Orchid Island Capital, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements Page Report of Independent Registered Public Accounting Firm ( BDO USA, P.C. ; West Palm Beach, FL ; PCAOB ID# 243 ) 73 Balance Sheets 75 Statements of Comprehensive Income (Loss) 76 Statements of Stockholders’ Equity 77 Statements of Cash Flows 78 Notes to Financial Statements 79 72 Table of Contents Report of Independent Registered Public Accounting Firm Stockholders and Board of Directors Orchid Island Capital, Inc. Vero Beach, Florida Opinion on the Financial Statements We have audited the accompanying balance sheets of Orchid Island Capital, Inc. (the “Company”) as of December 31, 2023 and 2022, the related statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 , in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 23, 2024, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. 73 Table of Contents Valuation of Investments in Mortgage-Backed Securities As described in Notes 1 and 13 to the financial statements, the Company accounts for its mortgage-backed securities at fair value, which totaled $3.9 billion at December 31, 2023. The fair value of mortgage-backed securities is based on independent pricing sources and/or third-party broker quotes, when available. Because the price estimates may vary, the Company must make certain judgments and assumptions about the appropriate price to use to calculate the fair values based on various techniques including observing the most recent transactions for like or identical assets (including security coupon rate, maturity, yield, prepayment speed), market credit spreads, and model driven approaches. We identified the valuation of mortgage-backed securities as a critical audit matter.  The principal considerations for our determination are: (i) the potential for bias in how the Company subjectively selects the price from multiple pricing sources to determine the fair value of the mortgage-backed securities and (ii) the audit effort involved, including the involvement of valuation professionals with specialized skill and knowledge.    The primary procedures we performed to address this critical audit matter included:   ● Testing the design, implementation, and operating effectiveness of controls relating to the valuation of mortgaged-backed securities in the Company’s process to select the price from multiple pricing sources to determine the fair value.  ● Assessing the range of values used for each investment position, and evaluating the price selected for potential bias by comparing the selected price to the high, low and average of the range of pricing sources.    ● Utilizing personnel with specialized knowledge and skill in valuation to develop an independent estimate of the fair value of each investment position by: (i) assessing the stated security coupon rate, maturity, yield, and prepayment speed, and comparing to the fair value used by the Company; (ii) comparing the Company’s fair value estimate of mortgage-backed securities to recent available market transactions, if available. /s/ BDO USA, P.C. Certified Public Accountants We have served as the Company's auditor since 2011. West Palm Beach, Florida February 23, 2024 74 Table of Contents ORCHID ISLAND CAPITAL, INC. BALANCE SHEETS ($ in thousands, except per share data) December 31, 2023 December 31, 2022 ASSETS: Mortgage-backed securities, at fair value (includes pledged assets of $ 3,885,554 and $ 3,512,640 , respectively) $ 3,894,012 $ 3,540,002 U.S. Treasury securities, at fair value (includes pledged assets of $ 36,382 at December 31, 2022) - 36,382 U.S. Treasury securities, available-for-sale (includes pledged assets of $ 79,680 at December 31, 2023) 148,820 - Cash and cash equivalents 171,893 205,651 Restricted cash 28,396 31,568 Accrued interest receivable 14,951 11,519 Derivative assets 6,420 40,172 Other assets 455 442 Total Assets $ 4,264,947 $ 3,865,736 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Repurchase agreements $ 3,705,649 $ 3,378,445 Payable for investment securities and TBA transactions 60,454 - Dividends payable 6,222 5,908 Derivative liabilities 12,694 7,161 Accrued interest payable 7,939 9,209 Due to affiliates 1,013 1,131 Other liabilities 1,031 25,119 Total Liabilities 3,795,002 3,426,973 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $ 0.01 par value; 20,000,000 shares authorized; no shares issued and outstanding as of December 31, 2023 and December 31, 2022 - - Common Stock, $ 0.01 par value; 100,000,000 shares authorized, 51,636,074 shares issued and outstanding as of December 31, 2023 and 36,764,983 shares issued and outstanding as of December 31, 2022 516 368 Additional paid-in capital 849,845 779,602 Accumulated deficit ( 380,433 ) ( 341,207 ) Accumulated other comprehensive income 17 - Total Stockholders' Equity 469,945 438,763 Total Liabilities and Stockholders' Equity $ 4,264,947 $ 3,865,736 See Notes to Financial Statements 75 Table of Contents ORCHID ISLAND CAPITAL, INC. STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Years Ended December 31, 2023, 2022 and 2021 ($ in thousands, except per share data) 2023 2022 2021 Interest income $ 177,569 $ 144,633 $ 134,700 Interest expense ( 201,918 ) ( 61,708 ) ( 7,090 ) Net interest (expense) income ( 24,349 ) 82,925 127,610 Realized losses on mortgage-backed securities ( 22,642 ) ( 133,695 ) ( 5,542 ) Unrealized losses on mortgage-backed securities and U.S. Treasury securities ( 18,941 ) ( 642,710 ) ( 198,454 ) Gains on derivative instruments 45,237 452,476 26,492 Net portfolio loss ( 20,695 ) ( 241,004 ) ( 49,894 ) Expenses: Management fees 10,491 10,447 8,156 Allocated overhead 2,389 2,042 1,632 Incentive compensation 1,419 957 1,132 Directors' fees and liability insurance 1,322 1,251 1,169 Audit, legal and other professional fees 1,495 1,143 1,112 Direct REIT operating expenses 715 831 1,090 Other administrative 700 778 575 Total expenses 18,531 17,449 14,866 Net loss $ ( 39,226 ) $ ( 258,453 ) $ ( 64,760 ) Unrealized gains on U.S. Treasury securities measured at fair value through other comprehensive net loss $ 17 $ - $ - Comprehensive net loss $ ( 39,209 ) $ ( 258,453 ) $ ( 64,760 ) Basic and diluted net loss per share $ ( 0.89 ) $ ( 6.90 ) $ ( 2.67 ) Weighted Average Shares Outstanding 44,649,039 37,464,671 24,228,865 See Notes to Financial Statements 76 Table of Contents ORCHID ISLAND CAPITAL, INC. STATEMENTS OF STOCKHOLDERS' EQUITY For the Years Ended December 31, 2023, 2022 and 2021 (in thousands) Additional Retained Other Common Stock Paid-in Earnings Comprehensive Shares Par Value Capital (Deficit) Income Total Balances, January 1, 2021 15,215 $ 152 $ 433,133 $ ( 17,994 ) $ - $ 415,291 Net loss - - - ( 64,760 ) - ( 64,760 ) Cash dividends declared - - ( 97,601 ) - - ( 97,601 ) Issuance of common stock pursuant to public offerings, net 20,166 202 513,857 - - 514,059 Stock based awards and amortization 18 - 1,108 - - 1,108 Shares repurchased and retired - - - - - - Balances, December 31, 2021 35,399 354 850,497 ( 82,754 ) - 768,097 Net loss - - - ( 258,453 ) - ( 258,453 ) Cash dividends declared - - ( 87,906 ) - - ( 87,906 ) Issuance of common stock pursuant to public offerings, net 3,885 38 40,542 - - 40,580 Stock based awards and amortization 30 - 1,055 - - 1,055 Shares repurchased and retired ( 2,549 ) ( 24 ) ( 24,586 ) - - ( 24,610 ) Balances, December 31, 2022 36,765 368 779,602 ( 341,207 ) - 438,763 Net loss - - - ( 39,226 ) - ( 39,226 ) Unrealized gain on available-for-sale securities - - - - 17 17 Cash dividends declared - - ( 81,127 ) - - ( 81,127 ) Issuance of common stock pursuant to public offerings, net 15,880 157 159,281 - - 159,438 Stock based awards and amortization 64 1 1,503 - - 1,504 Shares repurchased and retired ( 1,073 ) ( 10 ) ( 9,414 ) - - ( 9,424 ) Balances, December 31, 2023 51,636 $ 516 $ 849,845 $ ( 380,433 ) $ 17 $ 469,945 See Notes to Financial Statements 77 Table of Contents ORCHID ISLAND CAPITAL, INC. STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2023, 2022 and 2021 ($ in thousands) 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 39,226 ) $ ( 258,453 ) $ ( 64,760 ) Adjustments to reconcile net loss to net cash provided by operating activities: Stock based compensation 1,198 685 772 Discount accretion on U.S. Treasury Bills ( 1,875 ) - - Realized losses on mortgage-backed securities 22,642 133,695 5,542 Unrealized losses on mortgage-backed securities and U.S. Treasury securities 18,941 642,710 198,454 Realized and unrealized losses (gains) on derivative instruments 10,616 ( 245,421 ) ( 35,350 ) Changes in operating assets and liabilities: Accrued interest receivable ( 3,432 ) 7,340 ( 9,138 ) Other assets ( 7 ) ( 128 ) 196 Accrued interest payable ( 1,270 ) 8,421 ( 369 ) Other liabilities 534 454 663 Due to affiliates ( 118 ) 69 430 NET CASH PROVIDED BY OPERATING ACTIVITIES 8,003 289,372 96,440 CASH FLOWS FROM INVESTING ACTIVITIES: From mortgage-backed securities investments: Purchases ( 1,521,070 ) ( 1,004,526 ) ( 6,430,725 ) Sales and maturities 797,633 2,759,919 2,851,708 Principal repayments 326,720 440,094 591,086 Purchases of U.S. Treasury securities ( 97,787 ) - ( 37,440 ) Maturity of U.S. Treasury securities 37,500 - - Net proceeds from derivative instruments 15,940 245,335 8,571 NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES ( 441,064 ) 2,440,822 ( 3,016,800 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from repurchase agreements 37,761,388 40,040,024 35,950,241 Principal payments on repurchase agreements ( 37,434,184 ) ( 42,905,685 ) ( 33,301,721 ) Cash dividends paid ( 80,754 ) ( 93,494 ) ( 90,984 ) Proceeds from issuance of common stock, net of issuance costs 159,438 40,580 514,059 Common stock repurchases, including shares withheld from employee stock awards for payment of taxes ( 9,757 ) ( 24,842 ) ( 299 ) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 