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Mar 31, 2020
Orchid Island Q1 2020 Earnings Report
Orchid Island Capital reported a net loss for Q1 2020, impacted by the COVID-19 pandemic and related market conditions.
Key Takeaways
Orchid Island Capital reported a net loss of $91.2 million for the first quarter of 2020, primarily due to net realized and unrealized losses on RMBS and derivative instruments resulting from the COVID-19 pandemic's impact on financial markets. The company sold approximately $1.8 billion of RMBS and terminated interest rate swap positions to maintain liquidity and satisfy margin calls. Despite the losses, Orchid Island Capital maintained sufficient cash and liquidity and intends to continue paying monthly cash dividends.
Net loss of $91.2 million, or $1.41 per common share, was reported.
Net interest income was $19.1 million, or $0.30 per common share.
Net realized and unrealized losses on RMBS and derivative instruments totaled $108.2 million, or $1.68 per share.
A dividend of $0.24 per common share was declared and paid for the first quarter.
Forward Guidance
Orchid Island Capital expects to largely continue to operate as before, albeit with a smaller portfolio, and intends to continue to pay monthly cash dividends. The company believes its portfolio is well-positioned to withstand elevated levels of prepayments, and it benefits from lower funding costs.
Positive Outlook
- Company expects to continue to operate.
- Company intends to continue to pay monthly cash dividends.
- Portfolio retains significant call protection.
- Company is well positioned to withstand elevated levels of prepayments.
- Company has lower funding costs to cushion the blow of a reduced portfolio size.
Challenges Ahead
- Economy remains entrenched in a steep contraction.
- There is no assurance that the Fed and the Trump administration will be able to do enough to stabilize the economy and markets.
- There remains too much uncertainty to predict when the economy will recover, or to what extent it will recover.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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