Bimini Capital Management (OTCMKTS:BMNM) said its second-quarter results reflected uneven conditions in the agency residential mortgage-backed securities market, while its acquisition of Tom Johnson Investment Management, or TJIM, broadened the company’s advisory business and reduced its reliance on its investment portfolio.
Chairman and Chief Executive Officer Robert Cauley said market volatility during the quarter was influenced by developments related to the war with Iran, changes in perceptions of the Federal Reserve’s new chairman, and a sell-off in longer-dated interest rates that steepened the Treasury curve. Despite what he described as a mixed backdrop, Cauley said risk assets performed well during the quarter and that strength continued into the third quarter.
TJIM Acquisition Lifts Advisory Revenue
Advisory-services revenue, including TJIM’s contribution, totaled approximately $6.8 million in the second quarter. That compared with $3.8 million in the second quarter of 2025 and $5.1 million in the first quarter of 2026; neither prior period included TJIM.
Cauley said TJIM advisory revenue, less direct operating expenses, was roughly equal to the investment portfolio’s interest and dividend income, less repurchase-agreement interest expense, in the second quarter of 2025. Meanwhile, Bimini’s portfolio had a market value of $37.9 million as of June 30, down from $120.8 million a year earlier.
“We view the acquisition of TJIM as transformational for Bimini Capital Management,” Cauley said. He said the purchase is intended to improve the consistency of earnings and diversify the company’s assets under management beyond its historical focus on agency RMBS. Bimini expects to support TJIM’s growth through relationships it has developed across Wall Street and the banking industry, he added.
Orchid Performance Supports Management Fees
Orchid Island Capital reported an economic return of 6.2% during the quarter, Cauley said. Orchid’s share count grew about 1.5%, while its average equity base rose approximately 5.7% from the first quarter. Those developments resulted in a 3.4% increase in Bimini’s management-fee revenue, according to Cauley.
During the question-and-answer session, Cauley discussed the potential value of Bimini’s advisory arrangement with Orchid but said monetizing or internalizing that relationship could create operational and conflict-of-interest concerns. He said a sale of the management arrangement could leave questions about who would operate both Orchid and Bimini going forward.
Cauley said he believes the business has greater value as a going concern than through a near-term transaction, particularly as Bimini continues to grow Orchid and benefits from the earnings leverage associated with its relatively small share count.
NOL Expiration Drives Longer-Term Planning
Bimini remains focused on using its net operating losses, or NOLs, as part of its tax-driven strategy, but Cauley said the company is nearing an important transition. By the end of 2028, all but about $5.5 million of NOLs from Bimini’s former mortgage company are expected to have been used or expired. That amount is expected to decline to approximately $1 million by the end of 2029. The company has additional, smaller NOLs that do not expire until 2036.
Once the NOLs are used or expire, Bimini will become a tax-paying entity, Cauley said. He added that the company has been profitable and cash-flow positive year to date and expects that to continue.
Given its market outlook and the possibility of higher funding costs if the Federal Reserve raises the federal funds rate, Bimini may begin using available cash to reduce its trust-preferred debt, which matures in 2035. Cauley said reducing interest expense could function similarly to expanding an income-producing asset base.
Cauley also addressed a $1.1 million non-cash tax accrual recorded during the first six months. He said the TJIM acquisition was considered material enough to require an updated evaluation of Bimini’s deferred tax asset and expected NOL utilization. The accrual reflected both revised forward utilization estimates and NOLs used year to date.
TJIM Reports $1.7 Billion of Assets
TJIM President and Chief Investment Officer Richard Parry said the firm, founded in 1983, manages approximately $1.7 billion in assets. About 38% of its business comes from direct clients, while roughly 62% comes through platforms that use its separately managed account services.
The firm’s assets are allocated approximately 15% to equities, 30% to balanced accounts and 55% to fixed income. On a combined basis, Parry said about 33% of TJIM assets are dedicated to equities and 67% to fixed income.
Parry described TJIM as a conservative investment manager. He said its equity portfolios have price-to-earnings valuations of roughly 14 times, compared with more than 20 times for the broader market, while fixed-income duration is slightly below benchmark levels. The firm has shifted from a barbell fixed-income strategy last year to a more laddered structure and is currently more focused on Treasuries than corporate bonds.
About Bimini Capital Management (OTCMKTS:BMNM)
Bimini Capital Management, Inc, through its subsidiaries, operates as a specialty finance company in the United States. The company operates in two segments, Asset Management and Investment Portfolio. The Asset Management segment includes investment advisory services by Bimini Advisors to Orchid Island Capital, Inc and Royal Palm Capital, LLC. The Investment Portfolio segment engages in investment activities conducted by Royal Palm Capital, LLC. It invests in residential mortgage-backed securities.
