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Dec 31, 2022
Orchid Island Q4 2022 Earnings Report
Announced results for the fourth quarter of 2022, demonstrating a net income of $34.9 million.
Key Takeaways
Orchid Island Capital reported a net income of $34.9 million, or $0.95 per common share, for the fourth quarter of 2022. The company's book value per common share was $11.93 at the end of the quarter, and the total return was 8.67%.
Net income for Q4 2022 was $34.9 million, or $0.95 per common share.
Net interest income was $2.4 million, or $0.06 per common share.
Total expenses were $5.9 million, or $0.16 per common share.
Book value per common share was $11.93 at December 31, 2022.
Forward Guidance
The company anticipates maintaining lower coupon holdings as a core position and has added higher coupons with new capital and pay-downs, while still maintaining a lower coupon bias. However, the absence of the largest of the traditional buyers of the asset class – banks, and since March of 2020, the Fed, may result in the sector recovering more slowly towards pre-pandemic levels, if it can do so at all.
Positive Outlook
- Confidence grew that the Fed would need to pivot and start to reduce monetary policy later in 2023.
- Risk sentiment changed materially during the fourth quarter, and risk assets performed very well.
- The Agency RMBS market returns for 2022 were negative – down 11.9%. However, the sector posted positive returns for the fourth quarter of 2.1%, which was 110 basis points higher than comparable duration swaps.
- The sector’s rebound was likely triggered by the extreme spread levels reached in late October, and the rebound has continued into early 2023.
- The company's performance during the fourth quarter benefited from exposure to lower coupon, longer duration securities that were owned throughout 2022.
Challenges Ahead
- Markets and the Federal Reserve’s (“Fed”) outlook for the economy, inflation and the path of monetary policy began to diverge.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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