Capital Base: $3.1 billion, up 24% year to date. - G&A Expenses: 2% of total equity on an annualized basis; ~40% lower than the same period in 2025. - Leverage: 9.0 times shareholders' equity at quarter end. - Portfolio Spread Sensitivity: Increased from ~4.6% to ~5.7% of common equity per 10 bps of spread. - Rate Sensitivity: Instantaneous 50 bps rate rise modeled to reduce common equity by only ~0.5%, versus 3.5% at June 30. - Static ROEs: ~20% on new investments in lower coupons and ~25% in current coupons, hedged with interest rate swaps. - Warning! GuruFocus has detected 9 Warning Signs with DX. - Is DX fairly valued? Test your thesis with our free DCF calculator. Release Date: October 19, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Dynex Capital Inc (NYSE:DX) maintained a strong liquidity position with $1.3 billion in cash and unencumbered securities, representing over 42% of total equity, which buffered book value declines. - The company's financing remained deep and reliable with over $24 billion in repo financing across more than 25 counterparties, supporting the ability to hold positions through volatility. - Dynex Capital Inc (NYSE:DX) issued $116 million of Series D preferred stock, diversifying its capital base and increasing preferred equity to 7% of total equity, which was accretive to common shareholders. - The portfolio's convexity profile improved significantly, with a 50 basis point rise in rates now modeled to reduce common equity by only about 0.5%, compared to 3.5% at June 30. - Attractive forward returns are expected, with static ROEs on new investments around 20% in lower coupons and 25% in current coupons, and spread sensitivity increased to 5.7% of common equity per 10 basis points of spread widening. - Dynex Capital Inc (NYSE:DX) reported a 15.4% decline in book value per share to $10.91 and a negative total economic return of 11.4% for the third quarter. - The company experienced a comprehensive loss of $1.49 per common share, a sharp reversal from comprehensive income of $0.80 per share in the prior quarter. - Spread widening drove over 80% of the negative return in the quarter, with mortgage spreads widening nearly 20 basis points, largely in the last two weeks of September. - Leverage increased to 9.0 times shareholders' equity, up from prior levels, largely due to the decline in book value, which may heighten risk if market conditions worsen. - Despite strong liquidity, the company's G&A expenses were 2% of total equity on an annualized basis, and while down 40% year-over-year, they remain a focus for further operating leverage. Q: Doug Harter (US Bancorp) asked about risk positioning and comfort with letting leverage drift higher if markets stay weak and spreads widen in the short term.A: CIO T.J. Connelly emphasized the favorable financing environment, noting money market balances have grown roughly 60% over the past two to three years to about $8 trillion, which underpins the ability to carry positions through volatility. He said the jump in implied (not just realized) volatility means significant macro risk is priced into mortgages, and the healthy financing market gives confidence in carrying current leverage. Q: Doug Harter (US Bancorp) asked for the math behind the 20%-plus return expectation.A: CIO T.J. Connelly said the levered ROE is model-based on current spreads: roughly 20% static ROE on 5s through 6s, and about 25% on higher coupons such as 6.5s, with leverage of around 10x assumed in the static ROE model. Q: Bose George (KBW) asked for an update on book value quarter to date.A: CIO T.J. Connelly said estimated book value net of the accrued dividend was $10.95 as of the prior Friday (he clarified the figure after a brief audio cut). Q: Marissa Lobo (UBS) asked about the demand side of the compelling forward opportunity bank demand, GSE buying, foreign demand and who is the marginal buyer of Agency MBS at these spread levels.A: CIO T.J. Connelly said GSEs were very likely in the market in September and remain a backstop bid; at current rate levels and supply dynamics, not much marginal demand is needed. He cited foreign buyers (e.g., Norges Bank potentially selling global sovereigns to buy US Agency MBS) as a notable long-term flow, with the mortgage REIT community increasingly important as well. Co-CEO Smriti Popenoe added that forward returns look solid in the low- to mid-20s, aided by the decision not to de-lever, which preserved the portfolio's full earnings power. Q: Marissa Lobo (UBS) asked how to think about the preferred mix going forward and whether there is a target level within the capital structure.A: Co-CEO Smriti Popenoe said the Series D issuance was massively accretive to common shareholders and that preferred is now about 7% of the capital stack, with room to go higher. She said capital structure and capital raising decisions remain opportunistic, weighing accretion and the spread between the cost of capital and where capital can be deployed, and that the company could use preferred again in the future. Q: Merrill Ross (Compass Point) asked about the changes to hedge positions on slide 24 timing, rationale, and satisfaction with quarter-end positioning.A: CIO T.J. Connelly said the team added to the hedge book progressively and in lockstep as rates rose, with a clear game plan as yields broke through 5% and the new convexity profile of mortgages became apparent. He noted a modest increase in longer hedges, both swaps and Treasury futures. Q: Merrill Ross (Compass Point) asked where the company sees more value given Freddie Mac's projection of a 7.5% mortgage rate through 2027, and whether it prefers discounted lower coupon pools over current coupon.A: CIO T.J. Connelly said the team does not fixate on a static mortgage rate and instead prepares for a range of higher and lower scenarios, building the portfolio to generate