Fourth Quarter 2016 Earnings Presentation

February 15, 2017

2

Safe Harbor Statement NOTE:

This presentation contains certain statements that are not historical facts and that constitute “forward-looking statements” within the meaning of the Private Securities LitigationReform Act of 1995. Statements in this presentation addressing expectations, assumptions, beliefs, projections, estimates, future plans, strategies, and events, developmentsthat we expect or anticipate will occur in the future, and future operating results or financial condition are forward-looking statements. Forward-looking statements in thispresentation may include, but are not limited to, statements about projected future investment strategies, investment opportunities, future government or central bank actionsand the impact of such actions, financial performance, dividends, leverage ratios, capital raising activities, share issuances and repurchases, the use or impact of NOL carryforwards,and interest rates. The words “will,” “believe,” “expect,” “forecast,” “anticipate,” “intend,” “estimate,” “assume,” “project,” “plan,” “continue,” and similar expressions alsoidentify forward-looking statements. These forward-looking statements reflect our current beliefs, assumptions and expectations based on information currently available tous, and are applicable only as of the date of this presentation. Forward-looking statements are inherently subject to risks, uncertainties, and other factors, some of which cannotbe predicted or quantified and any of which could cause the Company’s actual results and timing of certain events to differ materially from those projected in or contemplatedby these forward-looking statements. Not all of these risks, uncertainties and other factors are known to us. New risks and uncertainties arise over time, and it is not possibleto predict those risks or uncertainties or how they may affect us. The projections, assumptions, expectations or beliefs upon which the forward-looking statements are basedcan also change as a result of these risks and uncertainties or other factors. If such a risk, uncertainty, or other factor materializes in future periods, our business, financialcondition, liquidity and results of operations may differ materially from those expressed or implied in our forward-looking statements.

While it is not possible to identify all factors, some of the factors that may cause actual results to differ from historical results or from any results expressed or implied by ourforward-looking statements, or that may cause our projections, assumptions, expectations or beliefs to change, include the risks and uncertainties referenced in our AnnualReport on Form 10-K for the year ended December 31, 2015 and subsequent filings with the Securities and Exchange Commission, particularly those set forth under the caption

“Risk Factors”.

3

Performance Highlights

Fourth Quarter 2016 Full Year 2016

• Dividend of $0.21 per common share

• Comprehensive loss of ($18.4) million, or($0.37) per common share

• GAAP net income of $66.8 million, or$1.36 per common share

• Core net operating income(1) of $10.0million, or $0.20 per common share

• Economic return(2) on book value of(4.8)%

• Dividend of $0.84 per common share

• Comprehensive income of $14.1 million, or$0.29 per common share

• GAAP net income of $33.9 million, or $0.69per common share

• Core net operating income (1) of $40.9million, or $0.83 per common share

• Economic return (3) on book value of 4.0%

• Generated 21% total common shareholderreturn (4)

• Reduced G&A expenses

• Continued rotation into CMBS IO andAgency CMBS

• Diversified repo funding sources(1) Reconciliations for non-GAAP measures are presented in the Appendix.(2) Equals sum of dividend of $0.21 per common share less decline in book value of ($0.58) divided by beginning book value per share for the quarter of $7.76. (3) Equals sum of dividend of $0.84 per common share less less decline in book value of ($0.53) divided by beginning book value per share for the year of $7.71.(4) Source: Bloomberg and assumes reinvestment of dividends in Company stock

4

Macroeconomic Tailwinds for Dynex• U.S. demographic trends are driving a significant increase in household formation

and therefore more demand in multi family and single family housing

• Global demographic aging trends are driving a demand for income/yieldinvestments

• As government participation wanes there is a large need for private capital andexpertise in the housing finance system

• Potentially improved regulatory environment

Source: San Francisco Federal Reserve

Annual Growth in Household Formation

5

Macroeconomic Themes

Our core macroeconomic views center around the following themes:• U.S. fundamentals now on more solid footing - but still fragile

◦ Employment increasing; inflation higher

• Government policy - monetary, regulatory, fiscal - will continue to drive returns and is moreuncertain today than at any point in the last decade

