UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 2019
|
Bimini Capital Management, Inc.
|
|
(Exact name of registrant as specified in its charter)
|
|
Maryland
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001-32171
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72-1571637
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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3305 Flamingo Drive, Vero Beach, Florida 32963
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code (772) 231-1400
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the
Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act: None.
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 9, 2019, Bimini Capital Management, Inc., (the “Company”) issued the press release attached hereto as Exhibit 99.1
announcing the Company’s consolidated results of operations for the period ended March 31, 2019.
The information furnished under this “Item 2.02 Results of Operations and Financial Condition,” including the exhibit related
hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any disclosure document of the Company, except as shall be expressly set forth by specific
reference in such document.
ITEM 9.01. EXHIBITS.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
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Date: May 9, 2019
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BIMINI CAPITAL MANAGEMENT, INC
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|
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By:
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/s/ Robert E. Cauley
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Robert E. Cauley
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||
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Chairman and Chief Executive Officer
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||
EXHIBIT 99.1
BIMINI CAPITAL MANAGEMENT ANNOUNCES FIRST QUARTER 2019 RESULTS
VERO BEACH, Fla., (May 9, 2019) – Bimini Capital Management, Inc. (OTCQB:BMNM), (“Bimini Capital,” “Bimini,” or the “Company”), today
announced results of operations for the three month period ended March 31, 2019.
First Quarter 2019 Highlights
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·
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Net income of $1.6 million, or $0.13 per common share
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|
·
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Book value per share of $2.41
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|
·
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Company to discuss results on Friday, May 10, 2019, at 10:00 AM ET
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Details of First Quarter 2019 Results of Operations
The Company reported net income of $1.6 million for the three month period ended March 31, 2019. The results for the quarter included
advisory services revenue of $1.6 million, interest and dividend income of $2.6 million, interest expense of $1.7 million, net realized and unrealized gains of $1.4 million, operating expenses of $1.6 million and an income tax provision of $0.6
million.
Management of Orchid Island Capital, Inc.
Orchid is managed and advised by Bimini. As Manager, Bimini is responsible for administering Orchid’s business activities and day-to-day
operations. Pursuant to the terms of the management agreement, Bimini Advisors provides Orchid with its management team, including its officers, along with appropriate support personnel.
Bimini also maintains a common stock investment in Orchid which is accounted for under the fair value option, with changes in fair value
recorded in the statement of operations for the current period. For the three months ended March 31, 2019, Bimini’s statement of operations included a fair value adjustment of $0.3 million and dividends of $0.4 million from its investment in
Orchid common stock. Also during the three months ended March 31, 2019, Bimini recorded $1.6 million in advisory services revenue for managing Orchid’s portfolio consisting of $1.3 million of management fees and $0.3 million in overhead
reimbursement.
Capital Allocation and Return on Invested Capital
The Company allocates capital between two MBS sub-portfolios, the pass-through MBS portfolio (“PT MBS”) and the structured MBS portfolio,
consisting of interest only (“IO”) and inverse interest-only (“IIO”) securities. The table below details the changes to the respective sub-portfolios during the quarter.
