Financial Performance - The company reported a net loss of $0.29 per share for Q2 2025, compared to a net income of $0.18 per share in Q1 2025 [11] - Book value decreased from $7.94 in Q1 2025 to $7.21 in Q2 2025 [11] - Average MBS balances increased from $5,996 million in Q1 2025 to $6,866 million in Q2 2025 [15] - Economic leverage ratio remained constant at 7.8 in both Q1 and Q2 2025 [15] - Liquidity increased from 52.2% in Q1 2025 to 54.0% in Q2 2025 [15] Portfolio & Hedging - The company increased its allocation to 30yr 5.5%, 6.0%, and 6.5% coupons by $555 million, $145 million, and $86 million, respectively, while decreasing allocation to 30yr 4.0% and 5.0% by $334 million and $137 million, respectively [47] - Total notional balance of hedge positions was $(4,881.8) million [59] - Interest rate swaps had a notional balance of $(3,843.3) million with a weighted average pay fix rate of 3.30% [59] - The company's hedge positions covered 58% of its repo funding liability [59]

Core Insights - Orchid Island Capital, Inc. reported a net loss of $33.6 million for the second quarter of 2025, compared to a net loss of $5.0 million in the same period of 2024, indicating significant financial challenges [6][7][8] - The company experienced a turbulent market environment influenced by reciprocal tariffs and the passage of the One Big Beautiful Bill Act, which shifted market focus from trade to domestic issues [4][5] - Despite the overall market recovery, the Agency RMBS sector did not fully recover, leading to negative excess returns for the quarter [5][6] Financial Performance - The interest income on the portfolio increased by approximately $11.2 million from the first quarter of 2025 [6] - The yield on average Agency RMBS decreased slightly from 5.41% in Q1 2025 to 5.38% in Q2 2025 [6] - The company declared and paid dividends of $0.36 per common share during the second quarter [7] Balance Sheet and Capital Allocation - As of June 30, 2025, the book value per common share was $7.21, down from a decrease of $0.73 per share during the quarter [7][25] - The company maintained a strong liquidity position with $492.5 million in cash and cash equivalents, representing approximately 54% of stockholders' equity [7][13] - The total mortgage assets increased to $6.993 billion as of June 30, 2025, compared to $5.253 billion at the end of 2024 [10][47] Portfolio Characteristics - The company allocated approximately 98.1% of its investable capital to the PT RMBS portfolio as of June 30, 2025 [26] - The return on invested capital for the PT RMBS portfolio was approximately (4.1)%, while the structured RMBS portfolio generated a return of 3.5% [32][33] Market Conditions and Strategy - The company faced challenges in the Agency RMBS market, which continued to experience volatility and did not recover fully from the turmoil earlier in the quarter [5][6] - The management believes that the company is well-positioned to capture attractive returns in the current market environment [5]

Core Viewpoint - Both Orchid Island Capital (ORC) and Starwood Property Trust (STWD) are mortgage REITs with different investment strategies, where ORC focuses on agency residential mortgage-backed securities and STWD has a diversified portfolio including commercial real estate lending [1][2] Summary of ORC - ORC exclusively invests in Agency residential mortgage-backed securities (RMBS), which limits credit risks but increases sensitivity to interest rate movements [3] - The recent decline in mortgage rates is expected to improve ORC's book value as spreads in the Agency market tighten, enhancing net interest spread and overall yield [4] - ORC has a strong dividend yield of 20.4% and has increased its dividend three times in the past five years, with $446.5 million in cash and no debt as of March 31, 2025, indicating sustainable capital distribution [5] Summary of STWD - STWD's investment strategy includes commercial mortgage-backed securities (CMBS) and related commercial real estate assets, with a diversified portfolio valued at $1.02 billion as of March 31, 2025 [6] - The company has engaged in acquisitions and divestitures to optimize its portfolio, including the sale of 16 retail properties for $387.1 million, recognizing a gain of $92 million [7] - STWD has a concerning liquidity position with $692 million in cash and long-term debt of $18.4 billion, which may pose risks in a worsening macroeconomic environment [8] Performance and Valuation - In the past three months, STWD shares rose by 6.9% while ORC shares increased by 9.3%, outperforming the industry growth of 6.2% [11] - ORC is trading at a 12-month forward P/E of 0.79X, lower than its five-year median of 0.90X, while STWD is at 1.03X, lower than its five-year median of 1.04X [14] - The Zacks Consensus Estimate for ORC's earnings indicates significant growth of 450% in 2025 and 39.7% in 2026, while STWD's earnings are expected to decline by 8.9% in 2025 [18][20] Investment Outlook - ORC is viewed as a more resilient and better-valued option due to its focus on Agency RMBS in a declining rate environment, strong liquidity, and high dividend yield [22] - In contrast, STWD's heavy debt burden and weaker earnings outlook raise concerns, making ORC the more compelling opportunity for investors seeking stable income with lower risk [23]

