Real Estate

Dynex Capital, Inc. Reports First Quarter 2012 Diluted EPS of $0.33 and Book Value Per Common Share of $9.62

  2012 MAY 18 - (VerticalNews.com) -- Dynex Capital, Inc. (NYSE: DX) reported net income of $16.5 million, or $0.33 per diluted common share for the first quarter of 2012 versus $14.4 million, or $0.36 per diluted common share, for the fourth quarter of 2011 and $10.3 million, or $0.31 per diluted common share, for the first quarter of 2011. First Quarter 2012 Highlights Book value per common share was $9.62 at March 31, 2012 versus $9.20 at December 31, 2011.

  Annualized return on average equity was 14.7% during the first quarter of 2012 compared to 15.6% for the fourth quarter of 2011.

  Net interest spread was 2.41% for the first quarter of 2012 versus 2.56% for the fourth quarter of 2011 and 2.43% for the third quarter of 2011.

  Net interest income was $19.1 million for the first quarter of 2012 versus $17.0 million in the fourth quarter of 2011 and $12.7 million in the first quarter of 2011.

  The investment portfolio prepaid at a constant prepayment rate, or CPR, of 15.4% for the first quarter of 2012 versus 17.8% for the fourth quarter of 2011 and 17.0% for the third quarter of 2011.

  Declared a dividend during the first quarter of 2012 of $0.28 per share to common shareholders for an annualized dividend yield of 11.7% based on the March 30, 2012 closing stock price of $9.55.

  Raised approximately $123.6 million in common equity during the first quarter of 2012.

  Overall leverage was 5.4 times equity capital at March 31, 2012 compared to 6.0 times at December 31, 2011. The overall leverage target for the Company based on the current investment portfolio is approximately 6 times equity capital.

  As previously announced, the Company's quarterly conference call to discuss the first quarter results is May 3, 2012 at 10:00 a.m. ET. Interested investors may access the call and the related slides by dialing 1-877-317-6789 or by webcast over the internet at www.dynexcapital.com through a link provided under "Investor Relations/IR Highlights."

  On the Company's operating results and the recent offering of common stock, Mr. Thomas Akin, Chairman and Chief Executive Officer, commented, "We believe our results for this quarter strongly demonstrate the benefits of our diversified investment model. We once again out-earned our dividend and posted a solid annualized return on average equity of 14.7%. Book value per common share was up almost 5% during the quarter to $9.62 at March 31, 2012 from $9.20 at December 31, 2011 primarily from improving prices on our CMBS investments even though longer-term rates increased during the quarter. Our average leverage was down during the quarter reflecting the lag in fully investing the capital raised in February. Our results for the quarter, while acceptable, reflect this lower average leverage for the first quarter. Our leverage target remains at approximately 6 times our equity capital based on the current investment portfolio and as of today, we are substantially fully invested and at our leverage target. We expect results for the second quarter to reflect a fully invested portfolio. Most importantly, risk-reward considerations continue to drive our investment and capital raising decision-making process and we fully expect to continue to deliver solid results for our shareholders without increasing the overall risk profile of the Company." Results of Operations Net interest income increased to $19.1 million for the first quarter of 2012 versus $17.0 million for the fourth quarter of 2011. Most of the increase is attributable to growth in average interest earning investments to $2,771.9 million for the first quarter of 2012 from $2,487.2 million for the fourth quarter of 2011. Net interest income in the first quarter of 2012 also includes yield maintenance payments of $1.1 million on non-Agency CMBS from early repayment of the underlying commercial mortgage loans. Amortization of investment purchase premium, which reduces interest income, was $12.6 million for the first quarter of 2012 versus $9.8 million for the fourth quarter of 2011 and $3.9 million for the first quarter of 2011.

  Net interest spread for the first quarter of 2012 was 2.41% versus 2.56% for the fourth quarter of 2011 and 2.43% for the third quarter of 2011. The net interest spread for the first quarter of 2012 is the difference between the yield on the Company's interest-earning investment portfolio of 3.58% and its cost of funds of 1.17%. The net interest spread declined sequentially in the first quarter due principally to a higher mix of Agency MBS which are lower yielding investments.

  The prepayment rate for the investment portfolio for the first quarter of 2012 as measured by CPR was 15.4% versus 17.8% for fourth quarter of 2011 as prepayment speeds remained muted during the first quarter of 2012. The Agency MBS portfolio prepaid at an 18.4% CPR (which includes both RMBS and CMBS) with Agency RMBS prepaying at 21.4% CPR for the first quarter of 2012. These compare to 21.5% and 25.4%, respectively, for the fourth quarter of 2011.

  Gain on sale of investments, net for the first quarter of 2012 of $0.4 million includes gain from the sale of $50.0 million in unsecured mortgage-linked amortizing notes issued by Freddie Mac. We sold our remaining $55.0 million investment in these notes in April 2012 for an estimated gain of $0.7 million which will be included in the results for the second quarter of 2012. The capital invested in these notes was redeployed in Agency MBS. Financial Condition The Company's investment portfolio was $3,276.2 million at March 31, 2012 versus $2,501.0 million at December 31, 2011. During the quarter, the Company increased its Agency MBS investments to $2,656.2 million at March 31, 2012 from $1,965.2 million at December 31, 2011 and increased its non-Agency MBS investments to $465.7 million at March 31, 2012 from $421.1 million at December 31, 2011. Agency MBS investments increased slightly as a percentage of the Company's investment portfolio, from 78.6% at December 31, 2011 to 81.1% at March 31, 2012.

  Keywords: Industry, Dynex Capital Inc., Financial Companies, Investing and Investments, Real Estate Investment Trust - Residential Companies.

  This article was prepared by VerticalNews Real Estate editors from staff and other reports. Copyright 2012, VerticalNews Real Estate via VerticalNews.com.