Orchid Island Capital, Inc., a REIT, reported results of operations for the three- and twelve-month periods ended December 31, 2025.

Orchid Island Capital, Inc. (NYSE:ORC) ("Orchid" or the "Company"), a real estate investment trust ("REIT"), today announced results of operations for the three and twelve month periods ended December 31, 2025.

Fourth Quarter 2025 Results

Net income of $103.4 million, or $0.62 per common share, which consists of:

Net interest income of $38.5 million, or $0.23 per common share

Total expenses of $5.8 million, or $0.04 per common share

Net realized and unrealized gains of $70.7 million, or $0.43 per common share, on RMBS and derivative instruments, including net interest income on interest rate swaps

Fourth quarter total dividends declared and paid of $0.36 per common share

Total return of 7.78%, comprised of $0.36 dividends per common share and a $0.21 increase in book value per common share, divided by beginning book value per common share

Full-year 2025 Results

Net income of $159.3 million, or $1.24 per common share, which consists of:

Net interest income of $108.3 million, or $0.84 per common share

Total expenses of $20.5 million, or $0.16 per common share

Net realized and unrealized gains of $71.2 million, or $0.56 per common share, on RMBS and derivative instruments, including net interest income on interest rate swaps

Full year total dividends declared and paid of $1.44 per common share

Total return of 11.00%, comprised of $1.44 dividends per common share and a $0.55 decrease in book value per common share, divided by beginning book value per common share

Other Financial Highlights

Book value per common share of $7.54 at December 31, 2025

Orchid maintained a strong liquidity position of $791.8 million in cash and cash equivalents and unpledged securities (net of unsettled purchased securities), or 58% of stockholder's equity as of December 31, 2025

Borrowing capacity in excess of December 31, 2025 outstanding repurchase agreement balances of $10,115.5 million, spread across 28 active lenders

Company to discuss results on Friday, January 30, 2026, 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 https://ir.orchidislandcapital.com

Management Commentary

Commenting on the fourth quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said, "The market conditions of the fourth quarter of 2025 were very conducive for the Agency RMBS market and Orchid. Orchid generated a 7.8% return for the fourth quarter of 2025 (not annualized).  The Agency RMBS sector performed well during the quarter, as interest rates were stable, associated interest rate implied volatility was low as well and the Federal Reserve (the "Fed") delivered two interest rate cuts during the quarter.  For reference, the ICE Data Indices Agency RMBS return for the fourth quarter of 2025 was 1.6% and the excess return versus comparable duration swaps was 1.3%. For the year ended December 31, 2025, Orchid generated an 11.0% return while the Agency RMBS index generated a return of 8.3% and an excess return versus comparable duration swaps of 2.6%.

"With respect to the market backdrop for the fourth quarter, one of the highlights of the quarter – or maybe a lowlight – was the six-week government shutdown that commenced on the first day of the quarter.  While the federal government was shut down, there was little economic data released, which was a real problem for the Fed.  Exacerbating the problem were the issues the government has been grappling with related to the quality and reliability of the data released prior to the shutdown.  So, the market went from having suspect data, to very little data at all during the shutdown, to stale data released months after the period covered by the data, and data that was still somewhat suspect as well. With little for the market to focus on in terms of economic data, gauging the path of monetary policy proved challenging. So, while the Fed delivered two 25 basis interest rate cuts during the quarter – consistent with their stated goal of returning the policy rate towards neutral - current market pricing for up to two additional cuts in 2026 may not materialize if the data ultimately does not support the case for additional easing. 

"These two cuts the Fed delivered are beneficial for levered Agency RMBS investors such as Orchid as they tend to lower our funding costs. Notably there were several dissents on the Fed decision as FOMC members have varied outlooks for inflation and the economy.  The byproduct of the uncertainty and data vacuum was a period of stable, range-bound interest rates and declining implied interest rate volatility in the swaptions market.  This backdrop was behind the significant tightening of Agency RMBS spreads and the sector's strong performance.  In early January, the Trump administration revealed they planned to allow the government-sponsored entities (the "GSEs") – Freddie Mac and Fannie Mae – to increase their open market purchases of Agency RMBS to $200 billion per year. This led Agency RMBS spreads to tighten even further. While marginal returns currently available in the sector are less attractive than in the last few years, other sectors of the fixed income markets have performed very well also and do not offer marginal risk-adjusted returns that surpass the Agency RMBS sector.

"Another material development for Orchid during both the fourth quarter of 2025 and for the entire year was that Orchid was able to raise additional capital. Orchid's shareholders' equity more than doubled in 2025 (increasing by 105%) and increased by 26% during the fourth quarter versus the third quarter of 2025. While the shares issued were mildly dilutive to book value on average, the growth in the equity base relative to our overhead costs was such that our general and administrative expenses, inclusive of our management fee, ended 2025 at an run rate of approximately 1.7% of equity versus the 2.6% run rate at the end of 2024. These cost savings will enhance returns going forward." 

