UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 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 3, 2010
Bimini
Capital Management, Inc.
(Exact
Name of Registrant as Specified in Charter)
|
Maryland
|
001-32171
|
72-1571637
|
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission File
Number)
|
(IRS
Employer Identification No.)
|
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:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
ITEM
2.02. RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.
On May 3,
2010, 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, 2010. 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
Exhibit 99.1 ― Press Release of Bimini
Capital Management,
Inc. dated May 3, 2010.
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.
|
Date:
May 3, 2010
|
BIMINI
CAPITAL MANAGEMENT, INC.
|
||
|
By:
|
/s/
Robert E. Cauley
|
||
|
Robert
E. Cauley
|
|||
|
Chairman
and Chief Executive Officer
|
|||
Exhibit
99.1
BIMINI
CAPITAL MANAGEMENT ANNOUNCES
FIRST
QUARTER 2010 RESULTS
|
·
|
First
Quarter Loss from Continuing Operations of $2.0
Million
|
|
·
|
MBS
Portfolio Remains 100% Invested in Agency
MBS
|
|
·
|
Company
to Discuss Results on Thursday, May 6, at 8:30 a.m.
ET
|
VERO
BEACH, Fla. (May 3, 2010) - Bimini Capital Management, Inc. (OTCBB:BMNM)
("Bimini Capital" or the "Company"), a real estate investment trust ("REIT"),
today announced results of operations for the three month period ended March 31,
2010. The Company reported a loss from continuing operations of $2.0
million for the three month period ended March 31, 2010, compared with income
from continuing operations of $8.9 million for the three month period ended
December 31, 2009. Including discontinued operations, the Company today reported
a net loss of $1.0 million for the three month period ended March 31, 2010,
compared with net income of $9.2 million for the three month period ended
December 31, 2009
Details
of First Quarter 2010 Results of Operations
The Company's first quarter loss from
continuing operations of $2.0 million included net interest income of $1.3
million, a net loss on trading securities of $1.9 million, audit, legal and
other professional fees of $0.6 million, compensation and related benefits of
$0.4 million, and other operating, general and administrative expenses of $0.4
million. During the first quarter, the Company sold mortgage-backed securities
(MBS) with a market value at the time of sale of $57.8 million, resulting in the
realized loss of $0.01 million on the sale of MBS (based on security prices from
December 31, 2009). The remaining net loss on trading securities was
due to fair value adjustments for the period.
Highlights
of the MBS Portfolio
As of
March 31, 2010, Bimini Capital’s MBS portfolio consisted of $102.2 million of
agency or government MBS at fair value, all of which were classified as
trading. This portfolio had a weighted average coupon of 4.45% and a
net weighted average repurchase agreement borrowing cost of 0.26%. The following
tables summarize Bimini Capital’s agency and government mortgage related
securities as of March 31, 2010 and December 31, 2009:
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
(in
thousands)
|
Asset
Category
|
Fair
Value
|
Percentage
of
Entire
Portfolio
|
Weighted
Average
Coupon
|
Weighted
Average
Maturity
in
Months
|
Longest
Maturity
|
Weighted
Average
Coupon
Reset
in Months
|
Weighted
Average
Lifetime
Cap
|
Weighted
Average
Periodic
Cap
|
|
|
March
31, 2010
|
|||||||||
|
Adjustable-Rate
MBS
|
$
|
13,865
|
13.6%
|
2.57%
|
203
|
1-Jan-32
|
2.12
|
11.66%
|
27.38%
|
|
Fixed-Rate
MBS
|
33,973
|
33.3%
|
5.21%
|
198
|
1-Oct-37
|
n/a
|
n/a
|
n/a
|
|
|
Hybrid
