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Sep 30, 2023
Orchid Island Q3 2023 Earnings Report
Orchid Island Capital's Q3 2023 results were announced with a net loss of $80.1 million and a book value per common share of $8.92.
Key Takeaways
Orchid Island Capital reported a net loss of $80.1 million, or $1.68 per common share, for the third quarter of 2023. The company's book value per common share was $8.92 at the end of the quarter. The results were impacted by net interest expense and net realized and unrealized losses on RMBS and derivative instruments.
Net loss of $80.1 million, or $1.68 per common share, was reported for Q3 2023.
Net interest expense was $8.6 million, or $0.18 per common share.
Book value per common share was $8.92 at September 30, 2023.
Total return of (15.77)% was reported, including a $0.48 dividend per common share.
Forward Guidance
Orchid Island Capital is navigating a challenging market environment with increased interest rates and volatility, focusing on preserving liquidity and maintaining suitable leverage. The company anticipates a potential normalization of rates but is prepared for a scenario with persistently higher rates. Recent actions include reducing leverage and increasing hedges in response to market conditions.
Positive Outlook
- Orchid maintains a lower coupon bias, believing these securities offer superior total return potential.
- The company added higher coupon, low pay-up specified pools and hedged these positions predominantly with swaps.
- Actions were taken to reduce leverage and increase hedges in response to the significant increase in interest rates and volatility.
- The company is focused on preserving liquidity and maintaining suitable levels of leverage.
- Orchid is positioned to maximize potential upside when the market stabilizes.
Challenges Ahead
- The credit rating of the U.S. was downgraded by Fitch, and Moody's has indicated it may do the same.
- Deficits in the U.S. were revised meaningfully higher in July.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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