396,131 ( 2,943,417 ) 3,071,296 NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 36,930 ) ( 213,223 ) 150,936 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of the period 237,219 450,442 299,506 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of the period $ 200,289 $ 237,219 $ 450,442 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 203,188 $ 53,288 $ 7,458 See Notes to Financial Statements 78 Table of Contents ORCHID ISLAND CAPITAL, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2023 NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization and Business Description Orchid Island Capital, Inc. (“Orchid” or the “Company”), was incorporated in Maryland on August 17, 2010 for the purpose of creating and managing a leveraged investment portfolio consisting of residential mortgage-backed securities (“RMBS”). From incorporation to the completion of Orchid's initial public offering of its common stock on February 20, 2013 Orchid was a wholly owned subsidiary of Bimini Capital Management, Inc. (“Bimini”). Orchid began operations on November 24, 2010 ( the date of commencement of operations). From incorporation through November 24, 2010, Orchid’s only activity was the issuance of common stock to Bimini. On August 4, 2020, Orchid entered into an equity distribution agreement (the “August 2020 Equity Distribution Agreement”) with four sales agents pursuant to which the Company could offer and sell, from time to time, up to an aggregate amount of $ 150,000,000 of shares of the Company’s common stock in transactions that were deemed to be “at the market” offerings and privately negotiated transactions. The Company issued a total of 5,498,730 shares under the August 2020 Equity Distribution Agreement for aggregate gross proceeds of approximately $ 150.0 million, and net proceeds of approximately $ 147.4 million, after commissions and fees, prior to its termination in June 2021. On January 20, 2021, Orchid entered into an underwriting agreement (the “January 2021 Underwriting Agreement”) with J.P. Morgan Securities LLC (“J.P. Morgan”), relating to the offer and sale of 1,520,000 shares of the Company’s common stock. J.P. Morgan purchased the shares of the Company’s common stock from the Company pursuant to the January 2021 Underwriting Agreement at $ 26.00 per share. In addition, the Company granted J.P. Morgan a 30 -day option to purchase up to an additional 228,000 shares of the Company’s common stock on the same terms and conditions, which J.P. Morgan exercised in full on January 21, 2021. The closing of the offering of 1,748,000 shares of the Company’s common stock occurred on January 25, 2021, with proceeds to the Company of approximately $ 45.2 million, after deduction of underwriting discounts and commissions and other estimated offering expenses. On March 2, 2021, Orchid entered into an underwriting agreement (the “March 2021 Underwriting Agreement”) with J.P. Morgan, relating to the offer and sale of 1,600,000 shares of the Company’s common stock. J.P. Morgan purchased the shares of the Company’s common stock from the Company pursuant to the March 2021 Underwriting Agreement at $ 27.25 per share. In addition, the Company granted J.P. Morgan a 30 -day option to purchase up to an additional 240,000 shares of the Company’s common stock on the same terms and conditions, which J.P. Morgan exercised in full on March 3, 2021. The closing of the offering of 1,840,000 shares of the Company’s common stock occurred on March 5, 2021, with proceeds to the Company of approximately $ 50.0 million, after deduction of underwriting discounts and commissions and other estimated offering expenses. On June 22, 2021, Orchid entered into an equity distribution agreement (the “June 2021 Equity Distribution Agreement”) with four sales agents pursuant to which the Company could offer and sell, from time to time, up to an aggregate amount of $ 250,000,000 of shares of the Company’s common stock in transactions that were deemed to be “at the market” offerings and privately negotiated transactions. The Company issued a total of 9,881,467 shares under the June 2021 Equity Distribution Agreement for aggregate gross proceeds of approximately $ 250.0 million, and net proceeds of approximately $ 246.0 million, after commissions and fees, prior to its termination in October 2021. On October 29, 2021, Orchid entered into an equity distribution agreement (the “October 2021 Equity Distribution Agreement”) with four sales agents pursuant to which the Company could offer and sell, from time to time, up to an aggregate amount of $ 250,000,000 of shares of the Company’s common stock in transactions that were deemed to be “at the market” offerings and privately negotiated transactions. The Company issued a total of 9,742,188 shares under the October 2021 Equity Distribution Agreement for aggregate gross proceeds of approximately $ 151.8 million, and net proceeds of approximately $ 149.3 million, after commissions and fees, prior to its termination in March 2023. 79 Table of Contents On March 7, 2023, Orchid entered into an equity distribution agreement (the “March 2023 Equity Distribution Agreement”) with three sales agents pursuant to which the Company may offer and sell, from time to time, up to an aggregate amount of $ 250,000,000 of shares of the Company’s common stock in transactions that are deemed to be “at the market” offerings and privately negotiated transactions. Through December 31, 2023 , the Company issued a total of 13,190,039 shares under the March 2023 Equity Distribution Agreement for aggregate gross proceeds of approximately $ 129.9 million, and net proceeds of approximately $ 127.8 million, after commissions and fees. Basis of Presentation and Use of Estimates The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could significantly differ from those estimates. The significant estimates affecting the accompanying financial statements are the fair values of RMBS and derivatives. Management believes the estimates and assumptions underlying the financial statements are reasonable based on the information available as of December 31, 2023 . Reclassification of Comparative Period Information The Company previously reported $ 3.3 million and $ 0.4 million of commissions, fees and other expenses associated with its derivative holdings for the years ended December 31, 2022 and 2021, respectively, in "Direct REIT operating expenses" in the statements of comprehensive income (loss). These expenses have been reclassified as part of "Gains (losses) on derivative and other hedging instruments" to conform with the presentation in the current period. Common Stock Reverse Split On August 30, 2022, the Company effected a 1 -for- 5 reverse stock split of its common stock and proportionately decreased the number of authorized shares of common stock. All share, per share, deferred stock unit ("DSU") and performance unit ("PU") information has been retroactively adjusted to reflect the reverse split. The shares of common stock retain a par value of $ 0.01 per share. Variable Interest Entities (VIEs) The Company obtains interests in VIEs through its investments in mortgage-backed securities. The Company's interests in these VIEs are passive in nature and are not expected to result in the Company obtaining a controlling financial interest in these VIEs in the future. As a result, the Company does not consolidate these VIEs and accounts for these interests in these VIEs as mortgage-backed securities. See Note 2 for additional information regarding the Company's investments in mortgage-backed securities. The maximum exposure to loss for these VIEs is the carrying value of the mortgage-backed securities. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents include cash on deposit with financial institutions and highly liquid investments with original maturities of three months or less at the time of purchase. Restricted cash includes cash pledged as collateral for repurchase agreements and other borrowings, and interest rate swaps and other derivative instruments. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows. (in thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 171,893 $ 205,651 Restricted cash 28,396 31,568 Total cash, cash equivalents and restricted cash $ 200,289 $ 237,219 80 Table of Contents The Company maintains cash balances at three banks, a government securities backed overnight sweep fund, and excess margin on account with three exchange clearing members. At times, balances may exceed federally insured limits. The Company has not experienced any losses related to these balances. The Federal Deposit Insurance Corporation insures eligible accounts up to $250,000 per depositor at each financial institution. Restricted cash balances are uninsured, but are held in separate customer accounts that are segregated from the general funds of the counterparty. The Company limits uninsured balances to only large, well-known banks and exchange clearing members and believes that it is not exposed to any significant credit risk on cash and cash equivalents or restricted cash balances. Mortgage-Backed Securities and U.S. Treasury Securities The Company invests primarily in mortgage pass-through (“PT”) residential mortgage backed securities (“RMBS”) and collateralized mortgage obligations (“CMOs”) issued by Freddie Mac, Fannie Mae or Ginnie Mae, interest-only (“IO”) securities and inverse interest-only (“IIO”) securities representing interest in or obligations backed by pools of RMBS. The Company refers to RMBS and CMOs as PT RMBS and IO and IIO securities as structured RMBS. The Company also invests in U.S. Treasury Notes and U.S. Treasury Bills, primarily to satisfy collateral requirements of derivative counterparties. The Company has elected to account for its investment in RMBS and U.S. Treasury Notes under the fair value