Dynex Capital Reports $23.1M Net Interest Income and $16.3M Net Loss for Q2 2025

Dynex Capital, Inc. reported significant financial developments in its latest 10-Q filing for the quarter ending June 30, 2025. The company recorded a net interest income of $23.1 million, a substantial increase from $1.3 million in the same quarter of the previous year. This improvement is attributed to a larger portfolio of Agency mortgage-backed securities (MBS) with higher yields, alongside a reduction in financing costs. However, the company also reported a net loss of $16.3 million for the quarter, compared to a loss of $10.2 million in the prior year, primarily due to losses on derivative instruments.

In terms of overall financial performance, Dynex's total assets increased to $11.3 billion as of June 30, 2025, up from $8.2 billion at the end of 2024. This growth was driven by a significant rise in mortgage-backed securities, which reached $10.5 billion, compared to $7.5 billion at the end of the previous fiscal year. The company’s liabilities also rose, with repurchase agreements increasing to $8.6 billion from $6.6 billion, reflecting its strategy to finance the acquisition of additional MBS.

Strategically, Dynex has been active in raising capital, having issued approximately 40.7 million shares of common stock through its at-the-market program, generating around $522 million in proceeds. This capital has been deployed into the Agency market, which the company views as historically attractive. Additionally, the company has expanded its investment portfolio, adding approximately $2.8 billion in Agency RMBS and $418 million in Agency CMBS during the first half of 2025.

Operationally, Dynex's engagement metrics indicate a robust increase in its investment activities, with a notable rise in the notional value of TBA dollar roll positions by $1.4 billion. The company’s liquidity position improved to approximately $891 million, consisting of unrestricted cash and unencumbered Agency MBS. Despite the challenges posed by market volatility and rising interest rates, Dynex remains focused on maintaining a portfolio of high-quality liquid securities and managing risks effectively.

Looking ahead, Dynex Capital anticipates continued volatility in the markets, influenced by macroeconomic conditions and potential policy changes. The company plans to maintain its strategy of raising capital and investing in highly liquid markets, while also monitoring prepayment risks and the direction of interest rates. The management remains committed to delivering shareholder returns and navigating the evolving landscape of the mortgage finance sector.