Bimini Capital Management, Inc.

Bob Cauley - Chairman & CEO

Thank you, operator. As we discuss when we reported our 2015 results, Bimini is no longer REIT for federal income tax purposes affective with tax year of 2015.

We further announced that we would take steps to take advantage of net operating losses available at both Bimini and MortCo, our formal mortgage company. This involved moving the NBS portfolio from Bimini to MortCo among other things.

We took the initial steps in late 2015 and have continued to do so during the current quarter ended March 31, 2016. Going forward the results of the NBS portfolio will continue to be presented as the portfolio resides at Bimini but this is simply because MortCo as a 100% on subsidiary is consolidated.

As of March 31, 2016 approximately 49% of the NBS portfolio was held by MortCo and the other 51% is still at Bimini. We will continue to transition the portfolio through sales at the Bimini level and purchase this at the MortCo level funded by the proceeds.

We currently have two repurchase agreement funding providers at the MortCo level and we'll seek to add as the need arises. The combined portfolios are run as if they are still one, there is no separation in strategy or positioning.

The second aspect of our operation as we revise our services performed by Bimini Advisors, another 100% owned subsidiary, which is the external manager of Orchid Island Capital. The Orchid management agreement is the only source of advisory services revenue.

Going forward discussion at Bimini results of operations will be divided into these two areas. The events of the first quarter had a negative impact on the performance of our MBS portfolio.

Our portfolio was biased towards higher coupon, fixed rate securities with various forms of prepayment protection, interest only and inverse interest only securities and funding hedges positioned primarily on the belly of the curve. As the market responded to a combination of weaker economic data, market turmoil and the Fed's announced intension to consider market turmoil in their policy decision making, the market rallied strongly during the quarter especially the front end and belly of the curve.

The net impact on our portfolio was a negative 1.2% return on invested capital. Our premium fixed rate pass-throughs experienced some price appreciation but such price increases were muted, as they always are with premium MBS due to fears of accelerated prepayments.

Return on investment capital for the pass-throughs portfolio was 4.4% not annualized. The market pricing almost all 2016 rate hike expectations out of the market hurt our Eurodollar funding hedges positions, with the negative mark-to-market offsetting realized and unrealized gains on the pass-through MBS portfolio and a portion of the net interest income generated.

Our interest only securities were impacted quite negatively as they are simply levered positions with respect to prepayments and generally declined in the value during market rallies. The inverse interest rate securities returned a slightly positive result as market expectations of Fed rate increase were reduced.

The structure portfolio return for the period was a negative 11.3%. As I mentioned the respective portfolio of Bimini and MortCo are run as if they are one portfolio, while we transition the portfolio to MortCo.

For the first quarter of 2016, capital allocation was altered slightly as pass-through securities were still at the Bimini level and proceeds invested at the MortCo level. Available cash was deployed as well such that the purchase of exceeded sales 53.8 million to 25.8 million.

Other than this activity the change in capital allocation was brought about by principle pay downs, mark-to -market adjustments as well as changes in the cash balances, which we consider part of the pass-through portfolio. As of March 31, 2016 the capital allocation to the pass-through portfolio had increase from 64.8% to 62.1%.

Prepayment rates for the quarter ended March 31, 2016 were 11.8 CPR for the pass-through portfolio versus 7.9 CPR for the fourth quarter of 2015. Fees for restructuring portfolio were 16.6 CPR for the current quarter versus 13.7 CPR for the fourth quarter of 2015.

Bimini has owned shares of Orchid Island Capital since Orchid's inception. During the fourth quarter of 2015 we added shares of Orchid at the MortCo level.

We own these shares as proxy for exposure to the MBS portfolio and treat the dividends received on all of our Orchid shares as a component of the total return of our MBS operations, coupled with any mark-to-market gains or losses on the shares. We have no current plans at the moment to increase or decrease our Orchid Island share holdings over the near term.

However, to the extent Orchid shares traded at substantial discount to book value, we may choose to deploy more capital into Orchid shares. For the first quarter of 2016, the dividend of Orchid shares was 0.6 million and we reported 0.6 million of mark-to-market gains on the Orchid shares as well.

The advisory services operations generated revenues of 1.3 million for the first quarter of 2016. Such revenues are a function of the size of the capital base of Orchid Island Capital, as adjusted, and the prorated allocation of certain Bimini overhead expenses, in both cases in accordance with the terms of the management agreement between the parties.

As we entered the second quarter of 2016, the U.S. economy generally appears to be on a trajectory of slow sustainable growth.

However, many production based economic indicators were less positive in the fourth quarter of 2015 and while the consensus forecast for first quarter of 2016 economic growth in the U.S. was approximately 2.5% at the onset of the quarter.

Growth ultimately reported only 0.5% on April 28. Most market participants expect a slight rebound over the course of the year.

The outlook has become somewhat clear off-late as output and production based measures of economic growth remain quite weak, reflecting the severe slow-down in mining and oil production as well as the manufacturing slow down resulting from strong dollar. Employment based measures remain quite strong however, and indicate the economy may be approaching full plummet.

This divergence in economic indicators has contributed to the volatility in the markets and as the Fed appears quite concerned with financial market volatility, reinforced the markets conviction that the Fed will raise the rates at an even slower rate than the Fed itself believes. To the extent the health of U.S.

economy remains unclear and the Fed remains on hold with respect to their policy normalization, our MBS portfolio operations will continue to benefit from lower funding costs. Although, we will remain exposed to potential negative mark-to-market adjustments on our hedges.

The advisor services business should not be affected by such an outcome as the fee based revenue is not a function of market rates or the economic performance of Orchid Island Capital's portfolio per se. Operator, that concludes my prepared remarks, we can open the call up for questions.

Thank you, operator. And again thank you to all of our listeners for taking the time to listen-in today or to the extent you're listening in on a recorded version of the call, please don’t hesitate to call question with question.

You can call the office, the number is 772-231-1400. We’ll be glad to answer any questions.

Otherwise we look forward to speaking with you next quarter. Thank you.