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Orchid Island Capital Announces Third Quarter 2025 Results

globenewswire.com
ORC The company reported positive financial results, including net income and an increase in book value, indicating a bullish sentiment.

VERO BEACH, Fla., Oct. 23, 2025 (GLOBE NEWSWIRE) -- Orchid Island Capital, Inc. (NYSE:ORC) ("Orchid” or the "Company"), a real estate investment trust ("REIT"), today announced results of operations for the three month period ended September 30, 2025.

Third Quarter 2025 Results

Other Financial Highlights

Management Commentary

Commenting on the third quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said, “Market conditions during the quarter were supportive for levered Agency RMBS investors such as Orchid Island Capital. Interest rates were quite stable outside of short-term rates, which declined in anticipation of additional interest rate cuts beyond the 25-basis point cut that occurred in September. Orchid generated a total return for the quarter of 6.7%, unannualized. Orchid continued to build its capital base, still comprised exclusively of common equity, and invested the proceeds into Agency RMBS offering both net interest income and total return potential above historical norms. Orchid was able to acquire Agency RMBS with these characteristics even with elevated levels of prepayments emerging as prevailing market interest rates decline in the face of a cooling labor market and Federal Reserve interest rate cuts. Orchid has done this through prudent security selection and risk management techniques without meaningfully changing its leverage – approximately 7.4 to 1 inclusive of its TBA positions. Orchid has room to raise leverage further should returns in the market become even more attractive.

“With respect to the market backdrop we are operating in, it appears we are at a crossroads. There is evidence that the tariffs introduced by the U.S. presidential administration and the associated uncertainty surrounding their impact on growth and inflation is impacting the labor market, and the Federal Reserve has stated they now see the balance of risk tilted towards economic weakness versus inflation. Note this statement was made before the U.S. federal government shutdown, which has added to risks of a downturn in economic growth. However, there is also evidence that the economy has been resilient in the face of the tariffs and that growth and consumer spending appear stable. Additionally, the likely benefits from the One Big Beautiful Bill Act, deregulation, capital expenditure and artificial intelligence should be supportive of growth in the near future. The path for economic growth, monetary policy and interest rates is uncertain, yet we believe Orchid’s portfolio is positioned to deliver attractive return potential in either scenario.”

Details of Third Quarter 2025 Results of Operations

The Company reported net income of $72.1 million for the three month period ended September 30, 2025, compared with a net income of $17.3 million for the three month period ended September 30, 2024. Interest income on the portfolio in the third quarter was up approximately $16.1 million from the second quarter of 2025. The yield on our average Agency RMBS increased from 5.38% in the second quarter of 2025 to 5.65% for the third quarter of 2025, and our repurchase agreement borrowing costs increased from 4.23% for the second quarter of 2025 to 4.45% for the third quarter of 2025. Book value increased by $0.12 per share in the third quarter of 2025. The increase in book value reflects our net income of $0.53 per share and the dividend distribution of $0.36 per share. The Company recorded net realized and unrealized gains of $50.6 million on Agency RMBS assets and derivative instruments, including net interest income on interest rate swaps.

Prepayments

For the quarter ended September 30, 2025, Orchid received $212.8 million in scheduled and unscheduled principal repayments and prepayments, which equated to a 3-month constant prepayment rate (“CPR”) of approximately 10.1%. Prepayment rates on the two RMBS sub-portfolios were as follows (in CPR):

Portfolio

The following tables summarize certain characteristics of Orchid’s PT RMBS (as defined below) and structured RMBS as of September 30, 2025 and December 31, 2024:

Financing, Leverage and Liquidity

As of September 30, 2025, the Company had outstanding repurchase obligations of approximately $8.0 billion with a net weighted average borrowing rate of 4.33%. These agreements were collateralized by RMBS with a fair value, including accrued interest, of approximately $8.4 billion and cash pledged to counterparties of approximately $26.4 million. The Company’s adjusted leverage ratio, defined as the balance of repurchase agreement liabilities divided by stockholders' equity, at September 30, 2025 was 7.4 to 1. At September 30, 2025, the Company’s liquidity was approximately $620.0 million consisting of cash and cash equivalents and unpledged securities. To enhance our liquidity even further, we may pledge more of our structured RMBS as part of a repurchase agreement funding, but retain the cash in lieu of acquiring additional assets. In this way we can, at a modest cost, retain higher levels of cash on hand and decrease the likelihood we will have to sell assets in a distressed market in order to raise cash. Below is a list of our outstanding borrowings under repurchase obligations at September 30, 2025.