solid cash flows across environments. He said the stable duration and convexity profile is most compelling in coupons of 5.5 and lower at this point. Q: Trevor Cranston (Citizens JMP) asked about macro views on rates moving significantly higher or lower and how MBS would perform in either case, given overall rate exposure came down this quarter.A: CIO T.J. Connelly said the key factor is elevated implied volatility in swaptions and rate options, well above realized volatility, which drives the ability to earn the targeted ROEs. He noted mortgage convexity is very stable in a higher-rate environment, housing turnover is around 4.5% per year with existing home sales possibly bottoming, and the wide spread compensates for macro risk so taking significant macro exposures does not make sense. Co-CEO Smriti Popenoe added that roughly 90% of the mortgage universe has already extended, so further extension from higher rates is limited and the market already prices significant risk premium. Q: Trevor Cranston (Citizens JMP) noted the 20%-plus incremental ROEs assume about 10x leverage versus the current 9x, and asked whether the existing portfolio provides good dividend coverage and how the company thinks about dividend policy after Q3 changes.A: Co-CEO Smriti Popenoe said that because the company did not de-lever, the book value mark was taken while the portfolio's earnings power was preserved, and confidence in dividend coverage remains intact since the asset side was not significantly adjusted. CIO T.J. Connelly clarified the quoted ROEs assume 10x leverage versus 9x at quarter end, and noted the company has been a net purchaser of assets since quarter end. Q: Bose George (KBW) asked about expenses, noting G&A looked closer to 1.5% than the stated 2%, and whether anything was unusual or seasonal and whether 2% is the right run rate going forward.A: CFO Michael Sartori confirmed G&A is down about 40% year over year and that the company remains focused on the 2% of equity ratio, expecting operating leverage benefits as it grows. He attributed the decrease primarily to compensation expense aligned with company performance and shareholder value. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management attributed the 15.4% book value decline to a simultaneous risk and price rerating driven by AI-related capital demand, infrastructure needs, and rising government borrowing. - The company deliberately chose not to deleverage during the quarter, a strategic decision intended to preserve the portfolio's full earnings power despite mark-to-market volatility. - Management emphasized that the 'convexity profile' of the mortgage market has improved dramatically, as most mortgages have already extended and have limited refinancing incentive. - Liquidity levels, representing over 42% of total equity, functioned as designed to absorb book value movements and support margin requirements without forced asset sales. - The issuance of Series D preferred stock was highlighted as a move to diversify the capital base and add a source of permanent, accretive capital to the structure. - Management views Agency MBS as a 'sideshow' to broader market stress, noting that the sector's fundamentals remain constructive despite choppy flows and illiquidity. - Management projects forward returns in the 20% to 25% ROE range, citing attractive real yields and historically wide spreads that compensate for macro risks. - The portfolio is positioned to be relatively agnostic to interest rate direction, with modeled sensitivity showing only a 0.5% equity impact for a 50 basis point rate rise. - Guidance assumes that the 'convexity selling' from other market participants has largely run its course, leading to more stable future cash flows and durations. - Strategic focus remains on capturing the embedded carry in the portfolio, with management noting they have net purchased assets since the end of the third quarter. - Future capital allocation will remain opportunistic, with the potential to further increase the preferred equity mix beyond the current 7% of the capital stack. - The company completed its first preferred equity offering in over six years, increasing preferred equity from 3% to 7% of the total equity base. - G&A expenses as a percentage of equity declined by approximately 40% compared to the same period in 2025, reflecting increased operating leverage as the platform scales. - Management flagged geopolitical uncertainty and rising global government borrowing as persistent upward pressures on yields and volatility. - The 'Dynex Angle' was launched as a new communication tool to provide deeper macro perspectives and market analysis to investors. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management expressed high confidence in carrying current leverage due to robust financing markets and the growth of money market fund balances. - They noted that mortgage repo spreads have remained near historical tights, providing a stable environment for holding positions through volatility. - Management identified GSEs as value-sensitive buyers providing a backstop bid, alongside emerging demand from foreign investors like Norges Bank. - They argued that current supply dynamics mean significant marginal demand isn't required to support the market at these yield levels. - Management reiterated confidence in dividend coverage, noting that because they did not deleverage, the portfolio's core earnings power remains intact. - They clarified that the 20%+ ROE targets are based on a modeled 10x leverage, while the company ended the quarter at 9.0x. - Hedges were added 'in lockstep' as rates rose throughout the quarter to limit the impact of the 10-year Treasury eclipsing 5%. - Management is satisfied with the current hedge book, stating it is designed to protect the portfolio across a wide range of interest rate scenarios.

