Orchid Island Capital (NYSE: ORC), a real estate investment trust (“REIT”) is reporting on its financial and operations results for the three-month period ended March 31, 2023. Highlights of the first-quarter report include net income of $3.5 million, or $0.09 per common share; net interest expense of $4.2 million; total expenses of $5 million; net realized and unrealized gains of $12.7 million; and first-quarter dividends declared and paid of $0.48 per common share. In addition, the company maintained a liquidity position of $197.0 million in cash and cash equivalents and unpledged RMBS. “The economy and the outlook for monetary policy were very volatile during the quarter,” said Orchid Island Capital chair and CEO Robert E. Cauley in the press release. “For Orchid, our performance coming into the first quarter benefited from our exposure to lower-coupon, longer-duration securities that we owned throughout 2022. While such securities generate less interest income, they offer very attractive total return opportunities, especially versus higher coupon, newer origination securities. Our book value performance for the first quarter of 2023 was primarily the result of price-related returns on these securities, which enabled us to generate a total positive return for the quarter of 0.84%. In conjunction with the company’s short positions in lower coupon TBAs, we have been able to manage our risk to higher rates, all the while maintaining an economic leverage ratio on the low end of our typical range. We prefer to continue to hold these lower coupon holdings as a core position, supplemented by modest additions of higher coupons with new capital and pay-downs, while continuing to maintain a lower coupon bias. . . . We intend to maintain our lower coupon bias as we believe they offer the best total return potential as we approach the end of the Fed’s tightening cycle and eventual pivot towards easing. To the extent we are able to raise new capital, and we desire to do so, we believe the return opportunities will be very attractive, even if performance of the sector may be choppy in the near term.”
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About Orchid Island Capital Inc.
Orchid Island Capital is a specialty finance company that invests on a leveraged basis in Agency RMBS. The company’s investment strategy focuses on, and it’s portfolio consists of, two categories of Agency RMBS: (i) traditional pass-through Agency RMBS, such as mortgage pass-through certificates, and CMOs issued by the GSEs, and (ii) structured Agency RMBS, such as IOs, IIOs and principal-only securities, among other types of structured Agency RMBS. Orchid is managed by Bimini Advisors LLC, a registered investment adviser with the Securities and Exchange Commission. For more information about this company, please visit www.OrchidIslandCapital.com.
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