BMNM 8-K
Bimini Capital Management, Inc. (BMNM)
8-K
2020-05-14
For: 2020-05-14
View Original
Added on
April 06, 2026
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 14,
2020
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Bimini Capital Management, Inc.
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(Exact name of registrant as specified in its charter)
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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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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 May 14 2020, 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, 2020.
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 14,
2020.
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 14, 2020
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BIMINI CAPITAL MANAGEMENT, INC
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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 2020 RESULTS
VERO BEACH, Fla., (May 14, 2020) – 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, 2020.
First Quarter 2020 Highlights
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•
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Net loss of $22.3 million, or $1.92 per common share
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•
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Book value per share of $1.52
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•
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Company to discuss results on Friday, May 15, 2020, at 10:00 AM ET
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Impact of the COVID-19 Pandemic
Beginning in mid-March 2020, the global pandemic associated with the novel coronavirus COVID-19 (“COVID-19”) and related economic
conditions began to impact our financial position and results of operations. As a result of the economic, health and market turmoil brought about by COVID-19, the Agency MBS market experienced severe dislocations. This resulted in falling prices of
our assets and increased margin calls from our repurchase agreement lenders. In order to maintain our leverage ratio at prudent levels, maintain sufficient cash and liquidity, reduce risk and satisfy margin calls, we sold assets at levels
significantly below their carrying values. We timely satisfied all margin calls. The Agency MBS market largely stabilized after the Federal Reserve announced on March 23, 2020 that it would purchase Agency MBS and U.S. Treasuries in the amounts
needed to support smooth market functioning. The following summarizes the impact COVID-19 has had on our financial position and results of operations through March 31, 2020.
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•
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We sold approximately $171.2 million of MBS during the three months ended March 31, 2020, realizing losses of approximately $5.8 million.
Substantially all of the realized losses sustained in the quarter were a direct result of the adverse MBS market conditions associated with COVID-19.
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•
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Our MBS portfolio had a fair market value of approximately $54.4 million as of March 31, 2020, compared to $217.8 million as of December 31, 2019.
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•
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Our outstanding balances under our repurchase agreement borrowings as of March 31, 2020 were approximately $52.4 million, compared to $210.0 million
as of December 31, 2019.
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•
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We recorded an additional valuation allowance against our deferred tax assets of approximately $11.2 million during the three months ended March 31,
2020.
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•
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Our stockholders’ equity was $17.6 million as of March 31, 2020, compared to $40.0 million as of December 31, 2019.
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In response to the Shelter in Place order issued in Florida, management has invoked the Company’s Disaster Recovery Plan and its employees
are working remotely. Prior planning resulted in the successful implementation of this plan and key operational team members maintain daily communication.
Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues,
it may continue to have adverse effects on the Company’s results of future operations, financial position, and liquidity in fiscal year 2020.
In addition, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which will provide billions of
dollars of relief to individuals, businesses, state and local governments, and the health care system suffering the impact of the pandemic, including mortgage loan forbearance and modification programs to qualifying borrowers who may have difficulty
making their loan payments. On April 13, 2020, the Company received $152,000 through the Paycheck Protection Program of the CARES Act in the form of a low interest rate loan. The Company has evaluated the other provisions of the CARES Act and does
not believe it will have material effect on our consolidated financial statements. The Federal Housing Financing Agency (the “FHFA”) has instructed the GSEs on how they will handle servicer advances for loans that back Agency RMBS that enter into
forbearance, which should limit prepayments during the forbearance period that could have resulted otherwise. During the forbearance period the Company will continue to receive scheduled principal and interest each month on its Agency RMBS
securities. There can be no assurance as to how, in the long term, these and other actions by the U.S. government will affect the efficiency, liquidity and stability of the financial and mortgage markets. To the extent the financial or mortgage
markets do not respond favorably to any of these actions, or such actions do not function as intended, our business, results of operations and financial condition may continue to be materially adversely affected.
Details of First Quarter 2020 Results of Operations
The Company reported net loss of $22.3 million for the three month period ended March 31, 2020. The results for the quarter included advisory services
revenue of $1.7 million, interest and dividend income of $2.4 million, interest expense of $1.3 million, net realized and unrealized losses of $16.1 million, operating expenses of $1.7 million and an income tax provision of $7.4 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, 2020, Bimini’s statement of operations included a fair value adjustment of $(4.4) million and dividends of $0.4 million from its investment in Orchid’s common
stock. Also during the three months ended March 31, 2020, Bimini recorded $1.7 million in advisory services revenue for managing Orchid’s portfolio consisting of $1.4 million of management fees and $0.3 million in overhead reimbursement.