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Portfolio Activity for the Quarter
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||||||||||||||||||||
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Structured Security Portfolio
|
||||||||||||||||||||
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Pass-Through
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Interest-Only
|
Inverse Interest
|
||||||||||||||||||
|
Portfolio
|
Securities
|
Only Securities
|
Sub-total
|
Total
|
||||||||||||||||
|
Market Value - December 31, 2018
|
$
|
209,675,220
|
$
|
2,021,178
|
$
|
727,794
|
$
|
2,748,972
|
$
|
212,424,192
|
||||||||||
|
Return of investment
|
n/a
|
(147,229
|
)
|
(38,928
|
)
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(186,157
|
)
|
(186,157
|
)
|
|||||||||||
|
Pay-downs
|
(3,648,912
|
)
|
n/a
|
n/a
|
n/a
|
(3,648,912
|
)
|
|||||||||||||
|
Premium lost due to pay-downs
|
(141,115
|
)
|
n/a
|
n/a
|
n/a
|
(141,115
|
)
|
|||||||||||||
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Mark to market (losses) gains
|
3,376,750
|
(170,994
|
)
|
(12,406
|
)
|
(183,400
|
)
|
3,193,350
|
||||||||||||
|
Market Value - March 31, 2019
|
$
|
209,261,943
|
$
|
1,702,955
|
$
|
676,460
|
$
|
2,379,415
|
$
|
211,641,358
|
||||||||||
The tables below present the allocation of capital between the respective portfolios at March 31, 2019 and December 31, 2018, and the
return on invested capital for each sub-portfolio for the three month period ended March 31, 2019. Capital allocation is defined as the sum of the market value of securities held, less associated repurchase agreement borrowings, plus cash and
cash equivalents and restricted cash associated with repurchase agreements. Capital allocated to non-portfolio assets is not included in the calculation.
The returns on invested capital in the PT MBS and structured MBS portfolios were approximately 13.1% and (4.9)%, respectively, for the
first quarter of 2019. The combined portfolio generated a return on invested capital of approximately 10.4%.
|
Capital Allocation
|
||||||||||||||||||||
|
Structured Security Portfolio
|
||||||||||||||||||||
|
Pass-Through
|
Interest-Only
|
Inverse Interest
|
||||||||||||||||||
|
Portfolio
|
Securities
|
Only Securities
|
Sub-total
|
Total
|
||||||||||||||||
|
March 31, 2019
|
||||||||||||||||||||
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Market value
|
$
|
209,261,943
|
$
|
1,702,955
|
$
|
676,460
|
$
|
2,379,415
|
$
|
211,641,358
|
||||||||||
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Cash equivalents and restricted cash(1)
|
6,733,003
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-
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-
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-
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6,733,003
|
|||||||||||||||
|
Repurchase agreement obligations
|
(199,146,000
|
)
|
-
|
-
|
-
|
(199,146,000
|
)
|
|||||||||||||
|
Total(2)
|
$
|
16,848,946
|
$
|
1,702,955
|
$
|
676,460
|
$
|
2,379,415
|
$
|
19,228,361
|
||||||||||
|
% of Total
|
87.6
|
%
|
8.9
|
%
|
3.5
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%
|
12.4
|
%
|
100.0
|
%
|
||||||||||
|
December 31, 2018
|
||||||||||||||||||||
|
Market value
|
$
|
209,675,220
|
$
|
2,021,178
|
$
|
727,794
|
$
|
2,748,972
|
$
|
212,424,192
|
||||||||||
|
Cash equivalents and restricted cash(1)
|
6,155,053
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-
|
-
|
-
|
6,155,053
|
|||||||||||||||
|
Repurchase agreement obligations
|
(200,396,000
|
)
|
-
|
-
|
-
|
(200,396,000
|
)
|
|||||||||||||
|
Total(2)
|
$
|
15,434,273
|
$
|
2,021,178
|
$
|
727,794
|
$
|
2,748,972
|
$
|
18,183,245
|
||||||||||
|
% of Total
|
84.9
|
%
|
11.1
|
%
|
4.0
|
%
|
15.1
|
%
|
100.0
|
%
|
||||||||||
|
(1)
|
Amount excludes restricted cash of $53,690 and $85,435 at March 31, 2019 and December 31, 2018, respectively, related to trust
preferred debt funding hedges.
|
|
(2)
|
Invested capital includes the value of the MBS portfolio and cash equivalents and restricted cash, reduced by repurchase agreement
borrowings.