option. Electing the fair value option requires the Company to record changes in fair value in the statements of comprehensive income (loss), which, in management’s view, more appropriately reflects the results of the Company's operations for a particular reporting period and is consistent with the underlying economics and how the portfolio is managed. The Company has designated its U.S. Treasury Bills as available-for-sale. The Company records securities transactions on the trade date. Security purchases that have not settled as of the balance sheet date are included in the portfolio balance with an offsetting liability recorded, whereas securities sold that have not settled as of the balance sheet date are removed from the portfolio balance with an offsetting receivable recorded. Fair value is defined as the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability either occurs in the principal market for the asset or liability, or in the absence of a principal market, occurs in the most advantageous market for the asset or liability. Estimated fair values for RMBS are based on independent pricing sources and/or third party broker quotes, when available. Estimated fair values for U.S. Treasury securities are based on quoted prices for identical assets in active markets. Income on PT RMBS and U.S. Treasury Notes is based on the stated interest rate of the security. Premiums or discounts present at the date of purchase are not amortized. Premium lost and discount accretion resulting from monthly principal repayments are reflected in unrealized gains (losses) on RMBS in the statements of comprehensive income (loss). For IO securities, the income is accrued based on the carrying value and the effective yield. The difference between income accrued and the interest received on the security is characterized as a return of investment and serves to reduce the asset’s carrying value. At each reporting date, the effective yield is adjusted prospectively for future reporting periods based on the new estimate of prepayments and the contractual terms of the security. For IIO securities, effective yield and income recognition calculations also take into account the index value applicable to the security. Changes in fair value of investments for which the fair value option is elected are recorded in earnings and reported as unrealized gains or losses on mortgage-backed securities and U.S. Treasury securities in the accompanying statements of comprehensive income (loss). Realized gains and losses on sales of investments for which the fair value option has been elected, using the specific identification method, are reported as a separate component of net portfolio income on the statements of comprehensive income (loss). U.S. Treasury Bills are zero -coupon bonds that are purchased at a discount to the par amount. This discount is accreted into income over the life of the investment and reported in the statements of comprehensive income (loss) as interest income. Changes in fair value of U.S. Treasury Bills that are classified as available-for-sale are reported in accumulated other comprehensive income ("OCI"). Upon the sale of a security designated as available-for-sale, we determine the cost of the security and the amount of unrealized gain or loss to reclassify out of accumulated OCI into earnings based on the specific identification method. The Company evaluated securities for allowance for credit losses and since all of the Company's available-for-sale securities designated investments consist of U.S. Treasury securities, which are backed by the full faith and credit of the U.S. government, the Company does not record an allowance for credit losses. Derivative Financial Instruments The Company uses derivative and other hedging instruments to manage interest rate risk, facilitate asset/liability strategies and manage other exposures, and it may continue to do so in the future. The principal instruments that the Company has used to date are Treasury Note (“T-Note”), SOFR, federal funds ("Fed Funds") and Eurodollar futures contracts, short positions in U.S. Treasury securities, interest rate swaps, options to enter in interest rate swaps (“interest rate swaptions”) , interest rate caps and TBA securities transactions, but the Company may enter into other derivative and other hedging instruments in the future. 81 Table of Contents The Company accounts for TBA securities as derivative instruments. Gains and losses associated with TBA securities transactions are reported in gain (loss) on derivative instruments in the accompanying statements of comprehensive income (loss). Derivative and other hedging instruments are carried at fair value, and changes in fair value are recorded in statements of comprehensive income (loss) as gains or losses on derivative and other hedging instruments for each period. The Company’s derivative financial instruments are not designated as hedge accounting relationships, but rather are used as economic hedges of its portfolio assets and liabilities. Gains and losses on derivatives, except those that result in cash receipts or payments, are included in operating activities on the statements of cash flows. Cash payments and cash receipts from settlements of derivatives, including current period net cash settlements on interest rates swaps, are classified as an investing activity on the statements of cash flows. Holding derivatives creates exposure to credit risk related to the potential for failure on the part of counterparties and exchanges to honor their commitments. In the event of default by a counterparty, the Company may have difficulty recovering its collateral and may not receive payments provided for under the terms of the agreement. The Company’s derivative agreements require it to post or receive collateral to mitigate such risk. In addition, the Company uses only registered central clearing exchanges and well-established commercial banks as counterparties, monitors positions with individual counterparties and adjusts posted collateral as required. Financial Instruments The fair value of financial instruments for which it is practicable to estimate that value is disclosed, either in the body of the financial statements or in the accompanying notes. RMBS, Fed Funds, SOFR and T-Note futures contracts, interest rate swaps, interest rate swaptions, interest rate caps and TBA securities are accounted for at fair value in the balance sheets. The methods and assumptions used to estimate fair value for these instruments are presented in Note 13 of the financial statements. Repurchase Agreements The Company finances the acquisition of the majority of its RMBS through the use of repurchase agreements under master repurchase agreements. Repurchase agreements are accounted for as collateralized financing transactions, which are carried at their contractual amounts, including accrued interest, as specified in the respective agreements. Manager Compensation The Company is externally managed by Bimini Advisors, LLC (the “Manager” or “Bimini Advisors”), a Maryland limited liability company and wholly-owned subsidiary of Bimini. The Company’s management agreement with the Manager provides for payment to the Manager of a management fee and reimbursement of certain operating expenses, which are accrued and expensed during the period for which they are earned or incurred. Refer to Note 14 for the terms of the management agreement. Earnings Per Share Basic earnings per share (“EPS”) is calculated as net income or loss attributable to common stockholders divided by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is calculated using the treasury stock or two -class method, as applicable, for common stock equivalents, if any. However, the common stock equivalents are not included in computing diluted EPS if the result is anti-dilutive. Stock-Based Compensation The Company may grant equity-based compensation to non-employee members of its board of directors and to the executive officers and employees of the Manager. Stock-based awards issued include Performance Units ("PUs"), Deferred Stock Units ("DSUs") and immediately vested common stock awards. Compensation expense is measured and recognized for all stock-based payment awards made to employees and non-employee directors based on the fair value of our common stock on the date of grant. Compensation expense is recognized over each award’s respective service period using the graded vesting attribution method. We do not estimate forfeiture rates; rather, we adjust for forfeitures in the periods in which they occur. Income Taxes Orchid elected and is organized and operated so as to qualify to be taxed as a REIT under the Code. REITs are generally not subject to U.S. federal income tax on their REIT taxable income provided that they distribute to their stockholders all of their REIT taxable income on an annual basis. A REIT must distribute at least 90% of its REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gain, and meet other requirements of the Code to retain its tax status. 