Capital Allocation and Return on Invested Capital
The Company allocates capital between two MBS sub-portfolios, the pass-through MBS portfolio (“PT MBS”) and the structured MBS portfolio, consisting of
interest only (“IO”) and inverse interest-only (“IIO”) securities. The table below details the changes to the respective sub-portfolios during the quarter.
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Portfolio Activity for the Quarter
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||||||||||||||||||||
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Structured Security Portfolio
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||||||||||||||||||||
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Pass-Through
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Interest-Only
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Inverse Interest
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||||||||||||||||||
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Portfolio
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Securities
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Only Securities
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Sub-total
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Total
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||||||||||||||||
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Market Value - December 31, 2019
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$
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216,231,000
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$
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1,024,237
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$
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585,716
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$
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1,609,953
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$
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217,840,953
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||||||||||
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Securities purchased
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20,823,373
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-
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-
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-
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20,823,373
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|||||||||||||||
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Securities sold
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(170,698,280
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)
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-
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(456,969
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)
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(456,969
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)
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(171,155,249
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)
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|||||||||||
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Losses on sales
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(5,752,514
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)
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-
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(52,142
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)
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(52,142
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)
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(5,804,656
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)
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|||||||||||
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Return of investment
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n/a
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(112,824
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)
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(39,628
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)
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(152,452
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)
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(152,452
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)
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|||||||||||
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Pay-downs
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(6,535,288
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)
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n/a
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n/a
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n/a
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(6,535,288
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)
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|||||||||||||
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Premium lost due to pay-downs
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(583,263
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)
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n/a
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n/a
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n/a
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(583,263
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)
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|||||||||||||
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Mark to market gains (losses)
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372,732
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(358,678
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)
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(5,072
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)
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(363,750
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)
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8,982
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||||||||||||
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Market Value - March 31, 2020
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$
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53,857,760
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$
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552,735
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$
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31,905
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$
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584,640
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$
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54,442,400
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||||||||||
The tables below present the allocation of capital between the respective portfolios at March 31, 2020 and December 31, 2019, and the return on invested
capital for each sub-portfolio for the three month period ended March 31, 2020. 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 (51.7)% and (25.2)%, respectively, for the first quarter of
2020. The combined portfolio generated a return on invested capital of approximately (49.6)%.
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Capital Allocation
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||||||||||||||||||||
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Structured Security Portfolio
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||||||||||||||||||||
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Pass-Through
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Interest-Only
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Inverse Interest
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||||||||||||||||||
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Portfolio
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Securities
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Only Securities
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Sub-total
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Total
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||||||||||||||||
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March 31, 2020
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||||||||||||||||||||
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Market value
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$
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53,857,760
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$
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552,735
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$
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31,905
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$
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584,640
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$
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54,442,400
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||||||||||
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Cash equivalents and restricted cash(1)
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6,731,983
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-
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-
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-
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6,731,983
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|||||||||||||||
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Repurchase agreement obligations
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(52,357,397
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)
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-
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-
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-
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(52,357,397
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)
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|||||||||||||
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Total(2)
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$
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8,232,346
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$
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552,735
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$
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31,905
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$
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584,640
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$
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8,816,986
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||||||||||
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% of Total
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93.4
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%
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6.2
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%
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0.4
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%
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6.6
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%
|
100.0
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%
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||||||||||
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December 31, 2019
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||||||||||||||||||||
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Market value
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$
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216,231,000
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$
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1,024,237
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$
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585,716
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$
|
1,609,953
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$
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217,840,953
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||||||||||
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Cash equivalents and restricted cash(1)
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12,353,267
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-
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-
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-
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12,353,267
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|||||||||||||||
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Repurchase agreement obligations
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(209,954,000
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)
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-
|
-
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-
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(209,954,000
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)
|
|||||||||||||
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Total(2)
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$
|
18,630,267
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$
|
1,024,237
|
$
|
585,716
|
$
|
1,609,953
|
$
|
20,240,220
|
||||||||||
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% of Total
|
92.0
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%
|
5.1
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%
|
2.9
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%
|
8.0
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%
|
100.0
|
%
|
||||||||||
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(1)
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Amount excludes restricted cash of $2,775 and $31,850 at March 31, 2020 and December 31, 2019, respectively, related to trust preferred debt funding
hedges.