Image source: The Motley Fool. Monday, Oct. 19, 2026 - Head of Capital Markets and Investor Relations - Kaitlyn J. Mauritz - Co-Chief Executive Officer and President - Smriti Laxman Popenoe - Chairman and Co-Chief Executive Officer - Byron Boston - Chief Financial Officer - Michael Sartori - Chief Investment Officer - Terrence J. Connelly Jr. Operator: Good day, and welcome to the Dynex Capital, Inc. Third Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kaitlyn Mauritz, Head of Capital Markets and Investor Relations. Please go-- Kaitlyn J. Mauritz: Thank you, operator, and thank you to everyone joining us today for Dynex third quarter 2026 earnings conference call. Joining me on today's conference call are Smriti Popenoe, Co-Chief Executive Officer and President Byron Boston, Chairman and Co-Chief Executive Officer Michael Sartori, chief financial officer and T.J. Connelly, chief investment officer. Before we begin, I would like to remind you that today's discussion may include forward looking statements. These statements are based on current expectations, forecasts and assumptions, are subject to risks, uncertainties, and other factors that could cause actual results to differ materially. For additional information regarding these risks and factors, please refer to our filings with the SEC available in the Investors section of our website as well as on the SEC's website. Dynex undertakes no obligation to update or revise any forward looking statements. Our earnings press release was issued and filed with the SEC earlier today and is available on the Investors section of our website at dynexcapital.com as well as on the SEC's website. We may also reference our earnings presentation today which is also available on our investor page. And with that, I will turn the call over to Smriti for opening remarks. Smriti Laxman Popenoe: Thank you, Kait. Good morning, everyone, and thank you for joining us today. This was a pivotal quarter in the markets, and Dynex was prepared for this moment. We had a strong liquidity position, Our experienced team maintained our position in our highest conviction trade and we have retained the capacity to invest as spreads have moved wider. In the third quarter, book value declined 15.4% to $10.91 per share, a total economic return of negative 11.4%. Our portfolio operated as designed. The liquidity position absorbed the book value movement. Our financing remained deep and reliable. And our hedging limited our downside as 10-year treasury yields rose above 5%. During the quarter, we took another step in the evolution of our capital structure. With the issuance of our Series D preferred stock. Our first preferred equity offering in more than 6 years. The transaction added an accretive source of permanent capital and further diversified our capital base. The quarter's results reflect higher volatility and higher yields in the overall bond markets and wider spreads in the Agency MBS markets. These moves were driven by fundamental shifts in the macroeconomic system. US economy is in the midst of a significant positive investment cycle. Driven by AI and the infrastructure required to support it, During the third quarter, we experienced a simultaneous and significant risk and price rerating. Of several crucial factors related to AI investment. The significant demand for capital in this sector, the price of that capital, the impacts of that capital investment on the price of commodities, and the follow-on impacts of all of this on inflation, are all higher. Pushing yields up. At the same time, geopolitical uncertainty and rising government borrowing needs, both in the US and globally, have reinforced upward pressure on yields. Against this backdrop, agency MBS have actually been a sideshow, not the main act, And while flows were choppy and illiquid at times, the sector has not been the origin of market stress. In fact, the fundamentals and technicals behind agency MBS are highly constructive. After the significant and rapid repricing, we find ourselves once again facing a highly attractive investment opportunity. Absolute real yields are compelling. At current levels, mortgage spreads are still historically wide and provide significant compensation at a time when the value of the borrower's prepayment option is substantially lower. Refinancing incentive is extremely limited, and much of the mortgage universe has already extended substantially. As a result, the duration and expected cash flows of these assets are more stable and most importantly, the convexity profile of the mortgage market has improved dramatically. As a result, and as long term investors in Agency MBS, we are being paid a widespread while assuming considerably less cash flow uncertainty than is typically associated with mortgages. This combination underpins our confidence around strong forward returns. Yes, the cost of capital has temporarily adjusted higher, and prospective returns have adjusted materially higher. This is an important moment for Dynex and our shareholders. We have been building a more scaled and resilient Dynex with the liquidity and flexibility to navigate market and operating shocks. As we grow, our investment platform becomes increasingly durable, with greater capacity to deploy capital and opportunistically capture attractive returns. I would now like to turn the call over to Mike and T.J. to discuss our financial results and portfolio positioning in greater detail. Michael Sartori: Thank you, Smriti. I will now review our financial results for the third quarter. We reported book value per common share of $10.91 at September 30. Compared with $12.90 at June 30. Including the $0.51 common dividend, total economic return was -11.5%. Comprehensive loss was $1.49 per common share, compared with comprehensive income of 80¢ per share in the second quarter. We raised $384 million of accretive capital during the third quarter, net of fees. Including $268 million of common equity through our ATM program. While maintaining an opportunistic approach to capital raising. We also completed our first preferred equity offering since 2020, raising $116 million of net proceeds in late September. The transaction was an important step in creating strategic flexibility in our capital structure. The offering increased preferred equity as a percentage of our capital stacks from approximately 3% to 7% of our total equity base. Diversifying our sources of capital as we continue to grow the business. The transaction was accretive and priced at an attractive cost of capital, particularly relative to the current yield on our common equity. Importantly, funding markets remain deep and supportive. We maintain more than $24 billion of repo financing across over 25 counterparties. The breadth of our counterparty relationships combined with the high quality and liquidity of our agency collateral provide substantial capacity to support additional investment opportunities. Asset yields increased from 4.9% to 5%. Outpacing the modest increase in our effective financing cost from 3.79% to 3.82%. As a result, our economic net interest