Orchid Island Capital, Inc. reported significant financial growth for the fiscal year ending December 31, 2025, with net income reaching $159 million, or $1.24 per share, compared to a net income of $37.7 million, or $0.57 per share, in 2024. This marks a substantial recovery from a net loss of $39.2 million, or $0.89 per share, in 2023. The company's interest income surged to $414 million, up from $241.6 million in the previous year, driven by a 26 basis point increase in yield on average residential mortgage-backed securities (RMBS) and a $2.9 billion increase in average RMBS holdings. Interest expense also rose to $305.7 million, reflecting a $2.7 billion increase in average borrowings.
The company’s strategic focus on Agency RMBS, which includes both traditional pass-through and structured securities, has been pivotal in its financial performance. As of December 31, 2025, Orchid's portfolio consisted of $10.6 billion in Agency RMBS, with a weighted average coupon of 5.64%. The effective duration of the portfolio was 2.513, indicating sensitivity to interest rate changes. The company experienced a notable increase in principal repayments, totaling $903.4 million, compared to $495.3 million in 2024, with a three-month average prepayment speed of 15.7%.
Operationally, Orchid Island Capital has maintained a robust liquidity position, with cash and cash equivalents amounting to $665.9 million as of year-end 2025. The company has also established borrowing facilities through repurchase agreements, with outstanding obligations of approximately $10.1 billion. The average cost of funds decreased to 4.27% in 2025 from 5.35% in 2024, reflecting favorable market conditions. The company’s leverage ratio stood at 7.4 to 1, consistent with its strategy to manage risk while maximizing returns.
Looking ahead, Orchid Island Capital anticipates continued stability in interest rates and a favorable environment for Agency RMBS, bolstered by government support for the housing market. The company plans to maintain its focus on generating attractive risk-adjusted returns through its investment strategy while navigating potential challenges such as interest rate volatility and prepayment risks. The management remains committed to distributing at least 90% of its taxable income to shareholders, in line with its REIT status, while also exploring opportunities for growth and expansion in its investment portfolio.
About Orchid Island Capital, Inc.
Orchid Island Capital, Inc. is a Maryland-based REIT that invests in residential mortgage-backed securities (RMBS), primarily agency-backed pass-through and structured securities. It focuses on generating attractive long-term returns through strategic asset allocation, leveraging, and risk management. The company relies on external management, maintains a focus on interest rate and prepayment risks, and distributes at least 90% of taxable income to shareholders.
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