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(2)
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Invested capital includes the value of the MBS portfolio and cash equivalents and restricted cash, reduced by repurchase agreement borrowings.
|
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Returns for the Quarter Ended March 31, 2020
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||||||||||||||||||||
|
Structured Security Portfolio
|
||||||||||||||||||||
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Pass-Through
|
Interest-Only
|
Inverse Interest
|
||||||||||||||||||
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Portfolio
|
Securities
|
Only Securities
|
Sub-total
|
Total
|
||||||||||||||||
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Interest income (net of repo cost)
|
$
|
1,101,386
|
$
|
6,195
|
$
|
4,597
|
$
|
10,792
|
$
|
1,112,178
|
||||||||||
|
Realized and unrealized gains (losses)
|
(5,963,045
|
)
|
(358,678
|
)
|
(57,214
|
)
|
(415,892
|
)
|
(6,378,937
|
)
|
||||||||||
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Hedge losses
|
(4,775,681
|
)
|
n/a
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n/a
|
n/a
|
(4,775,681
|
)
|
|||||||||||||
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Total Return
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$
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(9,637,340
|
)
|
$
|
(352,483
|
)
|
$
|
(52,617
|
)
|
$
|
(405,100
|
)
|
$
|
(10,042,440
|
)
|
|||||
|
Beginning capital allocation
|
$
|
18,630,267
|
$
|
1,024,237
|
$
|
585,716
|
$
|
1,609,953
|
$
|
20,240,220
|
||||||||||
|
Return on invested capital for the quarter(1)
|
(51.7
|
)%
|
(34.4
|
)%
|
(9.0
|
)%
|
(25.2
|
)%
|
(49.6
|
)%
|
||||||||||
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(1)
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Calculated by dividing the Total Return by the Beginning Capital Allocation, expressed as a percentage.
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Prepayments
For the first quarter of 2020, the Company received approximately $6.7 million in scheduled and unscheduled principal repayments and prepayments, which
equated to a 3-month constant prepayment rate (“CPR”) of approximately 13.7% for the first quarter of 2020. Prepayment rates on the two MBS sub-portfolios were as follows (in CPR):
|
PT
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Structured
|
|||||||||||
|
MBS Sub-
|
MBS Sub-
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Total
|
||||||||||
|
Three Months Ended
|
Portfolio
|
Portfolio
|
Portfolio
|
|||||||||
|
March 31, 2020
|
11.6
|
18.1
|
13.7
|
|||||||||
|
December 31, 2019
|
15.6
|
15.6
|
15.6
|
|||||||||
|
September 30, 2019
|
9.5
|
16.2
|
10.5
|
|||||||||
|
June 30, 2019
|
9.9
|
14.6
|
10.5
|
|||||||||
|
March 31, 2019
|
5.7
|
13.4
|
6.8
|
|||||||||
Portfolio
The following tables summarize the MBS portfolio as of March 31, 2020 and December 31, 2019:
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($ in thousands)
|
||||||
|
Weighted
|
||||||
|
Percentage
|
Average
|
|||||
|
of
|
Weighted
|
Maturity
|
||||
|
Fair
|
Entire
|
Average
|
in
|
Longest
|
||
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Asset Category
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Value
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Portfolio
|
Coupon
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Months
|
Maturity
|
|
|
March 31, 2020
|
||||||
|
Fixed Rate MBS
|
$
|
53,858
|
98.9%
|
4.18%
|
334
|
1-Feb-50
|
|
Interest-Only MBS
|
552
|
1.0%
|
3.64%
|
289
|
15-Jul-48
|
|
|
Inverse Interest-Only MBS
|
32
|
0.1%
|
5.20%
|
230
|
15-May-39
|
|
|
Total MBS Portfolio
|
$
|
54,442
|
100.0%
|
4.17%