spread remained stable at approximately 1.18%. Liquidity remains a key strength with $1.3 billion of cash and unencumbered securities at quarter end. Representing over 42% of total equity. Down approximately 9% from the prior quarter. As designed, liquidity levels have buffered the book value declines. Maintaining ample liquidity remains a core element of our risk management framework. And allows us to capitalize on market opportunities as they arise. We ended the quarter with $3.1 billion equity capital an increase of 24% year-to-date. Turning to operating expenses. G&A for the third quarter was 2% of total equity on an annualized basis, consistent with the run rate we discussed last quarter. As we have grown, we have continued to generate meaningful operating leverage across the platform. G&A expenses have declined as a percentage of equity over time. And was approximately 40% lower than the same period in 2025. As we execute on our business plan, we have continued to invest in talent, technology, and infrastructure to support a larger, more scalable platform. We remain committed to expense discipline and focused on further enhancing operating efficiency as we scale. With that, I will turn it over to TJ to discuss our portfolio and outlook in greater detail. Terrence J. Connelly Jr.: Thanks, Mike. Current coupon mortgage yields moved nearly 100 basis points higher in the third quarter. The 10-year treasury rose over 80 basis points eclipsing 5% for the first time since 2007. And mortgage spreads widened nearly 20 basis points. Much of it in the last 2 weeks of September. At quarter end, current coupon spreads to 7-year swap. Were around 162 basis points. Near the wide end of this year's range. We managed our portfolio actively and with discipline. As rates rose, we added to our hedges in lockstep. As a result, we limited the impact of the rate move. Spread widening drove over 80% of the return in the quarter. And our liquidity continued to do its job. This covered margin in the normal course of business, and we held our exposures and their return potential. We did not delever. As I turn to market dynamics, this quarter, I am excited to announce the release of the Dynex Angle, to accompany our earnings presentation. It gives you a deeper look into our market and macro perspectives. You can find it on our website under the Dynex perspective heading. I want to focus on what drove spreads wider. How orderly it was, and why it leaves us with 1 of the most compelling risk profiles we have seen in this market. Realized rate volatility increased and implied volatilities in interest rate options markets jumped even more. Causing cheapening of mortgages as expected. Loaders with interest rate caps were particularly exposed. Hedge funds were then forced to quickly exit or hedge their floater by selling agency MBS. We also saw convexity selling from servicers and other mortgage hedges as yields rose rapidly and durations extended. Outside of the activity I just mentioned, the market functioned in an orderly fashion. Money managers continued buying agency MBS into the wider spread, and that has continued into October. The GSEs also operated as we expected, As I said in July, they act as value sensitive buyers. And there was anecdotal evidence of GSE buying in late September. They added just enough demand when spreads were wide to support a healthy mortgage market. Funding markets remain very robust, and these conditions have continued in October. With strong demand from money market funds intermediated well by the dealer community. Mortgage repo spreads to SOFR held near the tights of the last several years, in the 12 to 15 basis point range. Moreover, for the first time in many years, quarter end came and went without any noticeable pressure. Looking ahead, we also see further structural support for financing from the expansion of central clearing and sponsor repo. Potential changes to bank capital requirements and the Fed's standing liquidity facility. All of which should contribute to the depth and resilience of funding markets over time. Smriti described the improved mortgage profile as an important part of today's opportunity. Let me put some numbers behind it and explain what it means for Dynex's portfolio today. Only about 1% of the outstanding mortgages have more than a 25 basis point refinance incentive, and the vast majority of agency mortgages trade below par. The convexity selling that added to the push higher in yields has largely run its course. Which means there is very little extension left even if rates move higher still. You can see this in the interest rate sensitivity table at the top of page 23 of our presentation. Where the modeled impact of rate movements on book value is now much more limited. An instantaneous 50 basis point rise in rates as of September 30 is modeled to reduce common equity by only about 0.5%. Compared with 3.5% at June 30. That means our shareholders have the potential to capture the attractive carry I mentioned without relying on a particular path for interest rates. Given this setup, we deliberately let our spread exposure grow. Our portfolio spread sensitivity increased from about 4.6% common equity per 10 basis points of spread at June 30, to about 5.7% at quarter end. What this means is if spreads tighten 20 basis points, which is roughly a retracement of the widening in the third quarter, you see the model shows approximately 11.5% of gains to book value. All else equal. Leverage ended the quarter at 9.0x shareholders' equity. With the increase largely reflecting the decline in book value due to the spread widening and convexity. Our leverage reflects the opportunity set the risk characteristics of the portfolio, and the liquidity we want to maintain. Our confidence in our current positioning is rooted in the market backdrop. Yield spread available favorable supply and demand technicals, the convexity profile driven by more stable mortgage duration, and a favorable financing environment. What matters is not simply that modeled ROE are attractive. With more stable durations and less hedge rebalancing, the portfolio is positioned to retain more of the carry embedded in those returns. We believe we are being well compensated for the risk we are taking which underscores our willingness to operate at the current level of leverage. We maintained our positions through the repricing. Kept our financing, and put new capital to work at wider spreads. Today, we are earning attractive spreads on mortgages with more stable duration amid a funding market that remained resilient through the volatility. That is the opportunity in front of us and we are positioned to capture it. At today's wider spreads, static ROE on new investments hedge with interest rate swaps are around 20% in lower coupons and 25% in current coupons. And as you see in the interest rate sensitivity, a 10 bp spread tightening adds almost 6% of incremental return. I will now turn the call back over to Smriti for some closing remarks. Smriti Laxman Popenoe: Thank you, TJ. Generic repricing is a normal occurrence in the