Net interest income sequentially increased by 78%, to$5.0 million for the first quarter of 2009 from $2.8 million in the fourthquarter of 2008. Our overall net interest spread for the first quarter was 2.82%versus 1.38% for the fourth quarter of 2008, driven by the increase in our netinterest spread on the Agency MBS portfolio to 3.35% versus 1.40% for the fourthquarter of 2008. We continued to grow our Agency MBS portfolio which stands at$451 million at March 31, 2009. And, finally, we increased book value to $8.36per share and paid a dividend of $0.23 to our common shareholders.
We didexperience non-cash charges in seasoned CMBS investments owned by the Company`sjoint venture amounting to a net negative $343 thousand. These non-cashadjustments resulted from changes in market expectations of the creditperformance of commercial real estate. Our CMBS portfolio continues to generatecash flows in line with our expectations." Mr. Akin continued, "At March 31, 2009, we had approximately $63 million of ourcapital allocated to our Agency MBS positions. We continue to find attractiveopportunities to invest in shorter-duration hybrid Agency ARMs at reasonableprices and excellent spreads to funding costs. To date our prepayment experiencehas been more modest than markets have predicted for Agency MBS, attributable inpart to the economic environment and in part to our Agency MBS positionsconsisting of a sizable amount of interest-only loans.
Financing costs havecontinued to decline and are currently well below 1.0% on average. Although weexpect financing costs to remain at low levels until the U.S. economy improves,we may selectively add interest-rate swaps to synthetically extend our financingmaturities and shorten the net duration on our capital invested in Agency MBS.In addition, overall credit conditions have improved, as we have been able tosecure repurchase agreement financing for several of our non-Agencyinvestments." Mr. Akin concluded, "Our investment portfolio is now positioned to maintain ourcurrent level of net interest income given current prepayment and financing costexpectations. While overall leverage remains quite low at four times our equitycapital, it provides us with great flexibility to increase our investmentportfolio as market conditions permit Several new programs initiated by theU.S.