• Global debt and US debt are at all time high levels, creating a fragile global economy vulnerable toexogenous events

• Globalization has created an irreversible connectedness between our economy and the rest of theworld

Source: Institute of International Finance

6

Federal Reserve• Potential composition and culture of the Federal Reserve will likely change over the next 2 years

• Environment increases potential tightening/easing cycle by the Fed similar to 1994-1995

• Probability of a change in the Fed's current portfolio investment strategy has increased

US 10-Year Treasury Rates 1994-1995

Source: Bloomberg

(%)

7

Investment Strategy

Diversified investment approach that performs in a variety of market environments

• Maintain a portfolio duration position with appropriateadjustments to reflect changing market conditions

• Invest in a high quality, liquid asset portfolio of primarilyAgency investments

◦ 96% AAA rated/85% Agency guaranteed as ofDecember 31, 2016

• Diversification is a key benefit

◦ High quality CMBS/CMBS IO are intended to limitcredit exposure and prepayment volatility vs. lowerrated tranches

◦ Agency Hybrid RMBS and Agency CMBS intended toprotect the portfolio from extension risk

8

Strategic Focus

• Maintain investments in higher credit quality, liquid assets that provideextension and prepayment protection

• Capitalize on opportunities for investing capital from shifts in governmentand regulatory policy

• Positioned to reallocate/invest capital as market volatility creates attractiverisk adjusted return opportunities

• Continue to seek ways to diversify funding sources as the regulatoryenvironment becomes more favorable

• Continue commitment to disciplined risk management and capital allocationdecisions that maximize flexibility given the current environment

9

Long-Term Value is Driven by Above Average Dividends

Source: SNL Financial

Total Return (%) January 1, 2008 - January 31, 2017

10

Long-Term Value is Driven by Above Average Dividends

Source: SNL Financial

Total Return (%) January 1, 2003 - January 31, 2017

11

Market Snapshot

Common Stock Preferred Stocks

NYSE Ticker: DX DXPrA DXPrB

Shares Outstanding: (as of 12/31/16) 49,153,463 2,300,000 2,271,937

Q4 Dividends per share: $0.21 $0.53125 $0.4765625

Dividend Yield:(annualized, based on 2/8/17 stock price) 12.63% 8.43% 8.15%

Share Price:(at 2/8/17) $6.65 $25.23 $23.38Market Capitalization:(based on 12/31/16 shares outstanding and2/8/17 stock price) $326.87M $58.03M $53.12M

Price to Book:(based on 12/31/16 book value and 2/8/17 stock price) 92.6% - -

Appendix

13

Interest Rates

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

Inte

rest

Rat

e

3Mo 1yr 2yr 3yr 5yr 7yr 10yr 30yr

3.00

2.50

2.00

1.50

1.00

0.50

0.00

Inte

rest

Rat

e

3Mo 1yr 2yr 3yr 5yr 7yr 10yr 30yr

Treasury Curve Swaps

Eurodollars Futures

12/31/16 09/30/16 06/30/16 12/31/15

3.503.002.502.001.501.000.500.00

Inte

rest

Rat

e

0 1yr 2yr 3yr 4yr 5yr 6yr 7yr 8yr 10yr

Source: Bloomberg

14

Asset Class 12/31/14 06/30/15 12/31/15 06/30/16 9/30/16 12/31/16

Agency ARM 5/1 21 16 22 38 32 19

Agency DUS 59 60 89 94 80 76

Freddie K AAA IO 155 150 225 255 230 200

AAA CMBS IO 165 175 240 240 215 195

Freddie K B 170 157 350 325 265 295

Freddie K C 250 228 480 540 490 435

IG Corporates 132 146 172 157 159 138

High Yield 562 521 746 628 558 476

AAA CMBS 88 92 138 104 100 91

AA CMBS 141 163 223 186 160 128

A CMBS 203 230 348 304 255 230

BBB CMBS 358 388 562 604 560 485

FN CC nominal/tsy 74 84 82 92 91 71

10y swap spreads 11.8 9.8 (8.5) (10.6) (14.0) (13.0)