82 Table of Contents Orchid assesses the likelihood, based on their technical merit, that uncertain tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period. All of Orchid’s tax positions are categorized as highly certain. There is no accrual for any tax, interest or penalties related to Orchid’s tax position assessment. The measurement of uncertain tax positions is adjusted when new information is available, or when an event occurs that requires a change. Recent Accounting Pronouncements In March 2020, the FASB issued ASU 2020 - 04 “ Reference Rate Reform (Topic 848 ): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ” ASU 2020 - 04 provides optional expedients and exceptions to GAAP requirements for modifications on debt instruments, leases, derivatives, and other contracts, related to the expected market transition from the London Interbank Offered Rate (“LIBOR”), and certain other floating rate benchmark indices, or collectively, IBORs, to alternative reference rates. ASU 2020 - 04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. The guidance in ASU 2020 - 04 is optional and may be elected over time, through December 31, 2022, as reference rate reform activities occur. In December 2022, the FASB issued ASU 2022 - 06 "Reference Rate Reform (Topic 848 )," deferring the sunset date provided in ASU 2020 - 04 from December 31, 2022 to December 31, 2024. The Company adopted this ASU during the second quarter of 2023 as the Secured Overnight Financing Rate ("SOFR") replaced LIBOR for certain derivative positions. The adoption of this ASU did not have a material impact on its financial statements. In January 2021, the FASB issued ASU 2021 - 01 “ Reference Rate Reform (Topic 848 ).” ASU 2021 - 01 expands the scope of ASC 848 to include all affected derivatives and give market participants the ability to apply certain aspects of the contract modification and hedge accounting expedients to derivative contracts affected by the discounting transition. In addition, ASU 2021 - 01 adds implementation guidance to permit a company to apply certain optional expedients to modifications of interest rate indexes used for margining, discounting or contract price alignment of certain derivatives as a result of reference rate reform initiatives and extends optional expedients to account for a derivative contract modified as a continuation of the existing contract and to continue hedge accounting when certain critical terms of a hedging relationship change to modifications made as part of the discounting transition. The guidance in ASU 2021 - 01 is effective immediately and available generally through December 31, 2024, as reference rate reform activities occur. The Company adopted this ASU during the second quarter of 2023 as SOFR replaced LIBOR for certain derivative positions. The adoption of this ASU did not have a material impact on its financial statements. NOTE 2. MORTGAGE-BACKED SECURITIES AND U.S. TREASURY SECURITIES, AT FAIR VALUE The following table presents the Company’s RMBS portfolio that are remeasured at fair value through earnings as of December 31, 2023 and December 31, 2022 : (in thousands) December 31, 2023 December 31, 2022 Par Value Cost (1) Fair Value Par Value Cost (1) Fair Value Pass-Through RMBS Certificates: Fixed-rate Mortgages $ 4,051,145 $ 4,198,424 $ 3,877,082 $ 3,848,367 $ 4,088,165 $ 3,519,906 Total Pass-Through Certificates 4,051,145 4,198,424 3,877,082 3,848,367 4,088,165 3,519,906 Structured RMBS Certificates: Interest-Only Securities (2) n/a 19,839 16,572 n/a 22,395 19,669 Inverse Interest-Only Securities (3) n/a 1,825 358 n/a 2,147 427 Total Structured RMBS Certificates - 21,664 16,930 - 24,542 20,096 Total $ 4,051,145 $ 4,220,088 $ 3,894,012 $ 3,848,367 $ 4,112,707 $ 3,540,002 ( 1 ) The cost information in the table above represents the aggregate current par value, multiplied by the purchase price of each security in the portfolio. ( 2 ) The notional balance for the interest-only securities portfolio was $ 98.6 million and $ 111.5 million as of December 31, 2023 and 2022, respectively. ( 3 ) The notional balance for the inverse interest-only securities portfolio was $ 26.8 million and $ 31.5 million as of December 31, 2023 and 2022, respectively. As of December 31, 2022, the Company held U.S. Treasury securities with a fair value of approximately $ 36.4 million, that were accounted for under the fair value option. U.S. Treasury securities are held primarily to satisfy collateral requirements of its repurchase and derivative counterparties. 83 Table of Contents The following table is a summary of the Company's net gain (loss) from the sale of mortgage-backed securities for the years ended December 31, 2023, 2022 and 2021 . (in thousands) 2023 2022 2021 Proceeds from sales of RMBS $ 797,633 $ 2,759,919 $ 2,851,708 Carrying value of RMBS sold ( 820,275 ) ( 2,893,614 ) ( 2,857,250 ) Net loss on sales of RMBS $ ( 22,642 ) $ ( 133,695 ) $ ( 5,542 ) Gross gain on sales of RMBS $ - $ 2,705 $ 7,930 Gross loss on sales of RMBS ( 22,642 ) ( 136,400 ) ( 13,472 ) Net loss on sales of RMBS $ ( 22,642 ) $ ( 133,695 ) $ ( 5,542 ) NOTE 3. U.S. TREASURY SECURITIES, AVAILABLE-FOR-SALE As of December 31, 2023 , the Company held U.S. Treasury securities with a fair value of approximately $ 148.8 million that were classified as available-for-sale. U.S. Treasury securities are held primarily to satisfy collateral requirements of its repurchase and derivative counterparties. The amortized cost, gross unrealized holding gains and losses, and fair value of available-for-sale investments as of December 31, 2023 are as follows: (in thousands) Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury Bill, 1/2/2024 Maturity $ 49,671 $ 9 $ - $ 49,680 U.S. Treasury Bill, 2/15/2024 Maturity 49,992 8 - 50,000 U.S. Treasury Bill, 4/30/2024 Maturity 49,140 - - 49,140 $ 148,803 $ 17 $ - $ 148,820 The Company had no securities classified as available-for-sale that were in an unrealized loss position as of December 31, 2023, 2022 and 2021 . NOTE 4. REPURCHASE AGREEMENTS The Company pledges certain of its RMBS as collateral under repurchase agreements with financial institutions. Interest rates are generally fixed based on prevailing rates corresponding to the terms of the borrowings, and interest is generally paid at the termination of a borrowing. If the fair value of the pledged securities declines, lenders will typically require the Company to post additional collateral or pay down borrowings to re-establish agreed upon collateral requirements, referred to as "margin calls." Similarly, if the fair value of the pledged securities increases, lenders may release collateral back to the Company. As of December 31, 2023 , the Company had met all margin call requirements. 84 Table of Contents As of December 31, 2023 and 2022 , the Company’s repurchase agreements had remaining maturities as summarized below: ($ in thousands) OVERNIGHT BETWEEN 2 BETWEEN 31 GREATER (1 DAY OR AND AND THAN LESS) 30 DAYS 90 DAYS 90 DAYS TOTAL December 31, 2023 Fair market value of securities pledged, including accrued interest receivable $ - $ 3,125,315 $ 710,055 $ 65,106 $ 3,900,476 Repurchase agreement liabilities associated with these securities $ - $ 2,966,650 $ 674,696 $ 64,303 $ 3,705,649 Net weighted average borrowing rate - 5.55 % 5.54 % 5.46 % 5.55 % December 31, 2022 Fair market value of securities pledged, including accrued interest receivable $ - $ 2,496,769 $ 884,632 $ 142,658 $ 3,524,059 Repurchase agreement liabilities associated with these securities $ - $ 2,404,329 $ 837,299 $ 136,817 $ 3,378,445 Net weighted average borrowing rate - 4.43 % 4.51 % 4.15 % 4.44 % In addition, cash pledged to counterparties as collateral for repurchase agreements was approximately $ 13.3 million as of December 31, 2022. If, during the term of a repurchase agreement, a lender files for bankruptcy, the Company might experience difficulty recovering its pledged assets, which could result in an unsecured claim against the lender for the difference between the amount loaned to the Company plus interest due to the counterparty and the fair value of the collateral pledged to such lender, including the accrued interest receivable and cash posted by the Company as collateral. At December 31, 2023 , the Company had an aggregate amount at risk (the difference between the amount loaned to the Company, including interest payable and securities posted by the counterparty (if any), and the fair value of securities and cash pledged (if any), including accrued interest on such securities) with all counterparties of approximately $ 176.5 million. The Company did not have an amount at risk with any individual counterparty that was greater than 10% of the Company’s equity at December 31, 2023 and 2022 . NOTE 5. DERIVATIVE AND OTHER HEDGING INSTRUMENTS The table below summarizes fair value information about the Company's derivative and other hedging instruments assets and liabilities as of December 31, 2023 and 2022 . (in thousands) Derivative and Other Hedging Instruments Balance Sheet Location December 31, 2023 December 31, 2022 Assets Interest rate swaps Derivative assets, at fair value $ 6,348 $ 4,983 Payer swaptions (long positions) Derivative assets, at fair value 72 33,398 Interest rate caps Derivative assets, at fair value - 1,119 TBA securities Derivative assets, at fair value - 672 Total derivative assets, at fair value $ 6,420 $ 40,172 Liabilities Interest rate swaps Derivative liabilities, at fair value $ - $ - Payer swaptions (short positions) Derivative liabilities, at fair value - 5,982 TBA securities Derivative liabilities, at fair value 12,694 1,179 Total derivative liabilities, at fair value $ 12,694 $ 7,161 Margin Balances Posted to (from) Counterparties Futures contracts Restricted cash $ 4,096 $ 16,493 TBA securities Restricted cash 23,720 1,734 Interest rate swaption contracts Restricted cash 580 - TBA securities Other liabilities - ( 532 ) Interest rate swaption contracts Other liabilities - ( 12,489 ) Total margin balances on derivative contracts $ 28,396 $ 5,206 85 Table of Contents T-Note and SOFR futures are cash settled futures contracts on an interest rate, with gains and losses credited or charged to the Company’s cash accounts on a daily basis. A minimum balance, or “margin”, is required to be maintained in the account on a daily basis. The tables below present information related to the Company’s T-Note and SOFR futures positions at December 31, 2023 and 2022 . ($ in thousands) December 31, 2023 Average Weighted Weighted Contract Average Average Notional Entry Effective Open Expiration Year Amount Rate Rate Equity(1) U.S. Treasury Note Futures