markets. And the mark to market impact of the third quarter's repricing is already reflected in our assets, our balance sheet, our book value, and our share price. At this point, our focus and we believe investors focus should be on the 20%+ ROE that the portfolio could generate in the future. We have a strong conviction in our ability to earn these forward returns. We continue to manage Dynex with a long term shareholder perspective. That means staying disciplined, through significant periods of repricing, managing risk while holding the positions where we have the greatest conviction, and preserving our ability to invest as opportunities emerge. Our focus extends beyond any single quarter. We are building Dynex to compound value across cycles with greater scale, a flexible capital structure, and the capacity to invest when shareholders are well compensated for risk. As always, we remain invested alongside you. In what we believe is a powerful long term opportunity for our shareholders. With that, I would like to open up the call to questions. Operator: Thank you. If you would like to ask a question. If you are using a speakerphone, please make sure your mute function is turned off. To allow your signal to reach our equipment. Once again, that is star 1 to signal for a question. And we will take our first question from Doug Harter with U. S. Bancorp. Please go ahead. Doug Harter: Thanks. TJ, I appreciate what you just said about kind of the risk of the market today. Over kind of the longer term. Can you just talk about the risk positioning and the comfort with ability to just let leverage drift higher if markets continue to be weak and spreads wider in the short term? Terrence J. Connelly Jr.: Yeah. Good morning, Doug. 1 of the most important factors in the market that I discussed a little bit, maybe need to even further emphasize is the favorable financing Over the last 2 to 3 years, we have seen money market balances grow by some 60%. $8 trillion sits in money market funds. And at the end of the day, that drives a lot of our ability to carry positions through volatility in markets. You know? it is really notable that while realized volatility jumped in the third quarter, the big jump was in implied volatility. there is a lot of macro risk priced into these mortgages. We are able to continue to hold the financing through these periods of volatility. So at the end of the day, it is it is all about the financing market for us. And that has been an extremely healthy part of the market. And gives us a lot of confidence in carrying the leverage that we are currently carrying. Doug Harter: Great. And then you talked about, you know, the ability to generate, 20% to 20%+ Can you just kind of walk through the math as to how you are getting to that level of return? Terrence J. Connelly Jr.: Yeah. We are. that is a levered ROE that is, you know, based on our models and where we think where spreads are today and at the end of the third quarter in particular, So we are getting on fives through sixes around 20% static ROE and some of the higher coupons and, you know, 6 and a halves, for instance, are actually around 25% ROE. Based on the model. Leverage works out to be around, 10 on that static ROE model. Doug Harter: Okay. Appreciate that. Thank you, TJ. Terrence J. Connelly Jr.: Mhmm. Pleasure. Operator: Once again, if you find your question has been answered, you may We will move next to Bose George with KBW. Please go ahead. Bose George: Hey, everyone. Good morning. Can we get an update on book value course-to-date? Smriti Laxman Popenoe: Yes of course. Good morning. Bose, as of Friday, our estimated book value net of the accrued dividend was $10.95. Okay. Bose George: Great. Thanks. And then you know, on expenses, you know, you noted the 2% I mean, just when I do the math, it looks like it was, you know, down a decent amount. Like, closer to maybe 1.5 or is there anything unusual or seasonal in that? And then just, like, thinking about it going forward, it is I guess 2% should be kind of the number we use? Smriti Laxman Popenoe: Yeah. Bose, that is right. As we indicated, G&A is down about 40% since last year at this time. We remain focused on that 2% ratio. As we continue to grow, we will see operating leverage benefits from this. At the end of the day, it is about performance and returns and what creates shareholder value. And what that decrease really comes from compensation expense. it is aligned with the company's performance. So and shareholder value. Bose George: Okay. Okay. Great. Thanks. Smriti Laxman Popenoe: Bose, 1 of my colleagues mentioned I may have cut out just slightly As I said, the book value is $10.95. Okay. Bose George: Thanks. Terrence J. Connelly Jr.: Yep. Operator: We go next to Melissa Lobo with UBS. Please go ahead. Melissa Lobo: Thank you, and good morning. You characterized the current environment as a compelling forward opportunity. Could you speak to the demand side of that view, just where you see bank demand, GSE buying, foreign demand, and who do you see as the marginal buyer of agency MBS at these spread levels? Terrence J. Connelly Jr.: Yeah. Good morning. Importantly, as I mentioned, GSEs were very likely in the market in September. They have been a back stop bid to mortgages, and I think that is something we have been talking about for several quarters now ever since the January tweet and their active purchases in the first quarter. So that remains an important backdrop. what is really notable here is given the supply dynamics at these rate levels, you actually need all that much of a marginal demand. We have seen foreign buyers in Europe. For instance, there was the news of the Norges Bank and the possibility that they would be selling global sovereigns to buy agency mortgages, and they specifically mentioned US agency mortgages. that is notable. I think that is a long-term flow that will, underpin and really shows the quality of these assets. Right? it is a yield that you can at these real yield levels are very compelling to the global investors. So I do expect foreign investors to be active on the demand side of the equation. Of course, the mortgage REIT community remains increasingly important to this. Yeah. Smriti Laxman Popenoe: Hi, Melissa. I would also jump in and just talk about you know, the view on forward returns being really solid here in the low to mid-20s. 1 of the other pieces to keep in mind is how we have been able to preserve our earnings power even when book value has declined. So 1 of the key decisions that we made over the quarter was the decision to not delever And by doing so, we have kept so much of the earnings power, in fact, all of it, And that is another big reason for having the level of confidence about compelling opportunity and the forward returns. Melissa Lobo: that is helpful. Thank you. And then just shifting to the capital structure, you talked about the benefits of diversifying with the preferred. How should we think about the preferred mix from here? Is there a level of preferred within the capital structure that you are thinking is