Adjustable-Rate MBS
|
36,272
|
35.4%
|
3.85%
|
355
|
1-Dec-39
|
55.03
|
8.85%
|
2.00%
|
|
|
Total
Mortgage-backed Pass-through
|
84,110
|
82.3%
|
4.19%
|
263
|
1-Dec-39
|
40.40
|
9.63%
|
6.86%
|
|
|
Derivative
MBS
|
18,050
|
17.7%
|
5.65%
|
247
|
15-Aug-38
|
n/a
|
n/a
|
n/a
|
|
|
Total
Mortgage Assets
|
$
|
102,160
|
100.0%
|
4.45%
|
263
|
1-Dec-39
|
40.40
|
n/a
|
6.86%
|
|
December
31, 2009
|
|||||||||
|
Adjustable-Rate
MBS
|
$
|
32,598
|
27.2%
|
3.75%
|
261
|
1-Oct-35
|
4.87
|
11.16%
|
10.34%
|
|
Fixed-Rate
MBS
|
5,242
|
4.4%
|
6.50%
|
333
|
1-Oct-37
|
n/a
|
n/a
|
n/a
|
|
|
Hybrid
Adjustable-Rate MBS
|
67,036
|
56.0%
|
4.45%
|
338
|
1-Dec-39
|
40.27
|
9.45%
|
2.00%
|
|
|
Total
Mortgage-backed Pass-through
|
104,876
|
87.6%
|
4.33%
|
305
|
1-Dec-39
|
28.69
|
10.01%
|
4.40%
|
|
|
Derivative
MBS
|
14,793
|
12.4%
|
5.59%
|
240
|
25-Jan-39
|
n/a
|
n/a
|
n/a
|
|
|
Total
Mortgage Assets
|
$
|
119,669
|
100.0%
|
4.49%
|
305
|
1-Dec-39
|
28.69
|
n/a
|
4.40%
|
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
(in
thousands)
|
March
31, 2010
|
December
31, 2009
|
|||||
|
Agency
|
Fair
Value
|
Percentage
of
Entire
Portfolio
|
Fair
Value
|
Percentage
of
Entire
Portfolio
|
||
|
Fannie
Mae
|
$
|
87,037
|
85.20%
|
$
|
108,775
|
90.9%
|
|
Freddie
Mac
|
15,123
|
14.80%
|
10,894
|
9.1%
|
||
|
Total
Portfolio
|
$
|
102,160
|
100.00%
|
$
|
119,669
|
100.0%
|
|
Entire
Portfolio
|
March
31, 2010
|
December
31, 2009
|
||
|
Weighted
Average Pass Through Purchase Price
|
$
|
103.66
|
$
|
103.13
|
|
Weighted
Average Derivative Purchase Price
|
5.11
|
4.66
|
||
|
Weighted
Average Pass Through Current Price
|
$
|
104.28
|
$
|
103.79
|
|
Weighted
Average Derivative Current Price
|
$
|
5.16
|
$
|
4.93
|
|
Effective
Duration (1)
|
2.643
|
1.593
|
||
(1)
Effective duration of 2.643 indicates that an interest rate increase of 1.0%
would be expected to cause a 2.643% decline in the value of the MBS in the
Company’s investment portfolio at March 31, 2010. An effective
duration of 1.593 indicates that an interest rate increase of 1.0% would be
expected to cause a 1.593% decline in the value of the MBS in the Company’s
investment portfolio at December 31, 2009. These figures include the derivative
securities in the portfolio.
Under the
Company’s current investment strategy, the Company allocates capital to two MBS
sub-portfolios, the pass-through MBS portfolio (“PT MBS”), and the derivative
MBS portfolio, consisting of interest only (“IO”) and inverse interest-only
(“IIO”) securities. The PT MBS sub-portfolio is encumbered under
repurchase agreement funding, while the derivative MBS sub-portfolio is
not. As a result of being encumbered, the PT MBS sub-portfolio
requires the Company to maintain cash balances to meet price and/or prepayment
related margin calls from lenders. As of December 31, 2008,
approximately 57% of the Company’s investable capital (equity in pledged PT MBS,
available cash and unencumbered assets) was deployed in the PT MBS
portfolio. As of September 30, 2009, the portion of investable
capital allocated to the PT MBS sub-portfolio was 32%, as the Company was
preparing to execute the second debt extinguishment transaction and needed to
preserve available cash. At December 31, 2009, the allocation to the
PT MBS had risen to 43%, although still lower than the 57% allocation at
December 31, 2008. As a result of anticipated higher levels of
prepayments and robust valuations of PT MBS driven by Federal Reserve purchases,
during the first quarter of 2010 the Company has allocated capital away from PT
MBS and potential price and prepayment related margin call
activity. As a result, at March 31, 2010, the allocation to
the PT MBS has fallen to 12%.