|
|
Returns for the Quarter Ended March 31, 2019
|
||||||||||||||||||||
|
Structured Security Portfolio
|
||||||||||||||||||||
|
Pass-Through
|
Interest-Only
|
Inverse Interest
|
||||||||||||||||||
|
Portfolio
|
Securities
|
Only Securities
|
Sub-total
|
Total
|
||||||||||||||||
|
Interest income (net of repo cost)
|
$
|
830,005
|
$
|
28,833
|
$
|
18,713
|
$
|
47,546
|
$
|
877,551
|
||||||||||
|
Realized and unrealized (losses) gains
|
3,235,635
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(170,994
|
)
|
(12,406
|
)
|
(183,400
|
)
|
3,052,235
|
||||||||||||
|
Hedge losses(1)
|
(2,037,061
|
)
|
n/a
|
n/a
|
n/a
|
(2,037,061
|
)
|
|||||||||||||
|
Total Return
|
$
|
2,028,579
|
$
|
(142,161
|
)
|
$
|
6,307
|
$
|
(135,854
|
)
|
$
|
1,892,725
|
||||||||
|
Beginning capital allocation
|
$
|
15,434,273
|
$
|
2,021,178
|
$
|
727,794
|
$
|
2,748,972
|
$
|
18,183,245
|
||||||||||
|
Return on invested capital for the quarter(2)
|
13.1
|
%
|
(7.0
|
)%
|
0.9
|
%
|
(4.9
|
)%
|
10.4
|
%
|
||||||||||
|
(1)
|
Excludes losses of approximately $220,000 associated with trust preferred funding hedges.
|
|
(2)
|
Calculated by dividing the Total Return by the Beginning Capital Allocation, expressed as a percentage.
|
Prepayments
For the first quarter of 2019, the Company received approximately $3.8 million in scheduled and unscheduled principal repayments and
prepayments, which equated to a 3-month constant prepayment rate (“CPR”) of approximately 6.8% for the first quarter of 2019. Prepayment rates on the two MBS sub-portfolios were as follows (in CPR):
|
PT
|
Structured
|
|||||||||||
|
MBS Sub-
|
MBS Sub-
|
Total
|
||||||||||
|
Three Months Ended
|
Portfolio
|
Portfolio
|
Portfolio
|
|||||||||
|
March 31, 2019
|
5.7
|
13.4
|
6.8
|
|||||||||
|
December 31, 2018
|
5.5
|
11.7
|
6.6
|
|||||||||
|
September 30, 2018
|
8.6
|
13.5
|
9.5
|
|||||||||
|
June 30, 2018
|
13.4
|
11.6
|
13.1
|
|||||||||
|
March 31, 2018
|
7.2
|
16.8
|
8.6
|
|||||||||
Portfolio
The following tables summarize the MBS portfolio as of March 31, 2019 and December 31, 2018:
|
($ in thousands)
|
||||||
|
Weighted
|
||||||
|
Percentage
|
Average
|
|||||
|
of
|
Weighted
|
Maturity
|
||||
|
Fair
|
Entire
|
Average
|
in
|
Longest
|
||
|
Asset Category
|
Value
|
Portfolio
|
Coupon
|
Months
|
Maturity
|
|
|
March 31, 2019
|
||||||
|
Fixed Rate MBS
|
$
|
209,262
|
98.9%
|
4.26%
|
318
|
1-Aug-48
|
|
Interest-Only MBS
|
1,703
|
0.8%
|
3.69%
|
285
|
15-Jul-48
|
|
|
Inverse Interest-Only MBS
|
676
|
0.3%
|
4.08%
|
263
|
25-Apr-41
|
|
|
Total MBS Portfolio
|
$
|
211,641
|
100.0%
|
4.25%
|
322
|
1-Aug-48
|
|
December 31, 2018
|
||||||
|
Fixed Rate MBS
|
$
|
209,675
|
98.7%
|
4.26%
|
327
|
1-Aug-48
|
|
Interest-Only MBS
|
2,021
|
1.0%
|
3.69%
|
293
|
15-Jul-48
|
|
|
Inverse Interest-Only MBS
|
728
|
0.3%
|
4.06%
|
272
|
25-Apr-41
|
|
|
Total MBS Portfolio
|
$
|
212,424
|
100.0%
|
4.25%
|
327
|
1-Aug-48
|
|
($ in thousands)
|
||||||||||||||||
|
March 31, 2019
|
December 31, 2018
|
|||||||||||||||
|
Percentage of
|
Percentage of
|
|||||||||||||||
|
Agency
|
Fair Value
|
Entire Portfolio