appropriate? Smriti Laxman Popenoe: Yeah. The. I mean, we are really happy with the issuance and the timing of that particular deal. It was really massively accretive to the common shareholder. We think of ourselves as having a significant amount of capital structure flexibility here at this point. The total I think Mike mentioned, preferred in the stack is about 7%. That number has room to go higher. As with all of our capital structure decisions, right, and capital raising decisions, it is it is it is opportunistic. it is, you know, thinking through the things like how accretive it is to shareholders, you know, where we can put the capital to work relative to the cost of that capital. But suffice to say, I think we are really happy with, 1, re-entering the market, the reception that we got and then the possibility that this could be something that we could continue to use in terms of, you know, a source of capital in the future. Melissa Lobo: Got it. Thank you. Operator: We will go next to Jason Stewart with Compass Point. Please go ahead. Jason Stewart: Thank you. If we look at slide 24, and look at the changes to your hedge positions, it would be helpful if you described when you changed the positioning and what you were thinking at the time and are you satisfied with where you were positioned at the end of the period? Terrence J. Connelly Jr.: Good morning, Jason. Yes, thanks for the question. The hedges were put. We added to the hedge book pretty much in lock step as rates were moving. We came into the quarter with a very strategic mindset in terms of continuing to add to hedges as rates moved higher. So it was progressive over the course of the quarter. As we broke through 5%, there was a clear realization of the new profile that mortgages would offer in terms of in terms of the convexity that we discussed. So we had a very clear game plan to put in place there. And continue to add the hedges. So you will see a modest increase in some of the longer hedges, in particular, that on page 24, as you mentioned in the. On the swap side of the book as well as on the treasury future side. Yeah. Right. Jason Stewart: Okay. And then, Fannie and Freddie Mac says in mortgage rates, it is gonna be 7.5% through 2027. So, wondering where in that market do you receive more value? Clearly, none. It seems not in TBAs, but do you prefer discounted lower coupon pools over, you know, the current coupon. Terrence J. Connelly Jr.: Yeah. Let me first make a comment on the notion of a static mortgage rate over time is not something we spend a lot of time thinking about. We are thinking about a range of scenarios and preparing for a significant number of outcomes, both higher and lower than that, 7.5 mortgage rate that they mentioned. So yes, our portfolio and. Our portfolio is built accordingly. Right? We are built to generate solid cash flows throughout a range of environments. I do think that a lot of these, that convexity profile we discussed in the stable duration profile that is so important to earning these ROEs is most compelling in coupons, say, 5.5 and lower at this point. Interesting. Yep. Jason Stewart: Thank you. Operator: We go next to Trevor Cranston with Citizens JMP. Please go ahead. Trevor Cranston: Great. Thanks. Good morning. It looks like your overall rate exposure came down this quarter. I am curious if you guys could share your macro thoughts on how you think about the risk of rates moving significantly higher or lower from where they are today? And generally, you think MBS would perform if there were to be a significant move in rates either way from here? Thanks. Terrence J. Connelly Jr.: Yep. Good morning, Trevor. I would say overall, the most important thing to keep in mind is what is priced into swaptions markets, into the interest rate options markets that I mentioned and those implied volatilities being higher, as high as they are, which is again, notably higher than realized volatility. I think that is 1 of the most important constructs that will drive our ability to earn these ROE and the returns that are available. So, you know, I do think the convexity profile in a higher rate environment for the overall mortgage market is very stable. Those durations just do not extend all that more. Overall, you can think from a very high level macro perspective, overall housing turnover is, you know, around 4.5% per year. If you look at, existing home sales, which are very depressed and you could make a case are making a bottom formation over the last several years. So these turnover rates that are implied in the in the mortgages, so you have got very low turnover in the in the mortgages that drives the mortgage cash flows, creating that very stable cash flow. And then you have this widespread that is there because the implied vols are so high on the macro side. It makes it very compelling for us to earn these ROE that we are talking about. So broadly, it is not an environment where taking significant macro exposures makes a ton of sense. We are being paid for it in the spread. So by design, very strategically, that is where our focus is, on this spread and earning those ROE. Without more or less agnostic to interest rate direction. Smriti Laxman Popenoe: Yeah. Trevor, I would say, like, the way the mortgage market is priced today, the level of extension on the margin for the next 25, 50, 100 basis points is very limited because we have extended 90% already. Right? So any future extension from rates rising is limited. So if you. If you are concerned about, again, rates up, those types of scenarios, What TJ is mentioning is that we will. it is all about the price of options in the implied vol markets, and those that is the mortgage market today is already pricing significant risk premium in implied vols. So we feel like we are getting compensated for that incremental risk. Terrence J. Connelly Jr.: Yeah. Okay. Trevor Cranston: That makes sense. And when you guys were mentioning the incremental ROE kind of in the 20 plus percent range. I think you said you had calculated that based off a 10x leverage number, which is a little bit higher than where you sit today. So I was just wondering if you could clarify you know, if you think the existing portfolio as it sits today provides good dividend coverage and just kinda curious how you are thinking about the dividend policy in light of all the changes in the third quarter? Thanks. Smriti Laxman Popenoe: I think you got to go back to the idea of earnings power in the portfolio, Trevor, not having delevered in the quarter. That just means that we have taken the mark in book value but the earnings power of the portfolio is preserved. And over the past several quarters, we have been pretty confident about our ability to cover the dividend. Even before we got to this point. So from here on, I do not think that is really changed that much because we did not significantly adjust the portfolio. Definitely not on the asset side. Right? So that piece of it, I think, is relatively well preserved. In terms of the marginal ROE, we use a range of numbers TJ, you can clarify on the low 20s, etcetera, the numbers that we quoted. Terrence J. Connelly Jr.: Right. Yeah. there is significant variables involved there, Trevor, but the numbers I was quoting were based on a 10 leverage number. And, yeah, as you point out, we were sitting at 9 at quarter end. I will note we have net purchased assets since quarter end. As well. Trevor Cranston: Got it. Okay. that is helpful. Thank you. Operator: We have no further questions. I would like to turn the floor back to Smriti Popenoe for any additional or closing remarks. Smriti Laxman Popenoe: Thanks, everyone, for joining us today, and we look forward to updating you on our performance in January. Operator: This concludes today's conference. We thank you for your participation. You may disconnect at this time. Before you buy stock in Dynex Capital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dynex Capital wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,315,732!