[Management View]
Orchid Island's management highlighted the impact of market volatility on their performance, primarily due to early-April reciprocal tariffs and hedge-related mark-to-market losses. Strategic priorities included portfolio shifts towards higher coupon MBS and capital actions to respond to market dislocations.

[Outlook]
Management expects the investment environment for agency RMBS to remain attractive, with production coupon spreads at historically wide levels. They plan to maintain a defensive position while being opportunistic with their larger equity base and refined coupon allocation.

[Financial Performance]
The company reported a GAAP net loss of $(0.29) per share, compared to a net income of $0.18 per share in Q1 2025. Book value decreased from $7.94 per share at March 31 to $7.21 per share at June 30. Total return was negative 4.66%, compared to 2.6% in Q1 2025.

[Q&A Highlights]
Question 1: Jason Weaver asked about the $18.8 million increase in shares and the company's position on raising additional capital.
Answer: Robert Cauley explained that while they would prefer higher stock prices, they are open to slight dilution to book value if market conditions are favorable. He noted that ROEs could reach 16-18% depending on leverage and coupon mix.

Question 2: Mikhail Goberman inquired about the outlook for prepayment speeds in Q3.
Answer: Robert Cauley and Hunter Haas expect prepayment speeds to remain muted, with potential speeds in the low nine handle, given the seasonal nature and current market conditions.

Question 3: Jason Stewart asked about the impact of share repurchases and capital activity on book value.
Answer: Robert Cauley estimated a negative impact of $0.20 to $0.21 per share from share issuance in Q2, with a net effect of 99.5% of book value for the first half of the year.

Question 4: Eric Hagen sought clarity on book value updates and MBS spread expectations.
Answer: Hunter Haas confirmed the book value update includes the dividend accrual. Management expects MBS spreads to remain stable, with potential tightening if the Fed cuts rates.

[Sentiment Analysis]
Analysts expressed concerns about market volatility and prepayment speeds but acknowledged management's strategic adjustments. Management maintained a cautiously optimistic tone, emphasizing their defensive positioning and potential for opportunistic growth.

[Quarterly Comparison]
| Key Metrics | Q2 2025 | Q1 2025 |
|------------------------------|-----------------|-----------------|
| GAAP Net Income (Loss) | $(0.29) per share | $0.18 per share |
| Book Value | $7.21 per share | $7.94 per share |
| Total Return | -4.66% | 2.6% |
| Dividend | $0.36 per share | $0.36 per share |
| Average MBS Portfolio Size | $6.9 billion | Just under $6 billion |
| Leverage Ratio | 7.3 | 7.8 |
| Liquidity | 54% | 52% |

[Risks and Concerns]
Key risks include market volatility, hedge-related losses, and potential impacts from tariff announcements. Management is concerned about the sanctity of the dollar and capital flight out of the US, which could affect future performance.

[Final Takeaway]
Orchid Island faced significant challenges in Q2 2025 due to market volatility and hedge-related losses. Despite these setbacks, management's strategic adjustments, including a shift towards higher coupon MBS and capital actions, position the company for potential growth. The investment environment for agency RMBS remains attractive, with management emphasizing their defensive stance and readiness to capitalize on opportunities. Investors should monitor market conditions and management's ability to navigate ongoing volatility.