UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 
 FORM
10-Q
 
 
 þ           QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF
 THE
SECURITIES EXCHANGE ACT OF 1934
 
 For
the quarterly period ended June 30, 2008
 
  ̈           TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF
 THE
SECURITIES EXCHANGE ACT OF 1934
 
 For
the transition period from __________ to ___________
 
 Commission
File Number: 001-32171
 
 Bimini
Capital Management, Inc.
 (Exact
name of registrant as specified in its charter)
 
 Maryland
              
              72-1571637(State
      or other jurisdiction of
                incorporation
      or organization)
              
              (I.R.S.
      Employer
                Identification
      No.)
 
 3305
Flamingo Drive, Vero Beach, Florida 32963
 (Address
of principal executive offices) (Zip Code)
 
 (772)
231-1400
 (Registrant’s
telephone number, including area code)
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES þ     NO
 ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company”  in Rule 12b-2 of the Exchange
Act. (Check one):
 
 Large
accelerated filer  ̈                                           Accelerated
filer ý                                           Non-accelerated
filer  ̈                                           
Smaller Reporting Company ý
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES  ̈     NO
þ
 
 As of
August 11, 2008, the number of shares outstanding of the registrant’s Class A
Common Stock, $0.001 par value, was 25,366,033; the number of shares outstanding
of the registrant’s Class B Common Stock, $0.001 par value, was 319,388; and the
number of shares outstanding of the registrant’s Class C Common Stock, $0.001
par value, was 319,388.
 
 
 
  
 
 
 
 
 
 
 
 
 BIMINI
CAPITAL MANAGEMENT, INC.
 
 INDEX
 
 
 
 PART
      I. FINANCIAL INFORMATIONITEM
      1.     FINANCIAL STATEMENTS
              3Consolidated
      Balance Sheets as of June 30, 2008 (unaudited) and December 31,
      2007
              3Consolidated
      Statements of Operations for the six and three months ended June 30,
      2008  and 2007 (unaudited)
              4Consolidated
      Statement of Stockholders’ Equity (Deficit) for the six months ended June
      30, 2008 (unaudited)
              5Consolidated
      Statements of Cash Flows for the six months ended June 30,
      2008  and 2007 (unaudited)
              6Notes
      to Consolidated Financial Statements
      (unaudited)
              7ITEM
      2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION
                AND
      RESULTS OF OPERATIONS.
              27ITEM
      3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK.
              38ITEM
      4.     CONTROLS AND PROCEDURES.
              38ITEM
      4T.   CONTROLS AND PROCEDURES.
              39PART
      II. OTHER INFORMATIONITEM
      1.     LEGAL PROCEEDINGS.
              39ITEM
      1A.  RISK FACTORS.
              39ITEM
      2.     UNREGISTERED SALES OF EQUITY SECURITIES
      AND USE OF PROCEEDS.
              40ITEM
      4.     SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS.
              40ITEM
      6.     EXHIBITS.
              41
 
 
 
  
  PART
I. FINANCIAL INFORMATION
 ITEM
1. FINANCIAL STATEMENTS.
 BIMINI
      CAPITAL MANAGEMENT, INC.CONSOLIDATED
      BALANCE SHEETS(Unaudited)June
      30, 2008
              
              
              December
      31, 2007ASSETS:Mortgage-backed
      securities:Available-for-sale,
      pledged to counterparties, at LOCOM
              
              $
              -
              
              
              $
              293,729,451Held
      for trading, pledged to counterparties, at fair value
              
              
              516,929,566
              
              
              
              396,175,157Unpledged,
      at fair value
              
              
              6,981,227
              
              
              
              674,326Total
      mortgage-backed securities
              
              
              523,910,793
              
              
              
              690,578,934Cash
      and cash equivalents
              
              
              17,337,744
              
              
              
              27,284,760Restricted
      cash
              
              
              -
              
              
              
              8,800,000Principal
      payments receivable
              
              
              382,451
              
              
              
              99,089Accrued
      interest receivable
              
              
              2,277,587
              
              
              
              3,637,302Property
      and equipment, net
              
              
              4,111,403
              
              
              
              4,181,813Prepaids
      and other assets
              
              
              4,913,071
              
              
              
              5,315,835Assets
      held for sale
              
              
              48,538,374
              
              
              
