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TheStreet Open House

Bimini Capital Management Announces Fourth Quarter 2012 Results

Stocks in this article: BMNM

Book Value Per Share

The Company's Book Value Per Share at December 31, 2012 was $0.33. Book Value Per Share is regularly used as a valuation metric by various equity analysts that follow the Company and may be deemed a non-GAAP financial measure pursuant to Regulation G. The Company computes Book Value Per Share by dividing total stockholders' equity by the total number of shares outstanding of the Company's Class A Common Stock. At December 31, 2012, the Company's consolidated stockholders' equity was $3.5 million with 10,616,912 Class A Common shares outstanding. At December 31, 2012, the Company had $6.6 million in cash and cash equivalents.

Management Commentary

Commenting on the Company's fourth quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said, "The fourth quarter of 2012 presented a challenging environment for those invested in the Agency MBS market. The economy, while recovering, is far from recovering all of the jobs lost a result of the financial crisis. Unemployment is stubbornly high.  The Federal Reserve, with its announcement on September 13, 2012, of another round of quantitative easing dubbed "QE3", committed to purchase $40 billion of Agency MBS per month until economic activity, and the unemployment rate in particular, improve. While the initial impact on our market was positive, as prices jumped higher, the fourth quarter witnessed a considerable amount of profit harvesting as most market participants concluded prices had gone as high as they were going to go. The combined effect of QE3 and expectations of additional efforts on the part of the administration and/or FHFA to stimulate additional HARP related refinancing, has driven market expectation for refinancing activity higher. While speeds have slowed somewhat since year end, they were quite high in the fourth quarter with aggregate speeds in the low to mid 30's CPR range. In addition, with many market participants fearful of the impact of rising interest rates at some point, increased hedging activity was evident. This was especially so in the IO market as yields on most securities were driven to negative levels. These securities are now viewed as mere hedge instruments, much like interest rate derivatives, and investors are willing to accept the negative yield in return for the protection these securities are expected to provide for their pass-through portfolios, as IO's are natural hedges for those securities. This development impacted Bimini as we now rely almost exclusively on our PT portfolio for our income." 

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