Details of Fourth Quarter 2025 Results of Operations

The Company reported net income of $103.4 million for the three month period ended December 31, 2025, compared with net income of $5.6 million for the three month period ended December 31, 2024. The Company increased its average Agency RMBS portfolio during the fourth quarter of 2025, from $7.7 billion for the quarter ended September 30, 2025 to $9.5 billion for the quarter ended December 31, 2025. Interest income on the portfolio in the fourth quarter increased by approximately $23.8 million from the third quarter of 2025. The yield on our average Agency RMBS decreased slightly from 5.65% in the third quarter of 2025 to 5.57% for the fourth quarter of 2025, repurchase agreement borrowing costs decreased from 4.45% for the third quarter of 2025 to 4.14% for the fourth quarter of 2025, and our net interest spread increased from 1.20% in the third quarter of 2025 to 1.43% in the fourth quarter of 2025.

Book value increased by $0.21 per share in the fourth quarter of 2025. The increase in book value reflects our net income of $0.62 per share and the dividend distribution of $0.36 per share. The Company recorded net realized and unrealized gains of $0.43 per share on Agency RMBS assets and derivative instruments, including net interest income on interest rate swaps.

Details of Full Year 2025 Results of Operations

The Company reported net income of $159.0 million for the year ended December 31, 2025, compared with net income of $37.7 million for the year ended December 31, 2024. Interest income on the portfolio in the year ended December 31, 2025 was approximately $414.0 million and the yield on our average Agency RMBS was 5.51%. Repurchase agreement interest expense was $305.7 million during 2025 with an average cost of 4.27%.

Book value decreased by $0.55 per share in the year ended December 31, 2025. The decrease in book value reflects our net income of $1.24 per share and the dividend distribution of $1.44 per share. The Company recorded net realized and unrealized gains of $0.56 per share on Agency RMBS assets and derivative instruments, including net interest income on interest rate swaps.

As of December 31, 2025 and 2024, the Company's portfolio had an effective duration of 2.513, indicating that an interest rate increase of 1.0% would be expected to cause a 2.513% decrease in the value of the RMBS in the Company's investment portfolio. As of December 31, 2024., the Company's portfolio had an effective duration of 4.200, indicating that an interest rate increase of 1.0% would be expected to cause a 4.200% decrease in the value of the RMBS in the Company's investment portfolio. These figures do not include the effect of the Company's funding cost hedges. Effective duration quotes for individual investments are obtained from The Yield Book, Inc.

Financing, Leverage and Liquidity

As of December 31, 2025, the Company had outstanding repurchase obligations of approximately $10,115.5 million with a net weighted average borrowing rate of 3.98%. These agreements were collateralized by RMBS with a fair value, including accrued interest, of approximately $10,551.3 million. The Company's adjusted leverage ratio, defined as the balance of repurchase agreement liabilities divided by stockholders' equity, at December 31, 2025 was 7.4:1. At December 31, 2025, the Company's liquidity was approximately $791.8 million consisting of cash and cash equivalents and unpledged securities (not including unsettled securities purchases). Below is a list of our outstanding borrowings under repurchase obligations at December 31, 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 December 31, 2025, such instruments were comprised of U.S. Treasury note ("T-Note") futures contracts, interest rate swap agreements, and contracts to sell to-be-announced ("TBA") securities.

Book Value Per Share

The Company's book value per share at December 31, 2025 was $7.54. 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 December 31, 2025, the Company's stockholders' equity was $1.4 billion with 181,985,900 shares of common stock outstanding.

Stock Offerings

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 could 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 gross proceeds from the sales of shares that may be offered by $150,000,000 to a total of $500,000,000. During the three months ended December 31, 2025, we issued a total of 3,472,759 shares under the February 2025 Equity Distribution Agreement for aggregate gross proceeds of approximately $24.9 million and net proceeds of approximately $24.5 million, after commissions and fees.  We issued a total of 59,492,504 shares under the February 2025 Equity Distribution Agreement for aggregate gross proceeds of approximately $445.1 million and net proceeds of approximately $438.0 million, after commissions and fees, prior to its termination in October 2025.

On October 27, 2025, we entered into an equity distribution agreement (the "October 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 $500,000,000 of shares of our common stock in transactions that are deemed to be "at the market" offerings and privately negotiated transactions. Through December 31, 2025, we issued a total of 30,265,963 shares under the October 2025 Equity Distribution Agreement for aggregate gross proceeds of approximately $223.1 million, and net proceeds of approximately $219.7 million, after commissions and fees. Subsequent to December 31, 2025, we issued a total of 1,360,032 shares under the October 2025 Equity Distribution Agreement for aggregate gross proceeds of approximately $10.2 million, and net proceeds of approximately $10.1 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 1,061,315 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 December 31, 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 year ended December 31, 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 per share. 

Earnings Conference Call Details

An earnings conference call and live audio webcast will be hosted Friday, January 30, 2026, at 10:00 AM ET.

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