Q3 2024 Orchid Island Capital Inc Earnings Call

October 25, 2024

Page 10 shows you this.

I don't.

Oh my.

Mike.

And again this.

And again this last Friday.

Right.

We would update the numbers would be.

The numbers would be closer to 101.

Pardon me.

These.

I don't see it.

It being supportive of a big rally.

That's kind of what's happened in the market and I'll, just kind of turned to what we've done how the portfolio has been repositioned and how we've.

Positioning ourselves going forward.

We had the fed pivot we've been waiting for this for a long time, we finally got it not so much sure how much we're going to get additional fed easing may not be much that being said, we did raise $110 million through our ATM in this quarter of that represents a 20% increase in our share count and by deploying those proceeds.

Speaker Change: We grew our portfolio likewise by about 20%, so a pretty substantial growth for the quarter.

Speaker Change: And the way that we did that was basically acquire higher coupon mortgages, we've talked about in the past probably wanted to build out a barbell portfolio now we have fully done. So in fact now the portfolio has a very much up in coupon bias. So the proceeds were deployed into 665, 7% coupons.

One thing being said is when we deploy these assets most of this was front loaded in the quarter for them to a large extent.

Speaker Change: Hedge those with predominantly longer duration swaps and 10 years and as a result with the rally during the quarter.

Speaker Change: Kind of underperformed and Thats just the result of the fact that with the rally in rates, our hedges, which were as I said longer tenor swaps combined with assets that were shorter duration assets, which rallied im sorry, which widened during the quarter as a result of prepay fears.

Speaker Change: That didn't do as well during the quarter that being said since quarter end and rates selling off its probably allowed us to outperform a little bit. So I'll say more about that in a moment. So thats basically what happened with respect to the assets.

Speaker Change: Page 16, just shows the Vista Pictures.

We've added up with coupons now you can clearly see on the far left if there is kind of a bias to upper coupons, but that being said we have retained a substantial holding of discount securities, which have great convexity characteristics in the event the market does rally back. So the bar Bell is still in place. It's just has another coupon bias.

Speaker Change: Now with respect to funding.

Speaker Change: One thing is clear with the fed ease we had an immediate benefit of that it was roughly 30 basis points, which was felt in September but thats just more of an artifact of the fact that.

Speaker Change: We posted role and so we don't get the immediate 50 basis points, but it has allowed our funding cost to drop they had been remarkably stable as you can imagine for some time.

Speaker Change: The data that's on this chart appears somewhat misleading I don't want to dwell on this but it says that for instance, our average repo rate was $5 62 versus $5 34, that's very misleading just an artifact of how we do this as I mentioned when we grew the portfolio. This quarter. It was tended to be more front loaded. So we had that extra interest expense.

Speaker Change: Load if you will for the quarter.

Speaker Change: But the denominator in the calculation, it's just the average balance and so the average balances kind of low and it makes it look like our funding cost is higher that's really misleading.

Speaker Change: I think we have a period of <unk>.

Slower growth or no growth those numbers will normalize and what youll see is that our repo funding costs are lower than they were prior quarters.

Speaker Change: Roughly 40 basis points, but I do have to make.

With respect to what we are seeing in the funding markets and that is the fact that over quarter end month and year end. There has been some expansion in the spread so for instance, when we entered into a repo thats a spread to fed funds spread the sofa.

Speaker Change: And those do <unk>.

Speaker Change: Expand over those periods. So there is evidence that.

Speaker Change: Funding pressures are emerging from.

Speaker Change: From what we hear from the Federal reserve and various members of the board they don't seem to be concerned about that but we do hear from the funding gas across the street.

There is clear evidence that starting to happen.

Speaker Change: Nothing too acute yet, but its definitely happening and it does offset some of the benefit of the fed cuts at least over those periods. So on average it's going to eat into the 50 basis point easing or whatever additional reason, we get by some amount.

Speaker Change: The exact extent of that is remains to be seen but it's definitely out there.

Speaker Change: And the fed is doing Qt.

So there is being liquidity drain from the system dealer balance sheets are quite full so we will see how that plays out something worth watching.

Speaker Change: With respect to our hedge position is really not much change we continue to be heavily reliant on swaps. They cover a very high percent of our funding liabilities and the combination of that with the migration up in coupon, which tend to be less rate sensitive securities.

Speaker Change: The portfolio is.

Slightly more defensive than it was at the end of the second quarter slot.

Speaker Change: Slide 10, just shows you the details of our hedge is one thing we have done I will point out.

Speaker Change: Is in the top left our sulfur futures.

Speaker Change: We've been opportunistic with respect to adding these whenever we've gotten really.

Speaker Change: Bad economic data, which caused the market to rally in the market to price it more fed easing we put a bunch of those in to try to lock that in.

Speaker Change: And so hopefully that has been bearish.

Speaker Change: Helps us in the future by kind of locking in some lower funding cost because the market has generally been very aggressive at pricing and fed eases and has been frustrated when they don't appear.

Speaker Change: As expected.

Speaker Change: Otherwise, we did move some of our five year future shorts into a five year swap in combination of that and so for future shorts and the rest of the expansion, which again is a product of the growth in the portfolio. We did add some seven year swap positions another $100 million.

Speaker Change: Slide 20, just shows you expected returns across the coupon stack. This is something we're always looking at I'm not going to say anything about it other than just pointed out that we have at the shape of our.

Speaker Change: Decision, making.

Speaker Change: Slide 21 shows you our interest rate sensitivity and you can see based on this that there is a.

Speaker Change: And a defensive bias of the portfolio at the moment just as a result of the things I just mentioned.

Speaker Change: And you can see that we do a little.

Speaker Change: Better in a rally or sell off which is.

Speaker Change: Not typical less in a rally and that's just because of the positioning.

Speaker Change: Speeds.

Speaker Change: We did take on a lot of our higher coupon exposure.

But by selecting kind of lower quality spec pools.

Speaker Change: And taken advantage of the newness of the securities and the fact that they don't tend to prepay rapidly our speeds went that high our 7% series you can see how to high print in August, but the three months speeds versus prior quarter has not been elevated and then when you consider that we've seen rate sell off and we're heading into the summer.

Speaker Change: Or the seasonal slowdown it seems that these.

Speaker Change: Securities that we had.

Speaker Change: Likely to experience slower speeds, which means they are going to have better carry.

Speaker Change: So the combination of higher coupons in the portfolio and higher coupons that are prepaying slower should be beneficial for the yields that we realize and as I mentioned, we have a slight improvement in our funding costs. So there has been some benefit to our NIM that we expect to realize going forward modest but some.

Speaker Change: So just kind of summarize looking back looking forward as I said, we did get the pivot.

Speaker Change: But may not be what the market was hoping for it may not be the extent of easing that we had hoped or expected not too long ago that being said, we have continued to both employ our barbell strategy, but now with them up in coupon bias, which I think is well suited for the market conditions today.

Speaker Change: The market for arguably two years now is continued overestimate the weakness in the economy.

Speaker Change: And the extent and timing of fed rate cuts.

Speaker Change: We really just haven't seen those play out.

Speaker Change: The fourth quarter, so far as a result of these developments in mortgage spreads have given back a.

Speaker Change: Fair amount of what we gave in the third quarter, but that being said, we're very comfortable with our positioning and our hedge structure.

Speaker Change: We think we have some modest NIM expansion here and as I said, there is a lot of uncertainty in terms of where we go from here, but to the extent that rates do continue to back up we do have a very high yielding portfolio.

Speaker Change: We might be able to continue to maintain that yield therefore dividend level with potentially less leverage. If this continues just because of that NIM expansion. So.

Speaker Change: That's kind of like it for the quarter Thats, how we see things evolving.

Speaker Change: Sure.

Speaker Change: With that I think we can turn the call over to questions operator.

Speaker Change: Thank you at this time, we will conduct a question and answer session to ask a question you will need to press star one on your telephone and we've been named to be announce to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Jason Weaver of Jones trading your line is now open.

Jason Weaver: Hey, good morning, Thanks for the time.

First Robert.

Jason Weaver: You touched on this during your remarks, but taking into account. The 30 years that you bought in the in the sixes and up into the Sevens in the short TBA and low coupons.

Jason Weaver: Does this reflect a view that you expect little.

Jason Weaver: A little relief and benchmark mortgage rates over the next 12 months and does it change the.

<unk> ability of the barbell strategy at all going forward.

Speaker Change: Well, we do have a bias to a higher coupon.

Speaker Change: And so we don't it's hard to have a firm view on rates going forward just because of the data just to be sold volatile as we saw in September you can get whipsawed.

Speaker Change: Let's say one thing we think though is that if you look at where kind of where they can book from here. They are certainly prefer them to go higher so to the extent the economy stronger inflation reemerge as deficits keep growing that can go higher I don't see the potential for rates to go the same magnitude lower let's say that we're totally missed.

Speaker Change: And the economy is going to go into a recession.

Speaker Change: You're going to cut to the funding level is going to go to neutral whatever that is I mean, we don't even know what that is if you look at the dot plot that could be two and a half to three and a half let's say it's three.

Speaker Change: Cut to three where do you think the rest of the curve shakes out I mean, the tenure in that scenario should be much less than four.

Speaker Change: We're little over for now so the outlook going forward I think is kind of asymmetric. So thats why we like this kind of up in coupon bias, but because of the uncertainty we don't want to just throw in the Taiwan lower coupons, because we saw in the third quarter you can have a rally in the higher coupons will underperform.

Speaker Change: Yes, the lower coupon strategy is.

Speaker Change: No.

Speaker Change: Nothing to write home about during times when spreads are relatively tight.

