Form: 8-K

Current report filing

July 31, 2013

Documents



PRESS RELEASE
FOR IMMEDIATE RELEASE
 
CONTACT:
Alison Griffin
 
 
 
(804) 217-5897
DYNEX CAPITAL, INC. REPORTS SECOND QUARTER 2013
DILUTED EPS OF $0.54 AND BOOK VALUE PER COMMON SHARE OF $8.94
GLEN ALLEN, Va. -- Dynex Capital, Inc. (NYSE: DX) reported net income available to common shareholders of $29.4 million, or $0.54 per diluted common share for the second quarter of 2013 versus $18.8 million, or $0.35 per diluted common share for the second quarter of 2012. The Company also reported book value per common share of $8.94 per common share at June 30, 2013 versus $10.50 at March 31, 2013.
Quarterly Highlights
($ in thousands, except per share amounts)
2Q2013
 
1Q2013
 
2Q2012
Net interest income
$
22,444

 
$
22,526

 
$
19,008

Gain on sale of investments, net
$
2,031

 
$
1,391

 
$
2,587

Fair value adjustments, net
$
10,753

 
$
(157
)
 
$
117

General and administrative expenses
$
(3,795
)
 
$
(3,808
)
 
$
(3,024
)
Net income to common shareholders
$
29,442

 
$
18,381

 
$
18,847

Earnings per common share
$
0.54

 
$
0.34

 
$
0.35

Dividend per common share
$
0.29

 
$
0.29

 
$
0.29

Return on average common equity (annualized) (1)
13.2
%
 
13.0
%
 
14.3
%
Interest earnings assets, end of period
$
4,627,188

 
$
4,531,342

 
$
3,276,170

Average interest earning assets
$
4,565,733

 
$
4,098,681

 
$
3,339,546

Average interest bearing liabilities
$
(4,068,830
)
 
$
(3,641,654
)
 
$
(2,916,801
)
RMBS/single-family capital allocation, end of period
$
218,029

 
$
233,870

 
$
204,631

CMBS/commercial capital allocation, end of period
$
313,133

 
$
362,693

 
$
279,545

Book value per common share, end of period
$
8.94

 
$
10.50

 
$
9.66

Net interest spread
1.75
%
 
1.89
%
 
2.18
%
Portfolio CPR (excluding CMBS IO)
21.0
%
 
19.3
%
 
14.3
%
Debt to shareholders' equity ratio, end of period
6.8
x
 
6.3
x
 
6.1
x
(1) The annualized return on average common equity for the second quarter of 2013 was calculated using an adjusted net income to common shareholders of $18.4 million. This amount excludes fair value adjustments of $11.0 million related to long-term interest rate swaps added during the quarter for which the Company did not elect hedge accounting. On a GAAP basis, including the fair value adjustments, our net income to common shareholders and annualized return on average common equity for the second quarter of 2013 were $29.4 million and 21.0%, respectively. Management believes the adjusted return on average common equity is useful to investors because it enhances comparability between the periods presented.
Conference Call
As previously announced, the Company's quarterly conference call to discuss the second quarter results is 11:00 a.m. ET on August 1, 2013. Interested investors may access the call by dialing 1-888-317-6016 or by accessing the webcast, the link for which is provided under “Investor Relations/IR Highlights” on our website (www.dynexcapital.com). A slide presentation will accompany the webcast and will also be available one hour prior to the call at the same location on our website.


1


Management Remarks
Mr. Thomas Akin, Chairman and Chief Executive Officer, commented, "Mortgage REIT portfolios experienced a volatile combination of rising rates and spreads during the second quarter that sent book values substantially lower. Leverage ratios were also affected and moved sharply higher for most mortgage REITs as book values dropped. At Dynex, we were disappointed to see our book value decrease, but our business model and portfolio remain largely intact as our leverage moved modestly higher and yet remained within our targets. Additionally, because we did not invest in 15-year or 30-year mortgages but instead invested in securities with shorter maturities and more predictable cash flows, our duration extension in the quarter was minimal. Going forward, we expect to maintain our leverage target below 6.5 times consistent with our investment discipline. Our conservative investment strategy of low duration, high quality investments remains applicable in the current environment, and we expect to recover shareholder value as our portfolio rolls down the yield curve and as markets stabilize."
Mr. Byron Boston, President and Chief Investment Officer commented, "Market events were extraordinary during the quarter leading to extreme price volatility in fixed income securities. During the quarter the ten-year Treasury rate increased by 64 basis points, but the bulk of the price volatility resulted from widening in market credit spreads versus higher interest rates. Fed talk of reducing bond purchases, global de-risking, bond fund redemptions, and regulatory constraints, led to reduced liquidity and lack of transparency in MBS pricing. The unusual combination of the increase in interest rates and the simultaneous widening of credit spreads had the equivalent impact of an approximate 200 basis point rise in interest rates on a substantial portion of our investment portfolio. While we have seen some stabilizing since quarter end, markets continue to be data dependent and volatile and could remain this way until the economic picture becomes clearer. Financing has not been a concern, and we are continuing to prioritize our liquidity and financial flexibility."
Market Summary
The following table provides various interest rates and credit spreads on assets (expressed in basis points) owned by the Company as well as other market credit spreads as of June 30, 2013 and March 31, 2013:
 
