Dynex Capital (DX) Tops Q3 EPS by 1c

Dynex Capital (NYSE: DX) reported Q3 EPS of $0.19, $0.01 better than the analyst estimate of $0.18.

• Comprehensive income of $0.01 per common share and net income of $0.39 per common share
• Core net operating income, a non-GAAP measure, of $0.19 per common share
• Book value per common share of $6.75 at September 30, 2018 compared to $6.93 at June 30, 2018
• Leverage including TBA dollar roll positions increased to 6.7x shareholders’ equity at September 30, 2018 compared to 6.1x at June 30, 2018 due to growth in the investment portfolio
• Net interest spread and adjusted net interest spread of 1.08% and 1.41%, respectively, for the third quarter of 2018 compared to 1.07% and 1.51%, respectively, for the prior quarter

Byron Boston, President and CEO commented, “Core net operating income improved this quarter as we increased our investment portfolio and benefited from the diversification of our investment strategy in residential and commercial investments. In particular, our CMBS IO portfolio continues to outperform on a total return basis. Total economic return to common shareholders was flat for the quarter as rising interest rates and a flattening yield curve led to a reduction in our book value, offsetting our common stock dividend.”

Mr. Boston continued, “We believe that the Federal Reserve is getting closer to the end of this policy tightening cycle with global markets already experiencing the negative impact of higher interest rates. In our view, as we have noted before, gathering macroeconomic headwinds from rapidly increasing amounts of global debt, emerging stress in financial markets, and fiscal policy concerns will ultimately limit how high interest rates in the U.S. may go on a sustained basis. Nonetheless, in the short-term we might see upward pressure on rates based on evolving economic data and technical factors. With this backdrop, we believe the higher liquidity of an Agency MBS portfolio is preferable for generating attractive shareholder returns. As the interest rate environment becomes more favorable, we expect return opportunities to further improve."

For earnings history and earnings-related data on Dynex Capital (DX) click here.

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