Bimini Capital Management, Inc., a specialty finance company, invests in mortgage-backed securities (MBS). The principal and interest payments of the company’s MBS are guaranteed by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), or the Government National Mortgage Association (Ginnie Mae); and are backed primarily by single-family residential mortgage loans. The company refers to these types of MBS as Agency MBS. The company’s portfolio consists of two categories of Agency MBS, such as traditional pass-through Agency MBS and structured Agency MBS, such as collateralized mortgage obligations (CMOs), interest only securities (IOs), inverse IOs (IIOs), principal only securities (POs), and other types of structured Agency MBS. The company has engaged AVM, L.P. to provide the company with certain repurchase agreement trading, clearing, and administrative services. Target Assets The company’s target asset categories and principal assets in which it intends to invest are as follows: Pass-through Agency MBS The company invests in pass-through securities, which are securities secured by residential real property in which payments of both interest and principal on the securities are made monthly. The mortgage loans underlying pass-through certificates could be classified into the following three categories: Fixed-Rate Mortgages: Fixed-rate mortgages are those where the borrower pays an interest rate that is constant throughout the term of the loan. Majority fixed-rate mortgages have an original term of 30 years. ARMs: ARMs are mortgages for which the borrower pays an interest rate that varies over the term of the loan. The company refers to such ARMs as ‘traditional’ ARMs. Hybrid Adjustable-Rate Mortgages: Hybrid ARMs have a fixed-rate for the first few years of the loan, often 3, 5, 7, or 10 years, and thereafter reset periodically like a traditional ARM. Such mortgages are hybrids, combining the features of a fixed-rate mortgage and a traditional ARM. Structured Agency MBS The company also invests in structured Agency MBS, which include CMOs, IOs, IIOs, and POs. CMOs: CMOs are a type of MBS the principal and interest of which are paid, in various cases, on a monthly basis. CMOs might be collateralized by whole mortgage loans, and are collateralized by portfolios of mortgage pass-through securities issued directly by or under the auspices of Ginnie Mae, Freddie Mac, or Fannie Mae. IOs: IOs represent the stream of interest payments on a pool of mortgages, either fixed-rate mortgages or hybrid ARMs. Holders of IOs have no claim to any principal payments. IIOs: IIOs represent the stream of interest payments on a pool of mortgages, either fixed-rate mortgages or hybrid ARMs. Holders of IIOs have no claim to any principal payments. POs: POs represent the stream of principal payments on a pool of mortgages. Holders of POs have no claim to any interest payments, although the amount of principal to be received over time is known — it equals the principal balance of the underlying pool of mortgages. Tax Status The company has elected to be taxed as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, as amended. As a result, the company is not subject to Federal or State income taxation at the corporate level to the extent it distributes annually approximately 90% of its REIT taxable income to its shareholders and satisfies certain other requirements. Strategy The company’s investment strategy consists of various components, such as investing in pass-through Agency MBS and certain structured Agency MBS, such as fixed and floating rate tranches of CMOs and POs, on a leveraged basis to increase returns on the capital allocated to this portfolio; investing in Agency MBS to minimize credit risk; investing in assets that would cause the company to maintain its exclusion from regulation as an investment company under the Investment Company Act of 1940, as amended; and investing in assets that would allow the company to qualify and maintain its qualification as a REIT. The company’s investment strategy also consists of investing in certain structured Agency MBS, such as IOs and IIOs, generally on an unleveraged basis to increase returns due to the structural leverage contained in such securities; improve liquidity due to the fact that these securities would be unencumbered or, when encumbered, retain the cash from such borrowings; and diversify portfolio interest rate risk due to the different interest rate sensitivity these securities have compared to pass-through Agency MBS. History The company, a Maryland corporation, was founded in 2003. It was formerly known as Bimini Mortgage Management, Inc. and changed its name to Opteum Inc. in 2006. Further, the company changed its name to Bimini Capital Management, Inc. in 2007.
bimini capital management-a
3305 Flamingo Drive
Vero Beach, FL 32963
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