Contracts (Short Positions) (2) March 2024 5-year T-Note futures (Mar 2024 - Mar 2029 Hedge Period) $ 421,500 4.36 % 4.04 % $ ( 9,936 ) March 2024 10-year Ultra futures (Mar 2024 - Mar 2034 Hedge Period) 320,000 4.38 % 4.39 % $ ( 11,393 ) SOFR Futures Contracts (Short Positions) June 2024 3-Month SOFR futures (Mar 2024 - Jun 2024 Hedge Period) $ 25,000 5.08 % 4.99 % $ ( 24 ) September 2024 3-Month SOFR futures (Jun 2024 - Sep 2024 Hedge Period) 25,000 4.67 % 4.52 % $ ( 39 ) December 2024 3-Month SOFR futures (Sep 2024 - Dec 2024 Hedge Period) 25,000 4.27 % 4.10 % $ ( 44 ) March 2025 3-Month SOFR futures (Dec 2024 - Mar 2025 Hedge Period) 25,000 3.90 % 3.73 % $ ( 43 ) June 2025 3-Month SOFR futures (Mar 2025 - Jun 2025 Hedge Period) 25,000 3.58 % 3.42 % $ ( 41 ) September 2025 3-Month SOFR futures (Jun 2025 - Sep 2025 Hedge Period) 25,000 3.37 % 3.21 % $ ( 39 ) December 2025 3-Month SOFR futures (Sep 2025 - Dec 2025 Hedge Period) 25,000 3.25 % 3.10 % $ ( 37 ) March 2026 3-Month SOFR futures (Dec 2025 - Mar 2026 Hedge Period) 25,000 3.21 % 3.07 % $ ( 35 ) ($ in thousands) December 31, 2022 Average Weighted Weighted Contract Average Average Notional Entry Effective Open Expiration Year Amount Rate Rate Equity(1) U.S. Treasury Note Futures Contracts (Short Position) (2) March 2023 5-year T-Note futures (Mar 2023 - Mar 2028 Hedge Period) $ 750,500 4.20 % 4.22 % $ ( 100 ) March 2023 10-year Ultra futures (Mar 2023 - Mar 2033 Hedge Period) 174,500 3.66 % 3.79 % $ 965 ( 1 ) Open equity represents the cumulative gains (losses) recorded on open futures positions from inception. ( 2 ) 5 -Year T-Note futures contracts were valued at a price of $ 108.77 at December 31, 2023 and $ 107.93 at December 31, 2022 . The contract values of the short positions were $ 458.5 million and $ 810.0 million at December 31, 2023 and 2022 , respectively. 10 -Year Ultra futures contracts were valued at price of $ 112.89 at December 31, 2023 and $ 118.28 at December 31, 2022 . The contract value of the short positions was $ 361.3 million and $ 206.4 million at December 31, 2023 and 2022 , respectively. 86 Table of Contents Under its interest rate swap agreements, the Company typically pays a fixed rate and receives a floating rate ("payer swaps") based on an index, such as SOFR. The floating rate the Company receives under its swap agreements has the effect of offsetting the repricing characteristics of its repurchase agreements and cash flows on such liabilities. The Company is typically required to post margin on its interest rate swap agreements. The table below presents information related to the Company’s interest rate swap positions at December 31, 2023 and 2022 . ($ in thousands) Average Fixed Average Average Notional Pay Receive Maturity Amount Rate Rate (Years) December 31, 2023 Expiration > 1 to ≤ 5 years $ 500,000 0.84 % 5.64 % 2.7 Expiration > 5 years 1,826,500 2.62 % 5.40 % 6.8 $ 2,326,500 2.24 % 5.45 % 5.9 December 31, 2022 Expiration > 1 to ≤ 5 years $ 500,000 0.84 % 4.75 % 3.7 Expiration > 5 years 900,000 1.70 % 4.23 % 6.6 $ 1,400,000 1.39 % 4.41 % 5.6 As of December 31, 2023, the table above includes swaps with aggregate notional amounts of $ 274.0 million that begin accruing interest February 24, 2024 with a weighted fixed pay rate of 3.43 % and a receive rate indexed to overnight SOFR. In accordance with procedures prescribed by the Chicago Mercantile Exchange ("CME"), all of the Company’s remaining LIBOR interest rate swaps cleared through the CME were converted into SOFR interest rate swaps, effective September 10, 2023. Our interest rate swaps are centrally cleared through two registered commodities exchanges, the CME and the London Clearing House (“LCH”). The clearing exchanges require that we post an "initial margin" amount determined by the exchanges. The initial margin amount is intended to be set at a level sufficient to protect the exchange from the interest rate swap's maximum estimated single-day price movement and is subject to adjustment based on changes in market volatility and other factors. We also exchange daily settlements of "variation margin" based upon changes in fair value, as measured by the exchanges. The table below presents information related to the Company's interest rate cap positions at December 31, 2022. The Company had no interest rate cap positions in place at December 31, 2023. ($ in thousands) Net Strike Estimated Notional Swap Curve Fair Expiration Amount Cost Rate Spread Value February 8, 2024 $ 200,000 $ 1,450 0.09 % 2Y10Y $ 1,119 The table below presents information related to the Company’s interest rate swaption positions at December 31, 2023 and 2022 . ($ in thousands) Option Underlying Swap Weighted Weighted Average Average Average Average Fair Months to Notional Fixed Adjustable Term Expiration Cost Value Expiration Amount Rate Rate (Years) December 31, 2023 Payer Swaptions (long positions) ≤ 1 year $ 1,619 $ 72 5.0 800,000 5.40 % SOFR 1.0 December 31, 2022 Payer Swaptions (long positions) ≤ 1 year $ 36,685 $ 21,253 9.6 1,250,000 4.09 % SOFR 10.0 > 1 year ≤ 2 years 11,021 12,145 239.5 120,000 2.05 % SOFR 10.0 $ 47,706 $ 33,398 29.8 $ 1,370,000 3.91 % SOFR 10.0 Payer Swaptions (short positions) ≤ 1 year $ ( 17,800 ) $ ( 5,982 ) 3.6 $ ( 917,000 ) 4.09 % SOFR 10.0 87 Table of Contents The following table summarizes the Company's contracts to purchase and sell TBA securities as of December 31, 2023 and 2022 . ($ in thousands) Notional Net Amount Cost Market Carrying Long (Short)(1) Basis(2) Value(3) Value(4) December 31, 2023 30-Year TBA securities: 3.0% $ ( 70,700 ) $ ( 59,278 ) $ ( 62,647 ) $ ( 3,369 ) 5.0% ( 250,000 ) ( 242,725 ) ( 247,657 ) ( 4,932 ) 5.5% ( 325,000 ) ( 322,410 ) ( 326,803 ) ( 4,393 ) Total $ ( 645,700 ) $ ( 624,413 ) $ ( 637,107 ) $ ( 12,694 ) December 31, 2022 30-Year TBA securities: 2.0% $ ( 175,000 ) $ ( 142,268 ) $ ( 143,145 ) $ ( 877 ) 3.0% ( 500,000 ) ( 440,644 ) ( 440,274 ) 370 Total $ ( 675,000 ) $ ( 582,912 ) $ ( 583,419 ) $ ( 507 ) ( 1 ) Notional amount represents the par value (or principal balance) of the underlying Agency RMBS. ( 2 ) Cost basis represents the forward price to be paid (received) for the underlying Agency RMBS. ( 3 ) Market value represents the current market value of the TBA securities (or of the underlying Agency RMBS) as of period-end. ( 4 ) Net carrying value represents the difference between the market value and the cost basis of the TBA securities as of period-end and is reported in derivative assets (liabilities), at fair value in the balance sheets. Gain (Loss) From Derivative and Other Hedging Instruments, Net The table below presents the effect of the Company’s derivative and other hedging instruments on the statements of comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021 . (in thousands) 2023 2022 2021 Futures contracts (short positions) $ 32,650 206,907 ( 1,026 ) Interest rate swaps 19,657 167,641 23,398 Payer swaptions (long positions) ( 8,734 ) 152,365 ( 2,580 ) Payer swaptions (short positions) 4,113 ( 81,050 ) 9,062 Interest rate caps ( 219 ) 919 - Interest rate floors (long positions) 1,785 - 2,765 Interest rate floors (short positions) ( 525 ) - - TBA securities (short positions) 1,370 4,494 3,432 TBA securities (long positions) ( 4,860 ) 1,200 ( 8,559 ) Total $ 45,237 $ 452,476 $ 26,492 Credit Risk-Related Contingent Features The use of derivatives and other hedging instruments creates exposure to credit risk relating to potential losses that could be recognized in the event that the counterparties to these instruments fail to perform their obligations under the contracts. The Company attempts to minimize this risk by limiting its counterparties for instruments which are not centrally cleared on a registered exchange to major financial institutions with acceptable credit ratings and monitoring positions with individual counterparties. In addition, the Company may be required to pledge assets as collateral for its derivatives, whose amounts vary over time based on the market value, notional amount and remaining term of the derivative contract. In the event of a default by a counterparty, the Company may not receive payments provided for under the terms of its derivative agreements, and may have difficulty obtaining its assets pledged as collateral for its derivatives. The cash and cash equivalents pledged as collateral for the Company's derivative instruments are included in restricted cash on its balance sheets. It is the Company's policy not to offset assets and liabilities associated with open derivative contracts. However, CME and LCH rules characterize variation margin transfers as settlement payments, as opposed to adjustments to collateral. As a result, derivative assets and liabilities associated with centrally cleared derivatives for which the CME or LCH serves as the central clearing party are presented as if these derivatives had been settled as of the reporting date. 88 Table of Contents NOTE 6. PLEDGED ASSETS Assets Pledged to Counterparties The table below summarizes the Company's assets pledged as collateral under our repurchase agreements and derivative agreements by type, including securities pledged related to securities sold but not yet settled, as of December 31, 2023 and 2022 . (in thousands) December 31, 2023 December 31, 2022 Repurchase Derivative Repurchase Derivative Assets Pledged to Counterparties Agreements Agreements Total Agreements Agreements Total PT RMBS - fair value $ 3,868,624 $ - $ 3,868,624 $ 3,492,544 $ - $ 3,492,544 Structured RMBS - fair value 16,930 - 16,930 20,096 - 20,096 U.S. Treasury securities - fair value - 79,680 79,680 - 36,382 36,382 Accrued interest on pledged securities 14,922 - 14,922 11,419 16 11,435 Restricted cash - 28,396 28,396 13,341 18,227 31,568 Total $ 3,900,476 $ 108,076 $ 4,008,552 $ 3,537,400 $ 54,625 $ 3,592,025 Assets Pledged from Counterparties The table