Dynex Capital, Inc.

Good day and thank you for standing by. Welcome to the Dynex Capital, Inc. Second Quarter 2021 Earnings Results Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll 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 first speaker today, Ms. Alison Griffin, VP of Investor Relations. Thank you. Please go ahead, madam.

Thank you so much, operator. Good morning and welcome to the Dynex Capital Second Quarter 2021 Earnings Conference call. We appreciate you joining us. The press release associated with today's call was issued and filed with the SEC this morning, July 28th, 2021. 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. As 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 will, believe, expect, forecast, assume, anticipate, estimate, project, plan, continue, and similar expressions identify forward-looking statements. These forward-looking statements reflect our current beliefs, assumptions, and expectations based on information currently available to us. and are applicable only as of the date of this presentation. These forward-looking statements 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 are contemplated by these forward-looking statements as a result of unforeseen external factors or risks. For additional information on these factors or risks, please refer to our disclosures filed with the SEC, which may be found on the Dynex website under Investor Center, as well as on the SEC's website. This conference call is being broadcast live over the internet with a streaming slide presentation, which could be found through a webcast link on the homepage of our website. The slide presentation may also be referenced under quarterly reports on the Investor Center page. Joining me on the call is Byron Boston, Chief Executive Officer and Chief Investment Officer, and Co-Chief Investment Officer, Percy Papineau, President and Co-Chief Investment Officer, and Steve Benedetti, Executive Vice President, Chief Financial Officer, and Chief Operating Officer. And with that, it is my pleasure to turn the call over to Byron Boston.

Good morning. Thank you, Alison, and thank you, everyone, for joining our call. 2021 continues to be a good environment for Dynex to deploy capital. Our financing costs remain pegged at very low levels and has resulted in steady earnings and a wider net interest spread, as shown on slide 25. We began this year believing we will get multiple opportunities to invest at attractive returns as the yield curve steepens or spreads widen. As such, we have raised capital, maintained lower leverage, and methodically deployed capital at attractive return levels. As of mid-year, we are sticking with our strategy. Nonetheless, we are in an evolving health and economic environment, and the capital markets have reflected this uncertainty. As such, our book value has fluctuated this year from being up 5.2% in the first quarter to declining 6.6% in the second quarter. Our year-to-date performance remains solid as our total economic return is a positive 2.4%. Our tactical deployment of capital at attractive levels and our ability to out-earn our dividend has helped cushion our book value during this period of volatility. Let me remind you that we manage Dynex Capital for the long term. Our goal is to generate a cash return between 8% to 10% while maintaining book value at steady levels over time. We will continue to create value for our shareholders by using a very disciplined, top-down, research-driven approach to develop strategies for multiple future scenarios in the short, medium and long term. This has been especially important since the global market environment changed in January 2020. Most importantly, since this new era in history began last year, We have outperformed our industry and other income-oriented vehicles with a 28% total shareholder return, as noted on slide five. I will emphasize the fact that we have an experienced team, and experience will be a major factor for creating value through these transitional times in the global capital markets and economies. We will continue to emphasize liquidity with a balance sheet of high-quality assets. Now, I will turn the call over to Steve and Smriti so they can give you more specific details regarding our results and our investment process.