Hedging

In connection with its interest rate risk management strategy, the Company economically hedges a portion of the cost of its repurchase agreement funding against a rise in interest rates by entering into derivative financial instrument contracts. The Company has not elected hedging treatment under U.S. generally accepted accounting principles (“GAAP”) in order to align the accounting treatment of its derivative instruments with the treatment of its portfolio assets under the fair value option election. As such, all gains or losses on these instruments are reflected in earnings for all periods presented. At September 30, 2025, such instruments were comprised of U.S. Treasury note (“T-Note”) and Secured Overnight Financing Rate ("SOFR") futures contracts, interest rate swap agreements and contracts to sell to-be-announced ("TBA") securities.

The table below presents information related to the Company’s T-Note and SOFR futures contracts at September 30, 2025.

The table below presents information related to the Company’s interest rate swap positions at September 30, 2025.

The following table summarizes our contracts to sell TBA securities as of September 30, 2025.

Dividends

In addition to other requirements that must be satisfied to qualify as a REIT, we must pay annual dividends to our stockholders of at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. We intend to pay regular monthly dividends to our stockholders and have declared the following dividends since our February 2013 IPO.

Book Value Per Share

The Company's book value per share at September 30, 2025 was $7.33. The Company computes book value per share by dividing total stockholders' equity by the total number of shares outstanding of the Company's common stock. At September 30, 2025, the Company's stockholders' equity was $1,086.1 million with 148,239,401 shares of common stock outstanding.

Capital Allocation and Return on Invested Capital

The Company allocates capital to two RMBS sub-portfolios, the pass-through RMBS portfolio, consisting of mortgage pass-through certificates issued by Fannie Mae, Freddie Mac or Ginnie Mae (the “GSEs”) and collateralized mortgage obligations (“CMOs”) issued by the GSEs (“PT RMBS”), and the structured RMBS portfolio, consisting of interest-only (“IO”) and inverse interest-only (“IIO”) securities. As of September 30, 2025, approximately 98.5% of the Company’s investable capital (which consists of equity in pledged PT RMBS, available cash and unencumbered assets) was deployed in the PT RMBS portfolio. At June 30, 2025, the allocation to the PT RMBS portfolio was approximately 98.1%.

The table below details the changes to the respective sub-portfolios during the quarter.

The tables below present the allocation of capital between the respective portfolios at September 30, 2025 and June 30, 2025 and the return on invested capital for each sub-portfolio for the three month period ended September 30, 2025.

The return on invested capital in the PT RMBS and structured RMBS portfolios was approximately 9.9% and 1.2%, respectively, for the third quarter of 2025. The combined portfolio generated a return on invested capital of approximately 9.8%.

Stock Offerings

On March 7, 2023, we entered into an equity distribution agreement (the “March 2023 Equity Distribution Agreement”) with three sales agents pursuant to which we could offer and sell, from time to time, up to an aggregate amount of $250,000,000 of gross proceeds from the sales of shares of our common stock in transactions that were deemed to be “at the market” offerings and privately negotiated transactions. We issued a total of 24,675,497 shares under the March 2023 Equity Distribution Agreement for aggregate gross proceeds of approximately $228.8 million and net proceeds of approximately $225.0 million, after commissions and fees, prior to its termination in June 2024.

On June 11, 2024, we entered into an equity distribution agreement (the “June 2024 Equity Distribution Agreement”) with three sales agents pursuant to which we could offer and sell, from time to time, up to an aggregate amount of $250,000,000 of gross proceeds from the sales of shares of our common stock in transactions that were deemed to be “at the market” offerings and privately negotiated transactions. We issued a total of 30,513,253 shares under the June 2024 Equity Distribution Agreement for aggregate gross proceeds of approximately $250.0 million and net proceeds of approximately $245.8 million, after commissions and fees, prior to its termination in February 2025.

On February 24, 2025, we entered into an equity distribution agreement (the “February 2025 Equity Distribution Agreement”) with four sales agents pursuant to which we may offer and sell, from time to time, up to an aggregate amount of $350,000,000 of gross proceeds from the sales of shares of our common stock in transactions that are deemed to be “at the market” offerings and privately negotiated transactions. On July 28, 2025, the February 2025 Equity Distribution Agreement was amended to increase the aggregate amount of shares that may be offered by $150,000,000 to a total of $500,000,000. On July 28, 2025, the February 2025 Equity Distribution Agreement was amended to increase the aggregate amount of gross proceeds from the sales of shares that may be offered by $150,000,000 to a total of $500,000,000. Through September 30, 2025, we issued a total of 56,019,745 shares under the February 2025 Equity Distribution Agreement for aggregate gross proceeds of approximately $420.2 million, and net proceeds of approximately $413.5 million, after commissions and fees. Subsequent to September 30, 2025, we issued a total of 3,472,759 shares under the February 2025 Equity Distribution Agreement for aggregate gross proceeds of approximately $25.0 million, and net proceeds of approximately $24.6 million, after commissions and fees.

