Dynex Capital, Inc. (NYSE: DX) reported net income of $18.8 million, or $0.35 per diluted common share for the second quarter of 2012 versus $16.5 million, or $0.33 per diluted common share, for the first quarter of 2012 and $13.6 million, or $0.34 per diluted common share, for the second quarter of 2011.
Second Quarter 2012 Highlights
- Book value per common share was $9.66 at June 30, 2012, $9.62 at March 31, 2012, and $9.20 at December 31, 2011.
- Annualized return on average equity was 14.3% during the second quarter of 2012 compared to 14.7% for the first quarter of 2012 and 14.2% for the second quarter of 2011.
- Net interest spread was 2.18% for the second quarter of 2012 versus 2.41% for the first quarter of 2012 and 2.45% for the second quarter of 2011.
- Net interest income was $19.0 million for the second quarter of 2012 versus $19.1 million in the first quarter of 2012 and $15.0 million in the second quarter of 2011. The decline in net interest income from the first quarter of 2012 to the second quarter of 2012 was related principally to an additional $1.7 million in premium amortization in the second quarter of 2012 versus the first quarter of 2012 primarily from changes in forecasted prepayment speeds from the first quarter to the second quarter as a result of continued declines in mortgage rates and the HARP refinance program.
- The investment portfolio prepaid at a constant prepayment rate, or CPR, of 14.3% for the second quarter of 2012 versus 15.4% for the first quarter of 2012 and 18.0% for the second quarter of 2011.
- Dividend per common share for the second quarter of 2012 was increased to $0.29 for an annualized dividend yield of 11.2% based on the June 30, 2012 closing stock price of $10.38.
- Overall leverage was 6.1 times equity capital at June 30, 2012 compared to 5.4 times at March 31, 2012 and 6.0 times at December 31, 2011. The overall leverage target for the Company based on the current investment portfolio is approximately 6.0 times equity capital.
As previously announced, the Company's quarterly conference call to discuss the second quarter results is today at 11:00 a.m. ET. Interested investors may access the call and the related slides by dialing 1-877-270-2148 or by webcast over the internet at www.dynexcapital.com through a link provided under “Investor Relations/IR Highlights.”
Commenting on the Company's results for the quarter, Mr. Thomas Akin, Chairman and Chief Executive Officer, stated, "Results for the quarter were solid given the somewhat volatile environment and a slowing macroeconomic outlook. Global growth concerns continue to drive rates lower and may lead to additional accommodation by the Federal Reserve in coming quarters. Our book value increase from $9.62 last quarter to $9.66 this quarter was driven by the excess of our earnings of $0.35 per common share and our second quarter dividend of $0.29 per common share even as CMBS spreads widened during the quarter. Our goal is to continue to shelter as much of our taxable earnings as possible as tax rates are expected to rise for all investors in 2013. Our dividend increase to $0.29 in the second quarter reflects the Board's confidence in our earnings and business model and the sixth increase since 2008 without any reductions. Our most recent preferred transaction gives the Company additional permanent capital at a good rate and should be accretive to our earnings in this investment environment. We expect to have the capital fully invested in short order. We continue to remain committed to our short duration and high quality investment strategy that has served our shareholders well."
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