Speaker Change: They do have lower yields lower carrying for the portfolio, but when we get environments like now where.

Speaker Change: I'd like to look at.

Speaker Change: Mortgage spreads versus current coupon mortgages versus seven or 10 year swaps and we're getting back to the wides of the year and so.

Speaker Change: Now is the time, when we really like to have those on in the event.

Speaker Change: Rates turnaround and rally and spreads tightened.

Speaker Change: We would expect the most spread duration positivity out of those where the higher coupons are going to underperform again into that rally so.

Speaker Change: We have intentionally had a sort of more.

Speaker Change: Conservative bias I guess.

Speaker Change: It felt like the economy is very strong as Bob alluded to earlier, we've opportunistically tried to lock in.

The aggressive amount of fed rate at one point I think we were pricing in six or seven fed cuts over the next.

Speaker Change: Nine to 12 months.

Speaker Change: <unk>.

Speaker Change: We're pretty we're pretty opportunistic about locking those in the DSO for futures.

Speaker Change: And so we like our positioning it wasn't looking all that great for us through the third quarter, but now rates have turned around and sold off and widen and.

Speaker Change: And so we feel like the strategy is continuing to work.

Speaker Change: Got it that's helpful color and then on the same dimension on the other side.

Speaker Change: Looking at the swap position it looks like your hedge ratio actually came down a bit even though dollar duration is not that much changed coming into September any color you can give us there regarding sort of risk appetite into year end around the election.

Comments about.

Speaker Change: You made some comments around expecting volatility ahead in the next few months.

Speaker Change: Yes, well, we did add to this.

Speaker Change: We grew the portfolio by 20%, but our swap book positions did not grow by that amount.

Speaker Change: That's why we added to the sulfur futures trying to lock in some of that funding we've seen a lot of movement in swap spreads on the front end of the curve.

Speaker Change: Which kind of offsets the effectiveness of those hedges.

Speaker Change: And volatility I would it's really hard to see that diagnostic anytime soon and as long as that stays elevated mortgages are going to not perform well.

Speaker Change: Going forward, it's hard to have a lot of conviction in anything.

Speaker Change: We were at a conference earlier this summer and Kevin Wash was speaking as you may recall it was a fed governor quite a bright line.

Speaker Change: He made the comment about economic data at his point was that Dana has no business, having any numbers to the right of the decimal point in other words, what he meant was very inexact science and he says I know every one of you guys out there in this room.

Speaker Change: Breath for the next nonfarm payroll number we said.

Speaker Change: They're not really good at this stuff and it's probably going to get revised multiple times and.

Speaker Change: It's very much economics has to be an exact science.

Speaker Change: It's really just in this year, we've seen so much volatility in data data being revised Gd I gross domestic investment revised throughout the savings rate in revised up by 200 basis points just causes a lot of volatility and we have a data dependent fit. So we have a fed that's making all the decisions based on data it's.

Speaker Change: The volatile and subject to revision so it's really hard to see volatility remaining low and then the election.

Speaker Change: Chaotic to say, the least who knows it's a pass up we don't know who's going to win with them what is going to control the house or the Senate, we don't even know when they're going to finalize the results.

Speaker Change: So it could be bumpy for a while with respect to the profile of the portfolio I think that just reflects a little we try to have a.

Speaker Change: We tried to not be myopic about quarter to quarters.

Speaker Change: Have a little bit of a house view and lean one direction or another we were leading to sort of that.

Speaker Change: We were very much in the camp of rates seem to have come down really fast and.

Speaker Change: But at the same time.

Speaker Change: We have to make adjustments and delta hedge as needed.

Speaker Change: When hedge ratios were coming way down so we did trim some hedges.

Speaker Change: Into the rally and we haven't reversed course quite yet so.

We're just we're just really trying to fine tune more than anything I wouldn't say, it's reflective of any change in our core position but.

Speaker Change: Mortgages start getting shorter whenever we have some big rallies and we've got to make sure we don't get too far off sides with respect to how the portfolio is hedged.

Speaker Change: Got it thank you for that and congrats on the quarter.

Speaker Change: Thank you.

Speaker Change: Thank you our next question.

Our next question comes from the line of mechanical from Ryan of JMP. Your line is now open.

Speaker Change: Hey, Good morning, guys Hope I hope everybody is doing well.

Speaker Change: Good morning, Barry.

Speaker Change: Good morning. Your recent statement just now going forward, it's hard to have a lot of conviction in anything I think it can be applied to a lot of things. So I think that's very much on point there.

Speaker Change: If I.

Speaker Change: If I can start with just an update on book value. I know you guys mentioned that it might be he might have outperformed a bit.

Speaker Change: Since the end of the quarter.

Speaker Change: Yep.

Speaker Change: We calculate and estimate everyday and as of yesterday, we were three 7% quarter to date.

Speaker Change: I'm sorry.

Speaker Change: Yeah.

Speaker Change: No no down three 7%.

Speaker Change: Got you okay.

Speaker Change: Most of that has occurred in the last five or six days.

Got it thank you britta spread widening in the.

Speaker Change: Just in the mortgage market has overwhelmed the positive effect of of our slight.

Speaker Change: Duration bias.

Speaker Change: Right right.

Just looking at your prepared remarks in the press release.

Speaker Change: The statement here that you continue to view their steepening of the yield curve.

Speaker Change: As the greatest risks in the portfolio if I could just maybe drill down into your thoughts around that if that situation were to come to pass how would that affect.

Speaker Change: Your portfolio construction as well as the hedge portfolio.

Speaker Change: Well I think the.

Speaker Change: As I said, the bare steepening and extension of mortgages, especially the higher coupons, we have a higher coupon bias. So the fear would be if you get a big bear steepening those premiums or no not even big premiums to three point premiums all of a sudden start drifting down the price range that become discounts potentially so they could extend that is why the hedges.

Speaker Change: A lot of seven and 10 year swap hedges, but I also think with the modest.

The improvement we've seen in our NIM, we could try to take the leverage down some and maintain that yield and we already we have one of the highest yields in the space as you know so it's not like we need to stretch to expand that we have no reason to do that.

Speaker Change: And especially given all the uncertainty that's out there. So if we could pay the same dividend yield and have less leverage that would be desirable, especially if we do see that bear steepening.

Speaker Change: Our rally as we mentioned.

<unk>.

Speaker Change: The reason the market rally was more in anticipation of something that didn't happen.

Speaker Change: Had that happened like let's say the next three months of data were horrible in the fed we're going to ease aggressively there, but that's going to change our outlook and positioning, but we didn't see that and so we're that's why we still see the risk of a bare steepening as being the most severe.

Speaker Change: Got you and just kind of piggybacking on that leverage.

Speaker Change: Question economic leverage seven six at the end of the quarter.

Speaker Change: With respect to your comments, just now maybe drifting into a six handle.

Speaker Change: <unk> like that arose.

Speaker Change: Yes, the way we've done that in the past generally not so much outright selling it's usually a combination of adding TBA shorts and or not invest in paydowns just to let the portfolio shrink a little bit.

Speaker Change: Depending on how it played out if it was sudden and violent diffusion nothing you can do with just the owner before you know it but if it is a slow grind higher that's how we would approach it.

Speaker Change: We have some cushion with the particularly in the 665% 7% buckets.

Speaker Change: Think that those will continue to do well.

Speaker Change: It's been a little bit frustrating for us because those those.

Speaker Change: Coupons underperformed into the rally of the third quarter and have not.

Speaker Change: Not really.

Speaker Change: Reversed course into the sell off I think that's just.

Speaker Change: Due to the uptick in volatility and uncertainty so we.

Speaker Change: Still like the strategy, even though those particular coupons aren't really ripping like we would have expected them to into a sell off.

Think that there is.

Good chance so we get past some of these we get some of some of this uncertainty behind us and we will start to see those firm up if rates stay at current levels. So those will be great assets to own the carrier will be fantastic on them.

Speaker Change: What Bob was alluding to this bear steepen or.

Being a.

Speaker Change: The worst case sort of.

Speaker Change: For the portfolio is one where we blow through even.

Speaker Change: Going back towards 5% on turns.

Speaker Change: It's got it's going to be a substantial move so we feel like we have.

Speaker Change: Adequate time to prepare for that it's going to it's going to be probably a grind as opposed to.

Speaker Change: Postal quick shock so.

Speaker Change: It will be.

Speaker Change: Watching and then reacting.

Speaker Change: Alright.

Speaker Change: And interesting times, Thank you gentlemen, and good luck.

Speaker Change: Thanks Mikael.

Thank you gentlemen for next question.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Jason Stewart of Janney Montgomery Scott. Your line is now open.

Jason Stewart: Alright, Thanks, guys Clare.

Jason Stewart: Clarification on repo.

Jason Stewart: How you doing Bob clarification on repo cost at quarter end.

Jason Stewart: 524 number with an average could you give us at quarter end or was that did I misunderstand that.

Speaker Change: The quarter end App the actual average as of that date was $5 24.

Speaker Change: And then would have been coming down.

Speaker Change: It's just the.

Speaker Change: We grew so fast and the growth was so frontloaded the way we present that number in there as Johnny you just take the total interest expense divided by the average balance and since the balance grew by 20% for the quarter I think the average repo balance was a little under seven eight or $4 8 billion, but in fact, our <unk>.

Speaker Change: We'll balance was north of $4 8 billion at the end of July.

Speaker Change: So the interest load was for more of a quarter. So it makes it look like our average repo expenses higher but it's been stable.

Speaker Change: Had moved for months and months. So we were running somewhere in the five five range.

Speaker Change: Then it came down about 30 basis points at September.