Core Viewpoint - Orchid Island Capital, Inc. (ORC) is expected to report second-quarter 2025 earnings on July 24, with a consensus estimate of $0.15, indicating a 266.7% year-over-year increase in earnings [1][8]. Group 1: Earnings Performance - ORC has a history of earnings surprises, outperforming the Zacks Consensus Estimate in two of the last four quarters, with an average earnings surprise of 101.39% [2]. - The consensus estimate for ORC's earnings has remained unchanged at 15 cents over the past week [2]. Group 2: Market Conditions Impacting Performance - Despite Federal Reserve interest rate cuts in 2024, mortgage rates have not significantly decreased, remaining in the mid-to-upper 6% range, which has led to growth in refinancing activities and origination volumes [3]. - A significant portion of ORC's mortgage-backed securities (MBS) holdings is expected to have experienced higher constant prepayment rates, positively impacting net premium amortization and supporting growth in interest income and average asset yield [4][8]. Group 3: Financial Metrics - The primary-secondary spread averaged 1.06% in Q2 2025, slightly down from 1.12% in Q1 2025, indicating increased market volatility [4]. - ORC is likely to have seen a decline in its book value per share due to stable primary-secondary spreads and increased mortgage rate volatility [5][8]. Group 4: Earnings Prediction Model - The current model does not predict an earnings beat for ORC, as it has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold) [6][7].

Core Insights - Orchid Island Capital, Inc. (ORC) estimates a net loss of 29 cents per share for Q2 2025, primarily due to losses on residential mortgage-backed securities (RMBS) and derivative instruments [1][9] - The estimated book value per share is $7.21, reflecting a 15.9% year-over-year decline, with a negative total return on equity of 4.7% as of June 30, 2025 [2][9] Financial Performance - As of June 30, 2025, Orchid's RMBS portfolio value is estimated at $6.9 million, indicating a challenging quarter due to net realized and unrealized losses [3][9] - Over the past three months, ORC shares have increased by 18.6%, outperforming the industry growth of 14% [7] Competitive Landscape - AGNC Investment focuses on leveraged investments in Agency RMBS, with a portfolio value of $70.5 billion as of March 31, 2025, and a tangible net book value of $8.25 per share [5] - Annaly Capital Management primarily invests in Agency mortgage-backed securities, holding $75 billion in Agency MBS as of March 31, 2025, with a book value per share of $19.02 [6] Valuation Metrics - Orchid trades at a forward price-to-tangible (P/TB) ratio of 1.03X, which is above the industry average of 1X [10] - The Zacks Consensus Estimate for ORC's earnings in 2025 and 2026 suggests significant year-over-year increases of 394.4% and 24.5%, respectively [13]