June 30, 2013
 
March 31, 2013
2 year vs. 10 year Treasury spread
 
218

 
 
 
166

 
Hybrid ARM 5/1 (2.0% coupon) spread to Treasuries
 
45

 
 
 
18

 
Hybrid ARM 10/1 (2.5% coupon) spread to Treasuries
 
75

 
 
 
34

 
Agency CMBS spread to Treasuries
 
92

 
 
 
59

 
'A'-rated CMBS spread to Treasuries
 
287

 
 
 
205

 
Agency CMBS IO spread to interest rate swaps
 
200

 
 
 
115

 
CC 30 year FNMA zero vol spread to Treasuries
 
43

 
 
 
29

 
IG Index spread to Treasuries
 
165

 
 
 
154

 
HY Index spread to Treasuries
 
537

 
 
 
501

 
CMBX.NA.A.6 (2012 'A'-rated)
 
254

 
 
 
200

 


2


Quarterly Performance Summary
Net interest income decreased slightly to $22.4 million for the second quarter of 2013 from $22.5 million for the first quarter of 2013 due primarily to increased expense from interest rate swaps and lower prepayment penalty income received on CMBS IO securities. Net interest spread for the second quarter of 2013 was 1.75% which consisted of the yield on interest-earning investments of 2.86% less the cost of funds of 1.11%. For the first quarter of 2013, net interest spread was 1.89% which consisted of the yield on the Company's interest-earning investments of 3.04% less the cost of funds of 1.15%. For the second quarter of 2012, the net interest spread was 2.18% which consisted of the yield on the Company's interest-earning investments of 3.29% less the cost of funds of 1.11%. Although our average interest earning investments increased in the second quarter of 2013 compared to the first quarter of 2013, our net interest spread declined in the second quarter compared to the first quarter primarily due to the addition of lower coupon assets at the end of the first quarter and the beginning of the second quarter.
Fair value adjustments, net for the second quarter of 2013 include $11.4 million related to the market value increase in the Company's interest rate swaps designated as trading, which is primarily the result of four 10-year interest rate swaps with a combined notional balance of $180 million that the Company entered into during the second quarter. Please see "Hedging Activities" below for further discussion. Partially offsetting that increase was a $0.6 million decline in the market value of certain Agency CMBS designated as trading securities.
During the second quarter of 2013, the Company sold CMBS and CMBS IO investments with an amortized cost basis of $144.5 million for a net gain of $2.6 million. These investments earned a weighted-average yield of 4.88% during the quarter. The Company also sold RMBS investments with an amortized cost basis of $10.1 million at a loss of $0.6 million.
General and administrative expenses were $3.8 million in the second quarter of 2013, or 0.57% of average shareholders' equity, versus $3.8 million, or 0.61% of average shareholders' equity, in the first quarter of 2013.
During the quarter the Company issued 2.25 million shares of 7.625% Series B Preferred Stock for net proceeds of $54.3 million which it invested principally in Agency hybrid ARMs. No shares of common stock were repurchased during the quarter. Principally as a result the decline in fair value in the Company's investments, accumulated other comprehensive income declined $96.7 million, or $1.76 per common share, during the second quarter to an accumulated loss position of $35.1 million, or $0.64 per common share at June 30, 2013. Book value per common share was $8.94, representing a decline of 15% from March 31, 2013 and 13% from December 31, 2012. The following table reconciles the changes in the Company's book value per common share from March 31, 2013 to June 30, 2013 (changes in fair value of MBS due to changes in interest rates and changes in credit spreads are based on Company estimates):

