Orchid Island Capital Announces One-for-five Reverse Stock Split, August 2022 Monthly Dividend and July 31, 2022 RMBS Portfolio Characteristics

Rhea-AI Summary

Orchid Island Capital, Inc. (NYSE: ORC) announced a one-for-five reverse stock split effective August 30, 2022, converting every five shares into one, with shares trading split-adjusted from August 31, 2022. Additionally, the company declared a monthly cash dividend of $0.16 per share for August, payable on September 28, 2022, to holders of record as of August 31, 2022. The estimated book value per share ranges from $3.10 to $3.12, reflecting an increase of approximately 8.0% to 8.7% compared to June 30, 2022. The company will announce its next dividend on September 12, 2022.

Positive

• Monthly dividend of $0.16 per share reflects commitment to shareholders.
• Estimated book value per share increased by approximately 8.0% to 8.7%.

Negative

• No minimum distribution payment level established, raising concerns about future dividends.

•  One-for-five reverse stock split of the outstanding shares of Common Stock
• August 2022 Monthly Dividend of $0.16 Per Share of Common Stock
• RMBS Portfolio Characteristics as of July 31, 2022
• Next Dividend Announcement Expected September 12, 2022

VERO BEACH, Fla.--(BUSINESS WIRE)-- Orchid Island Capital, Inc. (the “Company”) (NYSE: ORC) announced today that the Board of Directors of the Company (the “Board”) approved a reverse stock split of the outstanding shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at a ratio of one-for-five (the “Reverse Stock Split”). The Reverse Stock Split is scheduled to take effect at approximately 5:00 p.m. Eastern Time on August 30, 2022 (the “Effective Time”). At the Effective Time, every five issued and outstanding shares of Common Stock will be converted into one share of Common Stock, with a proportionate reduction in the Company’s authorized shares of Common Stock and preferred stock. The par value of each share of Common Stock will remain unchanged. The shares are expected to begin trading on a split-adjusted basis at market open on August 31, 2022. Trading in the Common Stock will continue on the NYSE under the symbol “ORC” but the security will be assigned a new CUSIP number.

No fractional shares will be issued in connection with the Reverse Stock Split. Instead, each stockholder that otherwise would receive fractional shares will be entitled to receive, in lieu of such fractional shares, cash in an amount determined on the basis of the closing price of the Common Stock on the NYSE on August 30, 2022. The Reverse Stock Split will apply to all of the outstanding shares of Common Stock as of the Effective Time. Stockholders of record will be receiving information from Continental Stock Transfer & Trust Company, the Company’s transfer agent, regarding their stock ownership following the Reverse Stock Split and cash in lieu of fractional share payments, if applicable. Stockholders who hold their shares in brokerage accounts or in “street name” are not required to take any action in connection with the Reverse Stock Split.

The Company also announced today that the Board declared a monthly cash dividend for the month of August 2022 (the “August Dividend”). The dividend of $0.16 per share will be paid September 28, 2022, to holders of record of Common Stock on August 31, 2022 (the “Record Date”), with an ex-dividend date of August 30, 2022. Because the Record Date for the August Dividend is after the Effective Time of the Reverse Stock Split, the August Dividend will reflect the Reverse Stock Split and will be paid on a split-adjusted basis. The August Dividend equates to a dividend of $0.032 per share of Common Stock on a pre-split basis. The Company plans on announcing its next common stock dividend on September 12, 2022.

The Company estimates book value per share as of August 16, 2022 to be approximately $3.10 to $3.12 per share without giving effect to the Reverse Stock Split, an increase of approximately 8.0% to 8.7% from the book value per share at June 30, 2022 of $2.87. The estimated book value per share includes a deduction for the Company’s July 2022 dividend of $0.045 per share of Common Stock that will be paid on August 28, 2022, which was declared on July 13, 2022 with a July 29, 2022 record date.

The estimated book value per share range is unaudited and has not been verified or reviewed by any third party. The Company undertakes no obligation to update or revise its estimated book value per share.

The Company intends to make regular monthly cash distributions to its holders of common stock. In order to qualify as a real estate investment trust (“REIT”), the Company must distribute annually to its stockholders an amount at least equal to 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain. The Company will be subject to income tax on taxable income that is not distributed and to an excise tax to the extent that a certain percentage of its taxable income is not distributed by specified dates. The Company has not established a minimum distribution payment level and is not assured of its ability to make distributions to stockholders in the future.

As of August 17, 2022, July 31, 2022 and June 30, 2022, the Company had 176,251,193 shares of common stock outstanding.

RMBS Portfolio Characteristics

Details of the RMBS portfolio as of July 31, 2022 are presented below. These figures are preliminary and subject to change. The information contained herein is an intra-quarter update created by the Company based upon information that the Company believes is accurate:

• RMBS Valuation Characteristics
• RMBS Assets by Agency

• Investment Company Act of 1940 (Whole Pool) Test Results
• Repurchase Agreement Exposure by Counterparty
• RMBS Risk Measures

About Orchid Island Capital, Inc.