* Now, it's worth noting Stock Advisor's total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 19, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Dynex (DX) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Dynex Capital, Inc. (NYSE:DX) closed at $10.85 on October 13. The stock has returned -18.2% over the last six months, compared to a 21.5% return for the Insider Monkey Billionaire Index and 14.0% for the State Street SPDR S&P 500 ETF Trust. Dynex Capital is the smallest company in this corner of the market that billionaires have crowded into. It is worth about $2.91 billion. It does much of what the giants do, which is buy government-backed mortgage bonds and borrow against them. What makes it interesting is a disagreement sitting inside its own valuation. Measured against last year, the stock looks remarkably cheap. Measured against next year, it looks ordinary. The two figures are telling different stories. READ ALSO: 12 Best REIT Dividend Stocks to Buy Now On trailing earnings, Dynex trades at 3.93 times profit. That is the lowest reading of any mortgage company on our list, and low enough to be worth a second look rather than a quick dismissal. Return on equity is 18.23%, which puts a company this small alongside trusts many times its size. Being small may be less of a disadvantage here than elsewhere, because buying bonds does not demand the scale that lending does. That may be part of why as many billionaires hold it as hold names four times larger. It earned its place in our 10 Best Mortgage Finance Stocks To Buy According to Billionaires that way. To see who else made it, click HERE. DON'T MISS: Top 10 Undervalued REIT Stocks to Buy Now The forward multiple is 7.88. Taken at face value, that implies analysts expect earnings to fall by roughly half. For a company whose profit comes mostly from the gap between borrowing costs and bond income, a forecast like that is mostly about interest rates rather than about management. Trailing profit for these trusts also includes gains and losses on the portfolio itself. A good year in bond prices flatters the figure, and a bad one wrecks it. That is why a cheap-looking trailing multiple here should be treated with care. Price-to-book is 0.99, so you buy the assets at close to their stated value. For a portfolio of government-backed bonds, that stated value tends to be more reliable than it would be for property loans, because the bonds are priced in a liquid market every day. That makes book value the more useful anchor here. The trailing multiple is flattered by a good year and the forward one depends on a rate forecast. Paying roughly the asset value for a portfolio you can see is the least speculative way to frame the decision. The two earnings multiples are not in conflict because one of them is wrong. They are measuring different things, and for a company like this neither deserves much weight on its own. What you can check is the portfolio, and you are paying roughly what it is carried at. The real question is whether you want exposure to the gap between short-term borrowing and long-term mortgage rates at all, because that gap is most of the business. Dynex Capital, Inc. (NYSE:DX) was held by 29 hedge funds with a combined stake value of about $310 million at the end of Q2 2026 in the Insider Monkey database. This is up from 25 hedge fund holders with a cumulative investment value of around $150 million in the previous quarter. While we acknowledge the potential of DX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Mortgage Finance Stocks To Buy According to Billionaires and 12 Best REIT Dividend Stocks to Buy Now This article is originally published at Insider Monkey.

Dynex Capital has delivered a strong 46.1% share price gain over the past three years, which puts sharper focus on a simple question for investors who own or track the stock today. Is the current US$10.85 price adequately supported by the earnings power of the business. - A 46.1% return over three years means anyone looking at Dynex Capital now needs to ask whether that share price journey matches what its earnings can reasonably justify. - As a mortgage REIT that depends on earning a spread between its investment portfolio and funding costs, any change in funding conditions or portfolio mix can shift the consistency and level of its earnings that feed into valuation work. - Your read on Dynex Capital is one view; the desks covering it have another. See what analysts think Dynex Capital's shares could be worth. The issue now is whether Dynex Capital's current earnings profile makes the existing market price look aligned with what the business is actually generating. If you want to stress test this same earnings question beyond Dynex Capital, compare it with other stocks that clear the quality bar in our 32 high quality undervalued stocks For a mortgage REIT like Dynex Capital, the P/E ratio gives a direct read on how much you are paying for each dollar of ongoing earnings power. Dynex Capital trades on a P/E of about 6.3x, which is above the peer group average of roughly 4.8x yet below the Mortgage REITs industry mean of around 7.8x. That mix signals the stock is priced richer than closer peers but not at the top of the wider sector range, so the market is neither giving it a rock bottom label nor treating it as a premium outlier. The in house fair P/E estimate, which blends Dynex Capital's own profitability profile, risk inputs and sector context, sits above the current 6.3x level. On this framework the shares screen as undervalued on earnings relative to what that tailored yardstick would imply for a stock with similar characteristics. Explore the numbers behind Dynex Capital's P/E valuation. Narratives for Dynex Capital pick up where this valuation puzzle leaves off and outline which paths for future growth, profitability and earnings would need to occur for the shares to be worth materially more or meaningfully less than they are today, all housed on Simply Wall St's Community page. Each one links its number to a clear view on where Dynex Capital's growth, margins and risk profile could head next, giving you a reference you can revisit as new information becomes available. A clear, written Narrative on Dynex Capital keeps the assumptions behind the current valuation visible and lets you check over time whether the business actually delivers on the growth, margin and execution path you expected. Putting those numbers and expectations on paper also makes it easier to adjust your view as new data lands, instead of reacting to short term price moves in isolation. Share your own Narrative for Dynex Capital and set out the assumptions behind your valuation. Before you file Dynex Capital away as fairly priced or not, there is a separate lens that compares today's valuation with where professionals currently expect the business to be a few years from now. Explore where analysts expect Dynex Capital to be in a few years. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

