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Mar 31, 2022
Orchid Island Q1 2022 Earnings Report
Orchid Island Capital reported a net loss due to net realized and unrealized losses on RMBS and derivative instruments, while strategically repositioning its portfolio amidst a volatile market environment.
Key Takeaways
Orchid Island Capital reported a net loss of $148.7 million for the first quarter of 2022, driven by net realized and unrealized losses on RMBS and derivative instruments. The company strategically reduced its portfolio size and repositioned its hedge positions to navigate the challenging market conditions.
Net loss of $148.7 million, or $0.84 per common share.
Net interest income of $39.2 million, or $0.22 per common share.
Book value per common share of $3.34 at March 31, 2022.
Leverage ratio decreased from 8.1 to one to 7.5 to one.
Forward Guidance
The company aims to preserve liquidity and minimize the impact of market volatility on its portfolio to capitalize on more favorable market conditions in the future.
Positive Outlook
- Repositioned hedge positions to minimize impact from headwinds
- Reduced portfolio size through asset sales and retaining cash from paydowns
- Leverage ratio declined from 8.1 to one to 7.5 to one
- Increased allocation to structured securities, interest only portfolio
- Maintained ample liquidity, with cash balances equal to approximately 50% of shareholders equity
Challenges Ahead
- Rapid removal of accommodation by the Federal Reserve.
- Inflation accelerating to levels not seen since the early 1980s.
- War in Ukraine causing substantial inflationary pressure.
- COVID-19 induced lock-downs across China exacerbating supply chain issues.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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