Main Announcements & Financial Highlights This section outlines Orchid Island Capital's recent dividend declaration and preliminary financial results for the second quarter of 2025 [Dividend Announcement](index=1&type=section&id=Dividend%20Announcement) Orchid Island Capital declared a $0.12 per share monthly cash dividend for July 2025, affirming its commitment to regular distributions to maintain REIT status by distributing at least 90% of taxable income annually July 2025 Dividend Details | Metric | Detail | | :--- | :--- | | Dividend per Share | $0.12 | | Record Date | July 31, 2025 | | Ex-Dividend Date | July 31, 2025 | | Payment Date | August 28, 2025 | - To qualify as a REIT, the Company must annually distribute at least **90%** of its REIT taxable income to stockholders[3](index=3&type=chunk) - The next common stock dividend announcement is planned for **August 13, 2025**[2](index=2&type=chunk) [Estimated Second Quarter 2025 Financial Results](index=1&type=section&id=Estimated%20Second%20Quarter%202025%20Financial%20Results) The company reported preliminary unaudited Q2 2025 results, including an estimated book value of **$7.21** per share, a GAAP net loss of **$(0.29)** per share, and a negative total return on equity of **(4.7)%**, all subject to auditor review Q2 2025 Estimated Financial Highlights (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Book Value per Share | $7.21 | | GAAP Net Loss per Share | $(0.29) | | Total Return on Equity | (4.7)% | | Total Stockholders' Equity | ~$912.0 million | - The total return of **$(0.37) per share** for the quarter was comprised of **$0.36** in dividends per share and a decrease in book value of **$(0.73)** per share from March 31, 2025[7](index=7&type=chunk) - The estimated net loss includes approximately **$0.45 per share** of net realized and unrealized losses on Residential Mortgage-Backed Securities (RMBS) and derivative instruments[6](index=6&type=chunk) Common Stock Outstanding Trend | Date | Shares Outstanding | | :--- | :--- | | June 30, 2025 | 126,566,926 | | March 31, 2025 | 107,786,614 | RMBS Portfolio Characteristics (as of June 30, 2025) This section details the company's Residential Mortgage-Backed Securities (RMBS) portfolio composition, risk management, and counterparty exposures as of June 30, 2025 [Portfolio Composition and Risk Profile](index=3&type=section&id=Portfolio%20Composition%20and%20Risk%20Profile) As of June 30, 2025, the company's **$7.0 billion** mortgage asset portfolio is predominantly traditional pass-through RMBS, with a **$(4.88) billion** hedging strategy in place to manage interest rate risk Mortgage Asset Composition (Fair Value) | Asset Type | Fair Value ($) | % of Portfolio | | :--- | :--- | :--- | | Pass-Through RMBS | 6,978,561,000 | 99.79% | | Structured RMBS | 14,798,000 | 0.21% | | **Total Mortgage Assets** | **$6,993,359,000** | **100.00%** | - The largest holdings within the fixed-rate RMBS portfolio are securities with **6.0%** and **6.5%** coupons, which together constitute over **52%** of the total portfolio fair value[12](index=12&type=chunk) Hedging Instruments (Notional Balance) | Hedge Type | Notional Balance ($) | | :--- | :--- | | Swaps | (3,843,300,000) | | Treasury Futures | (913,500,000) | | SOFR & ERIS Futures | (125,000,000) | | **Total Hedges** | **$(4,881,800,000)** | - After accounting for hedges, the portfolio's modeled sensitivity to a **+50 basis point** interest rate shock is a net loss of **$(1.5) million**, while a **-50 basis point** shock results in a net loss of **$(22.2) million**[12](index=12&type=chunk) [Portfolio Allocation and Counterparty Exposure](index=4&type=section&id=Portfolio%20Allocation%20and%20Counterparty%20Exposure) The company's RMBS portfolio consists entirely of Agency securities, primarily Fannie Mae and Freddie Mac, with **$6.66 billion** in diversified borrowings across 24 counterparties, the largest being Wells Fargo Bank at **5.8%** RMBS Assets by Agency | Agency | Fair Value ($ thousands) | % of Portfolio | | :--- | :--- | :--- | | Fannie Mae | 4,421,357 | 63.2% | | Freddie Mac | 2,572,002 | 36.8% | | **Total** | **$6,993,359** | **100.0%** | - Under the Investment Company Act of 1940 test, **95.9%** of the company's mortgage assets are classified as 'Whole Pool Assets'[15](index=15&type=chunk) Top 5 Borrowing Counterparties | Counterparty | Borrowings ($ thousands) | % of Total | | :--- | :--- | :--- | | Wells Fargo Bank, N.A. | 385,253 | 5.8% | | RBC Capital Markets, LLC | 382,428 | 5.7% | | J.P. Morgan Securities LLC | 348,072 | 5.2% | | Mirae Asset Securities (USA) Inc. | 338,514 | 5.1% | | ASL Capital Markets Inc. | 329,804 | 5.0% | | **Total Borrowings** | **$6,655,879** | **100.0%** |

Core Points - Orchid Island Capital, Inc. declared a monthly cash dividend of $0.12 per share for July 2025, payable on August 28, 2025, to shareholders of record as of July 31, 2025 [1] - The company aims to make regular monthly cash distributions to its common stockholders to comply with REIT regulations, which require at least 90% of taxable income to be distributed annually [2] - As of July 9, 2025, the company had 126,715,437 shares of common stock outstanding, an increase from 126,566,926 shares as of June 30, 2025 [3] - The estimated book value per share as of June 30, 2025, was $7.21, with total stockholders' equity approximately $912.0 million [4] - The company reported an estimated net loss per share of $0.29 for the quarter ended June 30, 2025, which includes $0.45 per share of net realized and unrealized losses on RMBS and derivative instruments [5] - The estimated total return on equity for the quarter ended June 30, 2025, was (4.7)%, calculated as the sum of dividends declared and changes in book value [6] - The company invests in Agency RMBS, focusing on traditional pass-through Agency RMBS and structured Agency RMBS [7] Financial Highlights - The total dividends declared during the quarter were $0.36 per share, indicating a net loss exceeding the dividends paid [5] - The estimated total return on equity was $(0.37) per share, consisting of $0.36 in dividends and a decrease in book value of $(0.73) [6] - The company's RMBS portfolio as of June 30, 2025, included significant investments in Fannie Mae and Freddie Mac securities, with a total mortgage asset value of approximately $6.99 billion [13] Borrowings and Risk Management - The company had total borrowings of $6.66 billion as of June 30, 2025, with a weighted average interest rate of 4.47% [15] - The company is exposed to interest rate risks, with various hedging instruments in place to manage these risks [12][16]