CRT.M3-2014 475 425 478 415 311 297

Credit Spreads (in bps)

Source: JP Morgan and Company data

DynexPortfolio

15

CMBS Spread Environment (in bps)

Source: J.P. Morgan

16

Comparable Total Return

Index 2016 2015

DX (total shareholder return) 21.23% (12.04)%

Bloomberg Mortgage REIT Index 22.27% (9.89)%

S&P 500 11.95% 1.37%

1-3 Year Treasury ETF 0.82% 0.43%

7-10 Year Treasury ETF 1.01% 1.51%

Real Estate ETF 7.03% 1.63%

Utilities ETF 16.05% (4.91)%

Hedge Fund ETF - macro (2.93)% (1.96)%

IG Corporate ETF 6.21% (1.25)%

HY Corporate ETF 13.41% (5.03)%

Emerging Markets ETF 10.87% (16.18)%

Infrastructure ETF 14.84% (25.68)%

Source: Bloomberg

17

($ in thousands, except per share amounts) $ AmountPer Common

Share

Common shareholders' equity, September 30, 2016 (1) $381,169 $7.76

GAAP net income:

Core net operating income (2) 9,956 0.20

Other 116 —

Change in fair value of derivatives 56,686 1.15

Unrealized losses on MBS (85,087) (1.73)

Dividends declared (10,322) (0.21)

Stock transactions, net 367 0.01

Common shareholders' equity, December 31, 2016 (1) $352,885 $7.18

(1) Common shareholders' equity represents total shareholders' equity less the liquidation value of preferred stock outstanding as of the date indicated.(2) Reconciliations for non-GAAP measures are presented in the Appendix.

Book Value Rollforward

Attribution of net unrealized losses: + $0.20 - tighter spreads - $(0.78) - higher interest rates = $(0.58) - total impact

18

Portfolio Details* (as of December 31, 2016)

Credit Quality Portfolio Expected Maturity/Reset Distribution

$1,200

$1,000

$800

$600

$400

$200

Fair

Valu

e

0-12 13-36 37-60 61-84 85-120 >120

Months to Maturity/Reset

AAA:96.0%

AA:1.9%

A:0.6%Below A:1.5%

Net Premium by Asset Type

CMBS & CMBS IO: 93.0%

RMBS: 7.0%

* MBS investments only, excludes loans held for investment.

Agency MBS are considered AAA-rated for purposes of this chart.

13% 13% 10%

21%

12%

31%

$765.0 $57

($ in millions)

($ in millions)

$3,083.2 ($ in millions)

19

Asset and Equity Allocations (Comparison at Quarter End)

Asset Allocation Equity Allocation (1)

($ in millions) ($ in millions)

$4,000

$3,000

$2,000

$1,000

$0

4Q15 1Q16 2Q16 3Q16 4Q16

$1,664 $1,550 $1,448 $1,339 $1,235

$1,040$1,016

$1,023$1,028 $1,223

$790$763

$737$743

$755

$600

$500

$400

$300

$200

$100

$0

4Q15 1Q16 2Q16 3Q16 4Q16

$155$91 $118 $144

$51

$109

$135$111

$101

$150

$127

$124 $122$130

$116

$34$83 $97

$74

$74

$58 $42 $35 $39$67

Approximately 76% of capital is invested in Agency MBS

(1) Equity allocation is computed as asset basis less associated financing, where applicable. Net Other includes all non-investment assets/financing liabilities. All amountsare computed using amounts included in the Company's quarterly/annual reports filed with the SEC.

RMBS(97% Agency)

CMBS(94% Agency)

CMBS IO(55% Agency)

RMBS

CMBS

CMBS IO

Net Other

Cash

Loans

20

Capital Deployment

12/31/2016 9/30/2016 QoQ Change

Investments $3,231,120 $3,130,833 $100,287

Financing 2,905,392 2,748,303 157,089

Leverage (1) 6.3x 5.8x 0.5x

Financing

Original Days to Maturity 63 days 58 days 5 days

Remaining Days to Maturity 20 days 18 days 2 days

 ($ in thousands)

Investment Asset TypeQoQ Change in

Investments

Agency RMBS ($96,513)

Non-Agency RMBS (7,988)

Agency CMBS 199,351

Non-Agency CMBS (4,556)

Agency CMBS IO 17,472

Non-Agency CMBS IO (6,149)

Loans and other investments (1,330)

Total $100,287

(1) Leverage is based on total liabilities divided by shareholders' equity.

