bcmi20240905_8k.htm
false 0001275477 0001275477 2024-10-31 2024-10-31
 
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):  October 31, 2024
 
 
Bimini Capital Management, Inc.
(Exact name of registrant as specified in its 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))
 
Securities registered pursuant to Section 12(b) of the Act: None.
 
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. ☐  
 
 
ITEM 2.02.   RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
 
On October 31, 2024, 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 September 30, 2024.
 
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 104 – Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
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: October 31, 2024
 
BIMINI CAPITAL MANAGEMENT, INC.
   
   
 
By:
/s/ Robert E. Cauley
   
Robert E. Cauley
   
Chairman and Chief Executive Officer
 
 
ex_721620.htm

Exhibit 99.1

 

https://cdn.kscope.io/a21996ba832928bd282134a820610c72-logo.jpg

 

BIMINI CAPITAL MANAGEMENT ANNOUNCES Third QUARTER 2024 RESULTS

 

VERO BEACH, Fla., (October 31, 2024) – Bimini Capital Management, Inc. (OTCQB: BMNM), (“Bimini Capital,” “Bimini,” or the “Company”), today announced results of operations for the three-month period ended September 30, 2024.

 

Third Quarter 2024 Highlights

 

 

Net income of $0.3 million, or $0.03 per common share

 

Book value per share of $0.83

 

Company to discuss results on Friday, November 1, 2024, at 10:00 AM ET

 

Management Commentary

 

Commenting on the third quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said, “The long-awaited impacts of tight monetary policy orchestrated by the Federal Reserve appear to have finally had the desired impacts on inflation and the imbalances in the labor market. Inflation is closing in on the Fed’s 2% target and hiring and wage growth are slowing while the unemployment rate has steadily risen. In contrast, growth in the economy and consumer spending have remained robust throughout. In late September the Fed reduced the overnight funding rate by 50 basis points, and the market anticipated it was the first of many such cuts.  Unfortunately, the non-farm payroll report for September 2024, released in early October, as well as the latest readings on inflation and consumer spending, imply the economy may not be weakening so much after-all. If this proves to be the case the magnitude and urgency of additional rate cuts by the Fed may differ with those market expectations mentioned above.

 

“Orchid Island Capital reported net income for the third quarter 2024 of $17.3 million and its shareholders equity increased from $555.9 million to $656.0 million. As a result, Bimini's advisory service revenues of approximately $3.3 million represented a 4% increase over the second quarter. The growth in Orchid’s capital base during the third quarter would translate into higher quarterly revenues – all else equal – for a full quarter. As mentioned above, if the Fed’s easing cycle proves to be brief and the economy remains resilient, capital raising opportunities for Orchid may not materialize in the near term.

 

“The investment portfolio generated net interest income of $0.3 million inclusive of dividends on our shares of Orchid Island. Mark to market gains and losses on our MBS portfolio, hedge positions and shares of Orchid netted to income of $0.4 million. The Company – inclusive of both the advisory services segment and the investment portfolio segment, recorded net income before taxes for the quarter of $0.8 million versus a net loss before taxes of $0.2 million for the second quarter of 2024.” 

 

Details of Third Quarter 2024 Results of Operations

 

The Company reported net income of $0.3 million for the three-month period ended September 30, 2024. Advisory service revenue for the quarter was $3.3 million. We recorded interest and dividend income of $1.7 million and interest expense on repurchase agreements of $1.4 million and on long-term debt of $0.6 million. We recorded an unrealized $0.1 million mark to market loss on our shares of Orchid common stock, net unrealized gains of $2.5 million on our MBS portfolio and net losses of $2.0 million on our derivative holdings. The results for the quarter also included operating expenses of $2.6 million and an income tax provision of $0.5 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 September 30, 2024, Bimini’s statement of operations included a fair value adjustment of $(0.1) million and dividends of $0.2 million from its investment in Orchid’s common stock. Also, during the three months ended September 30, 2024, Bimini recorded $3.3 million in advisory services revenue for managing Orchid’s portfolio consisting of $2.4 million of management fees, $0.6 million in overhead reimbursement and $0.2 million in repurchase, clearing and administrative fees.