|
333
|
1-Feb-50
|
|
December 31, 2019
|
||||||
|
Fixed Rate MBS
|
$
|
216,231
|
99.3%
|
4.25%
|
316
|
1-Nov-49
|
|
Interest-Only MBS
|
1,024
|
0.5%
|
3.65%
|
281
|
15-Jul-48
|
|
|
Inverse Interest-Only MBS
|
586
|
0.2%
|
4.77%
|
254
|
25-Apr-41
|
|
|
Total MBS Portfolio
|
$
|
217,841
|
100.0%
|
4.25%
|
316
|
1-Nov-49
|
|
($ in thousands)
|
||||||||||||||||
|
March 31, 2020
|
December 31, 2019
|
|||||||||||||||
|
Percentage of
|
Percentage of
|
|||||||||||||||
|
Agency
|
Fair Value
|
Entire Portfolio
|
Fair Value
|
Entire Portfolio
|
||||||||||||
|
Fannie Mae
|
$
|
42,669
|
78.4
|
%
|
$
|
203,321
|
93.3
|
%
|
||||||||
|
Freddie Mac
|
11,746
|
21.6
|
%
|
14,498
|
6.7
|
%
|
||||||||||
|
Ginnie Mae
|
7
|
0.0
|
%
|
22
|
0.0
|
%
|
||||||||||
|
Total Portfolio
|
$
|
54,442
|
100.0
|
%
|
$
|
217,841
|
100.0
|
%
|
||||||||
|
March 31, 2020
|
December 31, 2019
|
|||||||
|
Weighted Average Pass Through Purchase Price
|
$
|
108.92
|
$
|
107.12
|
||||
|
Weighted Average Structured Purchase Price
|
$
|
5.38
|
$
|
6.39
|
||||
|
Weighted Average Pass Through Current Price
|
$
|
109.75
|
$
|
108.77
|
||||
|
Weighted Average Structured Current Price
|
$
|
3.46
|
$
|
6.91
|
||||
|
Effective Duration (1)
|
3.266
|
3.196
|
||||||
|
(1)
|
Effective duration is the approximate percentage change in price for a 100 basis point change in rates. An effective duration of 3.266 indicates
that an interest rate increase of 1.0% would be expected to cause a 3.266% decrease in the value of the MBS in the Company’s investment portfolio at March 31, 2020. An effective duration of 3.196 indicates that an interest rate increase of
1.0% would be expected to cause a 3.196% decrease in the value of the MBS in the Company’s investment portfolio at December 31, 2019. 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, 2020, the Company had outstanding repurchase obligations of approximately $52.4 million with a net weighted average borrowing rate of
1.26%. These agreements were collateralized by MBS with a fair value, including accrued interest, of approximately $54.6 million. At March 31, 2020, the Company’s liquidity was approximately $5.9 million, consisting of unpledged MBS and cash and
cash equivalents.
We may pledge more of our structured MBS as part of a repurchase agreement funding, but retain cash in lieu of acquiring additional assets. In this way,
we can, at a modest cost, retain higher levels of cash on hand and decrease the likelihood we will have to sell assets in a distressed market in order to raise cash. Below is a list of outstanding borrowings under repurchase obligations at March 31,
2020.
|
($ in thousands)
|
||||||||||||||||||||
|
Repurchase Agreement Obligations
|
||||||||||||||||||||
|
Weighted
|
Weighted
|
|||||||||||||||||||
|
Total
|
Average
|
Average
|
||||||||||||||||||
|
Outstanding
|
% of
|
Borrowing
|
Amount
|
Maturity
|
||||||||||||||||
|
Counterparty
|
Balances
|
Total
|
Rate
|
at Risk(1)
|
(in Days)
|
|||||||||||||||
|
Mirae Asset Securities (USA) Inc.
|
$
|
21,085
|
40.2
|
%
|
1.14
|
%
|
$
|
1,338
|
15
|
|||||||||||
|
Guggenheim Securities, LLC
|
14,860
|
28.4
|
%
|
1.10
|
%
|
710
|
13
|
|||||||||||||
|
South Street Securities, LLC
|
7,212
|
13.8
|
%
|
1.77
|
%
|
428
|
43
|
|||||||||||||
|
Mitsubishi UFJ Securities (USA), Inc.
|
5,343
|
10.2
|
%
|
1.68
|
%
|
11
|
13
|
|||||||||||||
|
JVB Financial Group, LLC
|
3,353
|
6.4
|
%
|
0.80
|
%
|
278
|
20
|
|||||||||||||
|
Citigroup Global Markets, Inc.
|
504
|
1.0
|
%
|
1.87
|
%
|
292
|
14
|
|||||||||||||
|
$
|
52,357
|
100.0
|
%
|
1.26
|
%
|
$
|
3,057
|
18
|
||||||||||||
|
(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, 2020, such
instruments were comprised entirely of Eurodollar futures contracts.
