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Dynex Capital Reports Q1 2026 Earnings with Book Value at $12.60 Per Share
Dynex Capital, Inc. reported a negative 2.5% economic return for Q1 2026, with book value declining to $12.60 per share amid market volatility. The company raised $442 million in capital and grew its investment portfolio to $6 billion. Executives highlighted opportunities in agency MBS spreads and policy support for housing affordability.
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Dynex Capital, Inc. (NYSE: DX) reported its first-quarter 2026 earnings on April 20, 2026, with earnings per share of $0.31, missing expectations of $0.313. The company's book value ended the quarter at $12.60 per share, reflecting a negative 2.5% economic return.
This included $0.51 per share in common dividends and an $0.85 per share decrease in book value. The firm grew its total capital base by 18% during the quarter, raising $442 million and deploying it into agency mortgage-backed securities (MBS) as spreads widened.
Leverage increased to 8.6 times total equity, primarily due to the portfolio expansion to $6 billion. Liquidity remained strong at $1.3 billion in cash and unencumbered securities, representing over 46% of total equity.
executives noted supportive fundamentals in the MBS market, driven by government policy focused on housing affordability. Net interest income rose to $0.40 per share from $0.28, aided by a 33 basis point decline in financing costs following Federal Reserve rate cuts in Q4 2025.
The company reduced exposure to to-be-announced (TBA) securities from 16% to 7% of the portfolio, favoring specified pools for better prepayment stability. Agency MBS spreads to seven-year interest rate swaps widened to nearly 170 basis points in March before tightening to the low 160s by quarter end and toward 150 basis points by late last week.
Executives projected potential tightening to 120 basis points or an equilibrium of 100 basis points, supported by GSE activities and proposed Basel III changes.
“We are resolute in our view on those spreads moving down to as much as 100 basis points. Given the GSE backdrop, we think we are on the verge of a significant regime change." — T.J. Connelly, Chief Investment Officer, April 20, 2026 (earnings call). Static return on equity for current coupon mortgages hedged with swaps stood in the mid- to high-teens. Net MBS supply for 2026 is expected to be around $200 billion or lower, with robust demand from banks, REITs, money managers, and foreign investors.”