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
Prepayments
rates on the two MBS sub-portfolios were as follows: (in CPR)
|
Q1
2009
|
Q4
2009
|
Q1
2010
|
|
|
PT
MBS
|
10.9%
|
26.0%
|
9.2%
|
|
Derivative
MBS
|
9.2%
|
26.9%
|
33.3%
|
|
Total
|
10.7%
|
26.1%
|
28.8%
|
REIT
Taxable Income and Dividends
The REIT
incurred an estimated taxable loss for the three months ended March 31, 2010, of
$0.5 million. For the three months ended March 31, 2010, the Company recorded
approximately $0.5 million of capital gains related to sales of mortgage backed
securities. As of March 31, 2010, the Company has approximately $56.8 million of
capital loss carry-forwards that could be used to offset future capital gains
for tax purposes.
At a
meeting of the Board of Directors of Bimini Capital on April 1, 2010, the
members of the Board declared a common stock dividend of $0.03 per share of
Class A Common Stock related to estimated taxable income expected for the full
year ending December 31, 2010. The first quarter dividend was payable
on April 30, 2010, to holders of record on April 15, 2010.
REIT
taxable income/(loss) is a term that describes the Company's operating results
calculated in accordance with rules and regulations promulgated pursuant to the
Internal Revenue Code. The Company's REIT taxable income/(loss) is computed
differently from net income as computed in accordance with generally accepted
accounting principles (GAAP) as reported in the Company's consolidated financial
statements. Depending on the number and size of the various items or
transactions being accounted for differently, the differences between REIT
taxable income or loss and GAAP net income or loss can be substantial and each
item can affect several reporting periods. Generally, these items are timing or
temporary differences between years; for example, an item that may be a
deduction for GAAP net income/loss in the current year may not be a deduction
for REIT taxable income/loss until a later year.
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
In order
to maintain its qualification as a REIT, the Company is required (among other
things) to annually distribute dividends to its stockholders in an amount at
least equal to, generally, 90% of the Company's REIT taxable income.
Additionally, as a REIT, the Company may be subject to a federal excise tax if
it distributes less than 85% of its REIT taxable income by the end of the
calendar year. Accordingly, the Company's dividends are largely based on REIT
taxable income, as determined for federal income tax purposes as opposed to its
net income computed in accordance with GAAP. Dividends are paid if,
when, and as declared by the Company's Board of Directors.
Book
Value Per Share
The Company's Book Value Per Share at
March 31, 2010, was $1.05. Book Value Per Share is regularly used as a valuation
metric by various equity analysts that follow the Company and may be deemed a
non-GAAP financial measure pursuant to Regulation G. The Company computes Book
Value Per Share by dividing total stockholders' equity (or deficit) by the total
number of shares outstanding of the Company's Class A Common Stock. At March 31,
2010, the Company's consolidated stockholders' equity was $10.5 million with
10,035,654 Class A Common shares outstanding. At March 31, 2010, the Company had
$5.2 million in cash and cash equivalents.