The tables below present information related to outstanding Eurodollar futures contracts at March 31, 2020.
|
($ in thousands)
|
||||||||||||||||
|
As of March 31, 2020
|
||||||||||||||||
|
Junior Subordinated Debt Funding Hedges
|
||||||||||||||||
|
Average
|
Weighted
|
Weighted
|
||||||||||||||
|
Contract
|
Average
|
Average
|
||||||||||||||
|
Notional
|
Entry
|
Effective
|
Open
|
|||||||||||||
|
Expiration Year
|
Amount
|
Rate
|
Rate
|
Equity(1)
|
||||||||||||
|
2020
|
$
|
1,000
|
1.91
|
%
|
0.53
|
%
|
$
|
(3
|
)
|
|||||||
|
2021
|
1,000
|
1.02
|
%
|
0.30
|
%
|
(7
|
)
|
|||||||||
|
Total / Weighted Average
|
$
|
1,000
|
1.20
|
%
|
0.35
|
%
|
$
|
(10
|
)
|
|||||||
|
(1)
|
Open equity represents the cumulative gains (losses) recorded on open futures positions from inception.
|
Book Value Per Share
The Company's Book Value Per Share at March 31, 2020 was $1.52. 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, 2020, the Company's stockholders’ equity was $17.6 million, with 11,608,555 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 has
been extended twice by the Board of Directors, first until November 15, 2019, and then unit November 15, 2020. 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, 2020, the Company repurchased a total of 70,404 shares at an aggregate cost of approximately $166,945,
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 first quarter of 2020 was perhaps the most devastating
period ever witnessed in the United States and across the globe in terms of the impact on our health, way of life and particularly economic activity. The COVID-19 Pandemic that first emerged in China during the fourth quarter of 2019 quickly spread
around the globe and threatened the welfare and safety of everyone. Given the fact the virus causing the pandemic was a novel virus, and therefore no one had an immunity to it, coupled with the ease with which is spread, necessitated drastic action
be taken to safeguard society before the COVID-19 respiratory illness could cause health care centers to be hopelessly overwhelmed. The actions taken, social distancing, shelter in place, among others, had devastating effects on economic activity
across the globe. The effects were first felt in the financial markets including the agency MBS market, which is the sole market we invest in, and the treasury rates market which significantly impacts our portfolio.
“As it became clear economic activity was on the verge of collapse, businesses and investors moved to raise cash as quickly as possible. The resulting selling
of financial assets drove prices down quickly and margin calls became numerous, forcing levered investors to reduce leverage. Assets traded in the most liquid markets or in a gain position were the first to be sold. The Agency MBS market, the sole
market the Company invests in, was one such market that witnessed the first wave of selling (in addition to U.S. Treasuries). Bimini sold approximately 75% or our MBS portfolio, more than was needed to maintain adequate cash levels. We also reduced
our hedge positions materially. In the end, we were left with enough liquidity to allow us to opportunistically redeploy our remaining capital once the market had settled.
“Given the importance of the mortgage market to the U.S. economy, particularly the Agency MBS market, the breakdown of the market prompted the Fed to
intervene by, among other things, purchasing more U.S. Treasuries and Agency MBS in an effort to stabilize the market. While the Fed’s initial steps proved inadequate, eventually, on March 23, 2020, the Fed announced an essentially unlimited asset
purchase program for U.S. Treasuries and Agency MBS, including two day settlement periods. The Fed went on to introduce many other facilities to support additional markets over the following days and weeks. However, the action on March 23rd
stabilized the Agency MBS market and asset prices quickly began to recover. The Company was able to withstand the disruption to the Agency MBS market, although it did realize approximately $5.8 million of losses on the assets sold and book value on
a per share basis was reduced by approximately 56%. At this time, Bimini was able to redeploy capital opportunistically. Like Bimini, the share prices of all mortgage REIT’s were severely depressed in early April. Bimini opted to purchase
additional shares of Orchid Island at a substantial discount to March 31, 2020 book value. The potential return on the shares exceeded returns available in the MBS markets simply because we could acquire exposure to the same market at a price that
reflects the substantial discount to Orchid’s March 31, 2020 book value. Moving forward, we anticipate the markets to slowly recover, funding levels to be very low and MBS investments – either via direct investment in securities or indirectly via
shares of Orchid, to remain attractive.
“Orchid Island realized a 25.8% reduction in its shareholders equity during the first quarter and this will lower our management fees in coming months. Per
recent public disclosure Orchid has indicated its shareholder equity has partially recovered from the level as of March 31, 2020. We welcome this news. To the extent Orchid recovers further and is able to continue to grow its capital base in the
future we will see our management fee revenues increase. We hope to continue to execute on our strategy of organically growing our investment portfolio in an effort to utilize our tax NOL’s that expire later this decade. It appears that now that we
and Orchid have stabilized, we will be able to generate sufficient revenues to cover our costs and therefore will be able to resume execution of our strategy. The events related to the COVID-19 pandemic have set us back, but have not precluded us
from continuing on our intended path.”
