Bimini Capital Management Announces Second Quarter 2009 Results

-- Second Quarter Income from Continuing Operations of $34.4 Million (or $1.25 per Class A Common Share) Including $32.4 Million Gain on Early Extinguishment of Debt

-- $0.12 Book Value Per Share at Quarter End

-- MBS Portfolio Remains 100% Invested in Agency MBS

Bimini Capital Management, Inc. (OTCBB: BMNM | Quote | Chart | News | PowerRating) ("Bimini Capital" or the "Company"), a real estate investment trust ("REIT"), today announced income from continuing operations of $34.4 million, or $1.25 per Class A Common Share, for the three month period ended June 30, 2009, compared with a loss from continuing operations of $2.7 million, or $(0.10) per Class A Common Share, for the three month period ended June 30, 2008. The $34.4 million income from continuing operations included a gain on the early extinguishment of debt of $32.4 million associated with the Company's $50.0 million trust preferred debt issued in 2005. As a result of this transaction, the Company's total trust preferred debt outstanding was reduced from $103.1 million to $51.6 million. On a consolidated basis, the Company today reported net income of $31.9 million, or $1.16 per Class A Common Share, for the three month period ended June 30, 2009, compared with a net loss of $34.6 million, or $(1.36) per Class A Common Share, for the three month period ended June 30, 2008. Included in the Company's consolidated results were losses from discontinued operations, net of tax, of $2.5 million and $31.9 million for the three month periods ended June 30, 2009 and June 30, 2008, respectively.

Book Value per Share

The Company's book value per share at June 30, 2009, was $0.12. 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 June 30, 2009, the Company's consolidated stockholders' equity was $3.25 million. Please see the Company's Form 10-Q, Note 12, for additional information related to the restructuring of a portion of our trust preferred debt.

Details of Second Quarter 2009 Results of Operations

Excluding the $32.4 million gain on early extinguishment of debt, the Company's $34.4 million second quarter income from continuing operations included net interest income of $1.3 million, a net increase in the fair value of MBS of $1.2 million, a realized gain on the sale of mortgage-backed securities ("MBS") of $0.4 million, and $0.9 million in operating, general and administrative expenses. Such expenses include $0.3 million of compensation and related benefits.

REIT Taxable Income

As of March 31, 2009, the Company had a cumulative tax net operating loss (NOL) carryforward of $22.5 million. The tax basis gain on early extinguishment debt was $31.5 million. While this gain is not required to be distributed by a REIT under the existing tax code, it is subject to federal income tax as an ordinary income item. Therefore, it is possible the 2009 tax year results of operations, in conjunction with the gain on early extinguishment of debt, will consume the cumulative NOL that existed as of March 31, 2009. If so, this would result in the REIT having taxable earnings for the year. However, at this time the Company is unable to determine if it will have taxable earnings for all of 2009, or what portion, if any, will be required to be distributed. To the extent the Company does have taxable earnings for the year, the Company would have the option of either paying the associated tax, distributing the earnings via a dividend, or any combination of the two. Another factor to be considered is the fact Maryland state law prohibits the Company from distributing taxable earnings if it has negative net worth on a GAAP basis before or after distributing such earnings. Accordingly, the Company does not intend to consider declaring a dividend until there is greater clarity surrounding the magnitude and character of any earnings the Company may generate.

As of June 30, 2009, the Company has approximately $68.6 million of REIT tax capital loss carryforwards. These tax capital loss carryforwards can only be used to offset any future tax capital gains.

REIT taxable income or loss is a term that describes the Company's operating results calculated in accordance with rules and regulations promulgated pursuant to the Internal Revenue Code (IRC). The Company's REIT taxable income or loss is computed differently from net income as computed in accordance with generally accepted accounting principles ("GAAP net income or loss"), as reported in the Company's consolidated financial statements. Depending on the number and size of the various items or transactions being accounted for differently, the differences between REIT taxable income or loss and GAAP net income or loss can be substantial and each item can affect several reporting periods. Generally, these items are timing or temporary differences between years; for example, an item that may be a recorded under GAAP in the current year may not be recorded under IRC regulations until later years.

In order to maintain its qualification as a REIT, the Company is required (among other provisions) to annually distribute dividends to its stockholders in an amount at least equal to, generally, 90% of the Company's REIT taxable income. Additionally, as a REIT, the Company may be subject to a federal excise tax if it distributes less than 85% of its REIT taxable income by the end of the calendar year. Accordingly, the Company's dividends are largely based on REIT taxable income, as determined for federal income tax purposes as opposed to its net income computed in accordance with GAAP (as reported in the Company's consolidated financial statements), and are paid if and when declared by the Company's Board of Directors.

Management Commentary

Commenting on the Company's second quarter results, Robert E. Cauley, Chairman and Chief Executive Officer, said, "We are pleased to announce another quarter of operating profits in the second quarter, our second consecutive quarter, after negative operating results for most of 2007 and 2008. We continue working to turn the Company's fortunes around and the recently completed debt extinguishment of half of our trust preferred debt represented a significant step in this process. However, there is still much work to be done."

Mr. Cauley continued, "Our profitability in the second quarter was driven by two factors. Our funding rates remain well below one percent, and as a result, our net interest margins remain at or near the widest levels we have experienced in our operating history. But more importantly, our alternative investment strategy, implemented during the third quarter of 2008, has enabled us to remain profitable even in the face of additional assets sales necessitated by the exchange of half of our trust preferred debt. The combination of low levels of libor and slow prepayment speeds, especially in the selected borrower and loan types we have traditionally targeted, has resulted in gross interest income levels we would be unable to obtain even if we were not forced to reduce our MBS pass-through portfolio to fund the debt extinguishment. We intend to retain this strategy as a part of our core business model, at least to some degree, even when and if we regain greater access to repo funding. As we have maintained since the onset, the strategy has allowed us to leverage our expertise in the analysis of borrower and prepayment characteristics, while generating revenue not exposed to the vagaries of the funding market."

Conference Call and Webcast

The Company has scheduled an online Web simulcast and conference call to discuss these announcements that will begin at 8:30 a.m. E.T., Tuesday, August 11, 2009. An online replay will be available approximately two hours following the conclusion of the live broadcast and will continue for 48 hours. A link to these events will be available at the Company's website www.biminicapital.com. Those persons without Internet access may listen to the live call by dialing (888) 245-0918 or (913) 312-1429, Conference ID: 5170384.

About Bimini Capital Management

Bimini Capital Management, Inc. is a REIT that invests primarily in, but is not limited to, 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.

Statements 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 or Quarterly Report 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.

SOURCE: Bimini Capital Management, Inc.

Bimini Capital Management, Inc. 
Robert E. Cauley, 772-231-1400 
Chairman and Chief Executive Officer 
www.biminicapital.com