Management
Commentary
Commenting on the Company's first
quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said,
"As we entered 2010, Bimini Capital was attempting to put the major events of
the last few years behind us. We completed the restructuring of our
balance sheet in 2009 and eliminated 74% of our trust preferred debt, realizing
$42 million in gains on the early extinguishment of the debt. These
gains, although not resulting in cash flows to the Company, represented a form
of taxable income that is required to be distributed under IRS rules. In
accordance with IRS Revenue Procedure 2009-15, the Company distributed shares of
Class A Common Stock for 90% of the required distribution to minimize the cash
impact on the Company. The dividend was distributed on January 19,
2010. Also, related to our restructuring of 2009, the Company
completed a one-for-ten reverse stock split on March 12, 2010. The
dividend distributed in January utilized all of the shares authorized under the
Company’s charter and the reverse split reduced the number of shares outstanding
to one for every ten without changing the number of shares
authorized/to be issued. As a result of these actions, (and also from
a legal matter relating to the second debt extinguishment), legal and
professional fees have been significant for the past two quarters.
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
"Turning
now to the results of our operations in the first quarter, the major event of
the period was the delinquent loan buyouts announced by Fannie Mae and Freddie
Mac. Pursuant to these announcements, all loans in their existing MBS pools
delinquent 120 days or more were to be repurchased. As we mentioned
in our 2009 year-end earnings release, prepayment uncertainty at the time was as
high as we had ever experienced. Since the announcements by Fannie
Mae and Freddie Mac, this uncertainty has to a large extent evaporated as some
details of the buyouts have been released. The preponderance of the
Company’s MBS portfolio exposure has been to Fannie Mae, generally over 85% for
each of the last five quarters. Since Fannie Mae announced that their
buyouts would occur with the highest coupon mortgages first, and occur over
several months, the Company was able to reposition the pass-through
sub-portfolio and avoid excessive pay-downs. However, as market
pricing adjusted for anticipated pay-downs, security prices were impacted and
the Company recorded $1.8 million in adverse mark to market adjustments,
predominantly in the derivative sub-portfolio. The Company has taken
steps to reposition the derivative sub-portfolio away from higher coupon, newer
origination mortgages. However, exposure to such securities was
extremely beneficial for the latter half of 2008 and 2009, as prepayments were
generally benign. In fact, our initial investment in the derivative
sub-portfolio was $13.8 million in August 2008. Between August 2008 and
March 31, 2010, our investment in the derivative sub-portfolio has ranged
between $10.8 and $19.3 million, and averaged $15.3 million. Between
August 2008 and December 31, 2009, the company realized interest income,
realized and unrealized gains or losses on the derivative sub-portfolio of
approximately $12.6 million. As of March 31, 2010, the comparable
figure was $11.7 million."
Mr. Cauley continued, “We reduced the
size of our pass-through sub-portfolio in anticipation of the Fannie Mae and
Freddie Mac buyouts late in the first quarter. Since March 31, 2010,
we have started rebuilding the pass-through sub-portfolio it to its
previous size now that the Agency buyout activity is better understood and
repositioned it towards more seasoned mortgages with origination years from the
period prior to the peak of the housing bubble (2002-2004) and with a heavier
exposure to 15 year maturities. Our allocation to the derivative
sub-portfolio at March 31, 2010 was also greater than at 2009 year end (88%
versus 57%), although this percentage has come down since the end of the first
quarter. Going forward, we continue to leverage our expertise in the
MBS universe as we deploy our capital opportunistically in an effort to enhance
our earnings and protect our capital base. We look forward to a year focused on
managing our MBS portfolio rather than dealing with the events of the past few
years.”
The Company has scheduled an online Web
simulcast and conference call to discuss these announcements that will begin at
8:30 a.m. ET. Thursday, May 6, 2010. An online replay will be available
approximately two hours following the conclusion of the live broadcast and will
continue for 48 hours. A link to these events will be available at the Company's
website www.biminicapital.com.
Those persons without Internet access may listen to the live call by dialing
(888) 710-4007 or (913) 312-1471, confirmation code: 2974232.
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
The
following is a presentation of the unaudited quarterly results of operations for
each of the previous four quarters. (For all periods presented the per
share amounts reflect the one-for-ten share reverse stock split effective March
12, 2010).