|
Fair Value
|
Entire Portfolio
|
||||||||||||
|
Fannie Mae
|
$
|
193,128
|
91.3
|
%
|
$
|
193,437
|
91.1
|
%
|
||||||||
|
Freddie Mac
|
18,436
|
8.7
|
%
|
18,881
|
8.9
|
%
|
||||||||||
|
Ginnie Mae
|
77
|
0.0
|
%
|
106
|
0.0
|
%
|
||||||||||
|
Total Portfolio
|
$
|
211,641
|
100.0
|
%
|
$
|
212,424
|
100.0
|
%
|
||||||||
|
March 31, 2019
|
December 31, 2018
|
|||||||
|
Weighted Average Pass Through Purchase Price
|
$
|
106.81
|
$
|
106.81
|
||||
|
Weighted Average Structured Purchase Price
|
$
|
6.39
|
$
|
6.39
|
||||
|
Weighted Average Pass Through Current Price
|
$
|
105.57
|
$
|
103.87
|
||||
|
Weighted Average Structured Current Price
|
$
|
7.92
|
$
|
8.67
|
||||
|
Effective Duration (1)
|
3.280
|
3.935
|
||||||
|
(1)
|
Effective duration is the approximate percentage change in price for a 100 basis point change in rates. An effective duration of
3.280 indicates that an interest rate increase of 1.0% would be expected to cause a 3.280% decrease in the value of the MBS in the Company’s investment portfolio at March 31, 2019. An effective duration of 3.935 indicates that an
interest rate increase of 1.0% would be expected to cause a 3.935% decrease in the value of the MBS in the Company’s investment portfolio at December 31, 2018. These figures include the structured securities in the portfolio but not the
effect of the Company’s hedges. Effective duration quotes for individual investments are obtained from The Yield Book, Inc.
|
Financing and Liquidity
As of March 31, 2019, the Company had outstanding repurchase obligations of approximately $199.1 million with a net weighted average
borrowing rate of 2.71%. These agreements were collateralized by MBS with a fair value, including accrued interest, of approximately $212.3 million. At March 31, 2019, the Company’s liquidity was approximately $5.1 million, consisting of
unpledged MBS and cash and cash equivalents.
We may pledge more of our structured MBS as part of a repurchase agreement funding, but retain cash in lieu of acquiring additional
assets. In this way, we can, at a modest cost, retain higher levels of cash on hand and decrease the likelihood we will have to sell assets in a distressed market in order to raise cash. Below is a list of outstanding borrowings under
repurchase obligations at March 31, 2019.
|
($ in thousands)
|
||||||||||||||||||||
|
Repurchase Agreement Obligations
|
||||||||||||||||||||
|
Weighted
|
Weighted
|
|||||||||||||||||||
|
Total
|
Average
|
Average
|
||||||||||||||||||
|
Outstanding
|
% of
|
Borrowing
|
Amount
|
Maturity
|
||||||||||||||||
|
Counterparty
|
Balances
|
Total
|
Rate
|
at Risk(1)
|
(in Days)
|
|||||||||||||||
|
ED&F Man Capital Markets, Inc.
|
$
|
71,519
|
36.0
|
%
|
2.77
|
%
|
$
|
4,564
|
25
|
|||||||||||
|
Mirae Asset Securities (USA) Inc.
|
59,728
|
30.0
|
%
|
2.65
|
%
|
3,418
|
43
|
|||||||||||||
|
Citigroup Global Markets, Inc.
|
31,885
|
16.0
|
%
|
2.71
|
%
|
2,438
|
29
|
|||||||||||||
|
JVB Financial Group, LLC
|
25,933
|
13.0
|
%
|
2.67
|
%
|
1,701
|
67
|
|||||||||||||
|
Mitsubishi UFJ Securities (USA), Inc.
