Dynex Capital, Inc. (NYSE: DX) reported net income available to common shareholders of $18.4 million, or $0.34 per diluted common share for the third quarter of 2012 versus $18.8 million, or $0.35 per diluted common share, for the second quarter of 2012 and $1.5 million, or $0.04 per diluted common share, for the third quarter of 2011.
Third Quarter 2012 Highlights
- Book value per common share was $10.31 at September 30, 2012 versus $9.66 at June 30, 2012 and $9.20 at December 31, 2011.
- Annualized return on average common equity was 13.6% during the third quarter of 2012 compared to 14.3% for the second quarter of 2012.
- Net interest spread was 2.00% for the third quarter of 2012 versus 2.18% for the second quarter of 2012 and 2.43% for the third quarter of 2011.
- Interest earning assets were $4,316.2 million at September 30, 2012. Average interest earning assets for the third quarter of 2012 were $3,729.1 million versus $3,339.5 million for the second quarter of 2012 and $2,494.7 million for the third quarter of 2011. As of September 30, 2012, RMBS assets were $2,814.3 million and CMBS assets were $1,423.3 million. On an actual invested capital basis, approximately 39% of the Company's shareholders' capital is invested in RMBS with the balance in CMBS, cash and other assets.
- Issued 2.3 million shares of 8.50% Series A Preferred Stock for net proceeds of $55.4 million after expenses.
- Net interest income was $19.1 million for the third quarter of 2012 versus $19.0 million in the second quarter of 2012 and $14.6 million in the third quarter of 2011.
- Gain on sale of investments, net during the third quarter of 2012 was $3.5 million which includes $3.3 million from the sale of $15.0 million in non-Agency CMBS and $56.1 million in Agency RMBS.
- The investment portfolio (excluding CMBS interest only securities, or IOs) prepaid at a constant prepayment rate, or CPR, of 18.7% for the third quarter of 2012 versus 16.0% for the second quarter of 2012.
- Dividend per common share for the third quarter of 2012 was $0.29 for an annualized dividend yield of 11.7% based on the October 31, 2012 closing stock price of $9.92.
- Overall leverage was 6.1 times equity capital at September 30, 2012 the same as at June 30, 2012. Average leverage during the quarter was an estimated 5.9 times equity capital.
As previously announced, the Company's quarterly conference call to discuss the third quarter results is today at 10:00 a.m. ET. Interested investors may access the call and the related slides by dialing 1-877-317-6789 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, "We are very pleased with the consistency of our results in this challenging investment environment. Book value increased by almost 7% during the third quarter as all fixed income assets appreciated on the back of QE3. And while QE3 has supported our existing portfolio book value, it has reduced the expected returns we are seeing in our investment opportunity set. However, our diversified investment strategy and our significant holdings of prepayment protected commercial mortgage securities should dampen the effects of lower yields in the coming months. Additionally, our hybrid strategy affords us the flexibility to pursue opportunities in both the agency and non-Agency universe, where we continue to see pockets of value, particularly in CMBS. During the third quarter, we issued our Series A Preferred Stock at an attractive 8.5% coupon and we were very patient in adding assets with the new capital. As a result, our average earning assets were lower than target for the quarter. Currently, we are at our portfolio target size and may increase the investment portfolio modestly in the fourth quarter principally from reducing the amount of capital we hold against our Agency ARM portfolio. In summary, we were able to generate solid results for the third quarter while retaining balance sheet flexibility."