 

 

 

Book Value Per Share

 

The Company's Book Value Per Share on September 30, 2024 was $0.83. 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 September 30, 2024, the Company's stockholders’ equity was $8.3 million, with 10,005,457 Class A Common shares outstanding.

 

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.

 

Portfolio Activity for the Quarter

 
           

Structured Security Portfolio

         
                Inverse                  
    Pass     Interest     Interest                  
   

Through

   

Only

   

Only

                 
   

Portfolio

   

Securities

   

Securities

   

Sub-total

   

Total

 

Market Value - June 30, 2024

  $ 83,960,741     $ 2,450,477     $ 3,501     $ 2,453,978     $ 86,414,719  

Securities purchased

    31,715,015       -       -       -       31,715,015  

Return of investment

    n/a       (84,011 )     (162 )     (84,173 )     (84,173 )

Pay-downs

    (2,097,231 )     n/a       n/a       n/a       (2,097,231 )

Discount accreted due to pay-downs

    16,953       n/a       n/a       n/a       16,953  

Mark to market gains

    2,453,793       4,468       5,106       9,574       2,463,367  

Market Value - September 30, 2024

  $ 116,049,271     $ 2,370,934     $ 8,445     $ 2,379,379     $ 118,428,650  

 

The tables below present the allocation of capital between the respective portfolios at September 30, 2024 and June 30, 2024, and the return on invested capital for each sub-portfolio for the three-month period ended September 30, 2024. 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.

 

Capital Allocation

 
           

Structured Security Portfolio

         
                Inverse                  
    Pass     Interest     Interest                  
   

Through

   

Only

   

Only

                 
   

Portfolio

   

Securities

   

Securities

   

Sub-total

   

Total

 

September 30, 2024

                                       

Market value

  $ 116,049,271     $ 2,370,934     $ 8,445     $ 2,379,379     $ 118,428,650  

Cash equivalents and restricted cash

    5,706,502       -       -       -       5,706,502  

Repurchase agreement obligations

    (113,022,999 )     -       -       -       (113,022,999 )

Total(1)

  $ 8,732,774     $ 2,370,934     $ 8,445     $ 2,379,379     $ 11,112,153  

% of Total

    78.6 %     21.3 %     0.1 %     21.4 %     100.0 %

June 30, 2024

                                       

Market value

  $ 83,960,741     $ 2,450,477     $ 3,501     $ 2,453,978     $ 86,414,719  

Cash equivalents and restricted cash

    6,223,538       -       -       -       6,223,538  

Repurchase agreement obligations

    (82,875,999 )     -       -       -       (82,875,999 )

Total(1)

  $ 7,308,280     $ 2,450,477     $ 3,501     $ 2,453,978     $ 9,762,258  

% of Total

    74.9 %     25.1 %     0.0 %     25.1 %     100.0 %

 

The returns on invested capital in the PT MBS and structured MBS portfolios were approximately 7.5% and 2.1%, respectively, for the three months ended September 30, 2024. The combined portfolio generated a return on invested capital of approximately 6.2%.

 

 

 

Returns for the Quarter Ended September 30, 2024

 
           

Structured Security Portfolio

         
                Inverse                  
    Pass     Interest     Interest                  
   

Through

   

Only

   

Only

                 
   

Portfolio

   

Securities

   

Securities

   

Sub-total

   

Total

 

Interest income (expense) (net of repo cost)

  $ 71,254     $ 40,897     $ (15 )   $ 40,882     $ 112,136  

Realized and unrealized gains

    2,470,746       4,468       5,106       9,574       2,480,320  

Hedge losses

    (1,991,315 )     n/a       n/a       n/a       (1,991,315 )

Total Return

  $ 550,685     $ 45,365     $ 5,091     $ 50,456     $ 601,141  

Beginning capital allocation

  $ 7,308,280     $ 2,450,477     $ 3,501     $ 2,453,978     $ 9,762,258  

Return on invested capital for the quarter(1)

    7.5 %     1.9 %     145.4 %     2.1 %     6.2 %

 

(1)

Calculated by dividing the Total Return by the Beginning Capital Allocation, expressed as a percentage.

