Dynex Capital, Inc.

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dynex Capital third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Allison Griffin, Vice President of Investor Relations, you may begin your conference.

Good morning, and thank you for joining us today for Dynex Capital's third quarter 2023 earnings call. The press release associated with today's call was issued and filed with the SEC this morning, October 23, 2023. 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 contemplated 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 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 can 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 Co-Chief Investment Officer, Smriti Papano, President and Co-Chief Investment Officer, and Rob Colligan, Executive Vice President, Chief Financial Officer. And with that, it is now my pleasure to turn the call over to Byron.

Thank you, Allison, and good morning, everyone. I'd like to begin by congratulating my longtime colleague and friend, Smirti, on her nomination to the Dynex Board. Smirti and I have worked together since 1997. In these 25-plus years, we have forged a unique partnership based on trust, friendship, and an uncompromising focus on performance. I'm glad to have her with me on the board as we face a rapidly evolving business landscape. Over the last few months, I have spent a lot of time with shareholders discussing the macroeconomic environment. I will share my main thoughts and my comments today before turning over the call to Robin Smirty. There are three major factors that I have been focused on as we grow our business here at Dynex. Number one, Human conflict. I have long emphasized the setting of investment strategy in the context of a global macroeconomic environment. For some time now, I've also identified human conflict as an important consideration. We are now seeing it play out around the globe and within our own country. Number two, global debt. It has risen rapidly to levels that are quickly becoming unsustainable as the cost of financing has risen dramatically. while the need for more financing is also increasing due to human conflict and demographics, among other factors. Number three, balance sheet transition. There is a major transition underway globally as central banks run off their balance sheets. Private capital needs to take on the risk that was previously housed on government balance sheets at uneconomic price levels. We are witnessing a massive and ongoing price adjustment in assets across the risk spectrum because private capital demands a higher risk premium to hold those same assets. At the intersection of these factors, the probability of accidents increases exponentially. You've heard me say this as surprises are highly probable in a complex macroeconomic environment. What we have done at Dynex is to keep our shareholders in the game by investing in the most liquid asset that is yielding an above average long-term return. As the global economy transitioned from central banks to private capital, agency mortgage-backed securities have faced the earliest and steepest price correction. Our book value has felt the impact of this correction since the second quarter of 2022. We have anticipated and prepared for book value volatility with high levels of liquidity and a flexible position. While no one likes to see book value decline, the majority of the impact on book value has been due to spread widening, a risk we believe is organic and acceptable as we are invested in the highest quality assets with a guaranteed return of capital. The bonds in our portfolio are money good. As I leave Dynex, my focus remains on generating long-term sustainable returns. In that regard, our past performance provides a strong foundation to work from as we navigate what is clearly an unpredictable and evolving environment. I see a compelling business opportunity in agency mortgage-backed securities to earn above-average returns adjusted for the risk. We have positioned our shareholders to benefit from this in the long term. I know I've mentioned this on previous calls, but I continue to believe experience and skill are the key elements for success in this environment. I've been doing this for a long time. Extracting the yield spread available in mortgages is complex and requires skill. There's more spread available to earn today than in the last 20 years, and the team here at Dynex is one of the best in the business to be able to accomplish this. I'll now turn it over to Rob to review the quarter.