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BIMINI CAPITAL MANAGEMENT, INC. (BMNM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 reported net loss of $1.5M and diluted EPS of -$0.15, driven by a $2.1M tax provision from a higher deferred tax valuation allowance despite $0.56M pre-tax income .
  • Advisory services revenue rose slightly quarter-over-quarter to $3.4M on Orchid Island Capital’s equity base growth; average interest rate spread improved to 0.69% as cost of funds fell to 4.87% .
  • Book value per share declined to $0.68 from $0.83 in Q3 2024 and $0.81 in Q4 2023; MBS portfolio fair value increased to $122.35M with returns on invested capital of ~5.6% for the quarter .
  • Management flagged rising macro uncertainty but noted quarter-to-date market conditions were favorable for Orchid and Royal Palm portfolios; a further increase in advisory revenues is expected in Q1 2025 as Orchid’s shareholder base expands .

What Went Well and What Went Wrong

What Went Well

  • Advisory revenues increased to $3.4M (vs. $3.3M in Q3) as Orchid’s shareholders’ equity rose to $668.5M; management said “should lead to another increase in advisory service revenue for the first quarter of 2025” .
  • Net interest spread strengthened: average interest rate spread improved to 0.69% (from 0.19% in Q3), with average cost of funds down to 4.87% .
  • Investment portfolio produced positive net interest income ($0.3M) and hedge gains ($3.0M), supporting a ~5.6% ROIC for the combined MBS portfolio in Q4 .

What Went Wrong

  • Book value per share fell to $0.68 (from $0.83 in Q3), reflecting net losses and valuation allowance impacts on deferred tax assets .
  • Other income included unrealized MBS losses of $2.7M and a $0.3M mark-to-market loss on Orchid shares, partially offset by $3.0M of unrealized derivative gains .
  • Effective duration increased to 3.622 from 2.508 year-over-year, heightening rate sensitivity; management underscored an uncertain macro backdrop as 2025 progressed .

Financial Results

Income Statement Highlights (USD)

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Advisory services$3,076,045 $3,167,055 $3,300,512 $3,387,640
Interest & dividend income$1,554,080 $1,492,191 $1,690,252 $1,876,818
Interest expense$(1,794,094) $(1,762,116) $(1,980,863) $(1,982,610)
Net revenues$2,836,031 $2,897,130 $3,009,901 $3,281,848
Other income (expense)$599,961 $(621,397) $420,726 $99,565
Expenses$3,840,310 $2,782,576 $2,627,343 $2,818,739
Pre-tax income (loss)$(404,318) $(165,449) $803,284 $562,674
Income tax provision$4,451,159 $108,396 $547,059 $2,064,496
Net income (loss)$(4,855,477) $(273,845) $256,225 $(1,501,822)
Diluted EPS$(0.48) $(0.03) $0.03 $(0.15)

Note: Q4 press release commentary references Q3 pre-tax “net loss before taxes of $0.8M,” which conflicts with Q3’s reported pre-tax income of $0.8M in the Q3 release; we anchor to the Q3 release figures .

Margins and Balance Sheet KPIs

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Book value per share$0.81 $0.81 $0.83 $0.68
Avg. yield on MBS (%)6.08% 5.88% 5.80% 5.56%
Avg. cost of funds (%)5.60% 5.53% 5.61% 4.87%
Avg. economic cost of funds (%)5.70% 5.32% 5.75% 4.87%
Avg. interest rate spread (%)0.48% 0.35% 0.19% 0.69%
Avg. economic interest rate spread (%)0.38% 0.56% 0.05% 0.69%
Average MBS balance ($)$88,796,005 $87,539,021 $102,421,681 $120,388,407
CPR (quarter, %)8.0% 10.0% 6.3% 11.1%
Repurchase agreements (period-end, $)$86,906,999 $82,875,999 $113,022,999 $117,180,999

Segment Breakdown – Advisory Revenues (USD)

ComponentQ2 2024Q3 2024Q4 2024
Management fees$2.3M $2.4M $2.5M
Overhead reimbursement$0.7M $0.6M $0.7M
Repurchase/clearing/admin$0.2M $0.2M $0.2M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Advisory services revenueQ1 2025None formalManagement expects an increase given Orchid’s larger equity baseDirectional commentary (no formal guidance)
Portfolio outlook2025None formal“Quarter to date market conditions have been favorable” for Orchid and Royal PalmDirectional commentary (no formal guidance)

