Good morning and welcome to the Fourth Quarter 2014 Earnings Conference Call for Orchid Island Capital. This call is being recorded today February 24, 2015. At this time, the company would like to remind the 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 Private Securities Litigation Reform Act of 1995. Listeners are cautioned that such forward-looking statements are based on information currently available on the management’s good faith, belief with respect for 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 Commission, including the company’s most recent Annual Report on Form 10-K. The company assumes no obligation to update such forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking statements. Now I would like to turn the conference over to the company’s Chairman and Chief Executive Officer, Mr. Bob Cauley. Sir, you may begin.

Thank you, operator. The trends we have experienced for the first three quarters of 2014 continued into the fourth. The market continued to defy expectations and rates continued to rally. While the flash rally on October 15th didn’t hold, we still ended the year with rates down over 80 basis points on the 10 year U.S. Treasury and the curve substantially flatter. The swap curve moved similarly. In spite of the bull flattener, typically the bane of RMBS investors, 30 year agency RMBS continued to tighten to comparable duration treasuries. The reason for the outperformance was a combination of speeds that continued to ignore lower rates available to borrowers and reduced supply in the market. Also in spite of the rally, volatility, as measured by the SRVX index Chicago Board Options Exchange interest rate volatility index that measures the fair market value of future volatility implied by the 1 year option into 10 year pay fixed swap, remained stable and near the low end of the range for the year. Conditions in Europe continued to deteriorate and the European Central Bank announced their intention to initiate a $1trillion program of quantitative easing on January 22, 2015. As we neared the end of the year, tensions surrounding Greece started to rise as a new regime seemed poised to take control and was focused on defying the austerity measures imposed by the European Union when the Greek external debt was restructured just a few years ago. This raised the prospects for a Greek exit, or Grexit from EU and coupled with the EU quantitative easing program, caused sovereign rates across Europe to reach levels never seen outside of Japan. In some cases, longer term rates were negative, as overnight funding rates pushed well through the previously unthinkable zero bound repeatedly. These developments…

[Operator Instructions] And our first question comes from David Walrod of Ladenburg. Your line is now open.

I want to talk a little bit about the capital allocation obviously the 70% allocation to the pass-through is historically high, can you talk about how high you’re willing to let that go I guess some of the factors that were into that discussion?

You’re right that’s the highest it’s ever been range we don’t have a hard and fast limit, but it’s generally 70/30 or 30/70. It is at the high end of the range and since I try to allude to it on the call on my prepared remarks, it has started to back off somewhat since then about 100, speaking a moment about exactly rationale, but that led to high end of the range and we’re going to bring it back from there and a lot of that has to do with what’s we’ve been able to find in the IOs today.

That’s exactly right, David, also I guess one point to add to what Bob mentioned is that, it’s pretty typical of us when we are raising capital as we were in the third and fourth quarter to have the skew of pass-throughs to structured securities increase, the pass-throughs just typically are easier to find and get in place in a manner in which we can start producing some income off of them. So the structured take a little more digging to find the times of profiles we like for those and so that’s sort of another reason why it’s starting to normalize little bit here in the first quarter just because we’ve able to find some things. It’s actually quite opportunistic I guess that we were had the increased skew because IOs were very tight at the end of the fourth quarter and with the rally in January loosened enough that we’ve been able to find things we like a lot more -- there are a lot of more revenues available.

Well that kind of feels into my next questions which you just feel on a little bit about the return opportunity you’re seeing today relative to quarter ago or six months ago?

The pass-throughs space, there is still a feeling if you can pick up call protection at a reasonable price. As I mentioned in prepared remarks, we’re rallying in January pay ups got extremely high, the most costly form of call protection would be 30 year 4.5 and the pay ups went, I think it will strike from 70 to 120 picks in a few weeks, 120 is about the level they were in the spring of 2013. Now we’ve sold off in February and those numbers have dropped although we haven’t seen bonds up for the bidders much lately, so next week we’ll know where they’re but I believe they dropped pretty close back to 70. So those are not appealing that’s being said there are other call protected securities you can buy that offer higher pay up premiums and they were in the past but still at a point or maybe slightly over and so not too ghastly high and the carry you can carry on those spots still very appealing. And Hunter mentioned the IOs thought a little more if you will about that and what we see in that base.

Sure, there is a combination of a couple of different things. One is the low level of rates that we saw in January which was end of January very loosening IO market up in general and in addition to that we had some anxiety associated with the new FHA nip decrease. And we were able to take advantage we think I guess in February at least in with respect to both of those things. So we have been able to find attractive structured securities that offer reasonable yields and also have the kind of interest rate profiles as we like in being able to find both of those [space]. So negative duration and income is been something that we really haven’t seen for quite some time. It does add to the prepaid risk as a portfolio but we continue to think that at least from the perspective of the assets we have been buying that, that risk is relatively well contained.

And at this time I am showing no further questions in queue. I would like to turn the call back over to management for any closing remarks.

Thank you operator. To the extent anybody does come up any additional questions we will be here throughout the day to answer any and all questions you may have. And as always we appreciate your time at Orchid Island and we look forward to speaking to you again at the end of the first quarter. Thank you.

Ladies and gentlemen, thank you for your participation on today’s conference. This concludes the program. You may now disconnect. Everyone have a great day.