EXHIBIT 99.1

1 PRESS RELEASE

FOR IMMEDIATE RELEASE CONTACT: Cass English
July 15, 1997 804-217-5800


DYNEX CAPITAL, INC. REPORTS
SECOND QUARTER 1997 EARNINGS


Dynex Capital, Inc. (NYSE: DX) today reported net income of $18.4
million, or $0.35 per common share for the second quarter of 1997, compared to
$18.3 million, or $0.35 per common share for the first quarter of 1997, and
$25.9 million, or $0.58 per common share for the second quarter of 1996. The
second quarter of 1996 included a one-time $18.9 million gain from the sale of
the Company's single-family operations. Prior period per share information has
been adjusted for the Company's 2-for-1 stock split, effective May 5, 1997. The
Company previously declared a dividend of $0.335 per common share for the second
quarter.

In commenting on the Company's results, Thomas H. Potts, President,
stated, "The second quarter of 1997 produced solid results for the Company. Net
interest margin exceeded $21 million, a record for one quarter, in spite of the
tightening by the Federal Reserve in March. The Company issued $984 million in
collateralized bonds during the quarter, which reduced our short-term borrowings
and provides the basis for future net interest margin growth over the balance of
the year. The mark-to-market on the Company's investment portfolio increased to
a record $77 million primarily as a result of the issuance of the collateralized
bonds. We continue to feel that the quality of our income remains strong."

During the second quarter, the Company's fundings totaled $833 million,
consisting of $38 million in multi-family/commercial loans, $69 million in
manufactured housing loans, $703 million in bulk purchases of single-family
loans, and $23 million through its specialty finance division which concentrates
on loan products designed for home builders and single-family homeowners.

Mr. Potts noted, "Multi-family lending volumes increased
during the second quarter but were below expectations due to delays in
construction and lease-up of the corresponding apartment projects. The delays
are temporary and we expect production volumes to be strong for the remainder of
the year." The Company currently has $533 million in commitments outstanding to
originate multi-family loans over the next 18 months. The Company continues its
expansion into other complementary markets, funding $14 million in commercial
real estate loans during the quarter. The Company expects to securitize
approximately $300 million of multi-family and commercial loans during the
fourth quarter of this year.

Regarding the Company's manufactured housing production operations,
production volume increased from $29 million in the first quarter to $69 million
in the second quarter. The Company plans to introduce loan programs for
"land/home" financing during the third quarter. Mr. Potts commented, "We are
steadily building our infrastructure in manufactured housing lending. We have
established ourselves in all our targeted markets, and will shortly offer a full
selection of loan programs for our customers. We successfully securitized over
$100 million of manufactured housing loans during the second quarter, and
delinquencies are at low levels. We expect continued growth in our manufactured
housing lending volume."



Regarding the outlook for the balance of 1997, Mr. Potts remarked, "We
are positive about our prospects for the balance of the year. We expect
increasing production in our multi-family/commercial, manufactured housing
lending and specialty finance areas. We should also see continued growth in our
net interest margin as a result of the recent growth in our investment portfolio
and our expectation of a stable interest rate environment."

Dynex Capital, Inc. is a mortgage and consumer finance company which
uses its production operations to create investments for its portfolio. The
Company's primary production operations include the origination of mortgage
loans secured by multi-family and commercial real estate properties and the
origination of loans secured by manufactured homes. The Company has elected to
be treated as a real estate investment trust (REIT) for federal income tax
purposes. The Company's strategy is to create investments from its production
operations at a lower effective cost than if assets were purchased in the
market, and as a result, steadily increase its net interest margin income and
earnings per share over time.



Note: This document contains "forward-looking statements"(within the meaning of
the Private Securities Litigation Act of 1995) that inherently involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward looking statements as a result of unforeseen
external factors. As discussed in the Company's filings with the SEC, these
factors may include, but are not limited to, changes in general economic
conditions, fluctuations in interest rates, increases in costs and other general
competitive factors.

# # #


DYNEX CAPITAL, INC.
Consolidated Balance Sheets
(Thousands except share data)

June 30, December 31,
1997 1996
---------- ------------
ASSETS
Investments:
Portfolio assets:
Collateral for collateralized bonds $3,338,916 $2,702,294
Mortgage securities 1,181,424 892,037
Other 135,748 96,236
Loans held for securitization 307,392 265,537
---------- ----------
4,963,480 3,956,104

Cash 7,910 11,396
Accrued interest receivable 8,632 8,078
Other assets 58,778 11,879
---------- ----------
$5,038,800 $3,987,457
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
Collateralized bonds $3,110,678 $2,519,708
Repurchase agreements 661,310 756,448
Notes payable 306,594 177,124
Payable for investments purchased 393,844 --
Accrued interest payable 2,501 2,717
Other liabilities 31,542 27,843
---------- ----------
4,506,469 3,483,840
---------- ----------

SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per share,
50,000,000 shares authorized:
9.75% Cumulative Convertible Series A
1,481,160 and 1,552,500 issued 33,831 35,460
and outstanding, respectively
9.55% Cumulative Convertible Series B
2,061,243 and 2,196,824 issued 48,251 51,425
and outstanding, respectively
9.73% Cumulative Convertible Series C
1,839,000 and 1,840,000 issued 52,711 52,740
and outstanding, respectively
Common stock, par value $.01 per share,
50,000,000 shares authorized,
42,822,154 and 41,307,186 issued
and outstanding, respectively 428 414
Additional paid-in capital 311,080 291,430
Net unrealized gain on investments 77,006 64,402
available-for-sale
Retained earnings 9,024 7,746
---------- ----------
532,331 503,617
---------- ----------
$5,038,800 $3,987,457
========== ==========



DYNEX CAPITAL, INC.
Consolidated Statements of Operations
(Thousands except share data)