Speaker Change: We did have as I mentioned funding spreads are elevated over quarter end, but we'll get more of that in October and November and then we'll see what year and brings.

Speaker Change: But there is so it's down 30 to 40 basis points, depending on the day you look at it.

Speaker Change: Consistent with fed easing 50, and spreads on average a little higher than they had been because of what appears to be some tightness in funding.

Speaker Change: We'll see how that plays out as I mentioned when.

Speaker Change: When you speak.

Speaker Change: The head of the San Francisco Fred.

I guess, Mary Logan, who used to run the Soma das and her.

Speaker Change: Our mind that there are no issues and that they should ignore any.

Speaker Change: Ill talk from the markets that these things exist and that Theyre going to continue forehead, Steve with Qt.

Speaker Change: That's not consistent with <unk>.

Speaker Change: Here from people, who live in the repo funding markets day to day out Theres balance sheet constraints that are out there.

Speaker Change: Yeah.

Speaker Change: Just to give some context to that.

Speaker Change: Whereas we were maybe funding it.

Speaker Change: Anyway of 14 to 16 over sofa.

Speaker Change: For several several months.

Speaker Change: That's gapped out and maybe is pushing 18 or 20 now so we'll.

Speaker Change: We'll see.

Speaker Change: Of course, our are watching and it could those.

Speaker Change: Those things could change, especially coming into year end, but.

A handful of basis points, right, now, which is material, but where where our book is resetting is basically.

Speaker Change: Hi, very high fours low fives.

Speaker Change: The new sort of.

Speaker Change: Fed funds levels R. R.

Are going to impact our rolling repo positions and they just give you some added color on that like let's say this week.

Speaker Change: The market expects a pretty high probability cut in November and less so in December but theres a lot of uncertainty around that right. So if you look at the <unk>.

Speaker Change: Fed fund futures curve through the balance of the year, it's consistent with what you see on the work stream right. So youre going to have something north of one <unk>.

But you also know for instance that there could be some year end funding pressure, so what would be a three month.

Speaker Change: Repo today.

Speaker Change: It should factor in a combination of market pricing for certain eases.

And also maybe some funding pressure over a year end and if you go out and talk to dealers you can get a quite a wide range of levels that they're going to offer you all reflecting a combination of that uncertainty in their bias.

Speaker Change: That can be quite wide and we got that saw that as low as 488 in north of five.

Speaker Change: So that channel those are that's what we're seeing.

Speaker Change: Okay. Now 100 that was the Hunter you got it on the head there. So 18 to 20 over so far it <unk> seem like $4 90 in the 18 to 20 over puts you at five and with 25 days average maturities.

Speaker Change: Sort of rolled most of your repo by now.

Speaker Change: The marginal repo going through the quarter now it should be closer to that five level and we'll see where it goes from here net well, we got a fed meeting in a couple or two so well.

Speaker Change: We'll see what happens.

Speaker Change: Markets still pricing them pretty good profitability of 25 more so.

Speaker Change: We will see how that goes and as we alluded to earlier.

We've put a lot on that.

We've put a lot of them that September contract coming into the fourth quarter. So I think we have like $900 million with.

Speaker Change: Right.

East.

What was it.

Speaker Change: 100, 100, or 120 525 basis points of easing baked into the.

Speaker Change: Market at the time, we put those on.

Speaker Change: And this year, we're looking at probably 80 now.

Speaker Change: Got it and then the other question was just on where do you see.

Speaker Change: Marginal ROE I mean, if we look at <unk>.

Speaker Change: <unk> was a relatively good quarter for mortgages and when you look at pretty much any metric.

Speaker Change: Plus two 2% total return it looks like it's a 17, 1% dividend on.

Speaker Change: Book at the end of the quarter plus the cost to operate so.

Do the marginal ROE hit that level, how are you thinking about marginal ROE is in your mind relative to the dividend.

Speaker Change: I think they are probably they are expanded slightly.

Speaker Change: But.

Speaker Change: As I said, we're not looking to push the dividend yield so I would say there.

Speaker Change: I don't have the number in front of me I got to be very high teens.

Speaker Change: Figure four yield.

Speaker Change: Five and a half versus something in the mid twos.

Speaker Change: You've got.

Speaker Change: Close to 300 over on a hedged basis.

Speaker Change: Depending on where you wanted to such a leverage if.

Speaker Change: We're not going to be pushing it so.

Speaker Change: We can clearly get to those kind of high teen numbers, but with the park with par coupon mortgages right now we sit hedging with 10 years.

Speaker Change: Spread of 497 basis points over 10 year, so for swaps. So that's.

Speaker Change: Definitely a high teen operating environment.

Speaker Change: And just one more on that I mean, how do you weigh in in your mind the potential to build book value.

In the sense that let's say, we are at 20 and Youre paying out 2017, and so theres marginal growth in book.

Speaker Change: If you didn't pay such a high dividend payout.

You could get credit for that dividend yield or do you feel like how do you weigh the two principal of retaining that capital.

Speaker Change: That's actually very topical discussion point with us and the board of late.

Speaker Change: And.

Speaker Change: It's.

Speaker Change: Possibly more so in 'twenty five and 24 that was the last time, we had this discussion we're thinking that you're going to get more easing that it appears we are.

So the question do you retain that you'd consider paying some tax.

Speaker Change: Our view generally is you don't get rewarded for that.

Speaker Change: If you pay a special dividend they tend to get discounted if you pay tax.

Speaker Change: What he sees them.

Speaker Change: That give you any benefit for that either.

Which which tends to drive people to pay out what they earn.

But I think that especially if we're in a rising rate environment. The extent, we can retain any it's something we will give a very serious consideration.

Speaker Change: I think we're going to transition from an environment, where we were.

Speaker Change: Slightly over distributing to an environment, where we're maybe under distributing for a little bit and then we will have to make a decision into 'twenty five as too.

What to do to the extent that we have.

Speaker Change: Tax obligations you know a lot of this is stemming from the fact that.

Speaker Change: Our pay fixed swap rate is very low and so.

It's already been mark to market for for GAAP purposes, but for tax we are going to have.

Distribution requirements that we're gonna have to maintain so.

Speaker Change: I wouldn't expect to change anytime soon as Bob alluded to we think we can what.

Speaker Change: What's the leverage slide down a little bit in and maintain the dividend rate.

Speaker Change: And then at the end of 'twenty five.

Speaker Change: We will have to just take stock of where we sit with respect to our tax obligations and make a decision how we want to handle.

Speaker Change: To the extent that we have some some have under distributed throughout the year.

Speaker Change: Okay. Thanks.

Speaker Change: Thanks for the question.

Speaker Change: Yep. Thank you.

Speaker Change: Thank you gentlemen for next question.

Speaker Change: Our next question comes from the line of Christopher Nolan of Ladenburg Thalmann <unk> co. Your line is now open.

Speaker Change: Hey, guys Hey, Chris.

Christopher Nolan: A follow up to that previous question in terms of the yield and so forth.

Christopher Nolan: Bob when you're talking to the board or when you have discussions with the board.

Christopher Nolan: How do you guys tend to look at overall performance because the dividend yield is quite high but the book value has been good.

Christopher Nolan: Climbing down as you guys.

Christopher Nolan: For various reasons, including hitting the ATM pretty hard.

Christopher Nolan: Give a little color in terms of how you guys look at it.

Speaker Change: Shareholder return well, we always look at relative total performed total return.

Speaker Change: When we saw opportunities to grow the portfolio, where we're willing to run the ATM.

Speaker Change: We did so.

Speaker Change: Very modest discounts to book and I think given where returns are.

Speaker Change: It was very much justified.

Speaker Change: Obviously now that's not the case, so we're not going to be using that we in fact, you actually bought back some shares very late in the quarter.

Speaker Change: When we've traded down.

But no it's always total return on a relative basis.

Speaker Change: There were times when we were anxious to grow the portfolio to gain scale. So we ran the leverage on the high end, we had a high dividend as you well know one of the highest yields in this space and that allowed us to grow and reach some scale.

Not so much the case now.

Speaker Change: We were raising money in the ATM in Q2, and three because we thought we were on the verge of a fed easing cycle potentially any aggressive easing cycle, a steepening of the curve.

Speaker Change: In an environment, where it would be very attractive for both book value performance and net interest margin.

Speaker Change: Not so much sure. That's the case now as a result, we will pull back from that even to the point of as Hunter just alluded to maybe even looking at slightly under distribution. So there was a time when we are more aggressive with our duration, our leverage and the dividend to try to grow that.

Speaker Change: Probably behind us for the time being and maybe for quite a while we'll see.

Speaker Change: Now, it's more of a defensive posture.

Speaker Change: And in all cases.

Speaker Change: <unk> wood.

Speaker Change: Look at total return, but they also given what we were trying to do for instance, as I, just said grow the portfolio and run the deleverage on the high end with that caveat. They understood that so to the extent, we were running higher leverage than everybody else and we got a violent sell off and we underperformed.

Speaker Change: They are aware of that because they are a part of the decision.

Speaker Change: Okay and thank you and then also how did you guys have adjusted economic EPS number which includes such income and discount accretion.

Speaker Change: And we do not we did not put that in that table in there.

Speaker Change: We found that we did in the prior two quarters that it generate tended to generate more questions than answers.

Speaker Change: And we've kind of gotten away from that.

Speaker Change: But.

Speaker Change: I don't know if its in the Q, which is coming out a little later today.

Speaker Change: If you have that.

Speaker Change: If you call I can try to get you that I don't have enough top of my head.

Speaker Change: That'd be helpful.

