Dynex Capital Reports $4.999 Million Net Loss in Q1 2025, Revenue Increases to $95.059 Million

Dynex Capital, Inc. reported a net loss of $4.999 million for the first quarter of 2025, translating to a loss of $0.06 per diluted share, a significant decline from the net income of $38.195 million, or $0.64 per diluted share, recorded in the same period last year. The company's total revenue for the quarter was $95.059 million, up from $71.525 million in the prior year, primarily driven by an increase in interest income from mortgage-backed securities (MBS). However, the company faced challenges with derivative instruments, resulting in a net loss of $118.088 million, compared to a gain of $124.635 million in the previous year.

Dynex's financial position showed notable changes compared to the previous fiscal period. Total assets increased to $9.045 billion as of March 31, 2025, up from $8.185 billion at the end of 2024. This growth was largely attributed to a rise in mortgage-backed securities, which reached a fair value of $8.400 billion, compared to $7.512 billion at the end of the previous year. The company's liabilities also increased, with total liabilities rising to $7.649 billion from $6.999 billion, primarily due to higher repurchase agreement borrowings, which increased to $7.235 billion.

In terms of strategic developments, Dynex Capital raised $239.7 million through its at-the-market (ATM) program during the first quarter, issuing 17.6 million shares of common stock. This capital is intended to enhance liquidity and support investments in the Agency market. The company also reported a comprehensive income of $14.391 million for the quarter, reflecting a recovery in unrealized gains on investments, which totaled $19.390 million, compared to a loss of $17.268 million in the prior year.

Operationally, Dynex Capital's investment portfolio composition remained stable, with 74% in Agency RMBS, 24% in TBA securities, and 2% in Agency CMBS and CMBS IO. The company purchased approximately $895.1 million of Agency RMBS during the quarter, indicating a proactive approach to expanding its investment base. As of March 31, 2025, Dynex reported liquidity of $789.9 million, consisting of unrestricted cash and unencumbered Agency MBS, which reflects a solid position to navigate market volatility.

Looking ahead, Dynex Capital anticipates continued market volatility influenced by macroeconomic factors, including interest rate fluctuations and geopolitical events. The company remains focused on maintaining a high-quality, liquid investment portfolio while actively managing its hedging strategies. The management expressed confidence in the potential for attractive returns despite the challenges posed by the current economic environment, emphasizing their commitment to delivering long-term shareholder value.