Bimini Capital Management, Inc. · OTC:BMNM
Bimini Capital Management — Opteum — Investor Presentation (March 2006)
34 slides from Bimini Capital Management's investor presentation, Mar 29, 2006
Slide 1: Opteum Incorporated
Si yh teum. INCORPORATED
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements. Such forward-looking statements are based on information available at the time of the preparation of this presentation and on management's good faith belief with respect to future events, and are subject to risks and uncert
Slide 3: Table of Contents
Table of Contents 1. Strengths and Weaknesses of the Mortgage REIT Business Model (Page 4) 2. Making the Mortgage REIT Business Model Better (Page 9) » Corporate Mission and Long Term Goal » Diversity, Diversity, Diversity » Board and Management are Large Shareholders » The Strategic Thinking Behind
Slide 4: Strengths and Weaknesses of the Mortgage REIT Business Model
Strengths and Weaknesses of the Mortgage REIT Business Model § Biggest Strength » Permanent Equity to Invest in Fixed Income Instruments and Expand an Origination Platform through Various Business Cycles § Stock Price can go Down, but that does not Force the Investment Manager to Sell Assets and tak
Slide 5: Mortgage REIT Business Model: Fed Funds Target Rate
Strengths and Weaknesses of the Mortgage REIT Business Model: Fed Funds Target Rate Data Provided By Bloomberg
Slide 6: Mortgage REIT Business Model: Stock Prices Reflect Fed Funds
Strengths and Weaknesses of the Mortgage REIT Business Model: Stock Prices Reflect Fed Funds Data Provided By Bloomberg
Slide 7: Origination REITs Maintain Dividends Longer than RMBS REITs
Strengths and Weaknesses of the Mortgage REIT Business Model: Origination REITs Maintain Dividends Longer than RMBS REITs Data Provided By Bloomberg
Slide 8: Despite Rising Rates, ROEs Have Been Relatively Stable
Strengths and Weaknesses of the Mortgage REIT Business Model: Despite Rising Rates, ROEs Have Been Relatively Stable Q3 2004 Average RMBS Peer Group Q4 2005 Average 13.7% 10.1% Q3 2004 Average Active Originator Peer Group Q4 2005 Average 14.7% 13.9% Data Provided By Bloomberg and FlagStone Securitie
Slide 9: Corporate Mission and Long Term Goal
Making the Mortgage REIT Business Model Better: Corporate Mission and Long Term Goal Clearly Defined Corporate Mission § “Provide Superior Returns to our Shareholders.” » Protect Ultimate Book Value. » Stable Returns over Time. If we achieve our Corporate Mission, we will be able to achieve our Corp
Slide 10: Diversity, Diversity, Diversity
Making the Mortgage REIT Model Better: Diversity, Diversity, Diversity Diversity is Inherent in Everything We Do § Diverse Business Model in our Core Competences » Mortgage Origination Platform – Three Origination Channels, Over 100 Products, Geographic Diversity. » Portfolio Management - $3.5 Billi
Slide 11: Board and Management are Large Shareholders
Making the Mortgage REIT Business Model Better: Board and Management are Large Shareholders # of Shares § Independent Board (1) 675,499 » Bespolka, Hendricks, Kaplan, Mortenson, Ortale • Self, Spouse, Children, Trusts § Senior Management (1,2) 3,755,078 » Zimmer, Cauley, Norden, Levine, Floyd • Self
Slide 12: The Strategic Thinking Behind the OFS Acquisition
Making the Mortgage REIT Business Model Better: The Strategic Thinking Behind the OFS Acquisition § Diversify Sources of Revenue, Yet within Opteum’s Core Area of Competence. » Decrease Reliance of RMBS Portfolio Arbitrage on Federal Reserve Rate Decisions. § High Teens ROE Potential is Accretive to
Slide 13: Price to Book Ratios for RMBS REITs and REITs with Origination Platforms
Price to Book Ratios for RMBS (Portfolio Only) REITs and REITs with Origination Platforms (Active/Prime) Data Provided By FlagStone Securities
Slide 14: Current Price to Book Ratios for Active Originator REITs
Current Price to Book Ratios for Active Originator REITs Data Provided By FlagStone Securities
Slide 15: Capital Allocation and the Relationship Between the REIT and the TRS
Capital Allocation and the Relationship Between the REIT and the Taxable REIT Subsidiary (“TRS”) § The Company can Allocate Resources in Three Ways. 1. Capital to Opteum Financial Services (“OFS”, the Company’s TRS) to Facilitate Growth. 2. REIT Portfolio Investments. 3. Corporate Stock Buy-Back at
Slide 16: Opteum Financial Services
Opteum Financial Services The Company’s Mortgage Origination Platform and Taxable REIT Subsidiary
Slide 17: Who is OFS?