3


Book value per common share, March 31, 2013
 
$
10.50

 
Net income in excess of dividends declared (1)
 
0.05

 
Changes in fair value of MBS classified as available-for-sale, net of hedges, due to changes in interest
    rates
 
(0.50
)
 
Changes in fair value of MBS classified as available-for-sale due to changes in credit spreads
 
(1.06
)
 
Capital transactions:
 
 
 
 
Issuance of Series B Preferred Stock
 
(0.04
)
 
 
Other, net
 
(0.01
)
Book value per common share, June 30, 2013
 
$
8.94


(1) "Net income in excess of dividends declared" excludes $11.0 million, or $0.20 per common share, in fair value adjustments, net recorded during the quarter which relates to 10-year interest rate swaps which are designated as trading but considered economic hedges of interest rate risk. Such amounts are included in "Changes in fair value of MBS classified as available-for-sale, net of hedges, due to changes in interest rates" in the table.
Investments
The following tables present certain information for the Company's MBS portfolio by category as of and for the dates and periods presented:
 
As of June 30, 2013
 
2Q2013
($ in thousands)
Principal Balance (notional for CMBS IO)
 
Net Premium (Discount)
 
Amortized Cost
 
Fair Value
 
WAVG Coupon
 
WAVG Yield
 (2)
Agency MBS:
 
 
 
 
 
 
 
 
 
 
 
RMBS
$
2,966,661

 
$
170,225

 
$
3,136,886

 
$
3,084,367

 
3.34
%
 
1.90
%
CMBS
306,848

 
22,916

 
329,764

 
342,310

 
5.20
%
 
3.54
%
CMBS IO
10,641,141

 
540,484

 
540,484

 
550,189

 
0.87
%
 
4.54
%
Total (1)
$
3,273,509

 
$
733,625

 
$
4,007,134

 
$
3,976,866

 
 
 
2.43
%
 
 
 
 
 
 
 
 
 
 
 
 
Non-Agency MBS:
 
 
 
 
 
 
 
 
 
 
 
RMBS
$
12,315

 
$
352

 
$
11,963

 
$
12,064

 
4.64
%
 
4.99
%
CMBS
448,973

 
18,436

 
430,537

 
439,775

 
5.33
%
 
5.62
%
CMBS IO
2,821,042

 
128,428

 
128,428

 
130,618

 
0.87
%
 
4.47
%
Total (1)
$
461,288

 
$
147,216

 
$
570,928

 
$
582,457

 
 
 
5.39
%
 
 
 
 
 
 
 
 
 
 
 
 
Total MBS portfolio:
$
3,734,797

 
$
880,841

 
$
4,578,062

 
$
4,559,323

 
 
 
2.82
%


4


($ in thousands)
2Q2013
 
1Q2013
 
2Q2012
Agency MBS:
 
 
 
 
 
Weighted average annualized yield for the period (2)
2.43
 %
 
2.60
 %
 
2.75
 %
Weighted average annualized cost of funds including interest rate swaps for the period
(0.91
)%
 
(0.93
)%
 
(0.88
)%
Net interest spread for the period
1.52
 %
 
1.67
 %
 
1.87
 %
Average balance of investments for the period (1)
$
3,903,717

 
$
3,456,841

 
$
2,755,376

Average balance of financing for the period
$
(3,520,250
)
 
$
(3,128,324
)
 
$
(2,466,672
)
 
 
 
 
 
 
Non-Agency MBS:
 
 
 
 
 
Weighted average annualized yield for the period (2)
5.39
 %
 
5.39
 %
 
6.05
 %
Weighted average annualized cost of funds including interest rate swaps for the period
(2.45
)%
 
(2.58
)%
 
(2.55
)%
Net interest spread for the period
2.94
 %
 
2.81
 %
 
3.50
 %
Average balance of investments for the period (1)
$
596,506

 
$
572,312

 
$
472,106

Average balance of financing for the period
$
(511,034
)
 
$
(473,177
)
 
$
(381,826
)
(1) Total principal balance and average balance of investments exclude notional amounts of CMBS IO.
(2) Weighted average yield is based on weighted average amortized cost of investments for the quarter.

