DX Financial Analysis

Analysis Date: 1/28/2025

Business Model

Dynex Capital generates revenue primarily through net interest income from its portfolio of mortgage-backed securities (MBS)

Revenue Sources

• Agency RMBS (97.9% of portfolio fair value)
• Agency CMBS and CMBS IO (2.1% of portfolio fair value)

Revenue Distribution by Channel

• Interest income from MBS portfolio: $88.5M in Q4 2024

Income Statement Analysis

• Interest income increased 6% QoQ to $88.5M due to higher yielding asset purchases
• Interest expense decreased 1.2% QoQ to $81.6M from lower financing costs
• Net interest income improved significantly to $6.9M from $0.9M in Q3

Balance Sheet Analysis

• Total assets grew 28.5% YoY to $8.2B from portfolio expansion
• Shareholders' equity increased 36.1% YoY to $1.2B from capital raises

Capital Allocation

The company raised $64.4M in equity capital through ATM issuance in Q4 2024, bringing total capital raised in 2024 to $332.0M. Declared dividends of $0.43 per common share for Q4 2024 and $1.60 for full year 2024. Book value per share was $12.70 as of December 31, 2024.

Management Commentary

Shareholders earned total shareholder return of 13.7% in 2024 and 27.4% over last two years

Current environment characterized by steeper yield curve, lower financing costs, wide mortgage spreads

Team focused on preparation and flexibility amid rapidly evolving global environment

Overall Sentiment: Positive but cautious, emphasizing strong returns while maintaining preparedness for market changes

Recommendation

Rating: Buy

Reason for Rating: Strong fundamentals, proven track record of returns, and favorable market conditions support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/28/2025, 5:40:09 AM