Bimini Capital Management, Inc.

Overview

Bimini Capital Management, Inc. is a Maryland corporation with operating subsidiaries. The company operates two primary businesses: an investment portfolio segment that manages an Agency mortgage-backed securities (MBS) portfolio and an equity stake in Orchid Island Capital, Inc. (Orchid), and an asset management segment that provides external management services to Orchid through Bimini Advisors, LLC. The investment portfolio is managed through wholly owned subsidiary Royal Palm Capital, LLC. Bimini Advisors provides Orchid’s management team and support staff under a management agreement.

TJIM acquisition (pending)

• On January 13, 2026, the company announced an agreement to acquire 80% of Tom Johnson Investment Management, LLC (TJIM), a privately held registered investment adviser.
• TJIM managed approximately $1.6 billion in assets at the time of the announcement.
• Existing TJIM owners will retain an interest, with mutual put/call rights that could allow acquisition of the remaining 20%.
• Expected close: early in the second quarter of 2026.
• If completed, the acquisition would shift the company toward a purer asset management model with diversified AUM and three reportable segments: Orchid management, TJIM operations, and the existing investment portfolio.

Business segments (current and pro forma)

• Before TJIM: two reportable segments — Investment portfolio and Asset management.
• After TJIM (if completed): three reportable segments — Orchid management, TJIM operations, and Investment portfolio.
• The TJIM acquisition would involve substantial capital deployment into TJIM and could change leverage and investment style from primarily Agency MBS to a broader asset management mix.

Investment objective and strategy

• Objective: produce attractive risk-adjusted total returns over the long term through capital appreciation and interest income.
• Primary asset classes:
  • Pass-through Agency MBS (PT Agency MBS): traditional pass-through securities backed by single-family mortgages.
  • Structured Agency MBS: interest-only (IOs), inverse IOs (IIOs), and principal-only (POs).
• Leverage and funding:
  • PT Agency MBS portfolio is primarily funded using repurchase agreements (repos).
  • Structured Agency MBS portfolio is generally unleveraged.
  • Target leverage policy: generally not to exceed 12:1 total liabilities to equity; typical practice is below 10:1.
• Revenue sources:
  • Investment portfolio: interest income and dividends.
  • Asset management: management fees and expense reimbursements from Orchid.
• Hedging and risk management:
  • Hedging financing costs to protect net interest margin in a rising-rate environment.
  • Use of derivatives and TBAs to manage interest-rate exposure; changes in fair value of TBAs are reflected in earnings.
• Portfolio management principles:
  • Minimize credit risk and maintain diversification across mortgage loan pools.
  • Preference for specified pools to reduce prepayment risk.
  • Evaluate liquidity, financing cost, and hedging cost in investment decisions.
• Liquidity and margin management:
  • Maintain cash or unencumbered assets to meet repo margin calls.
  • Seek to reduce margin-call exposure by shifting capital between leveraged and unleveraged portfolios and by asset selection.
• Equity investments:
  • Holds Orchid common stock as part of its strategy and may consider other REIT common stock subject to limits.

Asset categories and key features

• Pass-through Agency MBS:
  • Examples include mortgage pass-through certificates and CMOs issued by Ginnie Mae, Fannie Mae, and Freddie Mac.
  • Ginnie Mae securities carry a full faith and credit guarantee on principal and interest; Fannie Mae and Freddie Mac guarantees apply to principal and interest but not market value.
  • Prepayment risk is a primary consideration because it affects reinvestment timing and income.
• To-Be-Announced forwards (TBAs):
  • Forward contracts for Agency MBS where specific securities are identified closer to settlement.
  • Include forward settlement, offsetting TBAs, and dollar rolls; treated as derivatives.
• Specified pools:
  • Pass-through pools selected for characteristics that reduce prepayment risk; typically trade at a premium.
• Structured Agency MBS:
  • IOs: cash flows depend on prepayments and interest rates; no principal payments.
  • IIOs: cash flows depend on prepayments and certain rate indices; often paired with floating-rate CMOs.
  • POs: cash flows depend on principal prepayments of the underlying pool.
  • Backed by Agency MBS issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac.
• Other investments:
  • Orchid common stock serves as a proxy for the company’s broader strategy.

Financing and leverage specifics

• Primary funding: short-term repurchase agreements with terms generally from one day to one year; repos can have longer terms.
• Haircuts and margin: cash collateral is posted and haircuts can increase, leading to additional collateral requirements or margin calls.
• Margin-call risk: adverse collateral requirements can force asset sales.
• Other leverage options: secured or unsecured debt and preferred stock may be used.
• No fixed leverage cap, but explicit targets and risk controls guide leverage levels.

Fees and capital structure highlights

• Orchid management fees (paid to Bimini Advisors) on Orchid equity:
  • 1/12 of 1.5% on the first $250 million
  • 1/12 of 1.25% on equity between $250 million and $500 million
  • 1/12 of 1.00% on equity above $500 million
• Termination fee: if Orchid terminates the management agreement without cause, the fee equals three times the average annual management fee.
• Historical debt: included $26.8 million of trust preferred securities outstanding; primary leverage source is repo financing.

Regulatory and organizational context

• Exempt from the Investment Company Act under Section 3(c)(5)(C), which requires at least 55% of assets to be qualifying real estate assets and 80% to be real estate-related assets overall.
  • PT Agency MBS generally qualify as real estate assets; structured Agency MBS typically do not.
• Received no-action relief from the CFTC regarding commodity pool operator registration.
• Rights Plan:
  • Antitakeover measure to protect net operating losses (NOLs) and net capital losses (NCLs).
  • Threshold: 4.9% ownership triggers rights to purchase shares at a discount to discourage ownership changes that could limit tax attributes.
  • Rights Plan was amended in December 2025; stockholder vote is planned at the 2026 annual meeting. The plan will automatically terminate if not approved by June 30, 2026.
• Tax considerations:
  • NOLs and NCLs are subject to Section 382/383 limitations following ownership changes.
  • Post-2017 NOLs are generally limited to 80% of taxable income in the utilization year.

People and benefits

• Employees: 10 full-time salaried employees as of December 31, 2025.
• No employees are subject to collective bargaining agreements.
• Benefits include a 401(k) plan and health, dental, and other insurance.

Investor information

• Investor relations website: https://ir.biminicapital.com
• Filings and governance materials available on the company website; SEC filings available at sec.gov.

Key risks

• Interest-rate, prepayment, and yield-curve risk from the asset and funding mix.
• Dependence on repurchase financing and exposure to margin calls.
• Earnings volatility from leverage and the potential for forced asset sales under stress.
• Competition for Agency MBS and access to favorable funding.
• Cybersecurity and operational risks.
• Climate-related and regional risks (e.g., hurricanes near Florida headquarters).
• Conflicts of interest with Orchid due to shared management and potential competition for assets.
• Regulatory changes that could affect exemptions or operations.
• Integration risk and strategic changes associated with the TJIM acquisition.

Executive summary

Bimini Capital Management, Inc. manages an Agency MBS-focused investment portfolio and operates an asset management business that externally manages Orchid Island Capital, Inc. The company invests in both pass-through and structured Agency MBS, uses repo financing and derivatives (including TBAs) to manage funding and interest-rate exposure, and holds Orchid common stock as part of its return strategy. Bimini seeks to maintain exemptions from certain investment company and commodity pool regulations while operating a capital-intensive, leveraged portfolio approach. The pending TJIM acquisition would expand the firm’s asset management capabilities, diversify AUM, and shift the business mix toward fee-based asset management.