Executives: Robert Cauley - Chairman, CEO and Secretary George Haas - President, CFO, CIO and Treasurer

Analysts:

Operator: Good morning and welcome to the Third Quarter 2017 Earnings Conference Call for Bimini Capital Management. This call is recorded today, November 3rd, 2017. At this time, the Company would like to remind the listeners that statements made during today's conference call relating to matters that are not historical facts are forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Listeners are cautioned that such forward-looking statements are based on information currently available on the 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 the Company's filings with the Securities and Exchange Commission, including the Company's most recent annual report on Form 10-K. The Company assumes no obligation to update such forward-looking statements to reflect actual results, changes and assumptions or changes and other factors affecting forward-looking statements. Now, I would like to turn the conference over to the Company's Chairman and Chief Executive Officer, Mr. Robert Cauley. Please go ahead, sir.

Robert Cauley: Thank you operator, as we enter the first quarter of 2017 risk assets were performing very well, the Trump Administration took off as it appeared to be very pro-business. The market looked forward to a rollback of recently expanding regulations across many industries. A new and hopefully improved healthcare act, tax reform and possibly much needed infrastructure spending to refurbish the nation's aging roads, highways and airports. While the Trump Administration made bold promises, very little has been delivered. Market optimism was quickly replaced with pessimism. Political infighting among the Trump Administration and congressional Republicans has generally been the cause, as has turmoil within the White House itself. Geopolitical events surfaced in early April specifically on the Korean peninsula. These events kept the markets on edge and induced sporadic flight to quality rallies as headlines hit the market from time to time. Incoming inflation data since March has been well below expectations. In the case of the core Consumer Price Index measure, the year-over-year figure moved from 2.3% in January of 2017 to 1.7% by May and has stayed there through September. The yield on the 10 year U.S. Treasury rate hit its year-to-date low on September 7th 2017 closing at 2.04% and nearly broke below the psychologically important 2% level intra-day. However, there was perceptible change in the market sentiment in early September and the market reversed course into the end of the third quarter and early fourth quarter. The Trump Administration managed to strike a deal with Congress with the Democratic leadership ironically to avoid a government shutdown by raising the debt ceiling and passing a continuing resolution to fund the government into December. In spite of the low inflation ratings described above, the Federal Reserve remains convinced these ratings are being driven by temporary or transitory phenomenon and that inflation will reverse and head back towards their 2% target over the medium term. At the conclusion of their meeting on September 20th, the Fed was quite clear they expect to hike their target rate again at the December meeting barring surprised outcomes to the downside. The market accepts this outcome as highly likely as reflected in Fed Funds futures pricing. However, using the same measure, the market does not expect the Fed to raise rates in 2018 and beyond to the extent the Fed expects. As a result, the combination of benign inflation ratings coupled with a hawkish Fed and expectations of the Fed has caused the yield curve to flatten significantly during the third quarter through the lows seen in late June to multiyear lows. A second order effect of these developments has occurred in the equity and risk markets as they continue to perform exceedingly well. The major equity indices in the U.S. have made record new highs almost daily of late. The RMBS market performed well in the third quarter due to low volatility, tight trading spreads across most competing asset classes and a demand from asset managers in REITs. Current coupon, 30-year fixed rate mortgage backed securities are trading at their tightest spread to comparable duration U.S. Treasuries since early 2014. As long as these conditions persist, we believe that the market is not likely to suffer a material widening of spreads to comparable duration U.S. Treasuries, even as the Fed has started to trim their asset purchases. The risk to this outcome appears to be inflation exceeding market expectations, which should allow the Fed to carry out their stated intentions to raise rates three times in 2018 and more so in the years after. This would also put upward pressure on volatility and longer-term rates, both expected to negatively impact MBS performance. Now I will focus on developments at Bimini during the third quarter of 2017. To reiterate information that we have shared