No formal numerical guidance (revenue, margins, OpEx, OI&E, tax rate, dividends) was issued in Q4 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3 2024)Current Period (Q4 2024)Trend
Fed policy and rate cutsQ2: Anticipated start of rate cuts; balanced risks; sector may benefit . Q3: September 50 bp cut; market reassessing pace of cuts .Fed cut two more times in Q4 (25 bp each); expectations for further cuts declined into 2025 .More cautious on pace of easing
Yield curve/inversionQ2: Focus on narrow spreads, hedge performance . Q3: Higher rates, mortgages underperform hedges .Dis-inversion in Q4 amid strong economic outlook .Shift to dis-inversion dynamics
Orchid equity base/advisoryQ2: Equity raises; advisory revenue +8% q/q . Q3: Equity up to $656M; advisory ~$3.3M (+4%) .Orchid equity $668.5M; advisory $3.4M; further increase expected in Q1 2025 .Positive trajectory
Funding costs & spreadsQ2: Cost ~5.5%; spreads narrow but hedges performing . Q3: Funding costs ~5.5–5.6%; spreads compressed .Avg. cost of funds down to 4.87%; spreads improved to 0.69% .Improving spreads with lower funding cost
Tax valuation allowance/DTANot highlighted in Q2/Q3.Increased valuation allowance drove $2.1M tax provision and net loss .New headwind (valuation allowance)
Macro uncertaintyQ2: Potential easing, watch for bear steepening risk . Q3: Election uncertainty, higher rates .2025 macro uncertainty rising; consumer confidence down; rate volatility up .Elevated uncertainty

Management Commentary

  • “The Company… recorded net income before taxes for the quarter of $0.6 million… We updated our projected utilization of our deferred tax assets and increased the valuation allowance, resulting in a tax provision of $2.1 million and a net loss for the 2024 fourth quarter of $1.5 million.”
  • “Orchid… reported fourth quarter 2024 net income of $5.6 million… As a result, Bimini's advisory service revenues also increased slightly, to $3.4 million… Orchid reported yet another increase in its shareholder base, which should lead to another increase in advisory service revenue for the first quarter of 2025.”
  • “With the Fed Funds rate lowered by 100 basis points… the persistently strong economic outlook led to a dis-inversion of the yield curve… market expectations for additional reductions… continued to decline over the course of the fourth quarter and into 2025.”
  • “Quarter to date market conditions have been favorable for both Orchid Island and Royal Palm's investment portfolios.”

Q&A Highlights

  • No analyst questions were recorded; management invited follow-ups via the corporate office line and expects to discuss further at the end of Q1 2025 .

Estimates Context

  • Wall Street consensus estimates (EPS and revenue) via S&P Global were unavailable at the time of request due to a request limit error; therefore, no formal comparison versus consensus is provided [GetEstimates error].

Key Takeaways for Investors

  • Q4 quality of earnings: pre-tax profit ($0.56M) offset by non-cash tax valuation allowance ($2.1M), resulting in -$0.15 EPS; monitoring DTA utilization is critical to near-term reported EPS volatility .
  • Advisory revenue tailwind: Orchid’s equity base growth supports incremental advisory revenue into Q1 2025; this is a clearer near-term catalyst than portfolio spread changes alone .
  • Spread dynamics improved: average funding cost fell to 4.87% and interest spreads widened to 0.69%, enhancing forward net interest prospects if funding costs stay lower .
  • Balance sheet sensitivity: effective duration rose (3.622), increasing rate sensitivity; hedge discipline and portfolio positioning remain key against macro volatility .
  • Book value pressure: BVPS dropped to $0.68; stabilization depends on spread capture, hedge effectiveness, and tax valuation allowance trajectory .
  • Portfolio growth: MBS fair value increased to $122.35M with Q4 ROIC ~5.6%; continued growth is feasible with positive operating cash flows and diversified repo counterparties .
  • Watch for macro catalysts: pace of Fed easing, yield curve evolution, and Orchid’s capital raising cadence are likely to drive advisory revenue visibility and trading sentiment .