Who is OFS? Opteum Financial Services § OFS is a Paramus, New Jersey Based Mortgage Banker § Founded in 1999 by Peter Norden and Marty Levine » Years Each in the Mortgage Business (Accounting and Financial Backgrounds) » Founded Three Mortgage Companies Previously § Diversified Originator » Three Ch
Slide 18: The Origination Platform: Opteum Financial Services
The Origination Platform: Opteum Financial Services Wholesale Division: Regional Offices (2) Branch Offices (3) Retail Division: Branch Offices (29) Conduit Division: National Office (1)
Slide 19: OFS Fiscal 2005 Production Summary
Product # of Loans Loan Amount % of Total OFS Fiscal 2005 Production Summary § OFS no longer securitizes Subprime products (starting with OPMAC 2005-2). § OFS sells 100% of it’s Subprime Originations Servicing Released. § OFS no longer securitizes second mortgages (the last one in OPMAC 2005-2). FNM
Slide 20: OFS Origination Production by Channel
OFS Origination Production by Channel 2005 includes closed loan production for 13 months ended December 31 st .
Slide 21: OFS Issuance Summary By Deal Name
Name UPB Issue Amount Gross WAC Net WAC WALTV WACLTV WA Fico OFS Issuance Summary By Deal Name HMAC 2004-1 309,846,147 6.114 5.634 81.64 84.67 HMAC 2004-2 387,791,245 5.559 5.296 77.35 81.32 HMAC 2004-3 417,055,302 5.529 5.244 77.00 81.89 HMAC 2004-4 410,125,325 5.960 5.620 79.60 84.72 HMAC 2004-5 4
Slide 22: OFS Credit Facilities and Sources of Capital
OFS Credit Facilities and Sources of Capital Provider Commitments Inter-Company Loan REIT Loan to OFS (10 Year Fixed Rate at 11%) $ 65,000,000 Warehouse Lines GMAC – RFC (Committed) $ 100,000,000 UBS (Uncommitted) $ 750,000,000 Colonial Bank – Syndication (Committed) $ 284,500,000 JP Morgan (Committ
Slide 23: OFS Origination and ROE Projections for 2006
OFS Origination and ROE Projections for 2006 Closings $7,250,000,000 # of Closings 38,625 Average Loan Size $187,715 Total Revenues $264,000,000 Operating Expenses ($149,000,000) Non-Operating Expenses ($ 94,000,000) OFS Net Income Before Taxes $ 21,000,000 Minority Interest ($ 1,000,000) Income Tax
Slide 24: The REIT Portfolio
The REIT Portfolio
Slide 25: The REIT Portfolio
The REIT Portfolio § The REIT Currently owns Agency Mortgage Related Securities. » Very Little Credit Risk. § Diversification Across Various Types of Low-Duration Assets. » There is Always Cash Flow from Some Type of Mortgage, Even When other Types are Not Generating Cash Flow. » Low-Duration Assets
Slide 26: How Opteum Addresses Weaknesses in the Mortgage REIT Portfolio Model
How does Opteum Effectively Address Weaknesses in the Mortgage REIT Investment Portfolio Model and Make it Better? 1. Cash Management and Committed Funding Agreements. • $1.85 Billion in Committed Lines • $100 million Principal Prepay Margin Waiver • 40% of Equity in Cash Prior to Factor Releases 1.
Slide 27: REIT Current Portfolio Holdings
REIT Current Portfolio Holdings
Slide 28: REIT Current Portfolio Holdings in More Detail
REIT Current Portfolio Holdings in More Detail
Slide 29: Opteum Inc Coupon Reset Schedule
Opteum Inc Coupon Reset Schedule Cpteur's Ttal 0 cf 3672008 (Erie Fr ‘rs) 206 196 1086 ‘of Total Portci(Curret Oustanding Face SWS SSS LASSE EES SEAS
Slide 30: Unaudited Funding Information
Unaudited Funding Information as of S7162008 Renurchase Courternartise ‘Baniovinas ‘Malurity in Dave Deutsche Bank (1) 3 943,499,000 a Nomura 3 72,187,000 80 wana 3 410's84000, 24 Cantor Fitzgerald 3 220,183,000 38 UBS Securities 3 28 640,000, 68 Bear Steams 3 238,536,000 0 Morgan Stanley 3 405 286.
Slide 31: Today's REIT Investment Opportunities on Marginal Equity
Today’s REIT Investment Opportunities on Marginal Equity As of 3/16/06 Net Asset Yield (After Amortization) 5.65% Cost of Funding (3 Month LIBOR) 4.93% Net Interest Spread (NIS) 0.72% NIS x Leverage (11.5:1) 8.28% Return on Unlevered Equity 5.22% Return on Investment 13.50% Overhead (2.00%) Funding
Slide 32: Analyst Estimates for OPX
Analysts Estimates for OPX
Slide 33: Analyst Estimates for OPX Earnings Including OFS Earnings
Analyst Estimates for OPX Earnings Including OFS Earnings Firm Analyst Q1 2006 Earnings Estimate Q2 2006 Earnings Estimate Date of Most Recent Report Rating Year 2006 Earnings Estimate Deutsche Bank Steven Laws $ 0.10 $ 0.13 January 10, 2006 Buy $0.61 FIG Partners Chris Marinac $ 0.11 $ 0.05 March 1
Slide 34: www.opteum.com
www.opteum.com