              96,619,615Total
      Assets
              
              $
              601,471,423
              
              
              $
              836,517,348LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)LIABILITIES:Repurchase
      agreements
              
              $
              452,446,754
              
              
              $
              678,177,771Junior
      subordinated notes due to Bimini Capital Trust I & II
              
              
              103,097,000
              
              
              
              103,097,000Unsettled
      Security Transactions
              
              
              48,941,425
              
              
              
              -Accrued
      interest payable
              
              
              2,461,612
              
              
              
              3,872,101Accounts
      payable, accrued expenses and other
              
              
              1,632,277
              
              
              
              644,858Liabilities
      related to assets held for sale
              
              
              7,377,926
              
              
              
              27,842,174Total
      Liabilities
              
              
              615,956,994
              
              
              
              813,633,904COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock, $0.001 par value; 10,000,000 shares authorized; designated,
      1,800,000 shares as Class A Redeemable and 2,000,000 shares as Class B
      Redeemable; no shares issued and outstanding
              
              
              -
              
              
              
              -Class
      A Common Stock, $0.001 par value; 98,000,000 shares designated: 25,350,200
      shares issued and outstanding as of June 30, 2008 and 24,861,404 shares
      issued and outstanding as of December 31, 2007
              
              
              25,350
              
              
              
              24,861Class
      B Common Stock, $0.001 par value; 1,000,000 shares designated, 319,388
      shares issued and outstanding as of June 30, 2008 and December 31,
      2007
              
              
              319
              
              
              
              319Class
      C Common Stock, $0.001 par value; 1,000,000 shares designated, 319,388
      shares issued and outstanding as of June 30, 2008 and December 31,
      2007
              
              
              319
              
              
              
              319Additional
      paid-in capital
              
              
              338,822,407
              
              
              
              338,241,582Accumulated
      deficit
              
              
              (353,333,966
              )
              
              
              (315,383,637
              )Total
      Stockholders’ Equity (Deficit)
              
              
              (14,485,571
              )
              
              
              22,883,444Total
      Liabilities and Stockholders’ Equity (Deficit)
              
              $
              601,471,423
              
              
              $
              836,517,348See
      Notes to Consolidated Financial Statements
 
 Bimini
      Capital Management, Inc.
                  CONSOLIDATED
      STATEMENTS OF OPERATIONS
                  (Unaudited)Six
      Months Ended
                
                
                Three
      Months EndedJune
      30, 2008
                
                
                June
      30, 2007
                
                
                June
      30, 2008
                
                
                June
      30, 2007Interest
      income, net of amortization of premium and discount
                
                $
                16,897,697
                
                
                $
                66,158,568
                
                
                $
                6,786,804
                
                
                $
                27,524,303Interest
      expense
                
                
                (13,085,907
                )
                
                
                (71,142,576
                )
                
                
                (5,458,446
                )
                
                
                (33,590,371
                )Net
      interest income (expense), before interest on trust preferred
      debt
                
                
                3,811,790
                
                
                
                (4,984,008
                )
                
                
                1,328,358
                
                
                
                (6,066,068
                )Interest
      expense on trust preferred debt
                
                
                (4,180,863
                )
                
                
                (4,180,864
                )
                
                
                (2,090,431
                )
                
                
                (2,090,432
                )Net
      interest expense
                
                
                (369,073
                )
                
                
                (9,164,872
                )
                
                
                (762,073
                )
                
                
                (8,156,500
                )Fair
      value adjustment - held for trading securities
                
                
                (134,831
                )
                
                
                -
                
                
                
                (737,912
                )
                
                
                -Other-than-temporary
      loss on mortgage-backed securities
                
                
                -
                
                
                
                (55,250,278
                )
                
                
                -
                
                
                
                (55,250,278
                )Gains/(loss)
      on sale of mortgage-backed securities, net
                
                
                708,319
                
                
                
                (19,388,377
                )
                
                
                385,748
                
                
                
                (18,568,106
                )Revenues
      (deficiency of revenues), net
                
                
                204,415
                
                
                
                (83,803,527
                )
                
                
                (1,114,237
                )
                
                
                (81,974,884
                )Direct
      REIT operating expenses
                
                
                373,613
                
                
                
                451,702
                
                
                
                188,324
                
                
                