(in
thousands, except per share data)
|
Quarters
Ended
|
|||||||||
|
June
30, 2009
|
September
30, 2009
|
December
31, 2009
|
March
31, 2010
|
||||||
|
Interest
income
|
$
|
2,683
|
$
|
2,882
|
$
|
1,785
|
$
|
1,898
|
|
|
Interest
expense
|
(105)
|
(69)
|
(60)
|
(68)
|
|||||
|
Net
interest income, before junior subordinated debt interest
|
2,578
|
2,813
|
1,725
|
1,830
|
|||||
|
Interest
on junior subordinated debt
|
(1,298)
|
(1,058)
|
(665)
|
(550)
|
|||||
|
Net
interest income
|
1,280
|
1,755
|
1,060
|
1,280
|
|||||
|
Other
income (expense)
|
33,980
|
1,274
|
9,840
|
(1,903)
|
|||||
|
Total
net revenues (deficiency in revenues)
|
35,260
|
3,029
|
10,900
|
(623)
|
|||||
|
Direct
REIT operating expenses
|
149
|
146
|
148
|
147
|
|||||
|
General
and administrative expenses
|
708
|
577
|
1,666
|
1,264
|
|||||
|
Income
taxes
|
-
|
-
|
145
|
(15)
|
|||||
|
Total
expenses
|
857
|
723
|
1,959
|
1,411
|
|||||
|
Income
(loss) from continuing operations
|
34,403
|
2,306
|
8,941
|
(2,019)
|
|||||
|
Discontinued
operations (net of tax)
|
(2,544)
|
200
|
234
|
1,010
|
|||||
|
Net
income (loss)
|
$
|
31,859
|
$
|
2,506
|
$
|
9,175
|
$
|
(1,009)
|
|
|
Basic
Net Income (Loss) Per Share:
|
|||||||||
|
Class
A Common Stock
|
|||||||||
|
Continuing
operations
|
$
|
12.52
|
$
|
0.80
|
$
|
3.10
|
$
|
(0.24)
|
|
|
Discontinued
operations
|
(0.93)
|
0.07
|
0.08
|
0.12
|
|||||
|
Total
|
$
|
11.59
|
$
|
0.87
|
$
|
3.18
|
$
|
(0.12)
|
|
|
Class
B Common Stock
|
|||||||||
|
Continuing
operations
|
$
|
12.45
|
$
|
0.83
|
$
|
3.20
|
$
|
(0.24)
|
|
|
Discontinued
operations
|
(0.92)
|
0.07
|
0.08
|
0.12
|
|||||
|
Total
|
$
|
11.53
|
$
|
0.90
|
$
|
3.28
|
$
|
(0.12)
|
|
|
Diluted
Net Income (Loss) Per Share:
|
|||||||||
|
Class
A Common Stock
|
|||||||||
|
Continuing
operations
|
$
|
12.50
|
$
|
0.80
|
$
|
1.26
|
$
|
(0.24)
|
|
|
Discontinued
operations
|
(0.93)
|
0.07
|
0.04
|
0.12
|
|||||
|
Total
|
$
|
11.57
|
$
|
0.87
|
$
|
1.30
|
$
|
(0.12)
|
|
|
Class
B Common Stock
|
|||||||||
|
Continuing
operations
|
$
|
12.45
|
$
|
0.83
|
$
|
3.20
|
$
|
(0.24)
|
|
|
Discontinued
operations
|
(0.92)
|
0.07
|
0.08
|
0.12
|
|||||
|
Total
|
$
|
11.53
|
$
|
0.90
|
$
|
3.28
|
$
|
(0.12)
|
|
About
Bimini Capital Management, Inc.
-MORE-
BMNM
Announces First Quarter 2010 Results
Page
May 3,
2010
Bimini Capital Management, Inc. is a
REIT that invests primarily in, but is not limited to, 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.
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 or Quarterly Report 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.
CONTACT:
Bimini
Capital Management, Inc.
Robert E.
Cauley, 772-231-1400
Chairman
and Chief Executive Officer
www.biminicapital.com