Dynex Capital book value falls to $10.91 in third quarter as Agency MBS spreads widen
Dynex reported a negative 11.5% economic return for the quarter ended Sept. 30 and raised leverage to 9.0 times equity. The company blamed wider Agency MBS spreads; hedges partly offset losses.
By Gino Yatouma · 3 min read
Dynex Capital, a real estate investment trust that holds mostly Agency mortgage-backed securities, said its book value per common share fell to $10.91 at the end of September from $12.90 at the end of June. The company released its third quarter 2026 results before the market opened on Monday, Oct. 19, at 8:00 a.m. EDT, according to the Dynex results release. The figures cover the quarter ended Sept. 30.
The quarter in numbers
Dynex reported a total economic return of negative $1.48 per common share, or negative 11.5% of beginning book value. That measure combines the $1.99 drop in book value with $0.51 per share of dividends declared. The company reported a comprehensive loss of $1.49 per common share and a net loss of $1.34 per common share.
The portfolio still grew. Dynex said its total investment portfolio reached $28.3 billion, up about 3% from $27.6 billion at June 30, after $3.2 billion of MBS purchases. Agency residential MBS, including to-be-announced (TBA) positions, totaled $26.8 billion and Agency commercial MBS $1.4 billion. The company said 99.99% of the portfolio is in Agency securities, split about 95% residential and 5% commercial.
Dynex Capital, June 30 vs. Sept. 30, 2026
| Measure | June 30, 2026 | Sept. 30, 2026 |
|---|---|---|
| Book value per common share | $12.90 | $10.91 |
| Leverage incl. TBAs at cost | 8.1x | 9.0x |
| Total investment portfolio | $27.6 billion | $28.3 billion |
| Q3 total economic return per share | −$1.48 (−11.5%) | |
| Q3 dividends declared per share | $0.51 | |
| Liquidity (cash and unpledged securities) | $1.3 billion (42% of equity) |
Leverage, including TBAs at cost, rose to 9.0 times shareholders' equity from 8.1 times. Dynex said the increase came mainly from the lower book value. Liquidity in cash and unpledged securities was $1.3 billion, or 42% of total equity. During the quarter the company raised $384 million net of commissions: $268 million of common stock through its at-the-market program and $116 million of 9.375% Series D preferred stock.
What Dynex says drove the decline
In the release, Dynex attributed the book value drop primarily to wider Agency MBS spreads, which lowered the fair value of its holdings, with gains on its interest rate hedges partly offsetting the losses. Co-Chief Executive Officer and President Smriti Laxman Popenoe said in the release that late-quarter volatility and wider mortgage spreads reduced reported book value and that the company sees "an attractive forward return opportunity." That is the company's view, not an independent forecast.
Management scheduled a conference call for 10:00 a.m. Eastern on Oct. 19, listed on the Dynex investor calendar. This article is based on the written release; mortgage.news did not listen to the call.
Why it matters for borrowers and loan officers
A spread is the extra yield investors demand to hold mortgage bonds instead of Treasuries. When spreads widen, the price of existing MBS falls, and mortgage rates offered to borrowers can be higher relative to Treasury yields than they would otherwise be. Dynex's report shows how that repricing hit one large Agency MBS investor in the third quarter. It does not by itself say where any lender's rate sheet stands today.
For loan officers, the release is a window into the investor side of the market that buys the securities their loans end up in. It is a company earnings report, not investment advice.
Watch: the quarter in 15 seconds
Film transcript: Dynex Capital book value per common share: $12.90 on June 30, 2026, $10.91 on Sept. 30, down $1.99. Third quarter: total economic return negative $1.48 per share, or negative 11.5%; net loss $1.34 per common share; dividends declared $0.51. Leverage including TBAs at cost: 8.1 times equity on June 30, 9.0 times on Sept. 30. Portfolio $28.3 billion, up 3%, after $3.2 billion of MBS purchases; Agency RMBS 95%, Agency CMBS 5%. Per Dynex, wider Agency MBS spreads lowered portfolio value and hedge gains partly offset the losses. The company raised $384 million. Company results, not investment advice. Music: original instrumental score made for this film.
Cover: illustration created for mortgage.news showing the two book value figures from the Dynex release. It is not a Dynex document or logo.