You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: We appreciate you joining us.
Joining me on the call is Byron Boston, Chief Executive Officer, and Chief Investment Officer and co-Chief Investment Officer; Smriti Popenoe, President and co-Chief Investment Officer, and Steve Benedetti, Executive Vice President, Chief Financial Officer, and Chief Operating Officer.
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 in 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 that the yield curve steepens or spreads widen.
As such we have raised capital, maintain lower leverage, and methodically deployed capital at attractive return levels.
As of mid-year, we are sticking with our strategy.
Nonetheless, we're 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 remained solid as our total economic return deposited 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 managed 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 5.
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.
For the second quarter, we reported a comprehensive loss of $0.98 per common share, and a total economic return of minus $0.93 per common share or a minus 4.6%.
We also reported core net operating income of $0.51 per common share, an increase of 10% over last quarter's $0.46 per common share, and well exceeding our $0.39 quarterly common stock dividend.
Book value per share declined $1.32 or minus 6.6%, principally from economic losses on the investment portfolio of $48 million or $1.49 per common share, driven in part by mortgage spread widening and in part due to the lower rate environment during the quarter versus our hedge position.
In terms of specific performance, TBAs and dollar roll specialness continue to be important contributors to results for the quarter, adding an incremental $0.06 per common share to core net operating income, which was partially offset by lower earnings from a smaller pass-through portfolio.
In addition, G&A expenses were lower by $0.02 on a per-share basis and preferred stock dividend on core earnings per share was lower by $0.04 per share.
Both reflecting the benefit of our capital management activities year-to-date.
As Smriti will discuss later, with the ongoing favorable conditions in the funding and TBA dollar roll markets, we expect continued sequential core net operating income growth in the third quarter.
Average interest-earning assets, including TBAs increased to $4.8 billion versus $4.3 billion, as we deploy the capital raised over the first half of the year.
At quarter end, interest-earning assets, including TBAs, were $5.4 billion versus $5.2 billion at the end of last quarter and leverage including TBA dollar rolls, was 6.7 times versus 6.9 times last quarter.
The lower overall leverage quarter-to-quarter primarily is due to the capital growth of the company and portfolio adjustments during the second quarter.
Adjusted net interest income was higher on an absolute dollar basis, given the growth in the investment portfolio during the quarter, inclusive of TBA securities, but was lower on a per-share basis, however, reflecting the new shares issued in the first half of the year and the conservative leverage posture of the company.
The increase in adjusted net interest income on an absolute dollar basis was due to the continued decline in repo borrowing cost and the increase in TBA dollar roll positions during the quarter, as previously noted.
Adjusted net interest spread increased eight basis points this quarter to 195 basis points, driven largely by the company's TBA position and a modest decline in repo borrowing cost.
The company's implied funding cost for its TBA dollar roll transactions was approximately 49 basis points lower than its repurchase agreement financing rate during the second quarter of 2021, an increase of 10 basis points in specialness relative to the prior quarter.
As a result, TBA dollar roll transactions contributed in eight basis point increase to adjusted net interest spread during the quarter.
Regarding Agency RMBS prepayment speeds, they were essentially unchanged at 19% CPR for the quarter versus 18.6% EPR for quarter 1.
Overall, total shareholders' capital grew approximately $25 million during the quarter.
This includes $68 million in new common equity raised through at the market offerings in the quarter.
Market conditions were favorable to issue equity and continue to unlock the operating leverage of the company.
Our capital issuances added $0.07 per common share to book value for the quarter.
I want to start by building on Byron's comments by describing the principles that have been consistent throughout our portfolio management history here at Dynex.
The first is a sound macroeconomic process and framework to assess the environment.
The second is a flexible mindset to be able to pivot when the environment shifts.
And finally, the right amount of patience in decision-making.
The environment we have been in since January 2020 has required all three of these principles in real-time, especially now, as the markets are still seeking a direction and level.
The most important principle for what we are in right now is patients.
While we continuously assess the environment because the passage of time, is what is now needed for the data and the market direction to become clear.
Even so, this remains a very favorable environment in which to generate long-term returns.
As shown on Slide 25, our repo financing cost declined seven basis points over the quarter.
Financing in the TBA market has continued to be strong, contributing 1% to 3% excess core ROE versus pools.
Since year-end, as Byron mentioned, we have used bouts of volatility to invest capital, and we did that late in the second quarter, and have done so into the third.
As spreads tightened in late April, we reduced our leverage by a full turn.
And as returns are now in the 10% to 12% core ROE range, we have reinvested a portion of that capital, growing the balance sheet from a low point of $4.5 billion in the second quarter to $5.6 billion thus far in the third quarter.
We allocated out of TBAs into specified pools as pay-ups declined substantially in May, and we added outright marginal investments in Fannie 2.5 specified pools as well as Fannie two TBAs with wider spreads in June and July.
Our total economic return year-to-date is 2.4%, with book value on June 30 at $18.75, relatively unchanged versus year-end.
In the third quarter thus far, MBS spreads are wider and as the yield curve has flattened dramatically in July, book value has fluctuated with yields in a range of flat to down about 5% versus quarter end.
To put the book value move in context, about half the book value decline in the second quarter was due to MBS spread widening, and the remaining half is attributable to our hedge position that is concentrated in the back end of the yield curve.
Post quarter end, MBS spreads are modestly wider, but the book value decline is directly attributable to our hedge exposure to the long end of the yield curve.
We have chosen to maintain a position with a portfolio structure hedged with the long end of the yield curve because we believe that the risk of a whipsaw in rates is substantial.
The catalyst for that whipsaw could be a turn in sentiment, realize fundamental data, or an easing of the technical nature of the recent move.
Any of which can happen rapidly.
We expect the book value to recapture much of the decline in these resteepening scenarios.
