Bimini Capital Management, Inc. (PNK:BMNM) Q4 2023 Earnings Call Transcript
Bimini Capital Management, Inc. (PNK:BMNM) Q4 2023 Earnings Call Transcript March 8, 2024
Bimini Capital Management, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the Fourth Quarter 2023 Earnings Conference Call for Bimini Capital Management. This call is being recorded today, March 8, 2024. 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 reports on Form 10-K. The company assumes no obligation to update such forward-looking statements to reflect actual results, changes in assumptions or changes in 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.
A trader at a stock exchange terminal, analyzing the daily data of a large-mid capitalization company.
Robert Cauley: Thank you, operator, and good morning. The fourth quarter of 2023 appeared to be the turning point in the current interest rate cycle and may still prove to be so. As the fourth quarter began in October, every sign pointed to progressively higher interest rates and Federal Reserve monetary policy remaining higher for longer. Not only did the incoming economic data consistently exceed expectations, especially readings on the labor market and inflation, but projected federal government deficits and related borrowing needs increased materially, fueling fears of even higher rates as the market was forced to cope with an increased supply of treasuries going forward. This changed dramatically as we moved into November.
The primary reason was the inflation data. While inflation readings were still above economist forecast, they were nonetheless still falling and the three and six month annualized rates for both headline and core inflation dropped below 3% and appeared headed toward 2% the Fed's target. Fed Governor Waller stated that if the inflation data trend continued, the Fed would likely lower rates soon. Finally, at the December FOMC meeting, the Chairman at its post-meeting News Conference strongly hinted that Fed was done raising rates and the focus of the discussions had turned to removing restrictive monetary policy. The market reaction to these developments was dramatic. Interest rates declined by over 100 basis points in the case of maturities of five years or more and market pricing reflected approximately six 25 basis point cuts by the Fed by the end of 2024.
Risk assets rallied strongly. As we enter 2024, the market has once again reversed and the data, along with the Fed, has led the market to expect three cuts at most in 2024, although, I wrote the script before today's non-farm payroll number now we're up to four. And in any way, the pricing of these cuts is midyear to the second half of the year. Orchid Island Capital reported fourth quarter 2023 net income of $27.1 million and its shareholders equity increased slightly from $466.8 million at September 30, 2023 to $469.9 million at December 31, 2023. The market conditions in the last two months of the fourth quarter described above led Orchid to report mark-to-market gains on its MBS assets of $205.6 million exceeding mark-to-market losses of $149 million on derivative hedge instruments.
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