with you since early 2016, Bimini is no longer a REIT and our tax NOLs are essential to our two-pronged strategy. First, we will manage the portfolio and operations we're working on in capital and collect management fees in overhead sharing payments through our subsidiary Bimini Advisors. As Bimini Advisors is consolidated by Bimini for federal income tax purposes, we expect these operations will generate taxable income that can be used to absorb Bimini's net operating losses of approximately 19.1 million as of December 31st, 2016. Secondly, we will manage the portfolio at Royal Palm and hopefully generate sufficient taxable income to absorb up to 257 million of net operating losses as of December 31st, 2016 at Royal Palm. To it, our MBS portfolio grew during the quarter from a 142.5 million at June 30th, 2017 to a 198 million at September 30th, 2017. The market developments I just described did not have a material impact on our results for the third quarter while higher coupon fixed rate mortgage backed securities, our core holding did not perform as well as lower coupon fixed rate mortgages. Market demand for the various funds of call protection was robust and payout premiums increased during the quarter. As a result, mark-to-market gains were approximately 0.5 million net and 0.7 million excluding the effects of prepayments on the pass-through portfolio. Inclusive of this mark to market gain net of a slight loss on our associated hedges, the pass-through portfolio posted a 13.2% gain for the quarter not annualized. The structured portfolio due primarily to unrealized to mark-to-market losses suffered a 9.2% loss for the quarter not annualized. Combined the RMBS portfolio generated a 7.9% return for the quarter not annualized. As mentioned, the MBS portfolio increased in market value by approximately 39% during the quarter as we added 58.1 million of faster MBS at pay downs of 2.4 million and return on investment of 0.3 million on the structured portfolio. With the additions to the pass-through portfolio, the capital allocation to pass-through increased again this quarter to 82.9% versus 76.3% at June 30th 2017. The allocation of the structured securities portfolio declined from 23.7% at June 30th 2017 to 17.1% at September 30th 2017. These swings in our capital allocation are not intended to represent a strategic shift in our strategy and are likely temporary as investment opportunities in the pass-through market are more compelling than in the structured market at this time. Prepayment speeds on our pass-through securities remain quite low and decrease modestly from 5.9 CPR for the second quarter of 2017 to 5.2 CPR for the third quarter of 2017. The structured securities portfolio decreased as well from 20.4 CPR during the second quarter to 18.8 CPR in the third quarter of 2017. Combined the portfolios decreased from 9.9 CPR in the second quarter of 2017 to 8.3 CPR in the third quarter of 2017. Finally, the portfolio remains positioned for higher rate scenarios with high coupon fixed rate concentration with various forms of call protected securities. The flattening of the U.S. Treasury curve had a negligible negative impact of 0.02 million on our year dollar hedges. Further the flattening of the curve and higher funding levels put slight downward pressure on our portfolio net interest spread as well as the spread declined from 2.76% for the second quarter of 2017 to 2.31% for the third quarter of 2017. Outside of market developments, advisory service revenue continued to benefit from growth at Orchid Island. Revenues from the management at Orchid Island grew from 1.79 million in the second quarter of 2017 to 1.94 million in the third quarter of 2017. The comparable figure for the third quarter of 2016 was 1.39 million. Dividends from our holdings of Orchid shares were 0.6 million the figure was flat with the second quarter of 2017 as no new shares of Orchid were purchased. The Company's retained interest continued to cash flow in our two funds available for deployment in the portfolio, although such cash flows have declined over the past two quarters. Going forward, we expect the performance of our MBS portfolio to continue to be driven by the slope of the U.S. Treasury curve which in turn will likely be driven by inflation reading either consistent with Fed expectations, the negative outcome or continuation of what we are seeing for the last seven months. The impact on longer term rates of the tapering of asset purchases by the Fed, if any will also be critical. Operator that concludes all my prepared remarks, we can turn the call over to questions.

Operator:

Robert Cauley: Thanks operator. Thank you for your time today. To the extent anybody has any follow on questions either just because they didn't have now or come up with one, if they listen to the replay later feel free to call us at the office, the number is 772-231-1400, otherwise look forward to talking to you next quarter, thank you.

Operator: Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great day.