Bimini Capital Management, Inc.

Robert Cauley - Chairman, Chief Executive Officer and Secretary

Derek Pilecki - Gator Capital Management, LLC Thomas Strobhar - Thomas Strobhar Financial

Thank you, operator. As we entered 2015, the economy was humming along nicely and the market was acutely focused on any and all utterings from Janet Yellen or other Federal Reserve governors for clues as to the timing of their eventual end of the zero rate policy.

Payroll growth had been robust and there were emerging signs of wage pressure. Developments in Europe were quite the opposite, with Greece renewing talk of their possible exit from the EU.

With projected demand falling and supply still expanding, oil prices had fallen nearly 50% since the summer of 2014, and the dollar was strengthening. At that point, the dichotomy in relative economic performance between the U.S.

and Europe was striking. On the one hand, the U.S.

was clearly removed from the financial crisis and approaching the point where the Federal Reserve needed to remove accommodation in a more explicit fashion. On the other, Europe, and to a lesser extent Asia, were clearly slowing.

Inflation in Europe was barely positive and GDP in China was approaching the psychologically important 7% level, below which alarm bells would be triggered. The central banks in China, Japan and Europe were still running policies to provide maximum accommodation.

The long end of the U.S. treasury market rallied into January, with the yield on the 10-year U.S.

Treasury reaching a low of 1.642% on January 30. The rally at the long end of the curve was being driven by events overseas while short rates in the U.S.

were more sensitive to Fed expectations. As a result, the yield curve was flattening as we approached the end of January.

The rally at the long end of the curve ended in early February with the release of the January jobs data, and then again when the February data was released in early March. With the rally in the long end of the treasury curve reversing, the curve began to steepen.

However, later in the quarter and into April it became apparent that the dichotomy was starting to erode. The strong dollar had an impact on exports, and therefore, the manufacturing sector of the economy.

The manufacturing sector was also being hurt by the plunge in oil prices, which impeded more robust growth in oil production, especially with respect to high cost fracking. Inflation in the U.S., as measured by the Consumer Price Index, especially at the headline level, was declining into year-end 2014 before eventually leveling off just below 0% the last two months.

This level is well below the Fed’s target level of 2%. Finally, on April 3rd, non-farm payroll growth for March came in at a mere 126,000, well below the 245,000 consensus estimate.

Prior months were revised down as well. At this point it became clear the growth of the U.S.

economy was not as robust as expected at the beginning of the first quarter. The market began to doubt that Fed would need to raise rates in the face of these developments and the belly of the curve, particularly the five year, rallied.

This caused the curve to steepen, especially the spread between 5 and 30 year maturity U.S. Treasury securities.

The market received confirmation of this on March 18 when the Fed, at the conclusion of their two day meeting, issued a statement that clearly reflected the Fed was attuned to these developments. The Federal Reserve’s Summary of Economic Projections, or SEP, was revised down from their last projections in December of 2014.

Their projections for GDP growth, the unemployment rate and inflation were all lowered. Given the lowered growth and inflation projections, their projections for the Fed Funds target rate over the next three years were also lowered.

The market priced in even lower estimates for Fed going out three years. Lately, the data has improved somewhat, although we still lack clarity as to the true direction of the US economy.

The Federal Reserve stated in their March 18 statement, and in comments by Fed Governors since, that they intend to get off the zero-bound this year. We believe the market expects this to occur in September at the earliest and for the trajectory of subsequent hikes to be shallow.

Orchid Island has dominated our performance since its IPO in February of 2013. The Orchid portfolio is managed in the same manner and with the same focus as the Bimini portfolio, so the composition of the respective portfolios are quite similar.

However, Orchid raised additional capital throughout 2014, and Orchid’s stand-alone net assets were $218.1 million as of December 31, 2014 versus $44.8 million at December 31, 2013. With this growth in the capital base the relative sizes of the respective portfolios became even more skewed towards Orchid.

However, as of December 31, 2014 we no longer consolidate Orchid, so for the period ended March 31, 2015 our reported results reflect the operations of Bimini alone. Conversely, for the corresponding three month period of 2014, we present consolidated financials and Orchid represents the bulk of consolidated assets and income.

For the current quarter, Bimini generated a net loss of approximately $1.4 million while the consolidated operations of Orchid and Bimini generated net income of $5.3 million for the period ended March 31, 2014. Excluding results attributable to non-controlling interests, Bimini generated net income of $2.4 million for the period ended March 31, 2014.