Summarized Consolidated Financial Statements
The following is a summarized presentation of the unaudited consolidated balance sheets as of March 31, 2020, and December 31, 2019, and the unaudited
consolidated statements of operations for the three months ended March 31, 2020 and 2019. Amounts presented are subject to change.
|
BIMINI CAPITAL MANAGEMENT, INC.
|
||||||||
|
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(Unaudited - Amounts Subject To Change)
|
||||||||
|
March 31, 2020
|
December 31, 2019
|
|||||||
|
ASSETS
|
||||||||
|
Mortgage-backed securities
|
$
|
54,442,400
|
$
|
217,840,953
|
||||
|
Cash equivalents and restricted cash
|
6,734,758
|
12,385,117
|
||||||
|
Investment in Orchid Island Capital, Inc. common stock
|
4,484,106
|
8,892,211
|
||||||
|
Accrued interest receivable
|
223,333
|
750,875
|
||||||
|
Deferred tax assets, net
|
25,887,684
|
33,288,536
|
||||||
|
Other assets
|
6,338,629
|
6,331,256
|
||||||
|
Total Assets
|
$
|
98,110,910
|
$
|
279,488,948
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Repurchase agreements
|
$
|
52,357,397
|
$
|
209,954,000
|
||||
|
Junior subordinated notes due to Bimini Capital Trust II
|
27,476,044
|
27,481,121
|
||||||
|
Other liabilities
|
633,425
|
2,076,836
|
||||||
|
Total Liabilities
|
80,466,866
|
239,511,957
|
||||||
|
Stockholders' equity
|
17,644,044
|
39,976,991
|
||||||
|
Total Liabilities and Stockholders' Equity
|
$
|
98,110,910
|
$
|
279,488,948
|
||||
|
Class A Common Shares outstanding
|
11,608,555
|
11,608,555
|
||||||
|
Book value per share
|
$
|
1.52
|
$
|
3.44
|
||||
|
BIMINI CAPITAL MANAGEMENT, INC.
|
||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
|
(Unaudited - Amounts Subject to Change)
|
||||||||
|
Three Months Ended March 31,
|
||||||||
|
2020
|
2019
|
|||||||
|
Advisory services
|
$
|
1,724,597
|
$
|
1,607,320
|
||||
|
Interest and dividend income
|
2,404,803
|
2,555,225
|
||||||
|
Interest expense
|
(1,277,317
|
)
|
(1,719,420
|
)
|
||||
|
Net revenues
|
2,852,083
|
2,443,125
|
||||||
|
Other (expense) income
|
(16,077,449
|
)
|
1,358,992
|
|||||
|
Expenses
|
1,705,957
|
1,621,026
|
||||||
|
Net (Loss) income before income tax provision
|
(14,931,323
|
)
|
2,181,091
|
|||||
|
Income tax provision
|
7,401,624
|
562,488
|
||||||
|
Net (loss) income
|
$
|
(22,332,947
|
)
|
$
|
1,618,603
|
|||
|
Basic and Diluted Net Income (Loss) Per Share of:
|
||||||||
|
CLASS A COMMON STOCK
|
$
|
(1.92
|
)
|
$
|
0.13
|
|||
|
CLASS B COMMON STOCK
|
$
|
(1.92
|
)
|
$
|
0.13
|
|||
|
Three Months Ended March 31,
|
||||||||
|
Key Balance Sheet Metrics
|
2020
|
2019
|
||||||
|
Average MBS(1)
|
$
|
136,141,675
|
$
|
212,032,778
|
||||
|
Average repurchase agreements(1)
|
131,155,699
|
199,771,000
|
||||||
|
Average stockholders' equity(1)
|
28,810,518
|
29,763,216
|
||||||
|
Key Performance Metrics
|
||||||||
|
Average yield on MBS(2)
|
5.99
|
%
|
4.13
|
%
|
||||
|
Average cost of funds(2)
|
2.83
|
%
|
2.63
|
%
|
||||
|
Average economic cost of funds(3)
|
4.22
|
%
|
2.62
|
%
|
||||
|
Average interest rate spread(4)
|
3.16
|
%
|
1.50
|
%
|
||||
|
Average economic interest rate spread(5)
|
1.77
|
%
|
1.51
|
%
|
||||
|
(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 15, 2020, 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 5778886. 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