2023-07-24 11:12:38 ET
Dynex Capital ( NYSE: DX ) stock gained 3.3% in Monday morning trading after its comprehensive income swung into the green, as hedging helped protect its portfolio from the effect of higher interest rates.
During the quarter, book value increased 2.9%, driving a recovery in economic return.
Q2 Comprehensive income to common shareholders was $0.79 per share vs. -$0.54 in the previous quarter. Total economic return of +5.7% improved from -3.7% in Q1. EPS available for distribution was -$0.27 vs. -$0.16 in Q1 2023.
Q2 net interest income worsened to -$2.93M from -$462K in Q1. Adjusted net interest income was -$5.08M in the most recent quarter vs. $995K in the prior quarter.
Book value per common share of $14.20 as of June 30, 2023, vs. $13.80 at March 31. Higher interest rates resulted in gains of $170M from Dynex's ( DX ) interest rate hedges, primarily its five-year U.S. Treasury futures, which offset the impact of higher interest rates on the fair value of the company's investment portfolio.
The increase in the fair value of the company's interest rate hedges, net of its investments, was $55.5M, making it the primary component of its comprehensive income to common shareholders of $43.0M.
The company had more than $561.5M of cash and unencumbered assets as of June 30 vs. more than $554M at March 31.
As of June 30, more than 95% of Dynex's ( DX ) investments were comprised of agency RMBS, includng TBA securities and less than 5% are agency CMBS, agency CMBS IO, and non-agency CMBS IO. It bought $2.2B of higher coupon agency RMBS and reduced its holdings of TBA securities and lower coupon agency RMBS.
Earlier, Dynex Capital ( DX ) GAAP EPS of $0.96 .
More on Dynex:
- Dynex Capital: Patience Is Key But the Short-Term Still Looks Rocky
- See Dynex's previous income statements
- J.P. Morgan Global FICC team chooses agency MBS as top pick in Q3 outlook
- Dynex Capital posted Q1 loss as March's bank turmoil churned financial markets
For further details see:
Dynex Capital stock rises after Q2 economic return pushes into the green