Orchid Island Capital Swings to $20.0M Net Loss in Q1 2026 as MBS Portfolio Depreciates

Orchid Island Capital, Inc. (NYSE: ORC), a real estate investment trust specializing in mortgage-backed securities, reported a net loss of $19.96 million for the three months ended March 31, 2026, a sharp reversal from net income of $17.12 million in the first quarter of 2025. The company's comprehensive net loss reached $20.23 million for the period. Read more earnings reports.

The loss was driven primarily by unrealized losses of $115.97 million on the company's mortgage-backed securities portfolio, compared to unrealized gains of $77.59 million in the year-ago quarter. Net interest income climbed to $57.06 million from $19.71 million, reflecting higher interest income of $157.84 million versus $81.09 million a year earlier.

Interest expense nearly doubled to $100.78 million from $61.38 million as the company expanded its borrowing base. Repurchase agreement liabilities — the company's primary funding source — rose to $10.86 billion at March 31, 2026, up from $10.12 billion at year-end 2025. The weighted average borrowing rate on those agreements declined to 3.79% from 3.98%.

Gains on derivative and other hedging instruments totaled $46.31 million, a swing from losses of $74.66 million in the first quarter of 2025. The company uses interest rate swaps, U.S. Treasury futures, and SOFR futures to hedge interest rate risk. Realized gains on mortgage-backed securities sales were minimal at $39,000, compared to a $1.30 million loss in the prior-year period.

Total expenses increased to $7.40 million from $4.23 million. Management fees rose to $3.99 million from $2.75 million, while incentive compensation swung to a charge of $1.42 million from a reversal of $207,000. Directors' fees and liability insurance costs declined to $312,000 from $338,000.

The company declared dividends of $0.36 per share, or $68.98 million in aggregate, unchanged from the prior-year quarter despite a substantially larger share count. Basic and diluted net loss per share was $0.11 on a weighted average of 189.26 million shares outstanding, compared to earnings of $0.18 per share on 95.17 million shares in the first quarter of 2025.

Orchid Island raised $107.77 million through its at-the-market offering program during the quarter, issuing 14.56 million shares at a weighted average price of $7.40 per share. The company had 196.70 million shares outstanding at March 31, 2026, up from 181.99 million at year-end and 82.62 million a year earlier.

Total assets expanded to $12.67 billion from $11.68 billion at December 31, 2025. Mortgage-backed securities at fair value — the bulk of assets — increased to $11.34 billion from $10.63 billion. The portfolio consisted almost entirely of agency pass-through residential mortgage-backed securities pledged under repurchase agreements.

Stockholders' equity rose to $1.39 billion from $1.37 billion at year-end, reflecting the equity raise partially offset by the quarterly loss and dividend payments. Book value per share declined modestly due to the net loss and share issuance.

Cash flows from operating activities totaled $48.62 million, up from $25.78 million in the first quarter of 2025. The company used $802.24 million in investing activities, primarily for mortgage-backed securities purchases of $1.26 billion, partially offset by principal repayments of $404.72 million and sales proceeds of $25.01 million. Financing activities generated $789.20 million, driven by net proceeds from repurchase agreements of $749.26 million and equity issuance proceeds.