The following table presents the weighted average of constant prepayment rates ("CPRs") for the Company's Agency MBS for the periods presented:
 
2Q2013
 
1Q2013
 
4Q2012
 
3Q2012
RMBS
25.7
%
 
24.8
%
 
24.3
%
 
23.4
%
CMBS
0.0
%
 
0.0
%
 
0.0
%
 
0.0
%
Total weighted average (1)
23.2
%
 
22.0
%
 
21.5
%
 
20.9
%
(1) CPRs for CMBS IO are not calculated and reported. If CPRs for CMBS IO were included, the total weighted averages above would be lower.

The following table presents the weighted average coupon by weighted average months-to-reset ("MTR") for the variable-rate portion of our Agency RMBS based on par value as of June 30, 2013 and December 31, 2012:
 
June 30, 2013
 
December 31, 2012
($ in thousands)
Par Value
 
WAVG Coupon
 
Par Value
 
WAVG Coupon
0-12 MTR
$
479,605

 
3.29
%
 
$
523,711

 
3.94
%
13-24 MTR
380,521

 
3.81
%
 
105,372

 
4.41
%
25-36 MTR
128,969

 
4.08
%
 
194,814

 
3.82
%
37-60 MTR
600,567

 
3.69
%
 
471,159

 
4.02
%
61-84 MTR
328,166

 
3.13
%
 
620,099

 
3.28
%
Over 84 MTR
1,029,426

 
3.02
%
 
490,759

 
3.40
%
 
$
2,947,254

 
3.36
%
 
$
2,405,914

 
3.69
%





5


Information related to the credit ratings for the Company's non-Agency MBS as of June 30, 2013 is as follows:
 
Fair Value
 
Weighted average % of total
($ in thousands)
RMBS
 
CMBS
 
CMBS IO
 
AAA
$
—

 
$
76,028

 
$
128,972

 
35.2
%
AA
—

 
44,283

 
1,646

 
7.9
%
A
—

 
257,864

 
—

 
44.3
%
Below A or not rated
12,064

 
61,600

 
—

 
12.6
%
 
$
12,064

 
$
439,775

 
$
130,618

 
100.0
%
Repurchase Agreement Borrowings
The following tables present the components of the Company’s repurchase agreements as of June 30, 2013 by the fair value and type of securities pledged as collateral to the repurchase agreements:
 
June 30, 2013
($ in thousands)
Balance
 
Weighted
Average Rate
 
Fair Value of
Collateral Pledged
Agency RMBS
$
2,885,261

 
0.40
%
 
$
2,994,711

Agency CMBS
244,739

 
0.39
%
 
295,461

Agency CMBS IOs
439,482

 
1.19
%
 
541,133

Non-Agency RMBS
8,986

 
1.88
%
 
10,796

Non-Agency CMBS
368,060

 
1.32
%
 
432,212

Non-Agency CMBS IO
102,298

 
1.38
%
 
130,605

Securitization financing bonds
23,017

 
1.61
%
 
25,893

Deferred costs
(451
)
 
n/a

 
n/a

 
$
4,071,392

 
0.60
%
 
$
4,430,811

The combined weighted average original term to maturity for the Company’s repurchase agreements was 49 days as of June 30, 2013 and 57 days as of December 31, 2012.
Hedging Activities
During the second quarter the Company entered into 10-year current pay and forward starting interest rate swaps with an aggregate notional balance of $180 million and a weighted average effective pay rate of 2.13%. Given the longer term of these interest rate swaps, the Company did not designate them as cash flow hedges under GAAP. As such, the increase in fair value of $11.0 million related to these additional swaps was included in the Company's income statement for the second quarter.
Additionally, effective on June 30, 2013, the Company voluntarily discontinued hedge accounting for interest rate swaps which previously had been accounted for as cash flow hedges under GAAP. Under GAAP cash flow hedge accounting, interest rate swaps are recorded at fair value as assets and liabilities on the balance sheet with any changes in fair value recorded in accumulated other comprehensive income, a separate component of shareholders' equity. As a result of discontinuing hedge accounting, future changes in the fair value of interest rate swap contracts will be recorded in the Company's consolidated statement of income rather than accumulated other comprehensive

6


income. The Company discontinued hedge accounting in order to more effectively manage the maturity dates of its repurchase agreements. Hedge accounting limits the ability of the Company to extend maturity dates for its repurchase agreements beyond 30-days, forcing the Company to have repurchase agreements mature, or roll, at fixed intervals throughout a given 30-day period. A fuller description of the reasons and the impact of the discontinuing of hedge accounting will be included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013. The Company has also begun utilizing other instruments to hedge its interest risk exposures such as Eurodollar contracts and has sold $450 million in such contracts since the end of the second quarter. The Company's interest rate swaps and Eurodollar contracts will continue to be treated as hedges for income tax purposes.
The following table summarizes the contractual maturities remaining for the Company’s outstanding interest rate swap agreements as of June 30, 2013:
($ in thousands)
Notional Amount:
Trading
 