21

Funding Sources (as of December 31, 2016)

Active Counterparty by Region # % of all REPO

North America 12 72.6%

Asia 4 12.8%

Europe 3 14.6%

Total 19 100%

Active Counterparty by Type # % of all REPO

Broker/Dealers 5 17.2%

Domestic Banks 5 65.8%

Foreign Banks 9 17.0%

Total 19 100%

• We maintain a diversified funding platform with over 32 established counterparties, currentlyactive with 19 counterparties

• Our funding is well diversified by counterparty and geography• Repo markets remain highly liquid

Repo-Uncommitted:$2,570

Repo-Committed: $329

 ($ in millions)

22

Interest Rate Swaps-Payers,Net of Receivers

Total Weighted Average Pay Rate, Net

$2,000

$1,500

$1,000

$500

$0

Not

iona

l($

inm

illio

ns)

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

2017

2018

2019

2020

2021

2022

2023

2024

2025

$198.1

$1,712.5 $1,654.2

$1,377.4$1,509.7

$1,253.4 $1,250.0 $1,257.1

$845.3

0.52%

1.79% 1.83%2.11% 2.26%

2.52% 2.52% 2.52%

2.47%

Hedging Details

As of December 31, 2016

• Terminated all of 3-month Eurodollar futures during the fourth quarter of 2016 with a combined notional balance of $6.3 billion• Added a net $2.1 billion notional in forward-starting interest rate swaps effective starting in 2018 through 2025

23

Risk Position

TreasuryYields (1)

As of January 31,

2017As of December 31,

20162Y 1.21% 1.20%

5Y 1.91% 1.93%

10Y 2.45% 2.45%

30Y 3.06% 3.07%

Parallel Change in Treasury Yields

(bps)

Percentage Change in Projected Market Value of AssetsNet of Hedges (2)

As of January 31, 2017 As of December 31, 2016+100 (0.46)% (0.63)%+50 (0.20)% (0.28)%-50 0.09% 0.17%

Parallel Change inMarket Credit

Spreads

Percentage Change in Projected Market Value of AssetsNet of Hedges

As of January 31, 2017 As of December 31, 2016+50 (2.22)% (2.21)%+25 (1.12)% (1.11)%-25 1.13% 1.13%-50 2.28% 2.27%

(1)Treasury yields source: Bloomberg(2) Source: Company models based on modeled option adjusted duration

Curve Shift2 year Treasury

(bps)

Curve Shift10 year Treasury

(bps)

Percentage Change in Projected Market Value of Assets, Net of Hedges (2)

As of January 31, 2017 As of December 31, 20160 -25 (0.15)% (0.21)%

-10 -50 (0.25)% (0.32)%+25 +50 0.05% 0.07%+50 +100 0.03% 0.05%+25 0 (0.24)% (0.35)%+50 +25 (0.31)% (0.47)%

24

CMBS and CMBS IO Portfolio Details (as of December 31, 2016)

Agency CMBS: 57.9%

Agency CMBS IO: 20.8%

Non-Agency CMBS: 4.0%

Non-Agency CMBS IO:17.3% AAA: 95.2%

AA: 3.1%A: 0.9%Below A/NR: 0.8%

Asset Type Credit Quality

Agency MBS are considered AAA-rated for purposes of this chart.

95% of our assets are rated AAA or are Agency guaranteed, reflecting our up in liquidity andup in credit strategy.