Speaker Change: Okay. Thanks, guys good job alright, thanks, Chris.

Thank you for.

Speaker Change: Our next question again as a reminder to ask a question you will need to press star one on your telephone.

Speaker Change: Our next question comes from the line of Eric Hagen of <unk>. Your line is now open.

Speaker Change: Hey, Thanks, good morning.

Speaker Change: How are we doing.

Eric Hagen: So how do you guys think about the size of the proportion of the TBA position right now.

Eric Hagen: And if mortgage spreads were wider do you feel like that would potentially lead you to raise your leverage or adjust maybe adjust the TVA. How do you guys think about that.

Thank you.

Eric Hagen: It's also a question on where we do the TBA shorts.

Speaker Change: Might start considering moving most of the higher coupons.

Speaker Change: Given that they may be the most vulnerable as I mentioned too bearish steeper.

Speaker Change: It was easier to do them with three is just because.

Speaker Change: Those are fully extended and those are pretty good hedge instruments.

Speaker Change: But I think as we're looking at a potential for a steepening curve steepen, our bare steepen or it might be more in the higher coupons, yes, we're always looking at.

Speaker Change: The roll levels and implied funding to.

Speaker Change: Give us a sense for.

Speaker Change: <unk>.

Speaker Change: If something's Richard shifts, there's been opportunities to sort of buy specified pools hedging with <unk>.

Speaker Change: And have the TBA is actually contribute a little bit to.

Speaker Change: To the to the earnings picture.

Speaker Change: We also like to look at depending where we are in the rate cycle now that we're bumping up kind of.

Speaker Change: Back towards the higher end at the convexity of the of the stack and.

Speaker Change: And use those usually convexity of short TBA.

Speaker Change: To benefit us in the event we took.

Speaker Change: Turnaround and have a rally did build in a little bit of protection like that's what Bob was alluding to about the upper coupons.

Finding the front in front of the finance something in the stack that has the worst convexity, whereas we approach kind of a <unk>.

Speaker Change: Higher end of the rate range. So that if we do turn around and get you know so well.

Speaker Change: Some sort of a relief rally would help with the underperformance of the higher coupon.

Mortgages, which are also going to have word convexity in that environment and also we had a lot of III shorts on for quite a while and that role is very negative for a long long time.

Speaker Change: So easily put that on.

Speaker Change: That's helpful color I appreciate that.

Actually wanted to ask you about the Io and derivative position you guys have been pretty active there in the past how do you how do you see that position maybe.

Speaker Change: Get entitled our adjusted going forward and even the supply of.

Agency derivatives.

Speaker Change: In this environment.

If the shape of the cover to change from here.

Speaker Change: It's interesting you say.

Speaker Change: Doing a lot of tire kicking running a lot of different Strats I think in general I don't love the profile of the.

Speaker Change: The.

Legacy lower coupon iOS to have good yields but.

Speaker Change: They're kind of a mess.

Speaker Change: Hedging perspective.

Speaker Change: We are so or at least we're at the point, where we did have some some actual two sided risk with some of the more recent production.

Speaker Change: I have been where we have been very.

Speaker Change: Hesitant about doing too much and Io, especially in a really high coupon space just because I think when you know if we ever get back to an environment, where mortgage rates are pushing 5% five 5%.

Speaker Change: I'm not sure that the models are really dialed in for the refi explosion, that's going to occur.

Speaker Change: Production Thats been created over the last couple of years.

Speaker Change: So I tend to kind of.

Speaker Change: I think there is some uncertainty around there also though we have seen some fast speeds, particularly in Ginnie space and so there has been a cheapening there.

Speaker Change: So given all of what I just said there are some opportunities and we're where we're looking we just haven't.

Speaker Change: <unk> been quite yet and then of course this more recent sell off has made.

Speaker Change: Making it less compelling, but I think that over the medium term, we will look to opportunistically add when we can find.

Speaker Change: Kinds of.

Speaker Change: Mortgage derivatives that have.

Speaker Change: The profiles that we like so something that is either a little bit in the money or kind of at the money and has some real upside so that we can.

Speaker Change: We can use it to mitigate some of the duration of the portfolio.

While simultaneously, providing a little bit of yield.

Speaker Change: And there is still huge demand for floaters on the CMO desks, so theres in versus being created.

Speaker Change: And those were very popular a few months ago with everybody's thinking theyre getting the big easing cycle coming.

Net cheapened up obviously yeah.

Speaker Change: So we've looked at some NIM versus as well.

Speaker Change: I think theres still a lot of.

Speaker Change: Fed cuts priced into the next year.

Speaker Change: So I think there could be to the extent that.

Speaker Change: The market range on the.

Speaker Change: Fed easing parade.

There could be some vulnerability in inverse io space, but they will definitely.

Speaker Change: Hap.

Speaker Change: Have there theyre moment.

I just don't think it's quite yet.

Speaker Change: Always really appreciate the great color from you guys. Thank you.

Speaker Change: Yep.

Speaker Change: Thank you I'm showing no further questions at this time I would like to turn it back to Robert Cauley for closing remarks.

Robert Cauley: Thank you operator, and thank everybody to.

Robert Cauley: To the extent anybody has any questions that come up after the call or if youre just listening to the replay and didn't have a chance to ask a question feel free to call. Chris I know you probably want to give us a shout try to get you that number otherwise we look forward to talking to you all again at the end of the fourth quarter.

Robert Cauley: Have great holidays, and well thank you.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Robert Cauley: Yeah.

Robert Cauley: [music].

Robert Cauley: Yes.

[music].

Robert Cauley: Sure.

Robert Cauley: Yes.

Robert Cauley: [music].

Robert Cauley: Yeah.

Robert Cauley: Yes.

Robert Cauley: [music].

Robert Cauley: Okay.

[music].

Robert Cauley: Okay.

Robert Cauley: [music].

Yes.

Robert Cauley: Okay.

Robert Cauley: [music].

Robert Cauley: Yeah.

Robert Cauley: [music].

Robert Cauley: Yes.

Robert Cauley: [music].

Robert Cauley: Okay.

Robert Cauley: Yes.

Robert Cauley: [music].

Robert Cauley: Okay.

Robert Cauley: [music].

Robert Cauley: Okay.

[music].

Robert Cauley: Okay.

Robert Cauley: Thanks.

Robert Cauley: Sure.

Robert Cauley: Okay.

Robert Cauley: [music].

Okay.

Robert Cauley: Yes.

Robert Cauley: [music].

Robert Cauley: Okay.

Robert Cauley: Yes.

Robert Cauley: Okay.

Robert Cauley: Yes.

Okay.

Speaker Change: Good morning, and welcome to the third quarter 2024 earnings conference call for Oregon Iron Capital This call.

Is being recorded today October 25 2024.

Speaker Change: At this time the company would like to remind listeners that statements made during today's conference call relating to matters that are not historical facts are forward looking statements subject to the safe Harbor provisions of the <unk>.

Speaker Change: Securities Litigation Reform Act of 1095.

Speaker Change: Listeners are cautioned that such forward looking statements are based on information currently available on the management's good faith.

Speaker Change: With respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in such forward looking statements.

Important factors that could cause such differences are described in the company's filings with the securities and exchange commissions, including the company's most recent annual report on Form 10-K.

Speaker Change: The company assumes no obligation to update such forward looking statements to reflect actual results changes in assumptions or changing at this factors affecting forward looking statements.

Speaker Change: Now I'd like to turn the conference over to the company's Chairman and Chief Executive Officer, Robert Robert Kelly. Please go ahead.

Robert Kelly: Thank you operator, and good morning. Thank you for joining US hope everybody's had a chance to download the slide deck. So you can follow along with us.

Robert Kelly: Just to kind of start I will start off by going over our financial results for the quarter.

Robert Kelly: Ill discuss the market developments that occurred during the quarter that shaped our performance and our decision making with respect to the portfolio. Then we will dive into the portfolio characteristics. What we did during the portfolio, how we positioned ourselves.

Robert Kelly: And then outlook and then Theres a substantial appendix we have a lot of information.

Robert Kelly: That is in the appendix that you can use we won't necessarily go through that Thats just for your reference so with respect to our financial results for the third quarter of 2024 or could had a net income of 24 per share.

Robert Kelly: Versus the 9% loss during the second quarter book value declined modestly from 8588.

Robert Kelly: 58 840.

Robert Kelly: The total return for the quarter was positive two 1% that's not an annualized number.

Robert Kelly: And we declared <unk> <unk> dividend.

Robert Kelly: Portfolio. Obviously these are average balances did increase quite a bit during the quarter I'll have more to say about that in a few minutes the leverage ratio didn't expand slightly that's predominantly just because of a slight tweak to the amount of TBA. So we're short in a modest book value decline speed.

Robert Kelly: Speeds increased modestly during the quarter from seven six to eight eight with the rally in rates and our liquidity is relatively in line up slightly versus where it was in the second quarter.

Robert Kelly: Slide seven just has our financial statements. So I'll leave those for you to review Im not going to go over those will be releasing our 10-Q. Later today. So you can have a much more in depth dive into our financials at that time.

Now turning to the market developments, which shaped our outlook our results just to kind.

Robert Kelly: I'm going to start if you look back to where we were at the end of the second quarter things were looking quite well for the mortgage market and for Reits in general most of the data that fed paid attention to inflation data and the labor data was trending down most people were anticipating substantial fed eases and in fact, we got 150 basis point.

Robert Kelly: Cut in September.

Robert Kelly: The curve Steepening.

Robert Kelly: Nims were expanding in this space and the outlook was quite good for mortgages.