Notional Amount:
Hedging
 
Notional Amount:
Total
 
Number of Swaps
 
Weighted-Average
Fixed Rate Swapped
0-12 months
$
435,000

 
$
—

 
$
435,000

 
7

 
1.26
%
13-36 months
390,000

 
—

 
390,000

 
11

 
1.99
%
37-60 months
212,000

 
—

 
212,000

 
8

 
1.17
%
Over 60 months
605,000

 
—

 
605,000

 
20

 
1.76
%
 
$
1,642,000

 
$
—

 
$
1,642,000

 
46

 
1.61
%
Equity Summary
The following table summarizes the allocation of the Company's shareholders' equity as of June 30, 2013 and the net interest income contribution for the quarters indicated to each component of the Company's balance sheet:
($ in thousands)
Asset Carrying Basis
 
Associated Financing(1)/Liability
Carrying Basis
 
Allocated
Shareholders' Equity
 
% of Shareholders' Equity
 
2Q2013 Net Interest Income Contribution
 
1Q2013 Net Interest Income Contribution
Agency MBS
$
3,976,866

 
$
3,569,150

 
$
407,716

 
67.1
 %
 
$
16,810

 
$
16,863

Non-Agency MBS
582,457

 
490,044

 
92,413

 
15.2
 %
 
4,838

 
4,861

Securitized mortgage loans (2)
62,083

 
36,832

 
25,251

 
4.2
 %
 
777

 
522

Other investments (2)
5,782

 
—

 
5,782

 
1.0
 %
 
19

 
19

Derivative instruments(3)
14,860

 
21,192

 
(6,332
)
 
(1.0
)%
 
—

 
—

Cash and cash equivalents
29,343

 
—

 
29,343

 
4.8
 %
 
—

 
—

Other assets/other liabilities
77,880

 
24,816

 
53,064

 
8.7
 %
 
—

 
—

 
$
4,749,271

 
$
4,142,034

 
$
607,237

 
100.0
 %
 
$
22,444

 
$
22,265

(1)
Associated financing for investments includes repurchase agreements and securitization financing issued to third parties (which is presented on the Company's balance sheet as “non-recourse collateralized financing”). Associated financing for hedging instruments represents the fair value of the interest rate swap agreements in a liability position.
(2)
Net interest income contribution amount is after provision for loan losses.
(3)
Net interest expense from derivative instruments designated as hedges of repurchase agreement financing is included within net interest income contribution amounts for each respective investment category.
Company Description
Dynex Capital, Inc. is an internally managed real estate investment trust, or REIT, which invests in mortgage assets on a leveraged basis.  The Company is actively investing in Agency and non-Agency RMBS and CMBS.  The

7


Company also has investments in securitized single-family residential and commercial mortgage loans originated by the Company from 1992 to 1998.  Additional information about Dynex Capital, Inc. is available at www.dynexcapital.com.

Note: This release contains “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. Forward-looking statements in this release include, without limitation, statements regarding future interest rates, our views on expected characteristics of future investment environments and risks posed by our investment portfolio, our future investment strategies, our future leverage levels and financing strategies including the use of specific financing and hedging instruments and strategies, and the expected performance of our investment portfolio and certain of our investments. The Company's actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements as a result of unforeseen external factors. These factors may include, but are not limited to, changes in general economic and market conditions, including volatility in the credit markets which impacts asset prices and the cost and availability of financing, defaults by borrowers, availability of suitable reinvestment opportunities, variability in investment portfolio cash flows, fluctuations in interest rates, fluctuations in property capitalization rates and values of commercial real estate, defaults by third-party servicers, prepayments of investment portfolio assets, other general competitive factors, uncertainty around government policy, the impact of regulatory changes, including the Emergency Economic Stabilization Act of 2008 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the full impacts of which are unknown at this time, and another ownership change under Section 382 that further impacts the use of our tax net operating loss carryforward. For additional information on risk factors that could affect the Company's forward-looking statements, see the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and other reports filed with and furnished to the Securities and Exchange Commission.
#
#
#

8


DYNEX CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share and per share data)

 
June 30, 2013
 
December 31, 2012
ASSETS
(unaudited)
 
