• Earnings Per Share (EPS): $0.18 for Q1, up from $0.07 in Q4.
• Book Value Per Share: $7.94 as of March 31, down from $8.09 as of December 31.
• Total Return: 2.6% unannualized for Q1, compared to 0.6% in Q4.
• Dividends: $0.36 per share declared and paid for the quarter.
• Average Portfolio Size: Just under $6 billion in Q1, up from $5.3 billion in Q4.
• Leverage Ratio: 7.8 as of March 31, compared to 7.3 as of December 31.
• Prepayment Speeds: 7.8% in Q1, down from 10.5% in Q4.
• Liquidity: 52.2% as of March 31, compared to 52.9% as of December 31.
• Capital Raised: $206 million in Q1 through the sale of 25 million shares.
• Share Buyback: Over 1.1 million shares repurchased in April at an average price of $6.44.
• Weighted Average Coupon (WAC): Increased from 5.03% at the end of December to 5.32% at the end of March.
• Repo Rate: 4.46% at the end of March, slightly up from 4.46% at the end of December.
• Prepayment Experience: Average speed of 7.5% in Q1, down from 10.2% in Q4.

• Warning! GuruFocus has detected 4 Warning Signs with VRTS.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Orchid Island Capital Inc (NYSE:ORC) reported an increase in earnings per share to $0.18 in Q1 2025, up from $0.07 in Q4 2024.
• The company declared and paid dividends of $0.36 per share for the quarter, maintaining a consistent dividend payout.
• The average portfolio size increased to just under $6 billion in Q1 2025 from $5.3 billion in Q4 2024.
• ORC raised $206 million in capital during the first quarter, which was slightly accretive to shareholders.
• The company successfully repositioned its portfolio by adding higher coupon, shorter-duration assets, which are expected to generate attractive returns.

Negative Points

• Book value per share decreased from $8.09 at the end of Q4 2024 to $7.94 at the end of Q1 2025.
• The leverage ratio increased to 7.8 at the end of Q1 2025 from 7.3 at the end of Q4 2024, indicating higher financial risk.
• The company experienced a decline in book value by approximately 8.3% quarter-to-date as of the earnings call.
• Market volatility and uncertainty, particularly related to tariffs and economic conditions, pose challenges to future performance.
• The potential impact of the Rocket Mortgage and Nationstar merger could negatively affect the convexity of the mortgage universe, impacting ORC's portfolio performance.

Q & A Highlights

Q: Can you tell me where you see your duration gap both at the end of the quarter and to date after the sales you made? A: We don't measure it in terms of just numbers but on a DV01 basis. On slide 22, it's shown as $13, which is very narrow. The duration hasn't changed materially since the end of the quarter. - Robert Cauley, CEO

Q: After these portfolio changes and hedge changes, where do you see gross ROE sitting today? A: Versus swaps, it's very high, potentially in the high teens to low 20s, depending on the moment due to volatility. These are the highest levels we've seen in some time. - Robert Cauley, CEO

Q: How are you looking at the dividend issuance and buybacks given the current return environment and cost of capital? A: With the stock trading close to book value, buybacks are off the table. We might consider raising capital to add liquidity, but the market is volatile. The dividend is closely related to taxable earnings, and some of it comes from closed hedges. - Robert Cauley, CEO

Q: What are your thoughts on the Rocket-Mr. Cooper deal and its impact on prepay speeds and MSRs? A: Rocket is a fast servicer, and we expect Nationstar loans to get faster, impacting the convexity of the mortgage universe negatively. We own specified pools, and the relative speed will determine pay-ups over time. - Robert Cauley, CEO

Q: Do you think the level of spreads has reset higher due to the tariff war, and what is your view on interest rate volatility and spreads tightening? A: Pre-COVID, spreads were at 80, but we don't expect to return there. Mortgages are attractive, but volatility and market conditions suggest investors will demand wider spreads. - Robert Cauley, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.