Robert Kelly: The fed reducing rates the curve steepening potential for banks to come in in a more meaningful way things look quite good.

Robert Kelly: That was until late in the quarter and things did change jobs. You are well aware late September into October we got some data that was kind of consistent with a <unk>.

Robert Kelly: Quite robust and resilient economy, certainly not one that appears to be headed into a recession anytime it's quite resilient.

Robert Kelly: We may have.

Robert Kelly: Soft landing, though Randy who knows.

Robert Kelly: But it's certainly not as dire as it looked just a few months ago and then most recently as we approach the election, which is of course, a big wildcard for the markets.

Robert Kelly: It appears that the market may be pricing in some probability of a Republican sweep.

Robert Kelly: The significance of that is kind of twofold traditionally Republican administrations tend to be more pro growth. So to the extent that the economy is not as soft as we had thought.

Robert Kelly: And may be much more resilient and growing that would of course add to that growth and then the second one would be just based on.

Robert Kelly: President Trump's pronouncements that they tend to be kind of.

Robert Kelly: Consistent with an expanding deficit and that would of course put some upward pressure on rates as well. So we're in this transition period now since the end of the quarter. There's a lot of uncertainty in the market at the moment, we don't know how the election is going to play out we really don't know just how the economy is going to evolve it looks at the moment as if it's going to be <unk>.

Robert Kelly: And strong GDP data comes out.

Robert Kelly: Next week, so we will get to see but it looks like it's somewhere around 3%. So it's not a weak economy and that means that rates are probably not going to be rallying any meaningful amount anytime soon if you look on page nine you can see that the Red line was where we were at the end of the second quarter that Green line. There on the top left is.

Robert Kelly: Where we were at the end of the third quarter and the Blue line was as of last Friday, we are higher than that today. Our rates have continued to sell off although the last two days have been some kind of a stabilization there and then the spread on the bottom you can see is us moved as we steepen, but still has a long way to go from what would be.

Robert Kelly: The more traditional levels turning to slide 10. This is just the spread of mortgages to the 10 year Treasury the current coupon mortgage.

Robert Kelly: And you can see this is a 10 year data range here. So it's kind of hard to pick this up but if you look at the extreme right you can see the downward sloping portion of that curve that was Q3, we had a very good quarter building on as I said until about mid September and we have since reversed. This number here on this table says 132 basis points that number is now north of a one.

Robert Kelly: <unk> 42, this morning, so quite a reversal.

Robert Kelly: With all the uncertainty in the market people are just not buying mortgages in any meaningful way, we generally have widened pretty much every day month.

Robert Kelly: Monday of this week was quite severe.

Robert Kelly: And then told this uncertainty is resolved, it's just kind of a tough market for rates for mortgages in particular other spread products don't seem to be as effective as mortgages are but it hasnt been a pretty run for mortgages of late the bottom left page 10 shows you. This is a normalized prices for select coupons.

And again this data is through last Friday, if you would update that those numbers will be closer to the 100 line with meaning that these coupons are giving up a fair amount of the gains that they enjoyed during the third quarter roll activity is somewhat better in the higher coupons not so much in the lowers but generally rules are a little bit better than when we last.

Robert Kelly: Both.

Robert Kelly: Moving onto volatility, obviously, a very important driver of mortgage performance.

Robert Kelly: You can see on the far right side of the page that.

We've been trending higher if you were to update this one again due today its still hires yet up close to 130 augment move index.

Robert Kelly: And we've got meaningful events on the horizon, We've got a non farm payroll report next we have the electrum the fifth and then the fed under Kevin.

Whatever else comes data wise after that so.

Robert Kelly: I would say the outlook for volatility in the near term at least is to remain elevated and unexpected to see that fall and thats generally not good for mortgages.

<unk> 12, just gives you some picture of refinancing activity and you can see we did have a bump.

Robert Kelly: The top left of the bottom right you do see that small bump, but it could be that was a short lived phenomenon.

Robert Kelly: During third quarter, our prepayment fears became very real spec pool pay ups did benefit from that people were really concerned about prepayment risk.

Robert Kelly: But as of now that's really not so much the case.

Robert Kelly: It remains to be seen how this plays out going forward, but for the moment those fears are clearly abating.

Slide 13, I'll, just kind of leave it for your per view one of my favorites. These numbers here. The Blue line is just the GDP in the United States in nominal dollars.

Robert Kelly: Nothing more than the Red line is the money supply and as you can see for 10 plus years growth, which would be represented by the slope of the lines of the Blue line was incredibly stable, but since the pandemic, we've seen the money supply expand far above trend growth line and GDP has is.

Robert Kelly: Well cause and effect you could debate.

But I don't think theres any doubt that with the current level of deficits.

Robert Kelly: The fact that money supply is elevated and we are seeing elevated growth levels and consumer spending.

Robert Kelly: It's possible that there is and to the extent that continues it's really hard to see the economy weakening materially and so what that means for rates remains to be seen but I don't see.

Robert Kelly: It being supportive of a big rally.

Speaker Change: Now that's kind of what's happened in the market now just kind of turn to what we've done how the portfolio has been repositioned and how we've.

Speaker Change: Positioning ourselves going forward. So we had the fed pivot we've been waiting for this for a long time, we finally got it not so much sure how much we are going to get additional fed easing may not be much that being said, we did raise $110 million through our ATM in this quarter.

That represents a 20% increase in our share count and why deploying those proceeds we grew our portfolio likewise by about 20%, so a pretty substantial growth for the quarter and the way that we did that was basically acquire higher coupon mortgages, we've talked about in the past probably wanted to build out a barbell portfolio now we have.

Speaker Change: Fully done so in fact now the portfolio has a very much up in coupon bias. So the proceeds were deployed into 665% 7% coupons.

Speaker Change: All of that was to raise our weighted average coupon by 22 basis points from $4 72 to $4 94, and the yield on the portfolio expanded by around 38 basis points $505 to $5 43, now one thing being said is when we deploy these assets. Most of this was front loaded in the quarter for that to a large extent.

Speaker Change: While we hedge those with predominantly longer duration swaps, seven and 10 years and as a result with the rally during the quarter.

Speaker Change: We kind of underperformed and Thats just the result of the fact that with the rally in rates, our hedges, which were as I said longer tenor swaps combined with assets that were shorter duration assets, which rallied.

Speaker Change: I'm, sorry that which widened during the quarter as a result of prepay fears.

That didn't do as well during the quarter that being said since quarter end and rates selling off its probably allowed us to outperform a little bit. So I'll say more about that in a moment. So thats basically what happened with respect to the assets.

Speaker Change: Page 16, just shows the Vista Pictures.

Speaker Change: <unk> added upper coupons now you can kind of clearly see on the far left if there's kind of a bias to upper coupons, but that being said we have retained a substantial holding of discount securities, which have great convexity characteristics in the event the market does rally back so the bar Bell still in places has an upper coupon bias.

Speaker Change: Now with respect to funding.

Speaker Change: One thing is clear with a fed ease we had an immediate benefit of that was roughly 30 basis points, which was felt in September that just more of an artifact of the fact that.

Speaker Change: Repos roll in so we don't get the immediate 50 basis points, but it has allowed our funding cost to drop it had been remarkably stable as you can imagine for some time.

Speaker Change: The data that's on this chart appears somewhat misleading I don't want to dwell on this but it says that for instance, our average repo rate was $5 62 versus $5 34, that's very misleading just an artifact of how we do this as I mentioned when we grew the portfolio this quarter tended to be more front loaded. So we had that extra interest expense.

Speaker Change: Load if you will for the quarter.

Speaker Change: But the denominator in the calculation is just the average balance and so the average balances kind of low and it makes it look like our funding cost is higher that's really misleading.

Speaker Change: We have a period of <unk>.

Speaker Change: Slower growth or no growth those numbers will normalize and what youll see is that our repo funding costs are lower than they were for prior quarters, roughly 40 basis points, but I do have to make one point.

Speaker Change: With respect to what we are seeing in the funding markets and that is the fact that over quarter end month and year end. There has been some expansion in the spread so for instance, when we enter into a repo, it's a spread to fed funds spread of sulfur.

Speaker Change: And those do.

Speaker Change: Band over those periods, where there is evidence that.

Speaker Change: Funding pressures are emerging.

Speaker Change: From what we hear from the Federal reserve and various members of the board they don't seem to be concerned about that but we do hear from the funding gas across the street.

Speaker Change: Is that there is clear evidence that starting to happen.

Speaker Change: <unk> extended that is remains to be seen but it's definitely out there and the fed is doing qt.

And so there is being liquidity drain from the system dealer balance sheets are quite full so we will see how that plays out something worth watching.

Speaker Change: Our portfolio is.

Speaker Change: Slightly more defensive than it was at the end of the second quarter Slide 10, just shows you. The details of our hedge is one thing we have done I will point out is in the top left our sulfur futures.

Speaker Change: We've been opportunistic with respect to adding these whenever we've gotten really bad.

Speaker Change: Bad economic data, which caused the market to rally in the market to price it more fed easing we put a bunch of those in to try to lock that in.

And so hopefully that has been bearish.

Helps us in the future by kind of locking in some lower funding cost because the market has generally been very aggressive at pricing and fed eases and had been frustrated when they don't appear as.

Speaker Change: As expected.

Slide 20, just shows you expected returns across the coupon stack. This is something we're always looking at I'm not going to say anything about it other than just pointed out we have it does shape our decision making.

Speaker Change: Slide 21 shows you our interest rate sensitivity and you can see based on this that there is a.

Speaker Change: Kind of a defensive bias of the portfolio at the moment just as a result of the things I just mentioned.

Speaker Change: And you can see that we do a little.

