Orchid Island Capital, Inc. has recently released its 10-Q report, providing insights into its business operations and financial performance. Orchid Island is a specialty finance company that invests in residential mortgage-backed securities (RMBS) in the United States, particularly focusing on traditional pass-through Agency RMBS and structured Agency RMBS. The company's investment strategy aims to provide attractive risk-adjusted total returns over the long term by strategically allocating capital between the two categories of Agency RMBS. As a real estate investment trust (REIT), Orchid Island aims to qualify for tax benefits and distribute a significant portion of its income to shareholders.
The Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the 10-Q report provides a detailed overview of the company's operations and the factors that may impact its financial condition. Orchid Island discusses various industry and economic factors, including interest rate trends, competition for investments in Agency RMBS, prepayment rates on mortgages, and actions taken by the U.S. government, which could affect its results of operations and financial condition.
The report also highlights Orchid Island's capital raising activities, including equity distribution agreements that have enabled the company to raise significant gross proceeds from the sales of shares of its common stock. Notably, the company issued a total of 56,019,745 shares under the February 2025 Equity Distribution Agreement, generating approximately $420.2 million in gross proceeds.
Furthermore, Orchid Island's stock repurchase program has been active, with the company repurchasing a total of 6,257,826 shares at an aggregate cost of approximately $84.8 million from the inception of the program through September 30, 2025. The remaining authorization under the stock repurchase program as of October 23, 2025, was 2,719,137 shares.
The report also provides a detailed analysis of the company's results of operations, highlighting net income for the nine months ended September 30, 2025, at $55.6 million, compared to $32.1 million for the same period in 2024. Additionally, the company's net income for the three months ended September 30, 2025, was $72.1 million, compared to $17.3 million for the same period in 2024. The report includes a breakdown of the components of net income, including interest income, interest expense, gains on RMBS and derivative contracts, net portfolio income, and expenses.
In addition to the results presented in accordance with Generally Accepted Accounting Principles (GAAP), Orchid Island's results of operations also include certain non-GAAP financial information, such as "Net Earnings Excluding Realized and Unrealized Gains and Losses," "Economic Interest Expense," "Economic Net Interest Income," "Interest Income – Inclusive of Premium Amortization/Discount Accretion," and "Yield on Average RMBS – Inclusive of Premium Amortization/Discount Accretion." These non-GAAP measures offer further insights into the company's financial performance. As a result of these announcements, the company's shares have moved -0.4% on the market, and are now trading at a price of $7.44. For more information, read the company's full 10-Q submission here.