below summarizes assets pledged to the Company from counterparties under repurchase agreements and derivative agreements as of December 31, 2023 and 2022 . (in thousands) December 31, 2023 December 31, 2022 Repurchase Derivative Repurchase Derivative Assets Pledged to Orchid Agreements Agreements Total Agreements Agreements Total Cash $ 42,179 $ - $ 42,179 $ 3,075 $ 13,021 $ 16,096 U.S. Treasury securities - fair value 10,429 - 10,429 197 - 197 Total $ 52,608 $ - $ 52,608 $ 3,272 $ 13,021 $ 16,293 U.S. Treasury securities received as margin under the Company's repurchase agreements are not recorded in the balance sheets because the counterparty retains ownership of the security. Cash received as margin is recognized in cash and cash equivalents with a corresponding amount recognized as an increase in repurchase agreements or other liabilities in the balance sheets. NOTE 7. OFFSETTING ASSETS AND LIABILITIES The Company’s derivative agreements and repurchase agreements are subject to underlying agreements with master netting or similar arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis in the case of repurchase agreements and for certain derivative agreements. CME and LCH rules characterize variation margin transfers as settlement payments, as opposed to adjustments to collateral. As a result, derivative assets and liabilities associated with centrally cleared derivatives for which the CME or LCH serves as the central clearing party are presented as if these derivatives had been settled as of the reporting date. 89 Table of Contents The following table presents information regarding those assets and liabilities subject to such arrangements as if the Company had presented them on a net basis as of December 31, 2023 and 2022 . (in thousands) Offsetting of Assets Net Amount Gross Amount Not Gross Gross of Assets Offset in the Balance Sheet Amount Amount Presented Financial of Offset in the in the Instruments Cash Recognized Balance Balance Received as Received as Net Assets Sheet Sheet Collateral Collateral Amount December 31, 2023 Interest rate swaps $ 6,348 $ - $ 6,348 $ - $ - $ 6,348 Interest rate swaptions 72 - 72 - - 72 $ 6,420 $ - $ 6,420 $ - $ - $ 6,420 December 31, 2022 Interest rate swaps $ 4,983 $ - $ 4,983 $ - $ - $ 4,983 Interest rate swaptions 33,398 - 33,398 - ( 12,489 ) 20,909 Interest rate caps 1,119 - 1,119 - - 1,119 TBA securities 672 - 672 - ( 532 ) 140 $ 40,172 $ - $ 40,172 $ - $ ( 13,021 ) $ 27,151 (in thousands) Offsetting of Liabilities Net Amount Gross Amount Not Gross Gross of Liabilities Offset in the Balance Sheet Amount Amount Presented Financial of Offset in the in the Instruments Recognized Balance Balance Posted as Cash Posted Net Liabilities Sheet Sheet Collateral Collateral Amount December 31, 2023 Repurchase Agreements $ 3,705,649 $ - $ 3,705,649 $ ( 3,705,649 ) $ - $ - TBA securities 12,694 - 12,694 - ( 12,694 ) - $ 3,718,343 $ - $ 3,718,343 $ ( 3,705,649 ) $ ( 12,694 ) $ - December 31, 2022 Repurchase Agreements $ 3,378,445 $ - $ 3,378,445 $ ( 3,365,104 ) $ ( 13,341 ) $ - Interest rate swaptions 5,982 - 5,982 - - 5,982 TBA securities 1,179 - 1,179 - ( 1,179 ) - $ 3,385,606 $ - $ 3,385,606 $ ( 3,365,104 ) $ ( 14,520 ) $ 5,982 The amounts disclosed for collateral received by or posted to the same counterparty up to and not exceeding the net amount of the asset or liability presented in the balance sheets. The fair value of the actual collateral received by or posted to the same counterparty typically exceeds the amounts presented. See Note 6 for a discussion of collateral posted or received against or for repurchase obligations and derivative and other hedging instruments. NOTE 8. CAPITAL STOCK Reverse Stock Split On August 30, 2022, the Company effected a 1 -for- 5 reverse stock split of its common stock and proportionately decreased the number of authorized shares of common stock. All share, per share, DSU and PU information has been retroactively adjusted to reflect the reverse split. The shares of common stock retain a par value of $ 0.01 per share. 90 Table of Contents Common Stock Issuances During 2023 and 2022 , the Company completed the following public offerings of shares of its common stock. ($ in thousands, except per share amounts) Weighted Average Price Received Net Type of Offering Period Per Share (1) Shares Proceeds (2) 2023 At the Market Offering Program (3) First Quarter $ 11.77 2,690,000 $ 31,657 At the Market Offering Program (3) Second Quarter 9.95 4,757,953 47,355 At the Market Offering Program (3) Third Quarter 9.54 8,432,086 80,426 At the Market Offering Program (3) Fourth Quarter - - - 15,880,039 $ 159,438 2022 At the Market Offering Program (3) First Quarter $ - - $ - At the Market Offering Program (3) Second Quarter - - - At the Market Offering Program (3) Third Quarter - - - At the Market Offering Program (3) Fourth Quarter 10.45 3,885,048 40,580 3,885,048 $ 40,580 ( 1 ) Weighted average price received per share is after deducting the underwriters’ discount, if applicable, and other offering costs. ( 2 ) Net proceeds are net of the underwriters’ discount, if applicable, and other offering costs. ( 3 ) As of December 31, 2023 , the Company had entered into eleven equity distribution agreements, ten of which have either been terminated because all shares were sold or were replaced with a subsequent agreement. Stock Repurchase Program On July 29, 2015, the Company’s Board of Directors authorized the repurchase of up to 400,000 shares of the Company’s common stock. On February 8, 2018, the Board of Directors approved an increase in the stock repurchase program for up to an additional 904,564 shares of the Company's common stock. Coupled with the 156,751 shares remaining from the original 400,000 share authorization, the increased authorization brought the total authorization to 1,061,315 shares, representing 10% of the then outstanding share count. On December 9, 2021, the Board of Directors approved an increase in the number of shares of the Company’s common stock available in the stock repurchase program for up to an additional 3,372,399 shares, bringing the remaining authorization under the stock repurchase program to 3,539,861 shares, representing approximately 10% of the Company’s then outstanding shares of common stock. On October 12, 2022, the Board of Directors approved an increase in the number of shares of the Company’s common stock available in the stock repurchase program for up to an additional 4,300,000 shares, bringing the remaining authorization under the stock repurchase program to 6,183,601 shares, representing approximately 18% of the Company’s then outstanding shares of common stock. As part of the stock repurchase program, shares may be purchased in open market transactions, block purchases, through privately negotiated transactions, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5 - 1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Open market repurchases will be made in accordance with Exchange Act Rule 10b - 18, which sets certain restrictions on the method, timing, price and volume of open market stock repurchases. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The authorization does not obligate the Company to acquire any particular amount of common stock and the program may be suspended or discontinued at the Company’s discretion without prior notice. The stock repurchase program has no termination date. 91 Table of Contents From the inception of the stock repurchase program through December 31, 2023 , the Company repurchased a total of 4,748,361 shares at an aggregate cost of approximately $ 74.2 million, including commissions and fees, for a weighted average price of $ 15.63 per share. During the year ended December 31, 2023 , the Company repurchased a total of 1,072,789 shares at an aggregate cost of approximately $ 9.4 million, including commissions and fees, for a weighted average price of $ 8.79 per share. During the year ended December 31, 2022, the Company repurchased a total of 2,538,470 shares at an aggregate cost of approximately $ 24.5 million, including commissions and fees, for a weighted average price of $ 9.63 per share. Subsequent to December 31, 2023 , and through February 23, 2024 , the Company repurchased a total of 332,773 shares at an aggregate cost of approximately $ 2.8 million, including commissions and fees, for a weighted average price of $ 8.35 per share. The remaining authorization under the stock repurchase program as of February 23, 2024 was 3,895,829 shares. Cash Dividends The table below presents the cash dividends declared on the Company’s common stock. (in thousands, except per share amounts) Year Per Share Amount Total 2013 $ 6.975 $ 4,662 2014 10.800 22,643 2015 9.600 38,748 2016 8.400 41,388 2017 8.400 70,717 2018 5.350 55,814 2019 4.800 54,421 2020 3.950 53,570 2021 3.900 97,601 2022 2.475 87,906 2023 1.800 81,127 2024 YTD (1) 0.240 12,362 Totals $ 66.690 $ 620,959 ( 1 ) On January 10, 2024 , the Company declared a dividend of $ 0.12 per share to be paid on February 27, 2024 . On February 14, 2024 , the Company declared a dividend of $ 0.12 per share to be paid on March 26, 2024 . The effect of these dividends are included in the table above, but are not reflected in the Company’s financial statements as of December 31, 2023 . NOTE 9. STOCK INCENTIVE PLAN In 2021, the Company’s Board of Directors adopted, and the stockholders approved, the Orchid Island Capital, Inc. 2021 Equity Incentive Plan (the “2021 Incentive Plan”) to replace the Orchid Island Capital, Inc. 2012 Equity Incentive Plan (the “2012 Incentive Plan” and together with the 2021 Incentive Plan, the “Incentive Plans”). The 2021 Incentive Plan provides for the award of stock options, stock appreciation rights, stock awards, PUs, other equity-based awards (and dividend equivalents with respect to awards of PUs and other equity-based awards) and incentive awards. The 2021 Incentive Plan is administered by the Compensation Committee of the Company’s Board of Directors except that the Company’s full Board of Directors will administer awards made to directors who are not employees of the Company or its affiliates. The 2021 Incentive Plan provides for awards of up to an aggregate of 10 % of the issued and outstanding shares of the Company's common stock (on a fully diluted basis) at the time of the awards, subject to a maximum aggregate 1,473,324 shares of the Company’s common stock that may be issued under the 2021 Incentive Plan. The 2021 Incentive Plan replaces the 2012 Incentive Plan, and no further grants will be made under the 2012 Incentive Plan. However, any outstanding awards under the 2012 Incentive Plan will continue in accordance with the terms of the 2012 Incentive Plan and any award agreement executed in connection with such outstanding awards. 