Speaker Change: Better in a rally or sell off which as you know.

Speaker Change: Typical less in a rally and that's just because of the positioning.

Speaker Change: <unk>.

Speaker Change: We did take on a lot of our higher coupon exposure.

Speaker Change: But by selecting kind of lower quality spec pools.

Speaker Change: <unk> taken advantage of the newness of those securities in the fact that they don't tend to prepay rapidly our speeds went that high our 7% series you can see how to high print in August, but the three months speeds versus the prior quarter not that elevated and then when you consider that we have seen rate sell off and we're heading into the summer.

Speaker Change: Or the seasonal slowdown it seems that these.

Speaker Change: Securities that we had we're likely to experience slower speeds, which means theyre going to have better clarity. So the combination of higher coupons in the portfolio and higher coupons that are prepaying slower should be beneficial for the yields that we realize and as I mentioned.

Speaker Change: A slight improvement in our funding costs. So there has been some benefit to our NIM that we expect to realize going forward modest but some.

Speaker Change: So just kind of summarize looking back looking forward as I said, we did get the pivot.

Speaker Change: But it may not be what the market was hoping for it may not be extent of easing that we had hoped or expected not too long ago that being said, we have continued to both employ our barbell strategy, but now with them up in coupon bias, which I think is well suited for the market conditions today.

Speaker Change: <unk>.

Speaker Change: The market for arguably two years now is continue to overestimate the weakness in the economy, and the extent and timing of fed rate cuts.

Speaker Change: Really just haven't seen those play out.

Speaker Change: The fourth quarter, so far as a result of these developments in mortgage spreads have given back a fair a fair amount of what we gave in the third quarter, but that being said, we're very comfortable with our positioning and our hedge structure.

Speaker Change: We might be able to continue to maintain that yield therefore dividend level with potentially less leverage. If this continues just because of that NIM expansion. So that's kind of it for the quarter Thats, how we see things evolving and.

Speaker Change: With that I think we can turn the call over to questions operator.

Thank you at this time, we will conduct a question and answer session to ask a question you will need to press star one wanted to telephone and wait for your name to be announced to withdraw. Your question. Please press star one again.

Speaker Change: Standby, while we compile the Q&A roster.

Our first question comes from the line of Jason Weaver of Jones trading your line is now open.

Jason Weaver: Hey, good morning, Thanks for the time first Robert you touched on this during your remarks, but taking into account for 30 years that you bought in the in the sixes and up into the Sevens in the short TBA and low coupons.

Jason Weaver: Does this reflect a view that you expect little.

Jason Weaver: Little relief in benchmark mortgage rates over the next 12 months and does it change the <unk>.

Jason Weaver: <unk> ability of the barbell strategy at all going forward.

Speaker Change: Well, we do have a bias to a higher coupon.

And so we don't.

Speaker Change: It's hard to have a firm view on rates going forward just because of the data just tends to be sold volatile as we saw in September you can get whipsawed.

Speaker Change: Let's say one thing we think though is that.

Speaker Change: If you look at where kind of where they can book from here. They are certainly prefer them to go higher so to the extent the economy stronger inflation reemerge as deficits keep growing that can go higher I don't see the potential for rates to go the same magnitude lower let's say that we're totally on this here and the economy is going to go into a recession.

Speaker Change: <unk>.

Speaker Change: It's going to cut to the funding level is going to go to neutral whatever that is I mean, we don't even know what that is if you look at the dot plot that could be two and a half to three and a half let's say it's three.

They were to cut to three where do you think the rest of the curve shakes out I mean, the tenure in that scenario should be much less than four and were little over for now so the outlook going forward I think is kind of asymmetric. So thats why we like this kind of up in coupon bias, but because of the uncertainty we don't walk.

Speaker Change: To just throw in the Taiwan lower coupons, because we saw in the third quarter you can have a rally in the higher coupons will underperform.

Yes, the lower coupon strategy is.

Speaker Change: Nothing to write home about during times when spreads are relatively tight.

Speaker Change: They do have lower yields lower carry for the portfolio, but when we get in environments like now where.

Speaker Change: I'd like to look at.

Speaker Change: Mortgage spreads versus current coupon mortgages versus seven or 10 year swaps and we're getting back to the wides of the year and so.

Speaker Change: Now is the time, when we really like to have those on in the event.

Speaker Change: Rates turnaround and rally and spreads tightened.

Speaker Change: We would expect the most spread duration positivity out of those where the higher coupons are going to underperform again into directly so.

Speaker Change: We have intentionally had a sort of more.

Speaker Change: Conservative bias I guess.

Speaker Change: It felt like the economy is very strong as Bob alluded to earlier, we've opportunistically tried to lock in.

Speaker Change: The aggressive amount of fed rate at one point I think we were pricing in six or seven fed cuts over the next.

Speaker Change: Nine to 12 months.

Speaker Change: <unk>.

Speaker Change: We're pretty we're pretty opportunistic about locking those in to be a silver futures.

Speaker Change: And so we like our positioning it wasn't looking all that great for us through the third quarter, but now rates have turned around and sold off and widen and.

Speaker Change: And so we feel like the strategy is continuing to work.

Speaker Change: Got it that's helpful color and then on the same dimension on the other side.

Speaker Change: Looking at the swap position it looks like your hedge ratio actually came down a bit even though the dollar duration is not that much changed coming into September any color you can give us there regarding sort of risk appetite into year end around the election.

Speaker Change: Comments about.

You made some comments around expecting volatility ahead in the next few months.

Speaker Change: Yes, well, we did add to this.

Speaker Change: We grew the portfolio by 20%, but our swap positions did not grow by that amount.

That's why we added to the sulfur futures trying to lock in some of that funding we've seen a lot of movement in swap spreads on the front end of the curve.

Speaker Change: Which kind of offsets the effectiveness of those hedges and <unk>.

Speaker Change: Volatility I would it's really hard to see that diagnostic anytime soon and as long as that stays elevated mortgages are going to not perform well.

Going forward, it's hard to have a lot of conviction in anything.

Speaker Change: We were at a conference earlier this summer and Kevin Wash was speaking of you may recall it was a fed governor quite a bright line.

Speaker Change: He made the comment about economic data basically his point was that Dana has no business, having any numbers to the right of the decimal point in other words, what he meant was very inexact science and he says I know everyone of you guys out there in this room.

Speaker Change: Breath for the next nonfarm payroll number we said.

Speaker Change: They're not really good at this stuff and Thats, probably going to get revised multiple times and.

Speaker Change: It's very much economics is via an exact science in.

Speaker Change: It's really just in this year, we've seen so much volatility in data data being revised Gd I gross domestic investment revised throughout the savings rate and revise up by 200 basis points.

Speaker Change: <unk> causes a lot of volatility and we have a data dependent fit so we have a fed that's making all the decisions based on data, it's extremely volatile and subject to revision. So it's really hard to see volatility remaining low and then the election.

Chaotic to say, the least who knows it's a toss up we don't know who's going to win we don't know who's going to control the house or the Senate, we don't even know when they're going to finalize the results.

So it could be bumpy for a while with respect to the profile of the portfolio I think that just reflects a little we try to have a.

Speaker Change: We try to not be myopic about quarter to quarters.

Yeah.

Have a little bit of a house view and lean one direction or another we were leading to sort of that and we were very much in the camp of rates seem to have come down really fast and.

But at the same time.

Speaker Change: We have to make adjustments and delta hedge as needed.

Speaker Change: When hedge ratios were coming way down so we did trim some hedges.

Speaker Change: Into the rally and we haven't reversed course quite yet so.

Speaker Change: We're just.

Speaker Change: Just really trying to fine tune more than anything I wouldn't say, it's reflective of any change in our core position but.

Speaker Change: Mortgages start getting shorter whenever we have some big rallies and we've got to make sure we don't get too far off sides with respect to how the portfolio is hedged.

Speaker Change: Got it thank you for that and congrats on the quarter.

Speaker Change: Thank you.

Speaker Change: Thank you our next question.

Speaker Change: Our next question comes from the line of mechanical Berman of Susan JMP. Your line is now open.

Speaker Change: Hey, good morning, guys Hope I hope everybody's doing well.

Speaker Change: Good morning, Barry.

Speaker Change: If I.

Speaker Change: If I can start with just an update on book value. I know you guys mentioned that it might be he might have outperformed a bit since the end of the quarter.

Speaker Change: Yep.

Speaker Change: We calculate and estimate every day and as of yesterday, we were three 7% quarter to date.

Speaker Change: I'm sorry, the last point.

Speaker Change: No no down three 7%.

Speaker Change: Got you, Okay, and then most of that has occurred in the last five or six days.

Got it thank you britta spread widening in the <unk>.

Speaker Change: Just in the mortgage market has overwhelmed the positive effect of of our slides.

Duration bias.

Speaker Change: Right right.

Speaker Change: Just looking at your prepared remarks in the press release.

Speaker Change: The statement here that you continue to view bear steepening of the yield curve.

Speaker Change: As the greatest risks in the portfolio if I could just maybe drill down into your thoughts around that if that situation were to come to pass how would that affect.

Your portfolio construction as well as the hedge portfolio.

Speaker Change: Well I think the.

Speaker Change: As I said, the bare steepening and extension of mortgages, especially the higher coupons, we have a higher coupon bias. So the fear would be if you get a big bear steepening. Those premiums are not even big premiums to three point premiums all of a sudden start drifting down the price rates become discounts potentially so they can extend that's why the hedges.

Speaker Change: A lot of seven and 10 year swap hedges, but I also think with the modest improvement we've seen in our NIM.

