Bimini Capital Mgmt Inc A

Q4 2022 Earnings Conference Call

3/10/2023

spk_0: good morning and a welcome to the fourth quarter twenty twenty two earnings come from school for the mainly capital management the school is being recorded today much the tenth twenty twenty three at this time the company would like to remind the listeners that statements made during today's conference call relating to matches are not historical facts are forward looking statements subject to the say i call but provisions of the private securities litigation reform ice of nineteen ninety five business all cautioned that such food looking statements are based on information county available on the management's good faith belief with respect to future events are not subject to risks and uncertainties that could cause actual performance results to differ materially from the expressed in such forward looking statements important factors that could cause such differences are described in the company's filings the securities and exchange commission increasing the company's most recent and new report on phone ten k the company assumed no obligation to update such for looking statements to reflect actual results changes in a some since or changes in other factors affecting it forward looking statements now have like attend the conference over to the company's chairman and chief executive officer mister robot coli please go ahead sir
spk_1: thank you operator a good morning thank you for joining us to discuss them his fourth quarter twenty twenty two results i want to give you a brief overview of the economic backdrop would face during the quarter and then discuss our results as we approached the and twenty twenty two economic data was as usual driving new federal reserve's monetary policy and the market always trying to discern the feds reaction to the data was adjusting pricing levels accordingly however market price it was not necessarily consistent with the fed public pronouncements regarding the outlook for monetary policy the consumer price index for october november were much lower than previous months although this data was revised time early february twenty twenty three at a time it it's release the market interpret these developments as evidence than inflation had peaked and was coming down quite quickly as incoming active economic data over the course of the fourth quarter of twenty twenty two years be consistent with the markets thesis that inflation that peaked in the according was slowly coffin it's grew that the fed wouldn't need to pivot you start to loosen tight monetary policy later and twenty twenty three this led to a material change and risk sentiment on the fourth quarter and risk assets performed very well the agency mbs market returns for the full year of twenty twenty two or negative and eleven point nine percent our for the sector posted part positive returns for the fourth quarter of two point one percent which was one hundred ten basis points higher than comparable duration swaps the performance of the agency or be of sector was not uniformly positive for the fourth quarter by late october us treasury yields reach their highest levels in many years the agency a bs spreads to kabul duration us treasuries also reached a was level since the financial crisis easily surpassing the lovers observed march twenty twenty was market sentiment turn mid corner and risk appetite improved agency mbs like most other asset classes were viewed as very attractive the sectors rebound was likely target buddies extreme spread levels they october and the rebound continued into early twenty twenty three at this point the market in the feds outlook for the economy inflation in the path of monetary policy and clearly diverge because the market proceed the that going to be successful at slowing inflation the market began to look beyond this step in the process and instead focus on the murder of occasions of such policy reversal namely a slowing of the economy as i mentioned the change of focus or pivot on the part the market occurred in late october or november duty to solving inflation data and further evidence of a slowing economy however as january or february or march the data has again shifted and inflation no longer appears to be slowing in fact maybe accelerated growth especially employment growth has accelerated literally higher break been sharply with this study slow interim evident throughout all twenty twenty two the feds public pronouncements recognize these trends by indicating the need to take rates even higher than the increased it increases anticipated the and twenty two like the resulting in a strict monetary policy for a considerable period reacting to these pronouncements the market as pivoted in market pricing the various rage and future markets is back into alignment with the fed in effect the market is not a round trip initially expecting the fed was nearing a pivot towards lower rates and now back to anticipating additional tightening and strict of monetary policy for the bouncer twenty twenty three in summary the last quarter twenty twenty two in the first quarter twenty twenty three have been quite volatile with risk assets delivering poor results in october twenty twenty two solid returns from november twenty two january twenty three only to give much of the performance back in february early march so that the operating environment we faced with last spoke for the fourth quarter twenty twenty two orchid island reported that intimate thirty four point nine billion and it shareholders' equity increased from forty point four know and as a timber thirtieth two thousand twenty two to four hundred and thirty eight point eight million december thirty first twenty twenty two or could share price increase during the quarter from eight dollars and twenty cents per share to ten dollars and fifty cents per share resulting in a one point two million dollar unrealized game august eleven and was unchanged for the poor although dividend income for the poor was down slightly as a given in late beginning of the third quarter and twenty two was slightly higher than the rate in effect for the bounds of the year finally advisory service revenues way to be admired his management of work it out and were essentially unchanged from the third quarter at a pro absently three point three million for the year advisory service revenues were approximately thirteen point zero million versus nine point eight million in all of twenty one reflecting the significant share issuance and shareholder equity increase in overcrowded during twenty twenty one with respect to the mbs put for oil palm as was the case rob most of the year our intention was to grow our cash position until we saw clear evidence the marketed stabilized before redeploying our characters and grow in the portfolio the agency mbs market didn't didn't act stabilized or in the latter half of the fourth quarter and we did add modesty to the portfolio for the fourth quarter we either approximate two point two million a new mbs reported a zero point seven million of unrealized mark to market gains which are offset by pay down to the proxies one point two million the net of these was a one point six million increase in the past portfolio the structure poor boy was essentially unchanged during the quarter we added further early in the first quarter twenty three although the recent the reemergence of elevated expectations of fed policy tightening and the subsequent starkness in the agency and the us market has caused us to pause or wrote plans for now with respect to the results of the m b s pour oil palm interest income was approximately zero point five for the million for the quarter vs zero point four four known in the third quarter inches expense on every purchase agreement funding however increase from zero point two one billion two zero point four two million then it just didn't come on the pulled for oil was therefore down from zero point two three million from the third quarter two zero point one three know for the fourth quarter of twenty twenty two as mentioned dividend income from our shares of work and island declined by approximate twenty five thousand from the third quarter into the fourth quarter of twenty twenty two finally the three months prepayment speeds remain barely use of duty this high interest rate barman declined from ten point eight cpr to april on three cpr for the third fourth quarters respectively looking forward we will continue to watch incoming economic data in how the fed responds with respect to monetary policy we all know that monetary policy works with long and variable legs and while the fed has removed considerable accommodation from the economy funding rates are well it too restrictive territory is not yet been a years it's a process began eventually the effects of the tightening will take calling economy will slow as inflation cools at that time the market will come far more accommodating about the money and work in ireland in such a scenario that we would expect both are advisory services sector by potential capital raising an orchid and rmb as for for at royal palm by on expanding images margin and potential price appreciation of our assets to do well in the and we remain cash flow positive and continue to generate taxable income at royal palm enabling us to to need to harvest our tax net operating losses that is was my prepared remarks and we can open the clock questions
spk_0: my teeth if you'd like to ask a question you compressed style one on the telephone keypad if you're not to throw your question you may press starter please ensure your unmetered locally when asking your question as a reminder to ask the question that lifestyle one on your telephone keypad out strongly county have now reached that questions so hand back to robert calling for any further remarks
spk_1: thank you operator and thank you for listening to our call today it's you are unable to listen live and have a call after to replay or a question comes to mind after listening to the tall live in either case just give us a call called the office the number here are seven seven two two three one one four zero zero are you always were ported taking your cause otherwise we look forward to talking to vienna the first quarter of a good day you
spk_0: thank you for joining say it's cool you may now disconnect your lines
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