Bimini Capital Management Announces Third Quarter 2024 Results
VERO BEACH, Fla., Oct. 31, 2024 (GLOBE NEWSWIRE) -- 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