Speaker Change: We could try to take the leverage down some and maintain that yield and we already we have one of the highest yields in the space as you know so it's not like we need to stretch to expand that we have no reason to do that.

Speaker Change: The rally as we mentioned it was kind of.

Speaker Change: The reason the market rally was more in anticipation of something that didn't happen.

Speaker Change: Had that happened like let's say the next three months of data were horrible in the fed we're going to ease aggressively, thereby that's going to change our outlook and positioning, but we didn't see that and so we're.

Speaker Change: That's why we still see the risk of a bare steepening as being the most severe.

Speaker Change: Got you and just kind of piggybacking on that leverage.

Question economic leverage seven six at the end of the quarter.

Speaker Change: With respect to your comments just now maybe directly to a six handle a situation like that heroes.

Speaker Change: Depending on how it played out if it was sudden and violent diffusion nothing you can do with usually younger before you know it but if it is a slow grind higher that's how we would approach it.

Speaker Change: We have some cushion with the particularly the 665% 7% buckets.

Speaker Change: That those will continue to do well.

Speaker Change: And it's been a little bit frustrating for us because those those particular coupons underperformed into the rally of the third quarter and have not really.

Speaker Change: Reversed course into the sell off I think that's just.

Speaker Change: Due to the uptick in volatility and uncertainty so we still like the strategy, even though those particular coupons aren't really ripping like we would have expected them to into a sell off.

Speaker Change: I think that there is.

Speaker Change: A good chance so we get past some of these we get some of some of this uncertainty behind us and we will start to see those firm up if rates stay at current levels. So those will be great assets to own the carrier will be fantastic on them.

Speaker Change: And I think what Bob is alluding to this bear steeper.

Speaker Change: Being a.

Speaker Change: A worst case sort of.

Speaker Change: For the portfolio is one where we blow through even.

Speaker Change: Going back towards 5% on cans.

Speaker Change: It's got it's going to be a substantial move so we feel like we have.

Speaker Change: Adequate time to prepare for that it's going to it's going to be probably a grind as opposed to.

Speaker Change: Postal quick shock so.

Speaker Change: We'll be.

Speaker Change: Watching and then and reacting.

Speaker Change: Alright may we live in interesting times, Thank you gentlemen, and good luck.

Speaker Change: Thanks Mikael.

Speaker Change: <unk>.

Speaker Change: Thank you gentlemen for next question.

Okay.

Speaker Change: Our next question comes from the line of Jason Stewart of Janney Montgomery Scott. Your line is now open.

Okay. Thanks, guys.

Jason Stewart: Clarification on repo.

Jason Stewart: I don't Bob clarification on repo cost at quarter end the.

Jason Stewart: The 524 number with an average could you give us at quarter end or was that did I misunderstand that.

Speaker Change: The quarter end App the actual average as of that date was $5 24.

Speaker Change: And then would have been coming down.

Speaker Change: It's just that we.

Speaker Change #100: We grew so fast and the growth was so frontloaded the way we present that number in there as Johnny you just take the total interest expense divided by the average balance and since the balance grew by 20% for the quarter I think the average repo balance was a little under seven eight or $4 8 billion.

Speaker Change #100: But in fact, our repo balance was north of $4 8 billion at the end of July.

So the interest load was for more of a quarter. So it makes it look like our average repo expenses higher but it's been stable.

Speaker Change #100: Had moved for months and months. So we were running somewhere in the five five range and then it came down about 30 basis points in September.

Speaker Change #100: We did have as I mentioned funding spreads are elevated over quarter end, but we'll get more of that in October and November and then we'll see what year and brings.

Speaker Change #100: But there is so it's down 30 to 40 basis points, depending on the day you look at it.

Consistent with fed easing 50, and spreads on average a little higher than they had been because of what appears to be some tightness in funding.

Speaker Change #100: We'll see how that plays out as I've mentioned when.

Speaker Change #100: When you speak.

Speaker Change #100: The head of the San Francisco Fred.

I guess, Barry Logan, who used to run the Soma des <unk>.

Speaker Change #100: Bear in mind that there are no issues and that they should ignore any.

Speaker Change #100: <unk> talked from the markets that these things exist and that Theyre going to continue forehead, Steve with Qt.

Speaker Change #101: That's not consistent with what we hear from people who live in the repo funding markets day in day out Theres balance sheet constraints that are out there.

Speaker Change #100: Yeah.

Speaker Change #102: Just to give some context to that.

Speaker Change #102: Whereas we were maybe funding it.

Speaker Change #102: Anywhere 14% to 16 over sofa.

Speaker Change #102: For several several months that's.

That's gapped out and maybe use pushing 18 or 20 now so we'll see.

Speaker Change #102: Of course, our are watching and it could those.

Speaker Change #102: Those things could change, especially coming into year end, but you know.

Speaker Change #102: A handful of basis points, right, now, which is material, but where where our book is resetting is basically high very high fours low fives as.

Speaker Change #102: The new sort of fair.

Speaker Change #102: <unk> funds levels R. R.

Are going to impact our rolling repo positions.

Speaker Change #102: Give you some added color on that like so let's say this week.

Speaker Change #102: The market expects a pretty high probability cut in November.

Speaker Change #102: Less so in December, but theres, a lot of uncertainty around that right. So if you look at the.

Speaker Change #102: Fed funds futures curve through the balance of the year, it's consistent with what you see on the work stream right. So youre going to have something north of one <unk>.

Speaker Change #102: But you also know for instance that there could be some year end funding pressure, so what would be a three month.

Speaker Change #102: Repo today.

Speaker Change #102: It should factor in a combination of market pricing for certain eases.

And also maybe some funding pressure over a year end and if you go out and talk to dealers you can get a quite a wide range of levels that theyre going to offer you all reflecting a combination of that uncertainty in their bias.

Speaker Change #102: That can be quite wide and we got that saw that as low as 488 in north of five.

Speaker Change #102: So that channel.

Speaker Change #102: What we're seeing.

Speaker Change #103: Okay, now 100 and that was the Hunter you got it on the head there. So 18 to 20 over so far I mean, I'm seeing GC like $4 90 in the 18 to 20 over puts you at five and with 25 days average maturities.

Sort of rolled most of your repo by now.

Speaker Change #103: The marginal repo going through the quarter now should be closer to that five level and we'll see where it goes from here net well, we've got a fed meeting.

Speaker Change #103: So.

We'll see what happens.

Speaker Change #103: Markets still pricing here I'm pretty good profitability of 35 more so we'll.

Speaker Change #103: We will see how that goes and as we alluded to earlier, we've we've put a lot on that.

Speaker Change #103: We've put a lot of them that September contract coming into the fourth quarter. So I think we have $900 million.

Speaker Change #103:

Speaker Change #103: With with at least of what was it.

Speaker Change #104: 100, 100, or 120 525 basis points of eases baked into the.

Speaker Change #104: Market at the time, we put those on now.

Speaker Change #104: And this year, we're looking at probably 80 now.

Speaker Change #105: Got it and then the other question was just on where do you see.

Speaker Change #105: Marginal ROE I mean, if we look at <unk>.

Speaker Change #105: <unk> was a relatively good quarter for mortgages and when you look at pretty much any metric.

Plus two 2% total return it looks like it's a 17, 1% dividend on.

Speaker Change #105: Book at the end of the quarter plus the cost to operate so.

Do the marginal ROE hit that level, how are you thinking about marginal ROE is in your mind relative to the dividend.

Speaker Change #106: I think they are probably they are expanded slightly.

Speaker Change #106: But.

Speaker Change #107: As I said, we're not looking to push the dividend yield so I would say there.

Speaker Change #107: I don't have the number in front of me I got to be very high teens.

Speaker Change #107: Figure far yield five.

Speaker Change #107: <unk> versus something in the mid twos.

Speaker Change #107: You've got.

Speaker Change #107: Close to 300 over on a hedged basis.

Speaker Change #107: Depending on where you want to set your leverage if we're.

Speaker Change #107: We're not going to be pushing it so.

Speaker Change #107: We can clearly get to those kind of high teen numbers.

Speaker Change #107: With the park with park, who upon mortgages right now we sit hedging with 10 years.

Spread of 197 basis points over 10 year, so for swaps. So that's.

Speaker Change #107: Definitely a high teen operating environment.

And just one more on that I mean, how do you weigh in in your mind the potential to build book value.

In the sense that let's say, we are at 20, and you're paying out 2017, and so there is marginal growth in book.

If you didn't pay such a high dividend payout do you feel like you get credit for that dividend yield or do you feel like how do you weigh the two principal of retaining that capital.

Speaker Change #108: That's actually very topical discussion point with us and the board of late.

Speaker Change #107: <unk>.

Speaker Change #107: It's.

Speaker Change #107: Possibly more so in 'twenty five and 24 that was the last time, we had this discussion we're thinking that you're going to get more easing that it appears we are.

Speaker Change #109: So the question do you retain that you'd consider paying some tax.

Speaker Change #109: Our view generally is you don't get rewarded for that.

Speaker Change #109: If you pay a special dividend they tend to get discounted if you pay tax.

Speaker Change #109: It seems that might give you any benefit for that either.

Speaker Change #109: Which which tends to drive people to pay out what they earn.

Speaker Change #109: But I think that especially if we're in a rising rate environment. The extent, we can retain any it's something we'll give a very serious consideration.

Speaker Change #109: I think we're going to transition from an environment, where we were.

Speaker Change #109: Slightly over distributing to an environment, where we're a baby under distributing for a little bit and then we will have to make a decision into 'twenty five as too.

What to do to the extent that we have.

Speaker Change #109: <unk> obligations you know a lot of this is stemming from the fact that.