Since Bimini no longer consolidates Orchid, Bimini reported a $0.2 million mark-to-market gain on its shares of Orchid, $0.5 million of dividends on the same shares and $0.9 million of management fees for the period ended March 31, 2015. For the period ended March 31, 2014, these items were eliminated in consolidation.

With respect to the portfolio of Bimini, the aggregate size contracted slightly from $117.8 million at December 31, 2014 to $115.6 million at March 31, 2015. As the portfolio grew over the course of 2014, the portfolio was skewed towards pass-through securities.

Structured securities, particularly IOs, were fully valued, and we were able to add attractively priced fixed rate, 30 year pass-throughs, predominantly 4.5% coupons. However, with the rally in long end rates during the first quarter of 2015 these securities appreciated to the point they were no longer attractive, especially versus IO securities, which cheapened somewhat.

Accordingly, we added an IO position with a market value of approximately $1 million, funded with a portion of the $3.7 million of run-off from the pass-through portfolio. As a result, the capital allocation between the two sub-portfolios changed this quarter from 60.3% pass-throughs and 39.7% structured securities at December 31, 2014, to 57.4% pass-throughs and 42.6% structured securities at March 31, 2015.

There have been no changes to the portfolio since quarter-end other than monthly pay-downs, no securities have been purchased or sold. As for returns, with longer rates continuing to decrease over the course of the quarter the unrealized gains for the combined portfolio were a positive $0.8 million.

The increase in pass-through prices reflects the net effect of lower rates causing high premium securities to languish somewhat in the face of higher anticipated speeds and the fact pay-ups for the various forms of call protection appreciated. With respect to the $0.3 million of mark-to-market gains with the structured securities, the positive mark reflects timing effects predominantly, as we purchased the IO position not long after the trough in rates in late January and the subsequent sell off in rates caused that security to appreciate in value and account for approximately two-thirds of that gain.

The pass-through portfolio generated 10.1% return for the quarter, not annualized. The return consisted of $1.0 million of net interest income, $0.5 million of unrealized gains off-set by $0.7 million of hedge mark-to-market losses.

Our structured securities generated interest income of $0.1 million and $0.3 million of mark-to-market gains. The structured portfolio generated an 8.6% return for the quarter.

The two portfolios combined generated a positive return on invested capital of 9.5% for the quarter, again, not annualized. With respect to the balance of our results, the retained interests of our former mortgage company were marked up by approximately $1.5 million for the quarter and, as mentioned above, we generated $1.6 million form Orchid Island via unrealized gains in our common share holdings, dividends from same shares and management fees.

Finally, we recorded a $3.5 million provision related to the settlement of a litigation matter stemming from our trust preferred securities exchange in 2009. As was the case at December 31, 2014, the portfolio is exposed to a substantial increase in prepayment speeds.

While we saw an increase in refinancing activity as a result of the rally in January, and speeds remained elevated when the April figures were released in early May, the market appears to have stabilized above the January lows as the ten year U.S. Treasury Note has traded off since late January and currently yields approximately 2.2%, comfortably below - above that is, the 2.17% yield level of December 31, 2014.

Further, the MBA refinance index continues to recede from its 2000 level that it was running at earlier this quarter and the percentage of applications that are refinancing has remained below 60% since January, a condition that is not consistent with a refinancing wave. We do not anticipate an acceleration in refinancing activity from current levels absent another shock, such as a Greek exit from the EU or a material downturn in economic data in the U.S.

Accordingly, we intend to maintain our exposure to higher prepayment speeds. We have been able to avoid excessive prepayment speeds by utilizing lower pay-up call protected securities.

We also anticipate ARM prepayment speeds to accelerate when the Fed begins to raise rates. As a result, we will continue to avoid them.

As we mentioned when we reported our fourth quarter 2014 results, we no longer see the greatest risks to the market as symmetrical and balanced. Previously, we feared there was a small, but non-zero probability we might see an outbreak of inflation resulting in a more aggressive Fed and elevated volatility in the rates markets.

With oil prices still depressed, the dollar quite strong and inflation low in Europe, this outcome seems even more unlikely. However, as always, with the consequences of such an outcome are potentially very severe, and so we attempt to protect against that outcome.

We feel the high premium pass-through/IO bias of the portfolio, which has traded to a negative duration for the past six months, will do well in such a scenario. Conversely, if we rally further we will experience higher premium amortization offset by appreciation in price for our call protected pass-throughs, as we experienced in the first half of the first quarter.

Looking ahead, we continue to anticipate that Federal Reserve will begin the process of policy normalization, which will entail, among other measures, increases to the Fed Funds target range. However, recent economic data continues to reinforce the notion the strong dollar and the decline in the price of oil having an impact on economic growth and, more importantly, the Federal Reserve has noticed.