|
8,064
|
4.0
|
%
|
2.67
|
%
|
590
|
22
|
|||||||||||||
|
South Street Securities, LLC
|
2,017
|
1.0
|
%
|
2.70
|
%
|
127
|
15
|
|||||||||||||
|
$
|
199,146
|
100.0
|
%
|
2.71
|
%
|
$
|
12,838
|
37
|
||||||||||||
|
(1)
|
Equal to the fair value of securities sold (including accrued interest receivable) and cash posted as collateral, if any, minus
the sum of repurchase agreement liabilities, accrued interest payable and securities posted by the counterparty (if any).
|
Hedging
In connection with its interest rate risk management strategy, the Company economically hedges a portion of the cost of its repurchase
agreement funding and also its junior subordinated notes by entering into derivative financial instrument contracts. The Company has not elected hedging treatment under U.S. generally accepted accounting principles (“GAAP”) in order to align the
accounting treatment of its derivative instruments with the treatment of its portfolio assets under the fair value option election. As such, all gains or losses on these instruments are reflected in earnings for all periods presented. As of
March 31, 2019, such instruments were comprised of Eurodollar futures contracts and to-be-announced (“TBA”) securities transactions.
The tables below present information related to outstanding Eurodollar futures contracts at March 31, 2019.
|
($ in thousands)
|
||||||||||||||||
|
As of March 31, 2019
|
||||||||||||||||
|
Repurchase Agreement Funding Hedges
|
||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
||||||||||||||
|
Contract
|
Average
|
Average
|
||||||||||||||
|
Notional
|
Entry
|
Effective
|
Open
|
|||||||||||||
|
Expiration Year
|
Amount
|
Rate
|
Rate
|
Equity(1)
|
||||||||||||
|
2019
|
$
|
133,333
|
2.63
|
%
|
2.47
|
%
|
$
|
(160
|
)
|
|||||||
|
2020
|
150,000
|
2.84
|
%
|
2.21
|
%
|
(947
|
)
|
|||||||||
|
2021
|
100,000
|
2.80
|
%
|
2.13
|
%
|
(669
|
)
|
|||||||||
|
Total / Weighted Average
|
$
|
127,273
|
2.77
|
%
|
2.26
|
%
|
$
|
(1,776
|
)
|
|||||||
|
($ in thousands)
|
||||||||||||||||
|
As of March 31, 2019
|
||||||||||||||||
|
Junior Subordinated Debt Funding Hedges
|
||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
||||||||||||||
|
Contract
|
Average
|
Average
|
||||||||||||||
|
Notional
|
Entry
|
Effective
|
Open
|
|||||||||||||
|
Expiration Year
|
Amount
|
Rate
|
Rate
|
Equity(1)
|
||||||||||||
|
2019
|
$
|
26,000
|
1.68
|
%
|
2.48
|
%
|
$
|
157
|
||||||||
|
2020
|
19,500
|
1.92
|
%
|
2.23
|
%
|
60
|
||||||||||
|
Total / Weighted Average
|
$
|
22,286
|
1.80
|
%
|
2.35
|
%
|
$
|
217
|
||||||||
|
(1)
|
Open equity represents the cumulative gains (losses) recorded on open futures positions from inception.
|
The following table summarizes our contracts to purchase and sell TBA securities as of March 31, 2019.
|
($ in thousands)
|
|||||
|
Notional
|
Net
|
||||
|
Amount
|
Cost
|
Market
|
Carrying
|
||
|
Long (Short)(1)
|
Basis(2)
|
Value(3)
|
Value(4)
|
||
|
March 31, 2019
|
|||||
|
30-Year TBA Securities:
|
|||||
|
3.0%
|
$(50,000)
|
$(48,719)
|
$(49,783)
|
$(1,064)
|
|
Book Value Per Share
The Company's Book Value Per Share at March 31, 2019 was $2.41. The Company computes Book Value Per Share by dividing total stockholders'
equity by the total number of shares outstanding of the Company's Class A Common Stock. At March 31, 2019, the Company's stockholders’ equity was $30.6 million, with 12,708,555 Class A Common shares outstanding.