25

CMBS(as of December 31, 2016)

AAA: 96.5% AA: 1.2%A: 1.5%Below A/NR: 0.8%

$1,200

$1,000

$800

$600

$400

$200

$0

Fair

Valu

e

Prior to 2009

2009-2012

2013-2014

2015-2016

$58

$205

$44

$916

Vintage

CMBS IO(as of December 31, 2016)

Vintage

AAA: 93.0%

AA: 6.2%

Below A/NR: 0.8%

$250

$200

$150

$100

$50

$0

Fair

Valu

e

2010 2011 2012 2013 2014 2015 2016

$10

$37

$104

$129

$200 $195

$80

By Year of Origination By Year of Origination($ in millions)

Credit QualityCredit Quality

26

($ in millions)

RMBS (as of December 31, 2016)

Credit QualityMonths to Maturity/Reset

For ARMs/Hybrids

Weighted Average Loan Age

Agency RMBS (AAA): 97.3%

Non-Agency RMBS (BelowA/Not Rated): 2.7%

$500

$400

$300

$200

$100

$0

Par

Valu

e

0-12 13-36 37-60 61-84 85-120

# of Months

$500

$400

$300

$200

$100

$0

Fair

Valu

e

0-24 25-48 49-60 61-84 >85

# of Months

17%

29% 36%

18%

30.5% 19.4%

15.1%

33.2%

1.8%

Prepayment protection in theform of seasoning and interestonly (IO) features reduce theincentive to refinance. 34% ofthe ARM portfolio has an IOfeature with a weightedaverage remaining IO periodof approximately 42 months.

27

Financial Performance - Comparative Quarters

(1) Net periodic interest costs and change in fair value of derivatives are components of "gain (loss) on derivative instruments, net" reported in thecomprehensive income statement.

(2) Reconciliations for non-GAAP measures are presented in the Appendix.

4Q2016 3Q2016

($ in thousands, except per share amounts)Income

(Expense)Per Common

ShareIncome

(Expense)Per Common

ShareInterest income $22,858 $0.46 $21,135 $0.43Interest expense (6,753) (0.14) (6,068) (0.12)

GAAP net interest income 16,105 0.32 15,067 0.31Less: accretion of de-designated hedges (99) — (99) —Plus: net periodic interest costs (1) (140) — (155) — Adjusted net interest income (2) 15,866 0.32 14,813 0.31Other income, net (18) — 545 0.01G & A expenses (3,589) (0.07) (3,355) (0.07)Preferred stock dividends (2,303) (0.05) (2,294) (0.05)

Core net operating income to common shareholders (2) 9,956 0.20 9,709 0.20Change in fair value of derivatives (1) 56,686 1.16 2,564 0.05Accretion of de-designated hedges 99 — 99 —Fair value adjustments, net 17 — 34 —

GAAP net income to common shareholders 66,758 1.36 12,406 0.25Unrealized (loss) gain on MBS (85,087) (1.73) 769 0.02Accretion of de-designated hedges (99) — (99) —

Total comprehensive (loss) income ($18,428) ($0.37) $13,076 $0.27

28

Dividend Character - 2016 (Estimated)

($ in thousands)

GAAP net income to common shareholders $33,914

GAAP net income on taxable REIT subsidiary 464

GAAP net income to common shareholders excluding taxable REIT subsidiary 33,450

Differences between GAAP net income and taxable income:

Change in fair value of derivative instruments 3,145

Loss on sale of investments (1,674)

Tax amortization on terminated derivative instruments (30,804)

Premium amortization 1,839

Other 648

Taxable income 6,604

Add back: Capital losses 5,911

Taxable income - ordinary income $12,515

Common dividends paid deduction $42,265

Common dividend representing return of capital $29,750

% of common dividend representing non-taxable return of capital 70.4%

29

Reconciliation of GAAP Measures to Non-GAAP Measures

Quarter Ended

12/31/16 9/30/16 06/30/16 3/31/16 12/31/15GAAP interest income/annualized yield $22,858 2.78% $21,135 2.75% $22,816 2.77% $25,089 2.78 % $25,522 2.74 %

GAAP interest expense/annualized cost offunds (2) 6,753 0.94% 6,068 0.85% 6,100 0.83% 6,310 0.81 % 5,833 0.70 %

GAAP net interest income/spread $16,105 1.84% $15,067 1.90% $16,716 1.94% $18,779 1.97 % $19,689 2.04 %

