Market Overview

Orchid Island Capital Announces Fourth Quarter 2017 Results

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VERO BEACH, Fla., Feb. 08, 2018 (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 December 31, 2017.

Fourth Quarter 2017 Highlights

  • Net loss of $6.0 million, or $0.12 per common share, which consists of:
    • Net interest income of $26.5 million, or $0.55 per common share
    • Total expenses of $3.0 million, or $0.06 per common share
    • Net realized and unrealized losses of $29.5 million, or $0.61 per share, on RMBS and derivative instruments, including net interest expense on interest rate swaps
  • Fourth quarter total dividends declared and paid of $0.42 per common share
  • Book value per share of $8.71 at December 31, 2017
  • 0.2% economic loss on common equity for the quarter, or 0.9% annualized, comprised of $0.42 dividend per common share and $0.44 decrease in net book value per common share, divided by beginning book value per share. Estimated total return for the year was 2.9%
  • Board approves increase in the stock repurchase program up to approximately 10% of the Company's common stock
  • Company to discuss results on Friday, February 9, 2018, at 10:00 AM ET
  • Supplemental materials to be discussed on the call can be downloaded from the investor relations section of the Company's website at www.orchidislandcapital.com 

Details of Fourth Quarter 2017 Results of Operations

The Company reported net loss of $6.0 million for the three month period ended December 31, 2017, compared with net loss of $20.4 million for the three month period ended December 31, 2016.  The fourth quarter net loss included net interest income of $26.5 million, net portfolio losses of $29.5 million (which includes realized and unrealized losses on RMBS and derivative instruments, and net interest expense realized in interest rate swaps), management fees and allocated overhead of $2.0 million, audit, legal and other professional fees of $0.2 million, accrued incentive compensation of $0.2 million, and other operating, general and administrative expenses of $0.6 million.

Capital Allocation and Return on Invested Capital

The Company allocates capital to two RMBS sub-portfolios, the pass-through RMBS portfolio ("PT RMBS"), and the structured RMBS portfolio, consisting of interest only ("IO") and inverse interest-only ("IIO") securities.  As of September 30, 2017, approximately 64% 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 December 31, 2017, the allocation to the PT RMBS portfolio increased 9% to 73%.

The table below details the changes to the respective sub-portfolios during the quarter, as well as the returns generated by each.

(in thousands)
Portfolio Activity for the Quarter
      Structured Security Portfolio  
    Pass-Through Interest-Only Inverse Interest    
    Portfolio Securities Only Securities Sub-total Total
Market value - September 30, 2017 $ 3,784,642   $ 90,551   $ 55,147   $ 145,698   $ 3,930,340  
Securities purchased   1,419,208     -     -     -     1,419,208  
Securities sold   (1,428,767 )   -     (15,858 )   (15,858 )   (1,444,625 )
Losses on sales   (10,864 )   -     (278 )   (278 )   (11,142 )
Return of investment   n/a     (6,330 )   (2,241 )   (8,571 )   (8,571 )
Pay-downs   (108,019 )   n/a     n/a     n/a     (108,019 )
Premium lost due to pay-downs   (8,920 )   n/a     n/a     n/a     (8,920 )
Mark to market (losses) gains   (23,595 )   2,697     (2,562 )   135     (23,460 )
Market value - December 31, 2017 $ 3,623,685   $ 86,918   $ 34,208   $ 121,126   $ 3,744,811  
 

The tables below present the allocation of capital between the respective portfolios at December 31, 2017 and September 30, 2017, and the return on invested capital for each sub-portfolio for the three month period ended December 31, 2017.  The return on invested capital in the PT RMBS and structured RMBS portfolios was approximately (1.6)% and 0.7%, respectively, for the fourth quarter of 2017.  The combined portfolio generated a return on invested capital of approximately (0.7)%.

 
($ in thousands)
Capital Allocation
      Structured Security Portfolio  
    Pass-Through Interest-Only Inverse Interest    
    Portfolio Securities Only Securities Sub-total Total
December 31, 2017                    
Market value $ 3,623,685   $ 86,918   $ 34,208   $ 121,126   $ 3,744,811  
Cash   246,712     -     -     -     246,712  
Borrowings(1)   (3,533,786 )   -     -     -     (3,533,786 )
Total $ 336,611   $ 86,918   $ 34,208   $ 121,126   $ 457,737  
% of Total   73.5 %   19.0 %   7.5 %   26.5 %   100.0 %
September 30, 2017                    
Market value $ 3,784,642   $ 90,551   $ 55,147   $ 145,698   $ 3,930,340  
Cash   181,288     -     -     -     181,288  
Borrowings(2)   (3,710,077 )   -
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