Stock Repurchase Plan
On March 26, 2018, the Board of Directors of Bimini Capital Management, Inc. (the “Company”) approved a Stock Repurchase Plan (“Repurchase
Plan”). Pursuant to Repurchase Plan, the Company may purchase up to 500,000 shares of its Class A Common Stock from time to time, subject to certain limitations imposed by Rule 10b-18 of the Securities Exchange Act of 1934, as amended. Share
repurchases may be executed through various means, including, without limitation, open market transactions. The Repurchase Plan does not obligate the Company to purchase any shares. The Repurchase Plan was originally set to expire on November
15, 2018, but it was extended by the Board of Directors until November 15, 2019. The authorization for the Share Repurchase Plan may be terminated, increased or decreased by the Company’s Board of Directors in its discretion at any time.
Since inception of the program through March 31, 2019, the Company repurchased a total of 70,404 shares at an aggregate cost of
approximately $166,241, including commissions and fees, for a weighted average price of $2.37 per share.
Management Commentary
Commenting on the first quarter, Robert E. Cauley, Chairman and Chief Executive Officer, said, “The outlook for the economy in the U.S.
changed over the course of the first quarter of 2019. As 2018 drew to a close, the markets were in a state of turmoil and the outlook for economic growth, both in the domestic U.S. economy and the global economy, was very bleak. Over the
course of the quarter incoming domestic economic data generally improved, implying the weakness seen in late 2018 and very early 2019 was temporary. The economic data in the EU and China also stabilized, although it has not recovered to the
extent it has in the U.S., especially with respect to the EU. Some of the external issues, Brexit and the trade dispute between China and the U.S., among others, have not had the impact on global growth feared at the end of 2018. In the case of
Brexit, the decision has been postponed in order to give the U.K. time to reach an internal decision on the terms of their exit from the EU. Prior to this week, the trade talks between the U.S. and China appeared to be nearing a successful
conclusion. In any event, while the domestic and global economies may not be growing as well as they did in 2018, the situation is not as dire as it appeared a few short months ago. As for the Federal Reserve, or “Fed”, they are clearly in a
wait and see, or data dependent, mode. In this respect, all of the world’s major central banks are aligned in their policy stance – in each case either accommodating economic growth or neutral – as in the case of the U.S. This accommodative
alignment of the world’s central banks is what has allowed the outlook to improve over the course of the quarter, as markets across the globe view their respective central banks, and all central banks, as having the markets back so to speak. The
consensus view seems to be the central banks will intervene as necessary whenever economic growth weakens or markets fall into turmoil.
“These developments were beneficial for Bimini. Bimini generated after-tax net income of approximately $1.6 million, or $0.13 per share of
class A common stock. Of course, owing to our available tax net operating losses, Bimini does not have to actually pay federal or state income taxes, so this income is retained, and a portion of our deferred tax asset can be utilized. With
respect to the portfolio operations at Royal Palm Capital, the portfolio was essentially unchanged in size and interest income was down 2%. Interest expense on our repurchase agreement borrowings increased by 6%, resulting in a 12% decrease in
the net interest income generated by the portfolio. However, with interest rates lower over the course of the quarter and agency mortgage backed securities performing well, mark to market gains on Royal Palm’s agency RMBS holdings exceeded mark
to market losses on our hedge instruments by approximately $1.0 million. Combined with net interest income of the portfolio of approximately $0.9 million, Royal Palm generated a 10.4% return on invested capital. We anticipate the agency RMBS
portfolio will grow over the course of the second quarter of 2019.
