BIMINI CAPITAL MANAGEMENT, INC. (BMNM) stock intrinsic value fair value estimate & owner earnings analysis

WHAT THE BUSINESS IS Bimini Capital Management is a small holding company whose value rests on one contract: through Bimini Advisors it is the external manager of Orchid Island Capital, a mortgage REIT. Bimini is paid a monthly fee of 1.5% a year on the first $250 million of Orchid's equity, 1.25% on the next $250 million and 1.0% on everything above $500 million. On top of that, Orchid repays a share of Bimini's overhead and pays repo clearing fees. The agreement has been renewed through February 20, 2027 and extends automatically one year at a time after that. If Orchid ends it without cause, it owes Bimini a fee of three times the average annual management fee. Bimini's revenue from Orchid was $12.8 million in 2024 and $16.6 million in 2025, and reached a $4.7 million quarterly pace by the fourth quarter of 2025. The driver is Orchid's equity, which rose from $669 million at the end of 2024 to $1.37 billion at the end of 2025 after Orchid raised about $741 million of new capital. It stood at $1.44 billion on June 30, 2026. The business changed in 2026. Until then Bimini also ran its own leveraged portfolio of agency mortgage-backed securities, funded with repurchase agreements. In January 2026 it agreed to buy 80% of Tom Johnson Investment Management (TJIM), a registered investment adviser that managed about $1.6 billion in equity and fixed-income accounts, sub-advisory mandates and wrap programs. The price was 2.5 times 80% of TJIM's 2025 revenue: up to $12 million in cash at closing, with any excess paid over three years. The deal closed early in the second quarter of 2026, paid for by selling down the securities portfolio. By June 30, 2026, total assets had fallen from $130 million to $64 million and repo borrowings from $85 million to $15 million, and $4.8 million of goodwill and $9.5 million of intangibles were on the balance sheet. The sellers keep 20%, and both sides hold put and call rights over it. Bimini is now essentially a pure asset manager. Its main liability is $26.8 million of junior subordinated notes whose rate resets quarterly (7.48% at the end of 2025). They mature on December 15, 2035 and can be repaid early, in whole or in part, without penalty. HOW WE MEASURED EARNINGS We measure owner earnings as operating cash flow, less working-capital swings, stock compensation and capital spending. The last two are negligible here. Gains and losses from marking the securities portfolio and the Orchid shares to market are left out because they are not cash. The same goes for large deferred-tax swings, which come from a big federal loss carryforward. On that basis, owner earnings per share over 2016-2025 were: $0.35, $0.51, $0.55, $0.02, -$0.03, $0.42, $0.48, $0.16, $0.31 and $0.24. The ten-year median is $0.33 and the five-year median $0.31. The weak 2019-2020 years reflect hedge losses and a squeezed portfolio when Orchid's equity was only about $400 million. That history describes a business that no longer exists. It had a securities portfolio that earned only about $1 million a year in cash net interest, and an Orchid about a third of today's size. So we start from the current business, built from pieces we can see in the filings. Orchid fees on today's $1.44 billion of equity come to roughly $20 million a year under the contract. Bimini's cost base was $12.6 million in 2025. Interest on the notes runs about $2.0 million a year. Bimini's 569,071 Orchid shares paid about $0.8 million of dividends in 2025. TJIM's 80% share adds roughly $2.5 million of cash a year: the 20% minority owners were credited $124,000 of profit in its first quarter, and $170,000 of the quarterly charge is non-cash amortization of acquired intangibles. The second quarter of 2026 fits this picture. Pre-tax profit was $1.81 million; after adding back the amortization and removing the minority share, cash earnings run at about $7.4 million a year, or $0.74 per share. The first quarter, before TJIM, was about $0.51 per share annualized once the securities marks are removed. In 2025, owner earnings fell 22%. Our first-year figure of $0.68 is far above that. Two dated facts justify the gap: Orchid's fee base was already more than doubled by capital raised in 2025, as confirmed by three quarters of higher fees, and TJIM's contribution began on closing in April 2026. We trim the second-quarter pace because TJIM has reported only one quarter under Bimini. Bimini paid no income taxes in 2024 or 2025. At the end of 2025 it had $246 million of federal loss carryforwards, which begin expiring in 2026. It carries a valuation allowance against all but about $10.8 million of the related $51.6 million tax asset, which implies it expects to use only about $51 million of those losses before they expire. So in the base and bull cases we assume no cash taxes for about seven years and a roughly 25% rate after that. The bear case earns less than $51 million in total over its whole life, so it pays no cash tax. THE CASES (6% discount