GLEN ALLEN, Va., October 05, 2026--(BUSINESS WIRE)--Dynex Capital, Inc. (NYSE: DX; "Dynex" or the "Company"), a REIT with a long track record of generating dividends from high-quality mortgage assets, announced today that it will release its financial results for the third quarter of 2026 before market open on Monday, October 19, 2026. In addition, Dynex's management team will host a conference call and live audio webcast to discuss its third quarter 2026 financial results that same morning at 10:00 a.m. ET. Conference Call Details To listen by telephone, participants can click here and enter their contact information to be connected by phone. Participants may also dial (800) 330-6710 and enter conference code 3227135. Participants are encouraged to connect at least 10 minutes before the call begins. To listen to the call and view the presentation online, participants can click here to access the live webcast or click the "Webcast" button on the Investors page of the Company's website (www.dynexcapital.com/investors). The webcast includes both the audio and presentation materials and does not require a telephone connection. The webcast will become active 15 minutes prior to the scheduled start time. A replay will be available approximately two hours after the conclusion of the live event through the same webcast link and on the Company's website. About Dynex Capital Dynex Capital, Inc. (NYSE: DX) is a leading internally managed REIT with a long track record of delivering attractive dividends through the disciplined risk management of investments in high-quality mortgage assets backed by U.S. residential and commercial real estate. For more information on Dynex, please visit our website at www.dynexcapital.com or connect with us on LinkedIn. Forward-Looking Statement "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding the business of Dynex Capital, Inc. that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of these risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements. View source version on businesswire.com: https://www.businesswire.com/news/home/20261005108481/en/ Contacts For further information or questions, please contact Investor Relations at (804) 217-5897 or [email protected].

Investing.com -- The U.S. dollar ticked up on Monday, helped by a slide in the euro to its lowest level in nearly 17 months. The single currency was under pressure amid a government debt crisis in France. Before you buy NVIDIA: our AI model's stock picks are beating the market by 120%+. See the list now » The U.S. dollar index, which tracks the greenback against a basket of six major peers, climbed 0.2% to 102.14, its highest since April 9, 2025. The euro was last down 0.3% to $1.1222, having earlier fallen to as much as $1.1161, its lowest since May 16, 2025. Foreign exchange market participants in Europe parsed a deepening fiscal shock in France, where mounting public debt loads and severe political gridlock ahead of next year's presidential election have triggered a repricing of sovereign risk premia. A violent sell-off in French government paper saw two-year yields jump 76 basis points on the day, while the yield spread between 10-year French OATs and benchmark German Bunds blew past 140 basis points - its widest since the Eurozone debt crisis in 2012. With five-year French credit default swaps soaring to 87 basis points, currency desks are actively pricing in broader fiscal contagion across the single-currency bloc. France last week unveiled its budget bill for 2027, targeting a public deficit of 5% of gross domestic product (GDP) through proposed spending cuts of 54 billion euros ($60.59 billion). However, France has been burdened with severe fiscal issues, with its deficit projected to reach 5.4% of GDP this year and public debt approaching 120% of GDP. "Europe has moved to the forefront of the challenges facing global bond markets, and its sluggishness has meaningfully strengthened the greenback, as difficult politics that impede fiscal discipline, in conjunction with a regulatory culture that limits economic expansion, make budget balancing almost impossible because revenue and spending differentials continue to widen," José Torres, senior economist at Interactive Brokers, said. Not finding the right stocks? Our AI's list of investor-grade stock picks for October just dropped » At home, U.S. Treasury yields surged as bonds were dumped. The benchmark 10-year yield rose 2.9 basis points to 5.309%, while the 30-year improved 3 basis points to 5.660%. Both instruments were hovering at multi-decade highs. Last week, more rate-sensitive shorter-term bonds had felt some relief last week after U.S. economic data led to a dent in expectations of imminent Federal Reserve monetary policy tightening. The latest reading on the central bank's preferred inflation gauge showed a moderation in annual growth, while an unexpectedly weak nonfarm payrolls report hinted at a slight cooling in the labor market. As per the CME FedWatch tool, the odds of quarter-point rate hike by the Fed later this month fell to around 20% at the end of last week compared to about 70% at the start of the week. The economic calendar is empty this week, with the minutes of the Fed's last interest rate meeting being the highlight. On Monday, the Institute for Supply Management's September report on the U.S. services sector showed economic activity slowing last month from August, though remaining above expansion territory. Notably, the measure of prices paid by services businesses accelerated in September to the highest reading since July 2022. "There is a bit of an early month lull in the data calendar this week," analysts at Lloyds Bank said. "The main focal point will be the final services and composite PMI reports (Mon), which should offer more granular color from across the Eurozone and perhaps include more detail on the effect of the rise in energy during the month, which had little impact on the early estimates," they added. Roushni Nair and Pranav Kashyap contributed to this article Original Article U.S. dollar ticks up as euro hits nearly 17-month low on France fiscal fears Loonie slips as early gains fade, oil weakness keeps pressure on Canadian dollar U.S. Treasuries pause; French debt yields retreat after violent shock