“Advisory services revenues were down 13% during the first quarter of 2019 compared to the fourth quarter of 2018, as the equity base of
Orchid Island Capital declined slightly over the quarter. Dividends from our holdings of shares in Orchid Island Capital, both at Bimini and Royal Palm Capital, were unchanged on the quarter at $0.4 million.
“As mentioned, while the agency RMBS portfolio was essentially unchanged in size during the quarter, with a market value of approximately
$211.7 million, (versus $212.4 million at December 31, 2018), we anticipate the portfolio will grow over the course of the second quarter as we are able to deploy retained earnings. The composition of the portfolio was not changed during the
quarter.
“As we move into the second quarter of 2019 the economic outlook has stabilized significantly versus the outlook at the end of 2018. The
central banks appear aligned in their monetary policy – generally accommodative, and risks to the outlook, while still present, are mitigated by anticipated interventions by central banks to stabilize conditions as needed. While the Fed may not
lower interest rates in 2019, the bar for additional rate increases appears quite high. Under such conditions, with rates generally stable, the agency RMBS portfolio at Royal Palm should continue to generate attractive returns, and as mentioned,
should grow over the course of the year. Advisory service revenue will be driven by developments at Orchid Island Capital, as always. We are cautiously optimistic the challenging environment caused by a prolonged rate hiking cycle by the Fed
may be over, and conditions will be supportive for levered bond funds such as Royal Palm and Orchid Island Capital going forward.”
Summarized Financial Statements
The following is a summarized presentation of the unaudited consolidated balance sheets as of March 31, 2019, and December 31, 2018, and
the unaudited consolidated statements of operations for the three months ended March 31, 2019 and 2018. Amounts presented are subject to change.
|
BIMINI CAPITAL MANAGEMENT, INC.
|
||||||||
|
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(Unaudited - Amounts Subject To Change)
|
||||||||
|
March 31, 2019
|
December 31, 2018
|
|||||||
|
ASSETS
|
||||||||
|
Mortgage-backed securities
|
$
|
211,641,358
|
$
|
212,424,192
|
||||
|
Cash equivalents and restricted cash
|
6,786,693
|
6,240,488
|
||||||
|
Investment in Orchid Island Capital, Inc. common stock
|
10,001,837
|
9,713,030
|
||||||
|
Accrued interest receivable
|
764,511
|
780,535
|
||||||
|
Deferred tax assets, net
|
22,445,722
|
23,202,821
|
||||||
|
Other assets
|
7,152,795
|
7,038,610
|
||||||
|
Total Assets
|
$
|
258,792,916
|
$
|
259,399,676
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Repurchase agreements
|
$
|
199,146,000
|
$
|
200,396,000
|
||||
|
Junior subordinated notes due to Bimini Capital Trust II
|
26,804,440
|
26,804,440
|
||||||
|
Other liabilities
|
2,270,794
|
3,244,615
|
||||||
|
Total Liabilities
|
228,221,234
|
230,445,055
|
||||||
|
Stockholders' equity
|
30,571,682
|
28,954,621
|
||||||
|
Total Liabilities and Stockholders' Equity
|
$
|
258,792,916
|
$
|
259,399,676
|
||||
|
Class A Common Shares outstanding
|
12,708,555
|
12,709,269
|
||||||
|
Book value per share
|
$
|
2.41
|
$
|
2.28
|
||||
|
BIMINI CAPITAL MANAGEMENT, INC.