Orchid Island Capital, Inc. is a specialty finance company that invests on a leveraged basis in 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 issued by Fannie Mae, Freddie Mac or Ginnie Mae, and (ii) structured Agency RMBS. The Company is managed by Bimini Advisors, LLC, a registered investment adviser with the Securities and Exchange Commission.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements include, but are not limited to, statements about the Reverse Stock Split and the Company’s distributions. These forward-looking statements are based upon Orchid Island Capital, Inc.’s present expectations, but these statements are not guaranteed to occur. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

RMBS Valuation Characteristics
($ in thousands)
																									Realized			Realized
																									Jul 2022			May - Jul				Modeled				Modeled
															Net								Weighted		CPR			2022 CPR				Interest				Interest
									%						Weighted								Average		(1-Month)			(3-Month)				Rate				Rate
			Current				Fair		of				Current		Average								Maturity		(Reported			(Reported				Sensitivity				Sensitivity
Type			Face				Value		Portfolio				Price		Coupon			GWAC			Age		(Months)		in Aug)			in Aug)				(-50 BPS)(1)				(+50 BPS)(1)
Pass Through RMBS
15yr 4.0		$	414			$	424		0.01	%		$	102.54		4.00	%		4.54	%		51		129		0.8	%		0.8	%		$	7			$	(7	)
15yr TBA			100,000				101,680		2.43	%			101.68		4.00	%																1,130				(1,350	)
15yr Total			100,414				102,104		2.44	%			101.68		4.00	%		4.54	%		51		129		0.8	%		0.8	%			1,137				(1,357	)
30yr 3.0			3,440,860				3,340,590		79.95	%			97.09		3.00	%		3.46	%		16		341		5.7	%		7.1	%			97,835				(104,728	)
30yr 3.5			224,806				226,608		5.42	%			100.80		3.50	%		4.03	%		29		322		12.0	%		12.9	%			5,778				(6,132	)
30yr 4.0			281,892				285,531		6.83	%			101.29		4.00	%		4.72	%		13		346		7.5	%		7.3	%			5,091				(6,108	)
30yr 5.0			55,514				57,213		1.37	%			103.06		5.00	%		5.92	%		1		360		0.1	%		11.7	%			506				(606	)
30yr Total			4,003,072				3,909,942		93.58	%			97.67		3.13	%		3.62	%		16		341		6.1	%		7.4	%			109,210				(117,574	)
Total Pass Through RMBS			4,103,486				4,012,046		96.02	%			97.77		3.15	%		3.62	%		16		341		6.1	%		7.4	%			110,347				(118,931	)
Structured RMBS
IO 20yr 3.0			325,562				37,672		0.90	%			11.57		3.00	%		3.69	%		73		160		10.4	%		11.7	%			(857	)			564
IO 20yr 4.0			11,745				1,408		0.03	%			11.99		4.00	%		4.57	%		127		106		11.9	%		12.5	%			(3	)			-
IO 30yr 3.0			41,142				6,292		0.15	%			15.29		3.00	%		3.69	%		37		316		17.1	%		13.6	%			(312	)			236
IO 30yr 3.5			497,027				93,105		2.23	%			18.73		3.50	%		4.01	%		56		295		9.6	%		11.3	%			(3,383	)			2,474
IO 30yr 4.0			145,236				25,682		0.61	%			17.68		4.00	%		4.56	%		75		276		12.8	%		16.9	%			(1,326	)			1,177
IO 30yr 4.5			4,144				720		0.02	%			17.37		4.50	%		4.99	%		145		202		9.1	%		11.6	%			(27	)			23
IO 30yr 5.0			2,274				400		0.01	%			17.57		5.00	%		5.36	%		145		202		7.4	%		14.9	%			(18	)			15
IO Total			1,027,130				165,279		3.96	%			16.09		3.41	%		3.99	%		64		248		10.6	%		12.4	%			(5,926	)			4,489
IIO 30yr 4.0			34,425				911		0.02	%			2.65		2.38	%		4.40	%		59		292		4.1	%		4.9	%			168				(173	)
Total Structured RMBS			1,061,555				166,190		3.98	%			15.66		3.37	%		4.00	%		64		249		10.4	%		12.1	%			(5,758	)			4,316
Total Mortgage Assets		$	5,165,041			$	4,178,236		100.00	%					3.19	%		3.70	%		26		322		7.0	%		8.4	%		$	104,589			$	(114,615	)
																																Interest				Interest
			Average				Hedge																									Rate				Rate
			Notional				Period																									Sensitivity				Sensitivity
Hedge			Balance				End																									(-50 BPS)(1)				(+50 BPS)(1)
5-Year Treasury Future(2)		$	(1,200,500	)			Sep-2022																								$	(27,570	)		$	27,004
10-Year Treasury Ultra(3)			(274,500	)			Sep-2022																									(15,450	)			14,714
Swaps			(1,400,000	)			Jul-2028																									(37,431	)			36,138
TBA			(175,000	)			Sep-2022																									(5,224	)			5,609
Swaptions			(777,800	)			Mar-2023																									(10,964	)			11,462
Hedge Total		$	(3,827,800	)																											$	(96,639	)		$	94,927
Rate Shock Grand Total																															$	7,950			$	(19,688	)