92 Table of Contents Performance Units The Company has issued, and may in the future issue additional PUs under the Incentive Plan to certain executive officers and employees of its Manager. PUs vest after the end of a defined performance period, based on satisfaction of the performance conditions set forth in the PU agreement. When earned, each PU will be settled by the issuance of one share of the Company’s common stock, at which time the PU will be cancelled. The PUs contain dividend equivalent rights, which entitle the Participants to receive distributions declared by the Company on common stock, but do not include the right to vote the underlying shares of common stock. PUs are subject to forfeiture should the participant no longer serve as an executive officer or employee of the Company. Compensation expense for the PUs, included in incentive compensation on the statements of comprehensive income (loss), is recognized over the remaining vesting period once it becomes probable that the performance conditions will be achieved. The following table presents information related to PUs outstanding during the years ended December 31, 2023 and 2022 . ($ in thousands, except per share data) 2023 2022 Weighted Weighted Average Average Grant Date Grant Date Shares Fair Value Shares Fair Value Unvested, beginning of period 36,920 $ 20.57 26,645 $ 29.40 Granted 76,696 10.82 35,114 16.55 Forfeited - - ( 14,980 ) 21.04 Vested and issued ( 17,848 ) 22.09 ( 9,859 ) 29.40 Unvested, end of period 95,768 $ 12.48 36,920 $ 20.57 Compensation expense during period $ 590 $ 376 Unrecognized compensation expense, end of period $ 597 $ 357 Intrinsic value, end of period $ 807 $ 388 Weighted-average remaining vesting term (in years) 1.2 1.2 The number of shares of common stock issuable upon the vesting of the remaining outstanding PUs was reduced as a result of three book value impairment events that occurred pursuant to the terms of the long term equity incentive compensation plans (the “Plans”) established under the Company’s 2012 Equity Incentive Plan and 2021 Equity Incentive Plan. The first book value impairment event occurred when the Company's book value per share declined by more than 15 % during the quarter ended March 31, 2022 and the Company’s book value per share decline from January 1, 2022 to June 30, 2022 was more than 10 %. The second book value impairment event occurred when the Company's book value per share declined by more than 15 % during the quarter ended September 30, 2022 and the Company’s book value per share decline from July 1, 2022 to December 31, 2022 was more than 10 %. The third book value impairment event occurred when the Company's book value per share declined by more than 15 % during the quarter ended September 30, 2023 and the Company’s book value per share decline from July 1, 2023 to December 31, 2023 was more than 10 %. The Plans provide that if such a book value impairment event occurs, then the number of outstanding PUs that are outstanding as of the last day of such two quarter period shall be reduced by 15%. Stock Awards The Company has issued, and may in the future issue additional, immediately vested common stock under the Incentive Plans to certain executive officers and employees of its Manager. Compensation expense for the stock awards is based on the fair value of the Company’s common stock on the grant date and is included in incentive compensation in the statements of comprehensive income (loss). The following table presents information related to fully vested common stock issued during the years ended December 31, 2023 and 2022 . All of the fully vested shares of common stock issued during the years ended December 31, 2023 and 2022 , and the related compensation expense, were granted with respect to service performed during the previous fiscal years. ($ in thousands, except per share data) 2023 2022 Fully vested shares granted 76,696 35,114 Weighted average grant date price per share $ 10.82 $ 16.55 Compensation expense related to fully vested shares of common stock awards (1) $ 830 $ 581 ( 1 ) The awards issued during the year ended December 31, 2023 were granted with respect to service performed in 2022 . Approximately $ 600,000 of compensation expense related to the 2023 awards was accrued and recognized in 2022 . The awards issued during the year ended December 31, 2022 were granted with respect to service performed in 2021. Approximately $ 600,000 of compensation expense related to the 2022 awards was accrued and recognized in 2021. 93 Table of Contents Deferred Stock Units Non-employee directors receive a portion of their compensation in the form of DSU awards pursuant to the Incentive Plans. Each DSU represents a right to receive one share of the Company’s common stock. Beginning in 2022, each non-employee director could elect to receive all of his or her compensation in the form of DSUs. The DSUs are immediately vested and are settled at a future date based on the election of the individual participant. Compensation expense for the DSUs is included in directors’ fees and liability insurance in the statements of comprehensive income (loss). The DSUs contain dividend equivalent rights, which entitle the participant to receive distributions declared by the Company on common stock. These distributions will be made in the form of cash or additional DSUs at the participant’s election. The DSUs do not include the right to vote the underlying shares of common stock. The following table presents information related to the DSUs outstanding during the years ended December 31, 2023 and 2022 . ($ in thousands, except per share data) 2023 2022 Weighted Weighted Average Average Grant Date Grant Date Shares Fair Value Shares Fair Value Outstanding, beginning of period 54,197 $ 20.29 28,595 $ 26.92 Granted and vested 42,507 9.81 25,602 12.89 Outstanding, end of period 96,704 $ 15.69 54,197 $ 20.29 Compensation expense during period $ 378 $ 328 Intrinsic value, end of period $ 815 $ 569 NOTE 10. COMMITMENTS AND CONTINGENCIES From time to time, the Company may become involved in various claims and legal actions arising in the ordinary course of business. Management is not aware of any reported or unreported contingencies at December 31, 2023 . NOTE 11. INCOME TAXES The Company will generally not be subject to U.S. federal income tax on its REIT taxable income to the extent that it distributes its REIT taxable income to its stockholders and satisfies the ongoing REIT requirements, including meeting certain asset, income and stock ownership tests. A REIT must generally distribute at least 90% of its REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gain, to its stockholders, annually to maintain REIT status. An amount equal to the sum of 85% of its REIT ordinary income and 95% of its REIT capital gain net income, plus certain undistributed income from prior taxable years, must be distributed within the taxable year in order to avoid the imposition of an excise tax. The remaining balance may be distributed up to the end of the following taxable year, provided the REIT elects to treat such amount as a prior year distribution and meets certain other requirements. REIT taxable income (loss) is computed in accordance with the Code, which is different than the Company’s financial statement net income (loss) computed in accordance with GAAP. Book to tax differences primarily relate to the recognition of interest income on RMBS, unrealized gains and losses on RMBS, and the amortization of losses on derivative instruments that are treated as hedges for tax purposes. As of December 31, 2023 , we had distributed all of our estimated REIT taxable income through fiscal year 2023 . Accordingly, no income tax provision was recorded for 2023 , 2022 and 2021 . 94 Table of Contents NOTE 12. EARNINGS PER SHARE (EPS) The Company had dividend eligible PUs and DSUs that were outstanding during the years ended December 31, 2023, 2022 and 2021 . The basic and diluted per share computations include these unvested PUs and DSUs if there is income available to common stock, as they have dividend participation rights. The unvested PUs and DSUs have no contractual obligation to share in losses. Because there is no such obligation, the unvested PUs and DSUs are not included in the basic and diluted EPS computations when no income is available to common stock even though they are considered participating securities. The table below reconciles the numerator and denominator of EPS for the years ended December 31, 2023, 2022 and 2021 . (in thousands, except per-share information) 2023 2022 2021 Numerator for basic and diluted EPS per share of common stock: Net loss - Basic and diluted $ ( 39,226 ) $ ( 258,453 ) $ ( 64,760 ) Weighted average shares of common stock: Shares of common stock outstanding at the balance sheet date 51,636 36,765 35,399 Effect of weighting ( 6,987 ) 700 ( 11,170 ) Weighted average shares-basic and diluted 44,649 37,465 24,229 Net loss per common share: Basic and diluted $ ( 0.89 ) $ ( 6.90 ) $ ( 2.67 ) Anti-dilutive incentive shares not included in calculation. 