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Jun 30, 2021
Orchid Island Q2 2021 Earnings Report
Orchid Island Capital reported a net loss for the second quarter of 2021, driven by net realized and unrealized losses on RMBS and derivative instruments, while strategically positioning its portfolio defensively amid economic recovery and potential tapering by the Federal Reserve.
Key Takeaways
Orchid Island Capital reported a net loss of $16.9 million for the second quarter of 2021, or $0.17 per common share. The results were impacted by net realized and unrealized losses on RMBS and derivative instruments. The company raised approximately $125 million of additional capital during the quarter and strategically deployed the proceeds into higher coupon, specified pools and interest only securities.
Net loss of $16.9 million, or $0.17 per common share.
Net interest income of $27.7 million, or $0.28 per common share.
Net realized and unrealized losses of $40.8 million, or $0.41 per common share, on RMBS and derivative instruments.
Second quarter total dividends declared and paid of $0.195 per common share.
Forward Guidance
The company positioned the portfolio defensively in light of the recovery, retaining a bias towards higher rates and the probable tapering of MBS asset purchases by the Fed. It aims to minimize exposure to Agency RMBS sub-sectors most adversely affected by the tapering.
Positive Outlook
- Company raised approximately $125 million of additional capital during the second quarter at very accretive levels.
- Proceeds deployed into higher coupon, specified pools and interest only securities.
- Capital allocation to interest only and inverse interest only securities increased from 9.5% to 18.0%.
- Portfolio prepaid at 12.9 CPR in the aggregate for the second quarter versus 12.0 CPR in the first.
- Realized net interest margin for the quarter was flat with the level in the first quarter.
Challenges Ahead
- Economic activity and inflation accelerated during the second quarter of 2021.
- Market participants anticipated interest rates would continue to rise as they had done during the first quarter of the year, but longer term interest rates declined.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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