 

Prepayments

 

For the third quarter of 2024, the Company received approximately $2.2 million in scheduled and unscheduled principal repayments and prepayments, which equated to a 3-month constant prepayment rate (“CPR”) of approximately 6.3% for the third quarter of 2024. 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

 

September 30, 2024

  6.3     6.7     6.3  

June 30, 2024

  10.9     5.5     10.0  

March 31, 2024

  18.0     9.2     16.5  

December 31, 2023

  8.9     4.6     8.0  

September 30, 2023

  4.3     6.6     4.8  

June 30, 2023

  8.0     13.0     9.6  

March 31, 2023

  2.4     10.3     5.0  

 

Portfolio

 

The following tables summarize the MBS portfolio as of September 30, 2024 and December 31, 2023:

 

($ in thousands)

                                 
                           

Weighted

   
           

Percentage

           

Average

   
           

of

   

Weighted

   

Maturity

   
   

Fair

   

Entire

   

Average

   

in

 

Longest

Asset Category

 

Value

   

Portfolio

   

Coupon

   

Months

 

Maturity

September 30, 2024

                                 

Fixed Rate MBS

  $ 116,050       98.0 %     5.61 %     342  

1-Apr-54

Structured MBS

    2,379       2.0 %     2.85 %     283  

15-May-51

Total MBS Portfolio

  $ 118,429       100.0 %     5.24 %     341  

1-Apr-54

December 31, 2023

                                 

Fixed Rate MBS

  $ 90,181       97.3 %     6.00 %     343  

1-Nov-53

Structured MBS

    2,550       2.7 %     2.84 %     290  

15-May-51

Total MBS Portfolio

  $ 92,731       100.0 %     5.44 %     341  

1-Nov-53

 

 

 

($ in thousands)

                               
   

September 30, 2024

   

December 31, 2023

 
           

Percentage of

           

Percentage of

 

Agency

 

Fair Value

   

Entire Portfolio

   

Fair Value

   

Entire Portfolio

 

Fannie Mae

  $ 35,338       29.8 %   $ 38,204       41.2 %

Freddie Mac

    83,091       70.2 %     54,527       58.8 %

Total Portfolio

  $ 118,429       100.0 %   $ 92,731       100.0 %

 

   

September 30, 2024

   

December 31, 2023

 

Weighted Average Pass Through Purchase Price

  $ 102.99     $ 104.43  

Weighted Average Structured Purchase Price

  $ 4.48     $ 4.48  

Weighted Average Pass Through Current Price

  $ 102.06     $ 101.55  

Weighted Average Structured Current Price

  $ 13.68     $ 13.46  

Effective Duration (1)

    2.627       2.508  

 

(1)

Effective duration is the approximate percentage change in price for a 100 basis point change in rates. An effective duration of 2.627 indicates that an interest rate increase of 1.0% would be expected to cause a 2.627% decrease in the value of the MBS in the Company’s investment portfolio at September 30, 2024. An effective duration of 2.508 indicates that an interest rate increase of 1.0% would be expected to cause a 2.508% decrease in the value of the MBS in the Company’s investment portfolio at December 31, 2023. 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 September 30, 2024, the Company had outstanding repurchase obligations of approximately $113.0 million with a net weighted average borrowing rate of 5.20%. These agreements were collateralized by MBS with a fair value, including accrued interest, of approximately $118.8 million. At September 30, 2024, the Company’s liquidity was approximately $4.7 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 September 30, 2024.

 

($ in thousands)

                               

Repurchase Agreement Obligations

 
                   

Weighted

   

Weighted

 
   

Total

           

Average

   

Average

 
   

Outstanding

   

% of

   

Borrowing

   

Maturity

 

Counterparty

 

Balances

   

Total

   

Rate

   

(in Days)

 

Marex Capital Markets Inc.

  $ 26,185       23.2 %     5.21 %     17  

Mirae Asset Securities (USA) Inc.

    20,016       17.7 %     5.25 %     18  

DV Securities, LLC Repo

    19,930       17.6 %     5.06 %     28  

Clear Street LLC

    17,894       15.8 %     5.31 %     33  

South Street Securities, LLC

    17,126       15.2 %     5.03 %     24  

Mitsubishi UFJ Securities, Inc.

    11,872       10.5 %     5.37 %     25  
    $ 113,023       100.0 %     5.20 %     24  

 

(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).