rate, earnings counted for about 20 years) Base, $5.71 per share. Orchid's record shows its equity rising through share issuance but also falling hard: 27% in 2018 and 43% in 2022, from $768 million to $439 million. We therefore assume Orchid's equity averages about $1.1-1.2 billion over the decade rather than today's $1.44 billion. Owner earnings, after interest on the notes, are about $0.68 in year one, $0.60 in years two and three, and $0.55 a year through year ten, and TJIM's contribution holds steady. Taxes start in year eight, taking the figure to about $0.41. We hold earnings at that level for another ten years, roughly as long as the Orchid relationship has already lasted (it began with Orchid's 2013 listing), and count nothing after that. That cut-off is simply where our evidence runs out, not an event that ends the business. On these earnings Bimini covers its note interest more than three times over and can refinance or repay the notes when they fall due, so in this case we treat them as permanent financing: the interest is paid every year, and we neither subtract the notes from the value nor add the company's cash. Bear, $0.39 per share. Orchid suffers a drawdown like 2022 and its equity averages about $700 million. Management fees fall by about $8 million a year and costs flex down only partly, leaving Bimini with about $0.17 a share after note interest. TJIM's principal seller signed only a three-year employment agreement at closing, so in this case TJIM loses about half its contribution from 2030 and earnings fall to about $0.05 a share. At that level Bimini earns barely more than its note interest, so it cannot simply roll the notes over when they mature in December 2035; in this case they have to be paid off. We apply the company's own resources first. At June 30, 2026 it held $6.5 million of cash, $1.8 million of receivables and $16.0 million of securities against $15.0 million of repo borrowings, and owed $5.0 million of other liabilities. After keeping $2 million as an operating balance, that leaves about $2.2 million, which we use to repay notes straight away, saving about $160,000 of interest a year. Every dollar the business earns after that also goes to repaying notes, and the Orchid shares, worth about $4.0 million at June 30, 2026, are sold at the 2035 maturity (their dividends stop then). That still leaves about $6.6 million due at maturity. After 2035 the business generates about $1.7 million a year, enough to pay off a refinancing of that balance by about 2040, well before the case ends. Shareholders receive nothing until then, and the notes absorb most of what the business earns over the next 14 years. In this case the company is worth only a little more than it owes. Bull, $10.33 per share. Orchid keeps growing its equity through issuance, about 5% a year against a 16% annual growth rate from 2016 to 2026. With the 1% marginal fee, owner earnings climb from about $0.74 to about $1.23 a share by year ten. TJIM holds its accounts. Taxes follow the base case, and so do the notes: they are treated as permanent financing whose interest is paid every year, with nothing subtracted for them and no cash added. WHAT CHANGED Our earlier estimate charged the full repayment of the notes in 2035 against every case, without counting the company's cash toward it. We now charge repayment only in the bear case, where earnings are too thin to carry the debt, and apply the company's cash and Orchid shares to it first. In the base and bull cases the business can carry or replace the notes, and the 20-year cut-off only marks where our evidence ends, so repayment is no longer deducted there. The base case rises from $4.85 to $5.71 and the bull case from $9.44 to $10.33; the bear case is little changed, at $0.39 against $0.37. ACCOUNTING JUDGEMENTS AND WHAT COULD BE WRONG Owner earnings are already after interest, so outside the bear case we did not subtract the notes from the value. We added back TJIM's intangible amortization as non-cash. To reflect the risk that acquired client relationships wear away, the bear case assumes TJIM attrition rather than cutting today's earnings level. Outside the bear case, Bimini's cash and Orchid shares are not added separately: the dividends on those shares are already in owner earnings. The later payments on the TJIM price and any purchase of the remaining 20% could not be sized from the filings; they would buy more earnings rather than destroy value. The biggest risk is concentration. Nearly all of Bimini's value depends on one client whose equity swings with the mortgage-bond market, and that client is run by the same executives who control Bimini, which creates a structural conflict of interest. With the consent of a majority of its independent directors, Orchid can decline to renew on 180 days' notice. Doing so would trigger the termination fee, but it would permanently remove the earnings stream. The shares trade over the counter on the OTCQX in a thin market, and the company is very small, so outcomes are unusually spread out and we require a large margin of safety.