The following excerpt is from the company's SEC filing.
VERO BEACH, Fla., (August 12,
2021) – Bimini Capital Management, Inc. (OTCQB: BMNM), (“Bimini Capital,”
“Bimini,” or the “Company”), today announced results of operations for the three-month
period ended June 30, 2021.
Second Quarter 2021 Highlights
Net loss of
$0.9 million, or $0.08 per common share
per share of $3.00
discuss results on Friday, August 13, 2021, at 10:00 AM ET
the second quarter results, Robert E. Cauley, Chairman and Chief Executive
Officer, said, “
continued its strong recovery fr om the COVID-19 pandemic during the second
quarter of 2021. New COVID-19 cases, hospitalizations and deaths from the
virus decreased dramatically, allowing the economy to reopen and substantial
pent-up demand on the part of consumers to be unleashed. Additional fiscal
policy steps taken by the Biden administration added to the surge in economic
activity. Gross domestic product, or GDP, expanded at a 6.5% annualized rate
during the second quarter of 2021. The consumer price index, or CPI,
accelerated by 5.4% on a year over year basis in June and again in July. The
lone disappointment over the second quarter was job growth, although the last
two reports, covering June and July, have shown a material acceleration. As we
enter the third quarter of 2021 job growth has accelerated, but the rapid
emergence of the delta variant of COVID-19 during July may negatively impact
activity and inflation accelerated during the second quarter of 2021, market
participants anticipated interest rates would continue to rise as they had done
during the first quarter of the year. However, interest rates did not continue
to rise in the second quarter of 2021, and in fact declined. As both Orchid
Island Capital, Inc. (“Orchid”) and Royal Palm were positioned defensively as
we entered the second quarter, the decline in rates and underperformance of MBS
assets versus hedge instruments led to sub-par performance for both portfolios.
Orchid recorded a GAAP loss of $0.17 per share or $16.9 million.
However, Orchid had another strong quarter growing its shareholders’ equity
after raising net proceeds of approximately $124.7 million through its “at the
market” program. The net effect of the new shares issued, the net loss and
dividends paid resulted in Orchid’s shareholders’ equity increasing $87.6
million, or 19% for during the second quarter. Year to date Orchid has
increased its shareholders’ equity by approximately $138.5 million, or 33%. As
a result, Bimini Advisor’s advisory services revenue increased 8% over the
first quarter and, as the increased capital base at Orchid was not in place for
the entire quarter, the run rate entering the third quarter is higher still.
Dividend income on our shares of Orchid common stock was flat with
the first quarter of 2021 but increased by 30% over the second quarter of 2020,
driven by the 71% increase in the number of shares we own as a result of
purchases that occurred during the second and third quarters of 2020.
“The Agency RMBS
portfolio at Royal Palm Capital decreased by 5% during the second quarter of
2021, the net effect of structured security asset purchases of $0.8 million
offset by $0.5 million in mark to market losses and $4.1 million of pay-downs
and return of investment during the quarter. Prepayment activity remained
elevated during the quarter, although it has moderated as we move through the
third quarter, in spite of lower interest rates available to borrowers. The
reason speeds have remained elevated is the securities owned by Royal Palm are
BMNM Announces Second Quarter 2021
August 12, 2021
predominantly higher coupon and more seasoned, and while
rates are still higher than levels seen in 2020, the loans underlying theses securities
are still in the money and the economic incentive to refinance is still
present. This lack of any meaningful sign of slower speeds, or burnout, in our
higher coupon securities led to spread widening. As a result, for the second
quarter of 2021, we recorded the mark to market loss mentioned above of $0.5
million on our RMBS holdings. The decline in book value that occurred at Orchid
during the first quarter led to a $0.82 decline in the price of our Orchid
shares, or $2.1 million, offsetting the $2.0 million gain recorded in the first
quarter. Finally, operating expenses declined modestly by 2% for the second
quarter versus the first quarter of 2021 and increased 2% versus the second
quarter of 2020.
the economy is clearly on a path to recovery, assuming the delta variant of the
virus does not intercede. The Federal Reserve Open Market Committee appears
focused on job growth and sees this as the key driver in achieving their
“substantial further progress” in the recovery needed before adjusting monetary
policy. The first two non-farm payroll reports released during the third
quarter suggest this may be at hand, but as stated above, this assumes the
rapid emergence of the delta variant in July does not derail momentum. If it
does not, it appears the first step in Fed’s monetary policy shift away from
accommodation – tapering of their monthly asset purchases – cannot be far off.
If this does occur, we would expect interest rates to start to gradually rise
and prepayment activity to abate, both of which would be welcome developments
for both Orchid Island and Bimini.”
Details of Second Quarter 2021
Results of Operations
Company reported net loss of $0.9 million for the three-month period ended June
30, 2021. As Orchid Island Capital, Inc. (“Orchid”) was able to grow its
capital base during the first half of 2021, advisory service revenues increased
35% compared to the second quarter of 2020. We recorded interest and dividend income
of $1.1 million and interest expense on long-term debt of $0.3 million. We
recorded a $2.1 million mark to market loss on our shares of Orchid common
stock and a mark to market loss of $0.5 million on our MBS portfolio. The
results for the quarter also included operating expenses of $1.7 million and an
income tax benefit of $0.3 million.
Management of Orchid Island
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 June 30, 2021, Bimini’s statement
of operations included a fair value adjustment of $(2.1) million and dividends
of $0.5 million from its investment in Orchid’s common stock. Also during the
three months ended June 30, 2021, Bimini recorded $2.2 million in advisory
services revenue for managing Orchid’s portfolio consisting of $1.8 million of
management fees and $0.4 million in overhead reimbursement.