192 91 55 NOTE 13. FAIR VALUE The framework for using fair value to measure assets and liabilities defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price). A fair value measure should reflect the assumptions that market participants would use in pricing the asset or liability, including the assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset and the risk of non-performance. Required disclosures include stratification of balance sheet amounts measured at fair value based on inputs the Company uses to derive fair value measurements. These stratifications are: ● Level 1 valuations, where the valuation is based on quoted market prices for identical assets or liabilities traded in active markets (which include exchanges and over-the-counter markets with sufficient volume), ● Level 2 valuations, where the valuation is based on quoted market prices for similar instruments traded in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market, and ● Level 3 valuations, where the valuation is generated from model-based techniques that use significant assumptions not observable in the market, but observable based on Company-specific data. These unobservable assumptions reflect the Company’s own estimates for assumptions that market participants would use in pricing the asset or liability. Valuation techniques typically include option pricing models, discounted cash flow models and similar techniques, but may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability. The Company's RMBS and TBA securities are Level 2 valuations, and such valuations are determined by the Company based on independent pricing sources and/or third party broker quotes, when available. Because the price estimates may vary, the Company must make certain judgments and assumptions about the appropriate price to use to calculate the fair values. The Company and the independent pricing sources use various valuation techniques to determine the price of the Company’s securities. These techniques include observing the most recent market for like or identical assets (including security coupon, maturity, yield, and prepayment speeds), spread pricing techniques to determine market credit spreads (option adjusted spread, zero volatility spread, spread to the U.S. Treasury curve or spread to a benchmark such as a TBA), and model driven approaches (the discounted cash flow method, Black Scholes and SABR models which rely upon observable market rates such as the term structure of interest rates and volatility). The appropriate spread pricing method used is based on market convention. The pricing source determines the spread of recently observed trade activity or observable markets for assets similar to those being priced. The spread is then adjusted based on variances in certain characteristics between the market observation and the asset being priced. Those characteristics include: type of asset, the expected life of the asset, the stability and predictability of the expected future cash flows of the asset, whether the coupon of the asset is fixed or adjustable, the guarantor of the security if applicable, the coupon, the maturity, the issuer, size of the underlying loans, year in which the underlying loans were originated, loan to value ratio, state in which the underlying loans reside, credit score of the underlying borrowers and other variables if appropriate. The fair value of the security is determined by using the adjusted spread. 95 Table of Contents The Company’s U.S. Treasury securities are based on quoted prices for identical instruments in active markets and are classified as Level 1 assets. The Company’s futures contracts are Level 1 valuations, as they are exchange-traded instruments and quoted market prices are readily available. Futures contracts are settled daily. The Company’s interest rate swaps and interest rate swaptions are Level 2 valuations. The fair value of interest rate swaps is determined using a discounted cash flow approach using forward market interest rates and discount rates, which are observable inputs. The fair value of interest rate swaptions is determined using an option pricing model. RMBS (based on the fair value option), derivatives and TBA securities were recorded at fair value on a recurring basis during the years ended December 31, 2023, 2022 and 2021 . When determining fair value measurements, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset. When possible, the Company looks to active and observable markets to price identical assets. When identical assets are not traded in active markets, the Company looks to market observable data for similar assets. The estimated fair value of cash and cash equivalents, restricted cash, accrued interest receivable, receivable for securities sold, other assets, due to affiliates, repurchase agreements, payable for unsettled securities purchased, accrued interest payable and other liabilities generally approximates their carrying values due to the short-term nature of these financial instruments as of December 31, 2023 and 2022 . The Company estimates the fair value of the cash and cash equivalents using Level 1 inputs, and the accrued interest receivable, receivable for securities sold, other assets, due to affiliates, repurchase agreements, payable for unsettled securities purchased, accrued interest payable and other liabilities using Level 2 inputs. The following table presents financial assets (liabilities) measured at fair value on a recurring basis as of December 31, 2023 and 2022 . Derivative contracts are reported as a net position by contract type, and not based on master netting arrangements. (in thousands) Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) December 31, 2023 Mortgage-backed securities $ - $ 3,894,012 $ - U.S. Treasury securities 148,820 - - Interest rate swaps - 6,348 - Interest rate swaptions - 72 - TBA securities - ( 12,694 ) - December 31, 2022 Mortgage-backed securities $ - $ 3,540,002 $ - U.S. Treasury securities 36,382 - - Interest rate swaps - 4,983 - Interest rate swaptions - 27,416 - Interest rate caps - 1,119 - TBA securities - ( 507 ) - During the years ended December 31, 2023 and 2022 , there were no transfers of financial assets or liabilities between levels 1, 2 or 3. 96 Table of Contents NOTE 14. RELATED PARTY TRANSACTIONS Management Agreement The Company is externally managed and advised by the Manager pursuant to the terms of a management agreement. The management agreement has been renewed through February 20, 2025 and provides for automatic one -year extension options thereafter and is subject to certain termination rights. Under the terms of the management agreement, the Manager is responsible for administering the business activities and day-to-day operations of the Company. The Manager receives a monthly management fee in the amount of: ● One- twelfth of 1.5% of the first $250 million of the Company’s month-end equity, as defined in the management agreement, ● One- twelfth of 1.25% of the Company’s month-end equity that is greater than $250 million and less than or equal to $500 million, and ● One- twelfth of 1.00% of the Company’s month-end equity that is greater than $500 million. On April 1, 2022, pursuant to the third amendment to the management agreement entered into on November 16, 2021, the Manager began providing certain repurchase agreement trading, clearing and administrative services to the Company that had been previously provided by AVM, L.P. under an agreement terminated on March 31, 2022. In consideration for such services, the Company will pay the following fees to the Manager: ● A daily fee equal to the outstanding principal balance of repurchase agreement funding in place as of the end of such day multiplied by 1.5 basis points for the amount of aggregate outstanding principal balance less than or equal to $5 billion, and multiplied by 1.0 basis point for any amount of aggregate outstanding principal balance in excess of $5 billion, and ● A fee for the clearing and operational services provided by personnel of the Manager equal to $10,000 per month. The Company is obligated to reimburse the Manager for any direct expenses incurred on its behalf and to pay the Manager the Company’s pro rata portion of certain overhead costs set forth in the management agreement. Should the Company terminate the management agreement without cause, it will pay the Manager a termination fee equal to three times the average annual management fee, as defined in the management agreement, before or on the last day of the term of the agreement. Total expenses recorded for the management fee, allocated overhead and repurchase agreement trading, clearing and administrative services were approximately $ 13.6 million, $ 13.0 million and $ 9.8 million, for the years ended December 31, 2023 , 2022 and 2021 , respectively. Other Relationships with Bimini Robert Cauley, the Company's Chief Executive Officer and Chairman of the Board of Directors, also serves as Chief Executive Officer and Chairman of the Board of Directors of Bimini and owns shares of common stock of Bimini. George H. Haas, the Company's Chief Financial Officer, Chief Investment Officer, Secretary and a member of the Board of Directors, also serves as the Chief Financial Officer, Chief Investment Officer and Treasurer of Bimini and owns shares of common stock of Bimini. In addition, as of December 31, 2023 , Bimini owned 569,071 shares, or 1.1 %, of the Company’s common stock. 97 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE We had no disagreements with our Independent Registered Public Accounting Firm on any matter of accounting principles or practices or financial statement disclosure.