|
||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
|
(Unaudited - Amounts Subject to Change)
|
||||||||
|
Three Months Ended
March 31,
|
||||||||
|
2019
|
2018
|
|||||||
|
Advisory services
|
$
|
1,607,320
|
$
|
2,093,465
|
||||
|
Interest and dividend income
|
2,555,225
|
2,551,477
|
||||||
|
Interest expense
|
(1,719,420
|
)
|
(1,146,599
|
)
|
||||
|
Net revenues
|
2,443,125
|
3,498,343
|
||||||
|
Other income (expense)
|
1,358,992
|
(6,124,421
|
)
|
|||||
|
Expenses
|
1,621,026
|
1,738,978
|
||||||
|
Net Income (loss) before income tax provision (benefit)
|
2,181,091
|
(4,365,056
|
)
|
|||||
|
Income tax provision (benefit)
|
562,488
|
(1,091,290
|
)
|
|||||
|
Net income (loss)
|
$
|
1,618,603
|
$
|
(3,273,766
|
)
|
|||
|
Basic and Diluted Net Income (Loss) Per Share of:
|
||||||||
|
CLASS A COMMON STOCK
|
$
|
0.13
|
$
|
(0.26
|
)
|
|||
|
CLASS B COMMON STOCK
|
$
|
0.13
|
$
|
(0.26
|
)
|
|||
|
Three Months Ended
March 31,
|
||||||||
|
Key Balance Sheet Metrics
|
2019
|
2018
|
||||||
|
Average MBS(1)
|
$
|
212,032,778
|
$
|
207,260,539
|
||||
|
Average repurchase agreements(1)
|
199,771,000
|
197,001,200
|
||||||
|
Average stockholders' equity(1)
|
29,763,216
|
54,156,798
|
||||||
|
Key Performance Metrics
|
||||||||
|
Average yield on MBS(2)
|
4.13
|
%
|
4.01
|
%
|
||||
|
Average cost of funds(2)
|
2.63
|
%
|
1.64
|
%
|
||||
|
Average economic cost of funds(3)
|
2.62
|
%
|
1.96
|
%
|
||||
|
Average interest rate spread(4)
|
1.50
|
%
|
2.37
|
%
|
||||
|
Average economic interest rate spread(5)
|
1.51
|
%
|
2.05
|
%
|
||||
|
(1)
|
Average MBS, repurchase agreements and stockholders’ equity balances are calculated using two data points, the beginning and
ending balances.
|
|
(2)
|
Portfolio yields and costs of funds are calculated based on the average balances of the underlying investment
portfolio/repurchase agreement balances and are annualized for the quarterly periods presented.
|
|
(3)
|
Represents interest cost of our borrowings and the effect of derivative agreements attributed to the period related to hedging
activities, divided by average repurchase agreements.
|
|
(4)
|
Average interest rate spread is calculated by subtracting average cost of funds from average yield on MBS.
|
|
(5)
|
Average economic interest rate spread is calculated by subtracting average economic cost of funds from average yield on MBS.
|
About Bimini Capital Management, Inc.
Bimini Capital Management, Inc. invests primarily in, but is not limited to investing in, residential mortgage-related securities issued by
the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae). Its objective is to earn returns on the spread between the yield on
its assets and its costs, including the interest expense on the funds it borrows. In addition, Bimini generates a significant portion of its revenue serving as the manager of the MBS portfolio of Orchid Island Capital, Inc.
Forward Looking Statements
Statements herein relating to matters that are not historical facts are forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. The reader is cautioned that such forward-looking statements are based on information available at the time and on management's good faith belief with respect to future events, and are subject to risks and
uncertainties that could cause actual performance or results to differ materially from those expressed in such forward-looking statements. Important factors that could cause such differences are described in Bimini Capital Management, Inc.'s
filings with the Securities and Exchange Commission, including Bimini Capital Management, Inc.'s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Bimini Capital Management, Inc. assumes no obligation to update
forward-looking statements to reflect subsequent results, changes in assumptions or changes in other factors affecting forward-looking statements.
Earnings Conference Call Details
An earnings conference call and live audio webcast will be hosted Friday, May 10, 2019, at 10:00 AM ET. The conference call may be accessed
by dialing toll free (877) 312-5414. International callers dial (408) 940-3877. The conference passcode is 1298253. A live audio webcast of the conference call can be accessed via the investor relations section of the Company’s website at www.biminicapital.com, and an audio archive of the webcast will be available for approximately one year.
CONTACT:
Bimini Capital Management, Inc.
Robert E. Cauley, 772-231-1400
Chairman and Chief Executive Officer
www.biminicapital.com