Value Per Share
The Company's Book Value Per
Share at June 30, 2021 was $3.00. 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 June 30, 2021, the Company's stockholders’
equity was $34.9 million, with 11,608,555 Class A Common shares outstanding.
July 2021, the Company completed a “modified Dutch auction” tender offer and
paid an aggregate of $1.5 million, excluding fees and related expenses, to
repurchase 812,879 shares of Bimini Capital’s Class A common stock at a price
of $1.85 per share. The financial statement impact of the completion of this
tender offer will be reported in our September 30, 2021 quarterly results.
Capital Allocation and Return on
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
Value - March 31, 2021
lost due to pay-downs
to market gains (losses)
Value - June 30, 2021
The tables below present the
allocation of capital between the respective portfolios at June 30, 2021 and
March 31, 2021, and the return on invested capital for each sub-portfolio for
the three-month period ended June 30, 2021. 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
0.1% and 8.6%, respectively, for the second quarter of 2021. The combined
portfolio generated a return on invested capital of approximately 0.4%.
equivalents and restricted cash
Cash equivalents and restricted cash
excludes restricted cash of $425 and $655 at June 30, 2021 and March 31, 2021,
respectively, related to trust preferred debt funding hedges.
capital includes the value of the MBS portfolio and cash equivalents and
restricted cash, reduced by repurchase agreement borrowings.
Returns for the Quarter Ended June 30, 2021
income (net of repo cost)
and unrealized gains (losses)
on invested capital for the quarter
by dividing the Total Return by the Beginning Capital Allocation, expressed as
For the second quarter of 2021,
the Company received approximately $4.1 million in scheduled and unscheduled
principal repayments and prepayments, which equated to a 3-month constant
prepayment rate (“CPR”) of approximately 21.9% for the second quarter of 2021.
Prepayment rates on the two MBS sub-portfolios were as follows (in CPR):
The following tables summarize
the MBS portfolio as of June 30, 2021 and December 31, 2020:
Average Pass Through Purchase Price
Average Structured Purchase Price
Average Pass Through Current Price
Average Structured Current Price
duration is the approximate percentage change in price for a 100 basis point
change in rates. An effective duration of 3.562 indicates that an interest
rate increase of 1.0% would be expected to cause a 3.562% decrease in the value
of the MBS in the Company’s investment portfolio at June 30, 2021. An
effective duration of 3.309 indicates that an interest rate increase of 1.0%
would be expected to cause a 3.309% decrease in the value of the MBS in the
Company’s investment portfolio at December 31, 2020. These figures include the
structured securities in the portfolio but not the effect of the Company’s
duration quotes for individual investments are obtained from The Yield Book,
of June 30, 2021, the Company had outstanding repurchase obligations of
approximately $71.3 million with a net weighted average borrowing rate of 0.16%. These
agreements were collateralized by MBS with a fair value, including accrued
interest, of approximately $69.2 million and cash of approximately $5.9
million. At June 30, 2021, the Company’s liquidity was approximately $7.3
million, consisting of unpledged MBS and cash and cash equivalents.
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 June 30, 2021.
Repurchase Agreement Obligations
Asset Securities (USA) Inc.
ED&F Man Capital Markets, Inc.
Street Securities, LLC
Global Markets, Inc.
Financial Group, LLC
UFJ Securities (USA), Inc.
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).
Consolidated Financial Statements
The following is a summarized presentation of the
unaudited consolidated balance sheets as of June 30, 2021, and December
31, 2020, and the unaudited consolidated statements of operations for the six
and three months ended June 30, 2021 and 2020. Amounts presented are subject
BIMINI CAPITAL MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited - Amounts Subject To Change)
Island Capital, Inc. common stock, at fair value
tax assets, net
AND STOCKHOLDERS' EQUITY
Liabilities and Stockholders' Equity
A Common Shares outstanding
value per share
BMNM Announces Second Quarter 2021 Results
BIMINI CAPITAL MANAGEMENT,
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - Amounts Subject to Change)
Six Months Ended June 30,
Three Months Ended June 30,
and dividend income
Income (loss) before income tax provision (benefit)
tax provision (benefit)
and Diluted Net Income (Loss) Per Share of:
A COMMON STOCK
B COMMON STOCK
Balance Sheet Metrics
yield on MBS
cost of funds
economic cost of funds
interest rate spread
economic interest rate spread
MBS, repurchase agreements and stockholders’ equity balances are calculated
using two data points, the beginning and ending balances.
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.
interest cost of our borrowings and the effect of derivative agreements attributed
to the period related to hedging activities, divided by average repurchase
interest rate spread is calculated by subtracting average cost of funds from
average yield on MBS.
economic interest rate spread is calculated by subtracting average economic
cost of funds from average yield on MBS.
Bimini Capital Management, Inc.
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.
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
earnings conference call and live audio webcast will be hosted Friday, August 13, 2021, at 10:00
AM ET. Participants
can receive dial-in information via email by following the link:
live audio webcast of the conference call can be accessed via the investor
relations section of the Company’s website at https://ir.biminicapital.com or at
https://event.on24.com/wcc/r/3191208/01197DE346909C4034E615AE1CF04694, and an
audio archive of the webcast will be available for approximately one year.
Robert E. Cauley, 772-231-1400
Chairman and Chief Executive Officer
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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Other recent filings from the company include the following:
Bimini Capital Management to Announce Third Quarter 2021 Results - Oct. 20, 2021