 

 

 

Summarized Consolidated Financial Statements

 

The following is a summarized presentation of the unaudited consolidated balance sheets as of September 30, 2024, and December 31, 2023, and the unaudited consolidated statements of operations for the nine and three months ended September 30, 2024 and 2023. Amounts presented are subject to change.

 

BIMINI CAPITAL MANAGEMENT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited - Amounts Subject to Change)

 

   

September 30, 2024

   

December 31, 2023

 

ASSETS

               

Mortgage-backed securities

  $ 118,428,650     $ 92,730,852  

Cash equivalents and restricted cash

    5,706,502       4,470,286  

Orchid Island Capital, Inc. common stock, at fair value

    4,677,763       4,797,269  

Accrued interest receivable

    572,506       488,660  

Deferred tax assets, net

    17,995,449       19,047,680  

Other assets

    4,251,713       4,063,267  

Total Assets

  $ 151,632,583     $ 125,598,014  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Repurchase agreements

  $ 113,022,999     $ 86,906,999  

Long-term debt

    27,373,739       27,394,417  

Other liabilities

    2,912,616       3,168,857  

Total Liabilities

    143,309,354       117,470,273  

Stockholders' equity

    8,323,229       8,127,741  

Total Liabilities and Stockholders' Equity

  $ 151,632,583     $ 125,598,014  

Class A Common Shares outstanding

    10,005,457       10,005,457  

Book value per share

  $ 0.83     $ 0.81  

 

 

 

BIMINI CAPITAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - Amounts Subject to Change)

 

   

Nine Months Ended September 30,

   

Three Months Ended September 30,

 
   

2024

   

2023

   

2024

   

2023

 

Advisory services

  $ 9,396,828     $ 10,518,862     $ 3,300,512     $ 3,620,002  

Interest and dividend income

    4,781,408       2,781,763       1,690,252       1,111,659  

Interest expense

    (5,558,657 )     (3,624,861 )     (1,980,863 )     (1,441,371 )

Net revenues

    8,619,579       9,675,764       3,009,901       3,290,290  

Other income (expense)

    1,067,454       (2,466,795 )     420,726       (2,360,590 )

Expenses

    8,439,314       6,657,293       2,627,343       2,105,424  

Net income (loss) before income tax provision (benefit)

    1,247,719       551,676       803,284       (1,175,724 )

Income tax provision (benefit)

    1,052,231       (320,596 )     547,059       (757,016 )

Net income (loss)

  $ 195,488     $ 872,272     $ 256,225     $ (418,708 )
                                 

Basic and Diluted Net (Loss) Income Per Share of:

                               

CLASS A COMMON STOCK

  $ 0.02     $ 0.09     $ 0.03     $ (0.04 )

CLASS B COMMON STOCK

  $ 0.02     $ 0.09     $ 0.03     $ (0.04 )

 

   

Three Months Ended September 30,

 

Key Balance Sheet Metrics

 

2024

   

2023

 

Average MBS(1)

  $ 102,421,681     $ 74,315,815  

Average repurchase agreements(1)

    97,949,499       71,055,794  

Average stockholders' equity(1)

    8,195,116       13,199,138  
                 

Key Performance Metrics

               

Average yield on MBS(2)

    5.80 %     4.51 %

Average cost of funds(2)

    5.61 %     4.68 %

Average economic cost of funds(3)

    5.75 %     4.74 %

Average interest rate spread(4)

    0.19 %     (0.17 )%

Average economic interest rate spread(5)

    0.05 %     (0.23 )%

 

(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, and providing certain repurchase agreement trading, clearing and administrative services to, 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, November 1, 2024, at 10:00 AM ET. Participants can register and receive dial-in information at https://register.vevent.com/register/BI909b06944b334b3e8e769108f5807eab. A live audio webcast of the conference call can be accessed at https://edge.media-server.com/mmc/p/qzvibaf6 or via the investor relations section of the Company's website at https://ir.biminicapital.com. An audio archive of the webcast will be available for 30 days after the call.

 

CONTACT:

Bimini Capital Management, Inc.

Robert E. Cauley, 772-231-1400

Chairman and Chief Executive Officer

https://ir.biminicapital.com