Our pay fixed swap rate is very low and so forth.

Speaker Change #109: It's already been mark to market for for GAAP purposes, but for tax we are going to have distribution requirements that we're gonna have to maintain so.

Speaker Change #109: I wouldn't expect to change anytime soon as Bob alluded to I think we can.

Speaker Change #109: What the leverage slide down a little bit in and maintain the dividend rate.

Speaker Change #109: And then at the end of 'twenty five.

We'll have to just take stock of where we sit with respect to our tax obligations and make a decision how we want to handle that.

Speaker Change #109: To the extent that we have some some have under distributed throughout the year.

Speaker Change #110: Okay. Thanks.

Thanks for the questions.

Speaker Change #110: Yep. Thank you.

Speaker Change #111: Thank you Mohan for next question.

Speaker Change #112: Our next question comes from the line of Christopher Nolan of Ladenburg Thalmann <unk> co. Your line is now open.

Christopher Nolan: Hey, guys Hey, Chris.

Christopher Nolan: A follow up to that previous question in terms of the yield and so forth.

Christopher Nolan: Bob when you're talking to the board or when you have discussions with the board.

Christopher Nolan: How do you guys tend to look at overall performance because the dividend yield is quite high but the book value has been good.

Christopher Nolan: Climbing down as you guys.

Christopher Nolan: You know for various reasons, including hitting the ATM pretty hard and just give a little color in terms of how you guys look at it I'm.

Speaker Change #113: Shareholder return well, we always look at relative total performed a total return.

Speaker Change #114: When we saw opportunities to grow the portfolio, where we're willing to run the ATM.

Speaker Change #113: We did so.

Speaker Change #113: Very modest discounts to book I think given where returns are.

Speaker Change #113: It was very much justified.

Obviously now that's not the case, so we're not going to be using that we in fact, you actually bought back some shares very late in the quarter.

Speaker Change #113: When we traded down.

Speaker Change #113: But no it's always total return on a relative basis.

Speaker Change #113: Our times when we were anxious to grow the portfolio gained scale. So we ran the leverage on the high end, we had a high dividend as you well know one of the highest yields in this space and that allowed us to grow and reach some scale.

Speaker Change #113: That's not so much the case now.

Speaker Change #113: We were raising money in the ATM in Q2, and three because we thought we were on the verge of a fed easing cycle potentially any aggressive easing cycle, a steepening of the curve.

Speaker Change #113: In an environment, where it would be very attractive for both book value performance and net interest margin.

Speaker Change #113: Not so much sure. That's the case now as a result, we'll pull back from that that even to the point of as Hunter just alluded to maybe even looking at slightly under distributions. So now there was a time when we are more aggressive with our duration, our leverage and the dividend to try to grow that.

Speaker Change #113: That's probably behind us for the time being and maybe for quite a while we'll see.

Speaker Change #113: Now, it's more of a defensive posture.

Speaker Change #113: And in all cases.

Speaker Change #113: <unk> would look at Tullow return, but they also get on what we were trying to do for instance, as I, just said grow the portfolio and run the deleverage on the high end with that caveat. They understood that so to the extent, we were running a higher leverage than everybody else and we got a violent sell off and we underperformed.

Speaker Change #113: They are aware of that because they are a part of the decision.

Speaker Change #115: Okay. Thank you and then also how did you guys have.

Speaker Change #116: <unk> economic EPS number which includes such income and discount accretion.

Speaker Change #117: And we do not we did not put that in that table in there. We found when we did it in the prior two quarters that it generate tended to generate more questions than answers.

Speaker Change #117: We've kind of gotten away from that.

But.

Speaker Change #118: I don't know if its in the Q, which is coming out a little later today.

Speaker Change #118: I don't think we have that.

Speaker Change #118: If you call I can try to get you that I don't have it off the top my head.

Speaker Change #119: Yeah that'd be helpful.

Speaker Change #120: Okay. Thanks, guys.

Chris: Alright, Thanks, Chris.

Thank you Amit.

Speaker Change #122: Our next question again as a reminder to ask a question you will need to press star one on your telephone.

Speaker Change #123: Our next question comes from the line of Eric Hagen of <unk>. Your line is now open.

Eric Hagen: Hey, Thanks, good morning.

Eric Hagen: Hey, how are we doing.

Eric Hagen: So how do you guys think about the size of the proportion of the TBA position right now.

Eric Hagen: And if mortgage spreads were wider do you feel like that would potentially lead you to raise your leverage or adjust maybe adjusted TBA. How do you guys think about that.

Eric Hagen: Thank you.

Eric Hagen: It's also a question on where we see the TBA shorts.

Eric Hagen: Might start considering moving most of the higher coupons.

Eric Hagen: Given that they may be the most vulnerable as I mentioned too bearish sleeper.

Speaker Change #124: It was easier to do them with three is just because.

Speaker Change #124: Those are fully extended and those are pretty good hedge instruments.

Speaker Change #124: But I think as we're looking at a potential for a steepening curve steepen, our bare steepen or it might be more in the higher coupons, yes, we.

We're always looking at.

Speaker Change #124: The roll levels and implied funding too.

Speaker Change #125: Give us a sense for.

Speaker Change #125: If something's Richard shape, there's been opportunities to sort of buy specified pools hedging with <unk> and have the tpa is actually contribute a little bit to.

Speaker Change #125: To the to the earnings picture.

Speaker Change #125: We also like to look at depending where we are in the rate cycle now that we're bumping up kind of back towards that higher end at the convexity of the of the stack and.

Speaker Change #125: And use those are usually convexity of our short TBA.

Speaker Change #125: Should benefit us in the event we.

Speaker Change #126: Turnaround and have a rally did build in a little bit of protection I think that's what Bob was alluding to about the upper coupons.

Speaker Change #126: Finding the front end of the prior to finding something in the stack that has the worst convexity, whereas we approach kind of a <unk>.

Speaker Change #126: Higher end of the rate range. So that if we do turn around and get you know so we're simply a relief rally would help with the underperformance of the higher coupon.

Speaker Change #126: Mortgages, which are also going to have word convexity in that environment and also we had a lot of III shorts on for quite a while and that role is very negative for a long long time.

Speaker Change #126: So easily put that on.

Speaker Change #127: That's helpful color I appreciate that.

Speaker Change #128: Actually wanted to ask you about the Io and derivative position you guys have been pretty active there in the past how do you how do you see that position maybe.

Speaker Change #129: Get entitled our adjusted going forward and even the supply of <unk>.

Speaker Change #129: Agency derivatives.

No.

And in this environment.

Speaker Change #129: As stated the cover to change from here.

Speaker Change #129: It's interesting you say.

Speaker Change #129: Doing a lot of tire kicking running a lot of different Strats I think in general I don't love the profile of the.

Speaker Change #129: The.

Speaker Change #129: Legacy lower coupon iOS have good yields but.

They're kind of a mess from a from a hedging perspective.

Speaker Change #129: We are sort of or at least we're at the point, where we did have some some actual two sided risk with some of the more recent production.

Speaker Change #129: I have been where we have been very.

Speaker Change #129: Hesitant about doing too much and Io, especially in the really high coupons space, just because I think when you know if we ever get back to an environment, where mortgage rates are pushing 5% five 5%.

Speaker Change #129: Im not sure that the models are really dialed in for the refi explosion, that's going to occur for the production Thats been created over the last couple of years.

Speaker Change #129: So I tend to kind of.

Speaker Change #130: I think there is some uncertainty around there also though we have seen some fast speeds, particularly at Ginnie space and so there has been a cheapening there.

Speaker Change #130: So given all of what I just said there are some opportunities and we're where we're looking we just haven't jumped into quite yet and then of course this more recent sell office maker.

Speaker Change #130: Making it less compelling, but I think that over the medium term, we will look to opportunistically add when we can find.

Speaker Change #130: Kinds of.

Mortgage derivatives that have.

Speaker Change #130: The profiles that we like so something that is either a little bit in the money or kind of at the money and has some real upside so that we can.

We can use it to mitigate some of the duration of the portfolio, while simultaneously, providing a little bit of yield.

Speaker Change #130: And there is still huge demand for floaters on the CMO desks, so theres in versus being created.

And those were very popular a few months ago with everybody's thinking theyre getting the big easing cycle coming.

Speaker Change #131: Net cheapened up obviously yeah.

So we've looked at some men versus as well and I think there's still a lot of.

Speaker Change #131: Fed cuts priced into the next year.

Speaker Change #131: So I think there could be to the extent that.

Speaker Change #131: The market range on the.

Speaker Change #131: Fed easing parade.

Speaker Change #131: There could be some vulnerability in inverse io space, but they will definitely.

Speaker Change #131: Hap.

Speaker Change #131: Have there theyre moment.

Speaker Change #131: I just don't think it's quite yet.

Speaker Change #131: Yes.

Speaker Change #132: Always really appreciate the great color from you guys. Thank you.

Speaker Change #132: Yes.

Speaker Change #133: Thank you I'm showing no further questions at this time I would now like to turn it back to Robert Cauley for closing remarks.

Robert Cauley: Thank you operator, and thank everybody today.

Robert Cauley: To the extent anybody has any questions that come up after the call or if youre just listening to the replay and didn't have a chance to ask a question feel free to call. Chris I know you probably want to give us a shout to try to get you that number otherwise we look forward to talking to you all again at the end of the fourth quarter.

Have great holidays.

Robert Cauley: Well thank you.

Speaker Change #134: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Q3 2024 Orchid Island Capital Inc Earnings Call

Request a DemoDemo

ORC

Orchid Island Capital

Earnings