Solid Cash Flows: Fed Tightening

Portfolio Construction • We have a diversified portfolio across residential and commercial agency securities. We have benefited from this diversification for multiple years. • Over time, the mix of CMBS and RMBS investments has reduced the negative impact of prepayments on our portfolio returns. ● ● Agency CMBS acts as a cushion in the event of unexpected moves up or down in the level of interest rates High quality CMBS 10 are shorter duration, add yield and are intended to limit portfolio volatility • 90% of our Agency 30 year RMBS fixed rate portfolio has prepayment protection in the form of loan characteristics that limit the incentive to refinance (low balances, high LTV, or geography specific or low weighted average note rates). • We anticipate continuing to opportunistically increase leverage in our high quality asset portfolio, given the funding environment as well as the marginal return offered by such assets. We still do not view this as an appropriate time to invest in credit sensitive assets that are leveraged with short term financing. • Our current portfolio construction allows us the flexibility to rapidly pivot to other opportunities when they arise. DYNEX CAPITAL INC. 15

View entire presentation