Dynex Capital, Inc. · NYSE:DX
Dynex Capital — Midwest IDEAS Conference 2011
17 slides from Dynex Capital's conference presentation, Aug 31, 2011
Slide 1: Dynex Capital, Inc. Midwest IDEAS Conference
Exhibit 99.1 Dynex Capital, Inc. Midwest IDEAS Conference August 31, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement NOTE: This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about projected future investment strategies and leverage ratios, financial performance, the projected impact of NOL ca
Slide 3: Our Guiding Principles
Our Guiding Principles Our Mission Manage a successful public mortgage REIT with a focus on capital preservation and providing risk-adjusted returns reflective of a diversified, leveraged fixed income portfolio. Our Core Values Generate dividends for our shareholders Manage leverage conservatively R
Slide 4: DX Snapshot
DX Snapshot Company Highlights Internally managed REIT commenced operations in 1988 Significant insider ownership and experienced management team Diversified investment strategy in residential and commercial mortgage assets Large NOL carryfoward for unique total return opportunity Market Highlights
Slide 5: Important Macro Themes
Important Macro Themes Multiple factors combining to depress economic activity – recession risk has increased Global risk remains high particularly in the Eurozone Fed maintaining its very accommodative posture Government policy/regulations continue to influence investment returns Financing environm
Slide 6: Investment Portfolio as of June 30, 2011
Investment Portfolio as of June 30, 2011 Composition (1) Ratings(1) Seasoned Other DX A CMBS/ 3% Below A CMBS/loans Seasoned AA RMBS 2% 9.87% DX 1% 3.10% RMBS/loans 2.14% AAA Agency MBS 94% 84.21% • High quality portfolio of primarily short-duration Agency MBS • 94% AAA/Agency securities, 98% rated
Slide 7: Credit Portfolio Comparisons
Credit Portfolio Comparisons Average June 30, 2011 Portfolio Non-Agency Price (1) $101.30 $120 $100 $75.83 $80 $60 $40 $20 $- DX Wgt Average of Other (2) Hybrid REITs (1) Figures exclude non-Agency interest-only securities. (2) Consists of the weighted average of dollar prices for non-Agency investm
Slide 8: Interest Rate Risk
Interest Rate Risk Change in Value from Change in Rates Estimated Company Portfolio Value(2) Equity Value(3) Ticker Leverage(1) +50 +75 +100 +75 +100 AGENCY MBS NLY 5.7x -.96% -1.58% -9.01% ANH 7.0x -2.40% -16.80% HTS 7.4x -0.56% -1.76% -13.02% AGNC 7.5x -0.50% -1.20% -9.00% CYS 8.1x -2.03% -3.09% -
Slide 9: Potential Return Profile for Prospective Investments as of August 24, 2011
Potential Return Profile for Prospective Investments as of August 24, 2011 Range of net Range of Range of spread to Range of Investment Prices yields funding ROEs Agency RMBS 103-109 2.3%-3.2% 1.3%-2.8% 13%-28% CMBS 103-111 3.0%-3.6% 1.3%-1.9% 13%-19% Non–Agency ‘AAA’RMBS 90-102 3.6%-6.0% 2.6%-4.0%
Slide 10: Balance Sheet Overview
Balance Sheet Overview as of June 30, 2011 (1) Associated financing for investments includes repurchase agreements, securitization financing issued to third parties and TALF financing (the latter two of which are presented on the Company’s balance sheet as “non-recourse collateralized financing”). (
Slide 11: Earnings – Paid and Retained
Earnings – Paid and Retained We Pay a Dividend AND Generate and Retain Earnings (Utilizing our NOL) to Grow Book Value $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 ($0.10) Dividends Declared Excess Earnings Retained 11
Slide 12: Investment Portfolio Income and Spread
Investment Portfolio Income and Spread $ in thousands $16,000 3.50% $14,000 3.00% $12,000 2.50% $10,000 2.00% $8,000 1.50% $6,000 1.00% $4,000 $2,000 0.50% $0 0.00% 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Net interest income after provision Net interest spread 12
Slide 13: Portfolio Leverage
Portfolio Leverage 5.9x 6.0x 5.2x 4.7x 4.6x 4.3x 4.3x 4.4x 4.1x 4.2x 4.0x 3.8x 3.3x 3.3x 2.0x 0.0x 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 13
Slide 14: Why Dynex
Why Dynex Excellent long term performance record Strong and defensive balance sheet positioned to weather market volatility Experienced management with a track record of disciplined capital deployment through multiple economic cycles Alignment of interests with shareholders due to owner-operator str
Slide 15: Appendix
DYNEX Appendix
Slide 16: Long Term Performance
Long Term Performance Five Year Total Return DX(+85.25%) (1) (2) S&P 500 (-0.02%) SNL U.S. Finance REIT Source: SNL Financial. (1) Based on beginning share price of $6.99 on 8/24/06 and ending share price of $9.00 on 8/23/11. Assumes reinvestment of dividends. (2) SNL U.S. Finance REIT: Includes all
Slide 17: Management Team
Management Team Experienced team of professionals with a combined 80 years of experience managing mortgage REITs and mortgage portfolios • ThomasB.Akin– ChairmanandChiefExecutive Officer – 32 years of experience in the industry and 7 years at Dynex – Chairman since 2003 and CEO since 2008 – Managing