While we still believe the Fed is anxious to get off the zero-bound in interest rates, the path of the Fed Funds target rate, or range of target rates, over the next few years likely will be shallow and reach a lower terminal rate than appeared likely late last year. This expectation is clearly reflected in the market pricing, such as the Eurodollar market and Fed Funds futures.

When and if Europe recovers materially, the European Central Bank can consider removing their QE program, the Euro will appreciate against the dollar and the effects of the strong dollar discussed above should begin to reverse. At that point, Fed rate moves, absent other developments, may occur on a steeper trajectory.

In any event, increases in the Fed Funds target range are likely to result in increases in LIBOR rates, which are tied to the company’s funding costs. The company utilizes Eurodollar futures to hedge its funding costs, although it does not employ hedge accounting for GAAP purposes.

For GAAP, our funding and trust preferred interest costs will rise as short-term rates rise and there will be no hedge offset. However, to the extent the corresponding hedges increase in value as LIBOR increases, then we will experience positive fair value adjustments associated with the funding hedges.

Operator, that concludes my prepared remarks and we can open the call up for questions.

Hey, Bob, how are you doing this morning?

Hey, how are you? Glad to see you’re calling in again.

Sure, I just had a question about the settlements that was booked for the quarter that you - was that - is that tax deductible, that settlement?

I don’t - I’m not certain about it, and I believe so, but I really can’t speak a lot about the settlement, but I’ll verify that, but I believe it is.

Okay. I’m just trying to get to a run rate of earnings in the quarter, trying to back that out.

So that’s the purpose of the question. Thanks a lot.

Yes, it’s - I just got a clarification on that. It’s deductible and it’s paid, so it’s going to be paid out over time, most of it is frontloaded though, so will be a deduction for this calendar year.

Okay. Thank you.

All right.

Thank you. So I was looking through the statements and I’m trying to model the long-run connection between management fees generated by the management of the Orchid portfolio, and compensation cost incurred by Bimini Capital Management.

Can you give us some guidance on that?

What was the second thing you were comparing it to, the what cost?

I’m looking at the increases in compensation cost we should expect over the next several years, as management fees generated from Orchid are increasing.

There is no correlation per se. We did have an increase this year that was really more catch-up but anything, because comp levels had been held very low, not very low, but low and flat for some period of time.

And so there was an uptick this year. But there is no correlation per se.

Now, we’re just not - it’s not tied to - I mean, assuming you’re meaning management compensation, it’s not tied in any way to the size of Orchid or the performance of Orchid directly. That being said, to the extent that performance is good with the portfolio, especially Orchid portfolio and we’re able to grow the portfolio, the management fee revenues should continue to grow and that would obviously be a very positive development for Bimini, but there is no exclusive link.

Okay. Would you say that this quarter’s compensation cost is relevant to what we should expect for future periods then?

Oh, yes, absolutely, yes.

Okay. And if you don’t mind, it’s about the litigation case, but it should be a kind of easier one.

With that being settled and with the expiration of the Tolling Agreements from December, are we looking at a Bimini capital that is no longer facing any legal cases?

Believe it or not, we are. There is - the mortgage company still has the potential for cases to come up, simply because in certain cases the statute of limitations has not run its course but there are none out there.

And with respect to Bimini, you are correct, they are all gone. Finally, it’s been a lot of years since we can make that statement.

Okay. Thank you.

And one last question for you. It sounds like the agreement was reached in May, but the GAAP provision is taken in the first quarter.

So for quarter two should we expect one last burst of legal fees associated with reaching the agreement?

Yes, there will be some, up through basically the date of the agreement signed. They should be less than in the first quarter, but yes, there will still be some.

Okay. Great.

Thank you very much.

Thank you.

Just to follow up the question about the legal fees, can you tell me what the legal fees were for 2013 and/or 2014?

Related to that case, I believe in 2014 it was around $600,000, 2013, I’m not sure, but it probably was in the same ballpark.

And that’s just related to that case?

That case, although, for Bimini that really is the lion’s share of the legal fees.

Okay.

That was really all that was left for those years.

Okay. That answers my question.

Thank you.

Thank you.

All right, operator, thank you. To the extent anybody comes up with additional questions after the fact, please feel free to call the office, or if somebody listens to the replay our number in the office is 772-231-1400.

We’d be glad to answer any and all questions. Otherwise, we look forward to talking to you at the end of the second quarter.

Thank you.