Core Viewpoint - Orchid Island Capital, Inc. is set to release its second quarter 2025 financial results on July 24, 2025, after market close [1] Earnings Conference Call Details - An earnings conference call will take place on July 25, 2025, at 10:00 AM ET, with registration available online [2] - A live audio webcast of the conference call can be accessed through the company's investor relations website [3] Company Overview - Orchid Island Capital, Inc. is a specialty finance company that invests in Agency RMBS on a leveraged basis, focusing on traditional pass-through Agency RMBS and structured Agency RMBS [4] - The company is managed by Bimini Advisors, LLC, which is a registered investment adviser with the SEC [4]

Core Insights - Orchid Island Capital (ORC) is a specialty finance mREIT focused on residential mortgage-backed securities (RMBS) and is noted for its attractive dividend policy [1][2]. Dividend Policy - ORC offers a substantial dividend yield of 20.1%, significantly higher than the industry average of 12.4% [3]. - The company has a history of increasing its dividend, having raised it three times in the past five years [3]. - In addition to dividends, ORC has a share repurchase plan, with 2.7 million shares available for repurchase as of April 25, 2025 [6]. Financial Position - As of March 31, 2025, ORC reported a strong liquidity position with $446.5 million in cash and cash equivalents, and no debt [7]. - This robust liquidity supports the sustainability of ORC's capital distribution [7]. Competitive Landscape - Compared to AGNC Investment Corp., which has a dividend yield of 15.3% and a payout ratio of 81%, ORC's dividend yield is notably higher [8]. - Annaly Capital Management, Inc. offers a dividend yield of 14.3% with a payout ratio of 101%, indicating a more aggressive dividend strategy [9]. Price Performance and Valuation - ORC shares have increased by 1.4% year-to-date, while the industry has grown by 7.3% [11]. - The company trades at a forward price-to-tangible book (P/TB) ratio of 0.80X, below the industry average of 0.98X [13]. Earnings Estimates - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 394.4% for 2025 and 24.5% for 2026 [16]. - Current estimates for 2025 and 2026 earnings are $0.53 and $0.66, respectively, reflecting significant improvement from previous years [19].

Core Viewpoint - Orchid Island Capital, Inc. (ORC) offers a high dividend yield of 20.3%, significantly above the industry average of 12.4%, and has increased its dividend three times in the past five years [1][9]. Dividend Yield - ORC is a specialty finance mortgage real estate investment trust (mREIT) that invests in residential mortgage-backed securities (RMBS) on a leveraged basis, providing favorable long-term returns and substantial dividend yields [3]. - Competitors AGNC Investment and Arbor Realty Trust have dividend yields of 15.8% and 15.5%, respectively [3]. Financial Position - As of March 31, 2025, ORC had $446.5 million in cash and cash equivalents, with no debt [4]. - The company has a share repurchase plan, with 2.7 million shares available for repurchase as of April 25, 2025 [5]. Market Conditions - The Federal Reserve has lowered interest rates by 100 basis points in 2024, and mortgage rates have slightly declined, with the average 30-year fixed-rate mortgage at 6.77% as of June 26, 2025 [7]. - Fannie Mae projects mortgage rates to reach 6.6% by the end of Q3 2025 and 6.5% by year-end [8]. Earnings Projections - Earnings for 2025 are projected to rise by 394.4%, with a year-over-year growth estimate of 266.67% for Q2 2025 [9][17]. - The Zacks Consensus Estimate for ORC's earnings in 2025 is $0.53, with a significant increase from a loss of $0.18 the previous year [19]. Valuation Analysis - ORC is currently trading at a forward 12-month price-to-sales (P/S) multiple of 2.47X, higher than the industry average of 2.35X [20]. - The company's share price has increased by 12.5% over the past three months, outperforming the industry average of 10% [14]. Strategic Focus - ORC maintains a focus on agency RMBS, which positions it well in the competitive market, with expectations of improved loan demand and net interest spreads as mortgage rates decline [10][11][22]. - The company generated a positive total return of 2.6% in Q1 2025, driven by its monthly dividend [12].