Orchid Island Capital, Inc. Files 2023 10-K Report

TL;DR

<b>Orchid Island Capital, Inc. reported its 2023 fiscal year-end financial results, including total assets of $3.89 billion and net income of $36.38 million.</b>

AI Summary

Orchid Island Capital, Inc. (ORC) filed a Annual Report (10-K) with the SEC on February 23, 2024. Orchid Island Capital, Inc. reported total assets of $3,885,554,000 and total debt of $3,512,640,000 for the fiscal year ended December 31, 2023. The company's net income was $36,382,000, with an Earnings Per Share (EPS) of $0.01 for the fiscal year 2023. The notional balance for the inverse interest-only securities portfolio was $26.8 million as of December 31, 2023. 5-Year T-Note futures contracts were valued at $105.4 at September 30, 2023, with short positions valued at $496.7 million. 10-Year T-Note futures contracts had short positions valued at $426.8 million at September 30, 2023.

Why It Matters

For investors and stakeholders tracking Orchid Island Capital, Inc., this filing contains several important signals. The filing details the company's financial position and performance, providing specific figures for assets, debt, and net income, which are crucial for investors to assess the company's stability and profitability. Information on derivative positions, such as T-Note futures and inverse interest-only securities, offers insight into the company's risk management strategies and potential exposure to market fluctuations.

Risk Assessment

Risk Level: medium — Orchid Island Capital, Inc. shows moderate risk based on this filing. The company's significant debt load relative to its assets and the nature of its investments in mortgage-backed securities and derivatives expose it to market and interest rate risks, as indicated by the substantial notional values of its derivative portfolios.

Analyst Insight

Investors should closely examine Orchid Island Capital's strategies for managing interest rate risk and the performance of its mortgage-backed securities portfolio in light of current market conditions.

Key Numbers

• 3,885,554,000 — Total Assets (As of December 31, 2023)
• 3,512,640,000 — Total Debt (As of December 31, 2023)
• 36,382,000 — Net Income (For the year ended December 31, 2023)
• 0.01 — EPS (For the year ended December 31, 2023)
• 26.8 million — Inverse Interest-Only Securities Portfolio Notional Balance (As of December 31, 2023)
• 496.7 million — 5-Year T-Note Futures Short Position Value (As of September 30, 2023)
• 426.8 million — 10-Year T-Note Futures Short Position Value (As of September 30, 2023)

Key Players & Entities

• Orchid Island Capital, Inc. (company) — Filer name
• 20231231 (date) — Fiscal year end
• 3,885,554,000 (dollar_amount) — Total assets
• 3,512,640,000 (dollar_amount) — Total debt
• 36,382,000 (dollar_amount) — Net income
• 0.01 (dollar_amount) — Earnings Per Share
• 26.8 million (dollar_amount) — Notional balance for inverse interest-only securities portfolio
• 5-Year T-Note (financial_instrument) — Futures contracts

FAQ

Risk Factors

• Market and Interest Rate Risk [high — financial]: The company's investments in Agency RMBS and derivative instruments expose it to significant market and interest rate risks, as evidenced by the large notional values of its derivative portfolios.

Key Financial Figures

• $0.01 — nge on Which Registered Common Stock, $0.01 par value ORC New York Stock Exchan

Filing Documents

• orc20231128_10k.htm (10-K) — 3604KB
• ex_600697.htm (EX-10.20) — 26KB
• ex_600698.htm (EX-23.1) — 3KB
• ex_600699.htm (EX-31.1) — 16KB
• ex_600700.htm (EX-31.2) — 16KB
• ex_600701.htm (EX-32.1) — 11KB
• ex_600702.htm (EX-32.2) — 10KB
• ex_620522.htm (EX-97) — 21KB
• orc20221231_10kimg001.jpg (GRAPHIC) — 3KB
• trr2.jpg (GRAPHIC) — 23KB
• 0001437749-24-005327.txt (&nbsp;) — 11653KB
• orc-20231231.xsd (EX-101.SCH) — 75KB
• orc-20231231_cal.xml (EX-101.CAL) — 31KB
• orc-20231231_def.xml (EX-101.DEF) — 436KB
• orc-20231231_lab.xml (EX-101.LAB) — 341KB
• orc-20231231_pre.xml (EX-101.PRE) — 467KB
• orc20231128_10k_htm.xml (XML) — 2358KB

