Dynex Capital, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Dynex Capital's second quarter 2020 earning results and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Alison Griffin, Vice President, Investor Relations. Thank you. Please go ahead.

Thank you, Casey. Good morning, everyone, and thank you for joining us. With me on the call today is Byron Boston, President and CEO, Smirthy Papano, EVP CIO, and Steve Benedetti, EVP CFO and COO. The press release associated with today's call was issued and filed with the SEC this morning, July 29, 2020. You may view the press release on the homepage of the Dynex website at dynexcapital.com, as well as on the SEC's website at sec.gov. Before we begin, we wish to remind you that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words believe, expect, forecast, anticipate, estimate, project, plan, and similar expressions identify forward-looking statements that are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. The company's actual results and timing of certain events could differ considerably from those projected and or compensated by those forward-looking statements as a result of unforeseen external factors or risks. For additional information on these factors or risks, please refer to the annual report on Form 10-K for the period ending December 31, 2019, as filed with the SEC. The document may be found on the Dynex website under Investor Center, as well as on the SEC's website. This call is being broadcast live over the internet with a streaming slide presentation, which can be found through our webcast link on the homepage of our website. The slide presentation may also be referenced under quarterly report on the Investor Center page. I now have the pleasure of turning the call over to our CEO, Byron Boston.

Good morning, and thank you very much for joining our call today. As the CEO and a shareholder of Dynix Capital, I am excited about the future of our business. I have a strong and experienced team of professionals managing our capital. We believe it is an exceptional environment to generate solid cash flows for our shareholders. Financing rates are low, and the liquid assets we're invested in offer attractive risk-adjusted returns and are generating solid net interest income. And our balance sheet gives us flexibility to navigate the complex environment. For over 30 years, Dynex Capital has managed leveraged, securitized asset portfolios to generate cash income for our shareholders. We've managed every asset class that you see represented across the mortgage REIT industry today. Over the past few years, however, As global risks have intensified, we have chosen to limit our investment focus to assets with the highest credit quality and highest levels of liquidity. In addition, we have chosen to maintain a higher level of overall liquidity on our balance sheet. This is a choice that has served us well if you look at comparative long-term returns through the second quarter of 2020. We believe the key to a successful long-term strategy of managing a mortgage REIT Is risk management first and effective capital allocation across multiple asset classes? We have been consistent in our approach to the market, so let me recap what we have said to help you understand why we are excited about our business today. So since the fall of 2018, when the Fed was still tightening credit and allowing the balance sheet to run down, we pointed out to you that we did not believe the Fed could continue on that path and that our financing costs would begin to decline. And as a result, our net spreads would increase. Well, today, our financing costs are pegged at low levels, and as a result, we're generating substantially more net interest income. We noted that surprise events were highly probable because global risks have intensified. In fact, March of this year represented a surprise event similar to what we saw in 1998. We had the experience, and we were prepared to weather this storm. We also highlighted that we were excited about the future outlook for our business model because the demand for yield would increase globally. We feel stronger about our expectations now that global yields have continued to plummet further towards zero and below. And finally, for the past decade, we have also said that government policy would drive returns, but we did not anticipate the extent to which this would evolve. A profound shift is taking place in economics. as we all adjust to a supersized level of state intervention in the economy and financial markets. I will now turn the call over to Steve Benedetti to go through our second quarter results.