(1)		Modeled results from Citigroup Global Markets Inc. Yield Book. Interest rate shocks assume instantaneous parallel shifts and horizon prices are calculated assuming constant LIBOR option-adjusted spreads. These results are for illustrative purposes only and actual results may differ materially.
(2)		Five-year Treasury futures contracts were valued at prices of $113.73 at July 31, 2022. The market value of the short position was $1,365.3 million.
(3)		Ten-year Treasury Ultra futures contracts were valued at prices of $131.25 at July 31, 2022. The market value of the short position was $360.3 million.

RMBS Assets by Agency								Investment Company Act of 1940 Whole Pool Test
($ in thousands)								($ in thousands)
					Percentage							Percentage
			Fair		of						Fair	of
Asset Category			Value		Portfolio			Asset Category			Value	Portfolio
As of July 31, 2022								As of July 31, 2022
Fannie Mae		$	2,688,405		65.9	%		Non-Whole Pool Assets		$	229,726	5.6	%
Freddie Mac			1,388,151		34.1	%		Whole Pool Assets			3,846,830	94.4	%
Total Mortgage Assets		$	4,076,556		100.0	%		Total Mortgage Assets		$	4,076,556	100.0	%

Borrowings By Counterparty
($ in thousands)
								Weighted			Weighted
					% of			Average			Average
			Total		Total			Repo			Maturity		Longest
As of July 31, 2022			Borrowings		Debt			Rate			in Days		Maturity
J.P. Morgan Securities LLC		$	357,502		9.4	%		1.52	%		11		8/25/2022
Mirae Asset Securities (USA) Inc.			344,846		9.1	%		1.45	%		57		1/30/2023
Mitsubishi UFJ Securities (USA), Inc.			340,537		9.0	%		2.31	%		24		8/29/2022
ABN AMRO Bank N.V.			317,886		8.4	%		2.07	%		21		9/14/2022
Merrill Lynch, Pierce, Fenner & Smith			308,322		8.1	%		2.11	%		16		8/26/2022
Cantor Fitzgerald & Co.			251,906		6.6	%		1.99	%		21		8/26/2022
ED&F Man Capital Markets Inc.			238,344		6.3	%		2.30	%		40		9/22/2022
RBC Capital Markets, LLC			222,173		5.9	%		2.23	%		28		9/2/2022
Santander Bank, N.A.			174,926		4.6	%		2.36	%		27		8/29/2022
Goldman Sachs & Co. LLC			161,905		4.3	%		2.36	%		27		8/29/2022
ING Financial Markets LLC			151,238		4.0	%		2.38	%		53		9/22/2022
Daiwa Capital Markets America, Inc.			148,494		3.9	%		2.36	%		47		9/16/2022
ASL Capital Markets Inc.			138,479		3.7	%		2.21	%		17		8/17/2022
Wells Fargo Bank, N.A.			118,656		3.1	%		2.14	%		21		9/6/2022
Citigroup Global Markets Inc.			117,951		3.1	%		2.23	%		21		8/24/2022
BMO Capital Markets Corp.			112,680		3.0	%		2.41	%		30		8/30/2022
Austin Atlantic Asset Management Co.			85,731		2.3	%		2.22	%		3		8/3/2022
StoneX Financial Inc.			78,109		2.1	%		2.23	%		20		8/30/2022
South Street Securities, LLC			60,342		1.6	%		2.21	%		18		8/18/2022
Nomura Securities International, Inc.			35,969		0.9	%		2.27	%		22		8/22/2022
Lucid Cash Fund USG, LLC			23,690		0.6	%		2.00	%		11		8/11/2022
Total Borrowings		$	3,789,686		100.0	%		2.09	%		27		1/30/2023

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220817005568/en/

Orchid Island Capital, Inc.

Robert E. Cauley

Telephone: (772) 231-1400

Source: Orchid Island Capital, Inc.

FAQ

What is the reverse stock split ratio for Orchid Island Capital (ORC)?

The reverse stock split for Orchid Island Capital is one-for-five.

When will the reverse stock split for ORC take effect?

The reverse stock split will take effect on August 30, 2022.

What is the dividend amount and payment date for Orchid Island Capital in September 2022?

Orchid Island Capital has declared a $0.16 per share dividend payable on September 28, 2022.

How does the reverse stock split affect the dividend payment for shareholders?

The August dividend will be split-adjusted, resulting in $0.032 per share on a pre-split basis.

What happens to shareholders holding fractional shares of ORC after the reverse stock split?

Shareholders will receive cash for any fractional shares instead of fractional shares.