 
Mortgage-backed securities, at fair value (including pledged of $4,437,651 and
$3,967,134, respectively)
$
4,559,323

 
$
4,103,981

Securitized mortgage loans, net
62,083

 
70,823

Other investments, net
5,782

 
858

 
4,627,188

 
4,175,662

Cash and cash equivalents
29,343

 
55,809

Derivative assets
14,860

 
—

Receivable from securities sold
22,875

 
—

Principal receivable on investments
22,860

 
17,008

Accrued interest receivable
24,304

 
23,073

Other assets, net
7,841

 
8,677

Total assets
$
4,749,271

 
$
4,280,229

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Liabilities:
 

 
 

Repurchase agreements
$
4,071,392

 
$
3,564,128

Non-recourse collateralized financing
24,634

 
30,504

Derivative liabilities
21,192

 
42,537

Accrued interest payable
1,661

 
2,895

Accrued dividends payable
17,902

 
16,770

Other liabilities
5,253

 
6,685

 Total liabilities
4,142,034

 
3,663,519

 
 
 
 
Shareholders’ equity:
 

 
 

Preferred stock, par value $.01 per share, 8.5% Series A Cumulative Redeemable; 8,000,000 shares authorized; 2,300,000 shares issued and outstanding, respectively ($58,532 aggregate liquidation preference)
55,407

 
55,407

Preferred stock, par value $.01 per share, 7.625% Series B Cumulative Redeemable; 7,000,000 shares authorized; 2,250,000 shares issued and outstanding, respectively ($57,108 aggregate liquidation preference)
54,251

 
—

Common stock, par value $.01 per share, 200,000,000 shares
authorized; 55,173,392 and 54,268,915 shares issued and outstanding, respectively
552

 
543

Additional paid-in capital
767,172

 
759,214

Accumulated other comprehensive income (loss)
(35,100
)
 
52,511

Accumulated deficit
(235,045
)
 
(250,965
)
 Total shareholders' equity
607,237

 
616,710

Total liabilities and shareholders’ equity
$
4,749,271

 
$
4,280,229

 
 
 
 
Book value per common share
$
8.94

 
$
10.30







DYNEX CAPITAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 (amounts in thousands except per share data)

 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2013
 
2012
 
2013
 
2012
Interest income:
 
 
 
 
 
 
 
Mortgage-backed securities
$
32,968

 
$
25,519

 
$
65,007

 
$
49,982

Securitized mortgage loans
903

 
1,527

 
1,827

 
3,031

Other investments
19

 
79

 
38

 
384

 
33,890

 
27,125

 
66,872

 
53,397

Interest expense:
 
 
 
 
 
 
 
Repurchase agreements
11,165

 
7,863

 
21,383

 
14,507

Non-recourse collateralized financing
281

 
254

 
519

 
735

 
11,446

 
8,117

 
21,902

 
15,242

 
 
 
 
 
 
 
 
Net interest income
22,444

 
19,008

 
44,970

 
38,155

Provision for loan losses
—

 
—

 
(261
)
 
(60
)
Net interest income after provision for loan losses
22,444

 
19,008

 
44,709

 
38,095

 
 
 
 
 
 
 
 
Gain on sale of investments, net
2,031

 
2,587

 
3,422

 
2,938

Fair value adjustments, net
10,753

 
117

 
10,596

 
(93
)
Other income, net
101

 
159

 
13

 
528

General and administrative expenses:
 
 
 
 
 
 
 
Compensation and benefits
(2,308
)
 
(1,779
)
 
(4,666
)
 
(3,577
)
Other general and administrative
(1,487
)
 
(1,245
)
 
(2,938
)
 
(2,568
)
Net income
31,534

 
18,847

 
51,136

 
35,323

Preferred stock dividends
(2,092
)
 
—

 
(3,313
)
 
—

Net income to common shareholders
$
29,442

 
$
18,847

 
$
47,823

 
$
35,323

 
 
 
 
 
 
 
 
Weighted average common shares:
 
 
 
 
 
 
 
Basic
54,974

 
54,354

 
54,639

 
51,931

Diluted
54,974

 
54,354

 
54,639

 
51,931

Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.54

 
$
0.35

 
$
0.88

 
$
0.68

Diluted
$
0.54

 
$
0.35

 
$
0.88

 
$
0.68

Dividends declared per common share
$
0.29

 
$
0.29

 
$
0.58

 
$
0.57