Dynex Capital (NYSE: DX) reported Q3 EPS of $0.48, $0.05 better than the analyst estimate of $0.43.

Third Quarter 2019 Highlights

• Comprehensive income of $0.63 per common share comprised of:
  • $(1.65) net loss per common share
  • $2.28 other comprehensive income per common share on available-for-sale securities
• Core net operating income, a non-GAAP measure, of $0.48 per common share
• Net interest spread and adjusted net interest spread, a non-GAAP measure, increased to 0.82% and 1.14%, respectively, for the third quarter of 2019
• Book value per common share of $18.07 at September 30, 2019, an increase of $0.39, or 2.2%, since June 30, 2019
• Repurchased 1.7 million shares of common stock at an average price of $14.65 per common share
• Quarterly economic return to common shareholders of 4.9% based on dividends declared of $0.48 per common share and an increase in book value per common share of $0.39; year-to-date economic return is 8.6%
• Leverage including TBA net long positions decreased to 9.1x shareholders’ equity at September 30, 2019
• Lower average pay-fixed rate on interest rate swaps to 1.65% as of September 30, 2019 from 2.04% at June 30, 2019

Management's Remarks

"We are very pleased to have generated a total economic return of 4.9% and increased core net operating income despite the somewhat volatile interest rate environment during the quarter," commented Mr. Byron L. Boston, President and Chief Executive Officer. "Prepayment speeds on our RMBS have increased quarter over quarter, negatively impacting effective yield, but the impact has been partially mitigated by higher yields on our CMBS and CMBS IO portfolios. Importantly, our net interest spread and adjusted net interest spread both increased for the first time since the end of 2017. Our net interest spread and adjusted net interest spread benefited from the decline in short-term interest rates following reductions in the targeted Federal Funds Rate, and the repositioning of hedges during the third quarter."

Mr. Boston added, "We continue to believe the most probable macroeconomic outcome is that structural issues within the global economy will keep the 10-year U.S.Treasury bond within a range of 1.5%-2.5%. We remain focused on managing for the long term and have structured the portfolio for flexibility in this environment."

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