Dynex Capital - Earnings Call - Q1 2021

Transcript

Speaker 0

Hello, and welcome to the twenty twenty one Annual Meeting of Shareholders of Dynex Capital Inc. Please note that today's meeting is being recorded. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to Byron Boston, CEO and Co Chief Investment Officer.

Sir, the floor is yours.

Speaker 1

Thank you very much, operator. Good morning. Will the meeting please come to order? Thank you all very much. I extend a warm welcome to each of you.

This is the second year we're holding our annual meeting in an all virtual format. We believe this virtual format continues to facilitate expanded shareholder access and participation. In addition, due to the ongoing public health concerns associated with the COVID nineteen pandemic, we believe that a virtual meeting format will help protect the health, safety, and well-being of our employees, shareholders, and community at large. I am Byron Boston, chief executive officer and co chief investment officer of Dynex Capital, and I will serve as chairman of this meeting. On behalf of the board of directors and officers of Dynex, I would like to thank you all for attending our twenty twenty one annual meeting of shareholders.

As I shared with you in my annual letter, I joined Dynex Capital in 2008 with a distinct philosophy of how to manage a mortgage REIT for the long term. That philosophy guides our investment approach today, and Dynex continues to prioritize risk management, disciplined capital allocation, and liquidity, principles that positioned us to not just withstand but to also drive positive results from the unprecedented market volatility of 2020. The decisions we made over the past fifteen months enabled us to weather the extraordinary market events of March 2020 and provided flexibility to rebalance our investments throughout the year. We demonstrated our ability to effectively manage your capital and deliver industry leading risk adjusted returns even during times of extreme market volatility. We're very pleased with our 2020 performance, having delivered a 17% total shareholder return and a 15.2% total economic return to our Shebahama common shareholders.

The Dynex team has now delivered industry leading performances on a one, three, and five year basis for the period ended 12/31/2020 while also performing outperforming the returns of the S and P five hundred Financials Index and the Russell two thousand Value Index over the past decade. Our market capitalization today is approximately 620,000,000, And we are building a thirty year vision to create a multigenerational organization that can stand the test of time. Our fundamental approach, discipline and long term thinking will always be our north star regardless of what the future holds. Our management team, our board of directors, and I are personally committed to investing alongside our shareholders, and we are optimistic about our future and our prospects for 2021 and beyond. I will now turn the meeting over to Allison Griffin, our Vice President, Investor Relations to conduct the formal business of the meeting.

Speaker 2

Thank you, Mr. Chairman. First, I'd like to direct everyone's attention to the rules of conduct that are available on the meeting website. Second, while the meeting is virtual only, we welcome questions from our shareholders. If you are a shareholder and wish to ask a question you can submit your question at any time by clicking on the meeting icon provided on the meeting website.

When we come to the Q and A portion of the meeting we will read and answer the questions that have been submitted online. Next, I offer to this meeting the notice of Internet availability of proxy materials dated 03/31/2021, the notice of annual meeting and proxy statement dated 03/31/2021, the form of proxy, and the annual report of the company for the year 2020. Links to the proxy statement and annual report are also available on the meeting website. I have been appointed judge of election for this meeting to certify the results of the voting and have taken the oath of office. As indicated in the proof of mailing affidavit from Computer Share, either the notice of Internet availability of proxy materials or the notice of the annual meeting of shareholders and accompanying materials commenced mailing on 03/31/2021 to each shareholder of record as of 03/09/2021.

As of the record date of 03/09/2021, there were 30,354,596 shares of common stock of the company issued and outstanding and entitled to notice of and to vote at this meeting of shareholders. As the judge of election, I report that at least 23,000,000 shares of common stock or approximately 77% of all common shares outstanding are present or represented by proxy at this meeting. Therefore a quorum is present and the meeting may proceed. As the judge of election I have a list of the shareholders of record of the company as of the record date entitled to receive notice of this meeting. This list has been available for inspection at the principal offices of the company during normal business hours since April 2 and is available for inspection throughout this meeting on the meeting website.

We also have available the meeting minutes of the twenty twenty Annual Meeting of Shareholders. I move that the reading of the minutes of the twenty twenty Annual Meeting of Shareholders be dispensed with. Is there a second?

Speaker 1

Second.

Speaker 2

The minutes of the twenty twenty Annual Meeting of Shareholders will not be read. It is 11:12AM and the polls for each matter to be voted upon at this meeting are open. As a reminder, shareholders can vote online at any time during the meeting prior to the closing of the polls. If you are a shareholder entitled to vote and have not yet voted or if you want to change your previously cast vote, please do so by clicking on the voting link on the meeting website. If you have already voted by proxy, it is not necessary to vote again.

The first item of business is the election of six directors by holders of the company's common stock, The individuals nominated to serve until the twenty twenty two annual meeting and until the election and qualification of their successors are Byron Boston, Julia Coronado, Michael Hughes, Joy Palmer, Robert Salcetti, and David Stevens. The secretary of the company has advised the company that no other nominations have been received. The second item of business today is to approve in an advisory and nonbinding vote the compensation of the company's named executive officers as disclosed in the proxy statement. The third and last item of business today is the ratification of the selection of BDO USA as the company's independent auditors for the 2021 fiscal year. The matters to be voted on have formally been presented.

The polls are now closed at 11:13AM. All proxies and votes should now have been submitted. As judge of election, I certify that each director nominee received a majority of the company shares voted in favor of his or her election. At least 92% of the common shares voted on the proposal have been voted for approval of the named executive officer's compensation as disclosed in the proxy statement. At least 97% of the common shares voted on the proposal have been voted for ratification of the selection of BDO USA as the company's independent auditors for 2021.

I declare Ms. Zores Boston, Hughes, Salcedi, Stephens and Doctor. Coronado and Ms. Palmer are elected directors. The shareholders have approved the compensation of the company's named executive officers as described in the proxy statement and the selection of BDO USA is ratified.

My written report as the judge of election with the final vote count for the matters voted on today will be filed with the permanent records of the company. A representative of BDO is attending the meeting today and may be available to answer questions during the Q and A portion of the meeting. There is no other business to come before the meeting. That concludes the formal part. And at this point, we will open it up to questions.

As a reminder, you may submit questions online by clicking the meeting icon provided on the meeting website. And we'll pause for a moment and just wait for any questions. And at this time, it doesn't look like we're gonna have any questions. I'm gonna turn it back to Byron Boston.

Speaker 1

Great. Before I adjourn, given that there's no other questions, I just wanna alert you that we we try to be as transparent as possible. We try to produce a solid amount of of information each quarter, our quarterly earnings deck, our quarterly conference calls. We try to answer the questions that may be on your mind. So I will direct you to that information which we put out about a couple of weeks ago.

And, again, we're being as transparent as possible. We appreciate you attending today. There's a video message recapping the exciting progress Dynex has made and will be available on our website, where you will also find our annual report and my annual letter to shareholders, in addition to really a ton of other information about how we take risks, how we're managing our company. And with that, we thank you for attending our Annual Meeting. Thank you very much.

Speaker 0

This concludes the meeting. You may now disconnect.