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Jun 30, 2023
Orchid Island Q2 2023 Earnings Report
Announced second quarter 2023 results, reporting net income of $10.2 million and declaring dividends of $0.48 per common share.
Key Takeaways
Orchid Island Capital reported a net income of $10.2 million, or $0.25 per common share, for the second quarter of 2023. The company increased its Agency RMBS portfolio and maintained a liquidity position of $204.1 million. They raised approximately $48 million of new capital in the second quarter and deployed the proceeds into higher coupon, low pay-up specified pools and hedged these positions predominantly with swaps.
Net income was $10.2 million, or $0.25 per common share.
Net realized and unrealized gains of $23.8 million on RMBS and derivative instruments.
Dividends declared and paid were $0.48 per common share.
Book value per common share was $11.16 at June 30, 2023.
Forward Guidance
The company anticipates current interest rate levels and curve shape are at or near the extremes they will experience for the cycle. They do not anticipate changes to their strategy other than possibly adding current income securities hedged with interest rate swaps to increase net interest income.
Positive Outlook
- FDIC liquidation sales of Agency RMBS seized from failed banks have gone well and are nearing an end, far sooner than originally anticipated.
- Anticipate current interest rate levels and curve shape are at or near the extremes we will experience for the cycle.
- Possibly adding current income securities hedged with interest rate swaps to increase our net interest income, assuming we can add additional capital at attractive levels.
- Continue to hold lower coupon bias securities as we believe these securities still offer superior total return potential over new origination, higher coupon securities.
- Hedge positions allow us to earn approximately 100 basis points of marginal net interest income on the new securities.
Challenges Ahead
- Market expectations were now in sync with Fed rhetoric that funding rates would be higher and for far longer than previously expected.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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