GAAP interest expense/cost of funds (2) $6,753 0.94% $6,068 0.85% $6,100 0.83% $6,310 0.81 % $5,833 0.70 %

Amortization of de-designated cash flowhedges (1) 99 0.01% 99 0.01% 80 —% (27) — % (727) (0.08)%

Net periodic interest costs of derivatives 140 0.02% 155 0.02% 486 0.07% 1,680 0.21 % 1,323 0.16 %

Adjusted interest expense/adjusted cost offunds $6,992 0.97% $6,322 0.88% $6,666 0.90% $7,963 1.02 % $6,429 0.78 %

Adjusted net interest income/spread $15,866 1.81% $14,813 1.87% $16,150 1.87% $17,126 1.76 % $19,093 1.96 %

(1) Amount recorded as a portion of "interest expense" in accordance with GAAP related to the amortization of the balance remaining in accumulated other comprehensive loss asof June 30, 2013 as a result of the Company's discontinuation of hedge accounting.(2) Cost of funds is calculated by dividing annualized interest expense by the average balance of borrowings outstanding during the period.

 ($ in thousands except per share data)

Quarter Ended12/31/16 9/30/16 06/30/16 3/31/16 12/31/15

Net income (loss) to common shareholders $66,758 $12,406 ($5,525) ($39,725) $30,237Adjustments: Amortization of de-designated cash flow hedges (1) (99) (99) (80) 27 727 Change in fair value of derivatives instruments, net (56,686) (2,564) 15,811 46,584 (19,177) Loss on sale of investments, net — — 297 3,941 908 Fair value adjustments, net (17) (34) (28) (24) 6Core net operating income to common shareholders $9,956 $9,709 $10,475 $10,803 $12,701Core net operating income per common share $0.20 $0.20 $0.21 $0.22 $0.25

30

MREIT Glossary of Terms

Commercial Mortgage-Backed Securities (CMBS) are a type of mortgage-backed security that is secured by theloan on a commercial property.

Credit Risk is the risk of loss of principal stemming from a borrower’s failure to repay a loan.

Curve Twist Terms:Bull Flattener: If the yield curve is exhibiting bull flattener behavior, the spread between the long-term

rate and the short-term rate is getting smaller because long-term rates are decreasing as short-termrates are increasing. This could occur as more investors choose long-term bonds relative to short-termbonds, which drives long-term bond prices up and reduces yields.

Bear Flattener: A yield-rate environment in which short-term interest rates are increasing at a faster ratethan long-term interest rates. This causes the yield curve to flatten as short-term and long-term ratesstart to converge.

Bear Steepener: Widening of the yield curve caused by long-term rates increasing at a faster rate thanshort-term rates. This causes a larger spread between the two rates as the long-term rate movesfurther away from the short-term rate.

Bull Steepener: A change in the yield curve caused by short-term rates falling faster than long-term rates,resulting in a higher spread between the two rates.

Duration is a measure of the sensitivity of the price of a fixed-income investment to a change in interest rates.Duration is expressed as a number of years.

Interest Only Securities (IOs) are the interest only strips of mortgage, Treasury, or bond payments, which areseparated and sold individually from the principal portions.

31

MREIT Glossary of Terms

Interest Rate Risk is the risk that an investment’s value will change due to a change in the absolute level ofinterest rates, in the spread between two rates, in the shape of the yield curve or in any other interest raterelationship.

Leverage is the use of borrowed money to finance assets.

Prepayment Risk is the risk associated with the early unscheduled return of principal.

Repurchase Agreements are a short-term borrowing that uses loans or securities as collateral. The lenderadvances only a percentage of the value of the asset (the advance rate). The inverse of the advance rate is theequity contribution of the borrower (the haircut).

Residential Mortgage-Backed Securities (RMBS) are a type of mortgage-backed debt obligation whose cashflows come from residential debt, such as mortgages, home-equity loans and subprime mortgages.

Spread Risk is the uncertainty in pricing resulting from the expansion and contraction of the risk premium overthe benchmark or the risk of how the spread of a security will react over the benchmarked security. treasurycurve.