Dynex Capital returns to profitability on MBS portfolio expansion
The mortgage real estate investment trust reported net income of $0.80 a share for the second quarter.
Dynex Capital (DX) reported a return to profitability in the second quarter as it aggressively expanded its investment holdings. The mortgage real estate investment trust shifted from a net loss in the previous period to a positive bottom line, driven by increased capital deployment into agency mortgage-backed securities.
Net income per common share-basic rose to $0.80 in the second quarter, compared to a loss of $0.41 a share in the prior quarter. The recovery was supported by an increase in interest income resulting from the deployment of capital into Agency MBS purchases.
Dynex grew its total investment portfolio 11% sequentially to $27.6 billion as of June 30, 2026, up from $24.8 billion as of March 31, 2026. This growth was driven by $2.8 billion of MBS purchases. Specifically, the Agency RMBS portfolio, including TBAs, increased approximately 11% to $26.1 billion, while the Agency CMBS portfolio rose approximately 11% to $1.4 billion relative to the end of March.
To fund its expansion and bolster its balance sheet, the company raised $391 million of common equity through its at-the-market program during the quarter, issuing approximately 30 million shares.
Book value per common share increased by $0.30 to $12.90 as of June 30, 2026, compared to $12.60 as of March 31, 2026. Despite the portfolio growth, leverage decreased to 8.1 times shareholders' equity from 8.6 times in the prior quarter.
Operating expenses decreased by $5 million quarter-over-quarter. The decline was due to the absence of one-time compensation and personnel costs that were recognized in the first quarter.