Orchid Island Capital, Inc. (NYSE: ORC), a real estate investment trust, recently announced results of operations for the second quarter of 2021. The company reported a net loss of $ $0.17 per common share ($16.9 million).
The net loss consisted of $0.28 per common share ($27.7 million) net interest income, total expenses of $0.04 per common share or $3.7 million, and net realized and unrealized losses of $0.41 per common share ($40.8 million), on RMBS and derivative instruments, including net interest expense on interest rate swaps.
2Q2021 total dividends declared and paid were $0.195 per common share, while book value at June 20, 2021, was $4.71. Thus, the total return was 0.7% and comprised a $0.195 dividend per common share and a $0.23 increase in book value per common share, divided by beginning book value per common share.
Robert E. Cauley, Chairman, and C.E.O., said that as the economy continues its strong recovery from the pandemic, the surge in COVID cases that occurred in 1Q2021 abated quickly. At the same time, injections of the new vaccine were distributed quickly around the country. As a result, the G.D.P. is estimated to have expanded an 8.0% annualized rate. In addition, the housing market is more robust than it was before the financial crisis. Price pressures are evident as a result of the combination of constrained supply channels and high demand. As a result, the C.P.I. increased by more than 5% year over year in June as well.
As economic activity and inflation accelerated in the second quarter of 2021, market participants expected interest rates to continue rising as they had done in the first quarter. Long-term interest rates declined by 27.2 basis points in the 10-year Treasury note and 32.5 basis points in the case of the 30-year bond. Since the end of the quarter, rates have accelerated, especially as the COVID 19 Delta variant seemed to spread around the U.S. and the globe.
On the company’s progress
Commenting on the company’s progress, Robert said that the company’s portfolio retains a bias towards higher rates and the probable tapering of M.B.S. asset purchases by the federal reserve. While the leadership of the Fed insists the policy will continue to be accommodative for a while, other Fed officials have hinted at the need for tapering sooner, and the housing market’s strength seems to confirm this.