Stock Repurchase Program

On July 29, 2015, the Company’s Board of Directors authorized the repurchase of up to 400,000 shares of our common stock. The timing, manner, price and amount of any repurchases is determined by the Company in its discretion and is subject to economic and market conditions, stock price, applicable legal requirements and other factors. The authorization does not obligate the Company to acquire any particular amount of common stock and the program may be suspended or discontinued at the Company’s discretion without prior notice. On February 8, 2018, the Board of Directors approved an increase in the stock repurchase program for up to an additional 904,564 shares of the Company’s common stock. Coupled with the 156,751 shares remaining from the original 400,000 share authorization, the increased authorization brought the total authorization to 1,061,316 shares, representing 10% of the Company’s then outstanding share count. On December 9, 2021, the Board of Directors approved an increase in the number of shares of the Company’s common stock available in the stock repurchase program for up to an additional 3,372,399 shares, bringing the remaining authorization under the stock repurchase program to 3,539,861 shares, representing approximately 10% of the Company’s then outstanding shares of common stock. On October 12, 2022, the Board of Directors approved an increase in the number of shares of the Company’s common stock available in the stock repurchase program for up to an additional 4,300,000 shares, bringing the remaining authorization under the stock repurchase program to 6,183,601 shares, representing approximately 18% of the Company’s then outstanding shares of common stock. This stock repurchase program has no termination date.

From the inception of the stock repurchase program through September 30, 2025, the Company repurchased a total of 6,257,826 shares at an aggregate cost of approximately $84.8 million, including commissions and fees, for a weighted average price of $13.55 per share. During the nine months ended September 30, 2025, the Company repurchased a total of 1,113,224 shares at an aggregate cost of approximately $7.3 million, including commissions and fees, for a weighted average price of $6.52. There were no shares repurchased during the three months ended September 30, 2025. The remaining authorization under the stock repurchase program as of October 23, 2025 was 2,719,137 shares.

Earnings Conference Call Details

An earnings conference call and live audio webcast will be hosted Friday, October 24, 2025, at 10:00 AM ET. Participants can register and receive dial-in information at https://register-conf.media-server.com/register/BIeb71dde9e1144ca49e705d45afa0579b. A live audio webcast of the conference call can be accessed at https://edge.media-server.com/mmc/p/d8o7sxmj or via the investor relations section of the Company's website at https://ir.orchidislandcapital.com. An audio archive of the webcast will be available for 30 days after the call.

About Orchid Island Capital, Inc.

Orchid Island Capital, Inc. is a specialty finance company that invests on a leveraged basis in Agency RMBS. Our investment strategy focuses on, and our portfolio consists of, two categories of Agency RMBS: (i) traditional pass-through Agency RMBS, such as mortgage pass-through certificates, and CMOs issued by the GSEs, and (ii) structured Agency RMBS, such as IOs, IIOs and principal only securities, among other types of structured Agency RMBS. Orchid is managed by Bimini Advisors, LLC, a registered investment adviser with the Securities and Exchange Commission.

Forward Looking Statements

Statements herein relating to matters that are not historical facts, including, but not limited to statements regarding interest rates, inflation, liquidity, pledging of our structured RMBS, funding levels and spreads, prepayment speeds, portfolio composition, positioning and repositioning, hedging levels, leverage ratio, dividends, investment and return opportunities, the supply and demand for Agency RMBS and the performance of the Agency RMBS sector generally, the effect of actual or expected actions of the U.S. government, including the Fed, market expectations, capital raising, future opportunities and prospects of the Company, the stock repurchase program, geopolitical uncertainty and general economic conditions (including the effects of tariffs, trade wars, inflation, the U.S. deficit, U.S. government shutdowns, and the strength of the U.S. dollar), are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The reader is cautioned that such forward-looking statements are based on information available at the time and on management's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in such forward-looking statements. Important factors that could cause such differences are described in Orchid Island Capital, Inc.'s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Orchid Island Capital, Inc. assumes no obligation to update forward-looking statements to reflect subsequent results, changes in assumptions or changes in other factors affecting forward-looking statements.

CONTACT:

Orchid Island Capital, Inc.

Robert E. Cauley

Chairman and Chief Executive Officer

772-231-1400

https://ir.orchidislandcapital.com

Summarized Financial Statements

The following is a summarized presentation of the unaudited balance sheets as of September 30, 2025, and December 31, 2024, and the unaudited quarterly statements of operations for the nine and three months ended September 30, 2025 and 2024. Amounts presented are subject to change.