Net income to common shareholders for the year of $11.1 million, or $0.91 per common share, versus $4.9 million, or $0.40 per common share, for 2007;

Net income to common shareholders for the fourth quarter of 2008 of $1.5 million, or $0.12 per common share, versus $0.6 million, or $0.05 per common share, for the fourth quarter of 2007;

Dividends declared of $0.71 per common share for 2008 and $0.23 per common share for the fourth quarter;

Book value per share of $8.07 at December 31, 2008, versus $8.22 at December 31, 2007;

Year-over-year increase in investment portfolio of $240.1 million to $573.8 million;

Agency MBS portfolio at December 31, 2008 of $311.6 million comprised principally of seasoned, short-duration hybrid ARMs with an average of 21 months to reset; and

Aggregate balance sheet is conservatively leveraged at just over three times equity capital and Agency MBS target leverage of seven times capital allocated to this investment strategy.

The Company has scheduled a conference call for Thursday, March 5, 2009, at 11:00 a.m. ET, to discuss fourth quarter and full year 2008 results. The call may be accessed by dialing 1-866-713-8566 (Passcode: 12186304) and will also be webcast over the internet at www.dynexcapital.com through a link provided under "Investor Relations."

Thomas Akin, Chairman and Chief Executive Officer, stated, "We are extremely pleased with our 2008 results and the progress we made this year in building our investment portfolio in a very tough environment. We intentionally focused on seasoned, short-duration Agency MBS which reduced our need to hedge our interest costs and provided us some protection against volatility in asset prices. This strategy served us well in 2008 by protecting shareholder capital while earning a respectable return on the invested capital."

Mr. Akin continued, "Our 2008 results reflect an excellent contribution from our non-Agency investment portfolio with more modest results from our Agency MBS investments as we built that portfolio during the year. With borrowing rates at historic lows already in 2009, barring any unforeseen market volatility like we experienced in the fourth quarter, we expect a significant contribution from the Agency MBS investments in the first quarter of 2009. We have already purchased additional Agency MBS in January 2009 and the size of our portfolio has increased to $438 million at the end of January and our average cost remains below 102% of par. Our net interest spread on Agency MBS for January improved to approximately 2.95% versus the 1.40% in the fourth quarter as a result of declining costs of financing. We expect financing costs to remain at low levels until the U.S. economy improves which may take some time."

Mr. Akin concluded, "The U.S. economy and the U.S. consumer are currently experiencing an extreme contraction on the heels of an unprecedented period of volatility in the fourth quarter of 2008. Given this backdrop, liquidity remains at a premium, balance sheet deleveraging continues and the banking system remains fragile. Over time, the recent initiatives undertaken by global central banks and the U.S. Government should dampen volatility and improve overall conditions. Recent Agency MBS purchase activity by the U.S. Treasury, banks and other financial institutions has increased prices for hybrid Agency ARMs in our portfolio from 101.3% of par at year end, to 102.3% of par at the end of January, suggesting improving market conditions for these assets. Despite these improvements since the fourth quarter, we will continue to remain cautious and seek to preserve ample liquidity should extreme levels of volatility return. We believe the long-term outlook for owning Agency and non-Agency MBS is quite good. We are monitoring prepayment risks in our MBS portfolio given the uncertainty around government policy and credit risk in our securitized mortgage loan portfolio given the uncertain economic environment. While we are comfortable with the composition of our current investment portfolio, our concerns about the environment remain high. Nevertheless, we will seek to conservatively add assets to the portfolio where returns are expected to compensate us for the risks involved."

Discussion of 2008 and Quarterly Results

At December 31, 2008, the Company's Agency MBS portfolio had a par balance of $307.5 million and a net amortized cost of $311.1 million, or 101.1% of par. The fair value of the Agency MBS portfolio was $311.6 million at December 31, 2008. Included in the portfolio as of that date were hybrid ARM MBS (securities which have a remaining fixed period of interest greater than 12 months) of $218.2 million and ARM MBS (securities which reset within the next 12 months) of $93.4 million. For the Agency MBS portfolio at December 31, 2008, the weighted average coupon was 5.06%, and the weighted average period to reset was 21 months. The Agency MBS portfolio was financed with $274.2 million in repurchase agreements with original terms to maturity of between 30 and 60 days. During the fourth quarter of 2008, the net interest spread on Agency MBS was 1.40% and was 1.55% for the year. The constant prepayment rate, or CPR, on the Agency MBS portfolio during the quarter was approximately 14%.

At December 31, 2008, the Company's securitized mortgage loans consisted of $172.0 million of commercial mortgage loans held by two securitization trusts and $71.9 million of single-family mortgage loans held by one securitization trust. These loans were originated by the Company and the weighted average loan age was 13 years and 15 years, respectively, for the commercial mortgage loans and the single-family loans. Loans delinquent as to payment for greater than 30 days totaled $9.5 million at December 31, 2008, or 3.7% of the securitized mortgage loans held by the Company. Delinquent securitized commercial mortgage loans were $3.1 million and delinquent securitized single-family loans were $6.1 million.