I will cover more on our thinking shortly when discussing the macroeconomic environment.
Leverage at the end of the quarter stood at 6.7 times, and we have the potential for two more turns from here.
At today's higher level of earning assets, which were added at wider spreads, we expect core earnings to continue to exceed the current level of the dividend.
We are on track for an 8% dividend yield on beginning book value for the year, with the excess core earnings providing a cushion to capital.
Shifting now to recent market moves, our macro opinion, and outlook.
The global economy is still evolving through the health crisis and corresponding economic situation from the pandemic, and the recovery is proceeding in fits and starts.
It will take time for the economic picture to become clearer.
In the absence of real data, technical factors like short-covering, overseas demand, and central bank activity have dominated recent market action.
This is leading many participants to arrive at conclusions on long-term fundamentals like inflation and growth, for which the data has been difficult to parse out and even to predict, but we expect that this will become clearer in the coming months.
In such an environment, our discipline, process, and framework play a key role in the management of our position.
We expect that front-end rates will remain low, close to 0 through 2022, providing a solid base from which to generate returns.
The long end of the yield curve, 10-year, 30-year will move based on the evolving economic situation.
The Fed's decision on tapering is a key event in our focus as is the fall reopening of schools as well as the debt ceiling.
In the short term, we expect choppy action in the markets to continue, and our current thinking is that 10-year yields will trade in a range between 1% and 1.5%.
In the medium term, there is room for 10-year yields to move to a higher range, 1.5% to 1.75%.
And this is as we transition globally to a more fully reopened economy, a higher percentage of vaccinated populations, more effective and available medication to treat Covid, stable or rising inflation, a rising supply of global sovereign bonds, both from tapering as well as deficit spending and fiscal stimulus.
Once again, this picture will evolve and become clearer over the summer and into the fall.
We are very respectful of a near-term scenario, resulting in yields remaining at the lower end of the 1% to 1.5% in the 10-year rate, as I mentioned earlier.
Agency RMBS are, of course, very much impacted by these factors.
In the near term, the fundamentals for agency RMBS point to greater levels of refinancing.
Mortgage rates are below 3%, originators are fully staffed and government policies favor broader access to refinancing and modifications.
This leaves higher coupons vulnerable to increasing prepayments and lower coupons susceptible to supply.
In the near term, the supply is balanced by powerful technicals.
Lower coupon MBS are still benefiting from strong demand from the Fed and banks.
Banks are investing in MBS because of the absence of loan demand.
And as MBS have widened, money managers are finding value there relative to corporates.
Tapering is also a key focus of the MBS market.
The recent spread widening, we believe, reflects some of this risk and spreads could widen further at the taper becomes more of a reality.
For Dynex, the tighter spreads in April represented a chance to reduce leverage and wider MBS spreads from here will continue to represent an opportunity to add assets at attractive long-term returns.
This is where the patience comes in.
And as we've shown, we have managed our leverage and our capital actively.
Ultimately though, we believe the Fed's balance sheet will create a powerful stock effect to limit spread widening.
Demand from money managers as mortgages become a high-quality alternative to corporate bonds and lower net supply from potentially higher rates will also provide a buffer against much wider spreads.
By holding a flexible, liquid, high credit quality position even as spreads widen, we can manage both sides of our balance sheet to position for solid long-term return generation.
As the markets are still seeking a direction and level, the most important principle for what we are in right now is patients.
While we continuously assess the environment as it will take time for the economic picture to become clearer.
Our macroeconomic view supports our current positioning, and we remain flexible and open to adjusting it as we see the facts change.
While booked value is lower due to spread widening and the curve positioning of our hedges, it is cushioned with our ability to continue to outearn the dividend at current levels of the balance sheet.
The investment environment is favorable.
Financing costs are fixed at low levels, providing us a strong foundation for returns and the TBA market continues to offer attractive returns.
We're entering a period where we anticipate having more opportunities to invest capital at wider spreads.
We're well-positioned for this.
We have relatively low starting leverage, over $400 million in liquidity and dry powder of two turns of leverage to drive future earnings power and total economic return generation well in excess of our cost of capital.
I want to leave you with three words: opportunities, patience and trust.
First, we continue to be in an evolving global environment that will give us opportunities to invest our capital at attractive long-term returns.
Our portfolio continues to be structured for a steeper curve and wider spreads.
We continue to operate with lower leverage and higher levels of liquidity, which will allow us to take advantage of these opportunities as they develop.
Second, our decades of experience in the business leads us to be very patient as the world and the capital markets continues to adjust to this evolving global environment.
Since this new era in history began in January of 2020, we have maintained patience in managing our balance sheet, effectively increasing our capital base and methodically investing money into wider mortgage spreads and higher yields.
We will continue with this mindset.
At Dynex Capital, we offer you two products to gain access to above-average dividend yield.
Our common stock offers a great monthly dividend yield with a book value that will fluctuate as the market environment continues to evolve.
On the other hand, our preferred stock offers less price fluctuations with a lower dividend yield than the common.
Finally, we want you to continue to trust us with your money.
Dynex Capital, our number 1 purpose is to make lives better by being good stewards of individual savings.
Over the past 14 years, since I joined Dynex, we have earned your trust as we have managed our business with an ethical focus, remained patient and looking for the right opportunities to invest your savings at attractive long-term returns.
We are consistent, and we will remain patient as we let the global environment evolve.
And we will continue to make wise decisions on behalf of our shareholders.
Please take a note, look at our long-term chart on Slide 13.
I love this chart.
Dynex continues to offer a great alternative to many larger financial institutions.

user
compname reports q2 loss per share of $0.98.
q2 non-gaap core operating earnings per share $0.51.
q2 loss per share $0.98.

assistant