Business

ITEM 1. Business. 2

Risk Factors

ITEM 1A. Risk Factors . 11

Unresolved Staff Comments

ITEM 1B. Unresolved Staff Comments. 37

Cybersecurity

ITEM 1C. Cybersecurity . 37

Properties

ITEM 2. Properties. 38

Legal Proceedings

ITEM 3. Legal Proceedings. 39

Mine Safety Disclosures

ITEM 4. Mine Safety Disclosures. 39 PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 40

Reserved

ITEM 6. Reserved . 42

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 43

Quantitative and Qualitative Disclosures About Market Risk

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk. 68

Financial Statements and Supplementary Data

ITEM 8. Financial Statements and Supplementary Data. 72

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 98

Controls and Procedures

ITEM 9A. Controls and Procedures. 98

Other Information

ITEM 9B. Other Information. 100

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 100 PART III

Directors, Executive Officers and Corporate Governance

ITEM 10. Directors, Executive Officers and Corporate Governance. 101

Executive Compensation

ITEM 11. Executive Compensation. 101

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 101

Certain Relationships and Related Transactions, and Director Independence

ITEM 13. Certain Relationships and Related Transactions, and Director Independence. 101

Principal Accountant Fees and Services

ITEM 14. Principal Accountant Fees and Services. 101 PART IV

Exhibits, Financial Statement Schedules

ITEM 15. Exhibits, Financial Statement Schedules. 102 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS We make forward-looking statements in this Report that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "intend," "should," "may," "plans," "projects," "will," or similar expressions, or the negative of these words, we intend to identify forward-looking statements. Statements regarding the following subjects are forward-looking by their nature: our business and investment strategy; our expected operating results; our ability to acquire investments on attractive terms; the effect of actual, anticipated or proposed actions of the U.S. government, including the U.S. Federal Reserve (the "Fed"), the Federal Housing Finance Agency (the "FHFA"), the Federal Housing Administration (the "FHA"), the Federal Open Market Committee (the "FOMC") and the U.S. Treasury, on interest rates, monetary policy, fiscal policy and the housing and credit markets; the effect of interest rate changes on inflation, unemployment, and mortgage supply and demand; the effect of prepayment rates on the value of our assets; our ability to access the capital markets; our ability to obtain future financing arrangements; our ability to successfully hedge the interest rate risk and prepayment risk associated with our portfolio; market trends; the federal conservatorship of the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac" and together with Fannie Mae, the "Enterprises") and related efforts, along with any changes in laws and regulations affecting the relationship between the Enterprises and the U.S. government; our ability to make distributions to our

BUSINESS

ITEM 1. BUSINESS Our Company Orchid Island Capital, Inc., a Maryland corporation ("Orchid," the "Company," "we" or "us"), is a specialty finance company that invests in residential mortgage-backed securities ("RMBS"). The principal and interest payments of these RMBS are guaranteed by the Enterprises or the Government National Mortgage Association ("Ginnie Mae" and, collectively with the Enterprises, "GSEs") and are backed primarily by single-family residential mortgage loans. We refer to these types of RMBS as 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 collateralized mortgage obligations ("CMOs") issued by the GSEs and (ii) structured Agency RMBS, such as interest only securities ("IOs"), inverse interest only securities ("IIOs") and principal only securities ("POs"), among other types of structured Agency RMBS. Our website is located at http://ir.orchidislandcapital.com. Information on our website is not part of this Report. Our common stock is listed on the NYSE and trades under the symbol "ORC." We are organized and conduct our operations to qualify to be taxed as a REIT for U.S. federal income tax purposes. As such, we are required to distribute 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding any net capital gain, annually. We generally will not be subject to U.S. federal income tax on our REIT taxable income to the extent we currently distribute our net taxable income to our stockholders and maintain our REIT qualification. It is our intention to distribute 100% of our taxable income, after application of available tax attributes, within the limits prescribed by the Internal Revenue Code of 1986, as amended (the "Code"), which may extend into the subsequent taxable year. Our Manager Bimini Capital Management, Inc. (sometimes referred to h

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View this 10-K filing on SEC EDGAR