Bimini Capital Management, Inc. · OTC:BMNM
Bimini Capital Management — Opteum — Investor Presentation (May 2006)
39 slides from Bimini Capital Management's investor presentation, May 18, 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 12) » Corporate Mission and Long Term Goal » Diversity, Diversity, Diversity » Board and Management are Large Shareholders » The Strategic Thinking Behin
Slide 4: Strengths and Weaknesses of 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: Fed Funds Target Rate
Strengths and Weaknesses of the Mortgage REIT Business Model: Fed Funds Target Rate Data Provided By Bloomberg
Slide 6: Interest Rates
Strengths and Weaknesses of the Mortgage REIT Business Model: Interest Rates Data Provided By Bloomberg
Slide 7: Swap Spreads
Strengths and Weaknesses of the Mortgage REIT Business Model: Swap Spreads Data Provided By Bloomberg
Slide 8: Net Interest Spread
Strengths and Weaknesses of the Mortgage REIT Business Model: Net Interest Spread
Slide 9: Stock Prices Reflect Fed Funds
Strengths and Weaknesses of the Mortgage REIT Business Model: Stock Prices Reflect Fed Funds Data Provided By Bloomberg
Slide 10: 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 11: 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 Data Provided By Bloomberg and FlagStone Securities Annualized Q3 2004 - Q1 2006 Average Active Originator Peer Group = 13.4% RMBS Peer Group = 9.2% Opteum = 12.4% Return on Equity de
Slide 12: 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 13: 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 Products, Geographic Diversity. » Portfolio Management - $3.5 Billion i
Slide 14: Board and Management are Large Shareholders
Making the Mortgage REIT Business Model Better: Board and Management are Large Shareholders Approximate # of Shares § Independent Board (1) 675,500 » Bespolka, Hendricks, Kaplan, Mortenson, Ortale • Self, Spouse, Children, Trusts § Senior Management (1,2) 3,755,000 » Zimmer, Cauley, Norden, Levine,
Slide 15: 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 16: 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 17: Current Price to Book Ratios for Active Originator REITs
Current Price to Book Ratios for Active Originator REITs Data Provided By FlagStone Securities
Slide 18: Capital Structure
Capital Structure Class A Stock Market Capitalization* $203,789,751 Shares Outstanding: 24,318,586 Share Price: $8.38 Bimini Capital Trust I $50,000,000 Interest Rate of 7.61% Bimini Capital Trust II $50,000,000 Interest Rate of 7.8575% Total Capital Structure $303,789,751 Loan to OFS at 11% $65,000
Slide 19: 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 20: Opteum Financial Services
Opteum Financial Services The Company’s Mortgage Origination Platform and Taxable REIT Subsidiary
Slide 21: 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 22: The Origination Platform: Opteum Financial Services
The Origination Platform: Opteum Financial Services Wholesale Division: Regional Offices (2) Branch Offices (4) Retail Division: Branch Offices (30) Conduit Division: National Office (1)
Slide 23: OFS Production Summary
2005 2006 (Through 3/31/06) Product # of Loans Loan Amount % of Total # of Loans Loan Amount % of Total OFS 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 se
Slide 24: OFS Origination Production by Channel
OFS Origination Production by Channel Actual Conduit Results May Vary Greatly Based on Market Conditions
Slide 25: OFS Issuance Summary By Deal Name
OFS Issuance Summary By Deal Name Name UPB Issue Amount Gross WAC Net WAC WALTV WACLTV WA Fico 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 26: 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 27: The REIT Portfolio
The REIT Portfolio
Slide 28: 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 29: How Opteum Addresses Weaknesses in Investment 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. • $1.65 Billion in Committed Lines • Two Principal Prepay Margin Waiver Contracts Totaling $150 Million • Typically, 40% of Equity i
Slide 30: REIT Current Portfolio Holdings
REIT Current Portfolio Holdings
Slide 31: REIT Current Portfolio Holdings in More Detail
REIT Current Portfolio Holdings in More Detail
Slide 32: Opteum Inc. Coupon Reset Schedule
Opteum Inc. Goupon Reset Schedule Opteumn's Total Outstanding Current Face as of 5152006 (Entire Perio, Assumes No Paydovns) 2086 19% 1086 ‘kof Total Perfo (Current Outstanding Face) S&S SN YYW ESS HH HS
Slide 33: Funding Information: Repurchase Counterparties
Unaudited Funding formation as of 66/2005, Repurchase Count erparties Borrowings Maturity in Day tur Dautohe Bank (1) 3 1p7e.021000 a rer} IP Morgan Secs 5 eor.s27.569 at 22h ‘wan 3 43/9400 8 Zunes Nomura 3 soz.894000, a 18.5ep08 Goldman Sache 3 ‘a 446,000 o 27 June UBS Secures 3 ‘3,182.00 8 18.0ct0
Slide 34: Opteum ARM & Hybrid Prepayment Speeds
Opteum ARM & Hybrid Prepayment Speeds
Slide 35: Opteum Fixed & Balloon Prepayment Speeds
Opteum Fixed & Balloon Prepayment Speeds
Slide 36: Today's REIT Investment Opportunities on Marginal Equity
Today’s REIT Investment Opportunities on Marginal Equity As of 5/15/06 Net Asset Yield (After Amortization) 5.98% Cost of Funding (3 Month LIBOR) 5.21% Net Interest Spread (NIS)0.77% NIS x Leverage (11:1) 8.47% Return on Unlevered Equity 5.55% Return on Investment 14.02% Overhead (2.00%) Funding Con
Slide 37: Analysts Estimates for OPX
Analysts Estimates for OPX
Slide 38: Analysts Estimates for OPX Earnings Including OFS Earnings
Analysts Estimates for OPX Earnings Including OFS Earnings Firm Analyst Q2 2006 Earning s Estimate Q3 2006 Earning s Estimate Year 2006 Earnings Estimate Date of Most Recent Report Rating Year 2006 Dividend Estimate Deutsche Bank Steven Laws $ 0.13 $ 0.17 $0.61 March 22, 2006 Buy N/A FIG Partners Ch
Slide 39: www.opteum.com
www.opteum.com