                223,455General
      and administrative expenses:Compensation
      and related benefits
                
                
                1,673,344
                
                
                
                2,343,830
                
                
                
                827,966
                
                
                
                1,151,445Directors'
      fees and liability insurance
                
                
                368,742
                
                
                
                388,536
                
                
                
                194,696
                
                
                
                188,573Audit,
      legal and other professional fees
                
                
                455,469
                
                
                
                681,226
                
                
                
                61,382
                
                
                
                338,830Other
      administrative
                
                
                758,726
                
                
                
                328,614
                
                
                
                268,098
                
                
                
                183,310Total
      general and administrative expenses
                
                
                3,256,281
                
                
                
                3,742,206
                
                
                
                1,352,142
                
                
                
                1,862,158Total
      expenses
                
                
                3,629,894
                
                
                
                4,193,908
                
                
                
                1,540,466
                
                
                
                2,085,613Loss
      from continuing operations before minority interest
                
                
                (3,425,479
                )
                
                
                (87,997,435
                )
                
                
                (2,654,703
                )
                
                
                (84,060,497
                )Minority
      interest in consolidated subsidiary
                
                
                -
                
                
                
                770,563
                
                
                
                -
                
                
                
                -Loss
      from continuing operations
                
                
                (3,425,479
                )
                
                
                (87,226,872
                )
                
                
                (2,654,703
                )
                
                
                (84,060,497
                )Loss on sale and disposal of
      assets of discontinued operations, net of tax
                
                
                -
                
                
                
                (10,469,203
                )
                
                
                -
                
                
                
                (10,469,203
                )Loss
      from discontinued operations, net of tax
                
                
                (36,238,946
                )
                
                
                (142,841,366
                )
                
                
                (31,905,445
                )
                
                
                (67,937,722
                )Total
      loss from discontinued operations, net of tax
                
                
                (36,238,946
                )
                
                
                (153,310,569
                )
                
                
                (31,905,445
                )
                
                
                (78,406,925
                )Net
      loss
                
                $
                (39,664,425
                )
                
                $
                (240,537,441
                )
                
                $
                (34,560,148
                )
                
                $
                (162,467,422
                )Basic
      And Diluted Net Loss Per Share Of:CLASS
      A COMMON STOCKContinuing
      operations
                
                $
                (0.14
                )
                
                $
                (3.51
                )
                
                $
                (0.10
                )
                
                $
                (3.38
                )Discontinued
      operations
                
                
                (1.43
                )
                
                
                (6.16
                )
                
                
                (1.26
                )
                
                
                (3.15
                )Total
      basic and diluted net loss per Class A share
                
                $
                (1.57
                )
                
                $
                (9.67
                )
                
                $
                (1.36
                )
                
                $
                (6.53
                )CLASS
      B COMMON STOCKContinuing
      operations
                
                $
                (0.13
                )
                
                $
                (3.50
                )
                
                $
                (0.10
                )
                
                $
                (3.37
                )Discontinued
      operations
                
                
                (1.41
                )
                
                
                (6.15
                )
                
                
                (1.25
                )
                
                
                (3.15
                )Total
      basic and diluted net loss per Class B share
                
                $
                (1.54
                )
                
                $
                (9.65
                )
                
                $
                (1.35
                )
                
                $
                (6.52
                )Average
      Shares OutstandingCLASS
      A COMMON STOCK
                
                
                25,023,908
                
                
                
                24,555,916
                
                
                
                25,118,066
                
                
                
                24,577,222CLASS
      B COMMON STOCK
                
                
                319,388
                
                
                
                319,388
                
                
                
                319,388
                
                
                
                319,388Cash
      dividends declared per share of:CLASS
      A COMMON STOCK
                
                $
                -
                
                
                $
                0.05
                
                
                $
                -
                
                
                $
                -CLASS
      B COMMON STOCK
                
                $
                -
                
                
                $
                0.05
                
                
                $
                -
                
                
                $
                -See
      Notes to Consolidated Financial Statements
 
 BIMINI
      CAPITAL MANAGEMENT, INC.CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)(Unaudited)Six
      Months Ended June 30, 2008Common
      Stock,
                  Amounts
      at par value
                
                Additional
                  Paid-in
                
                AccumulatedClass
      A
                
                Class
      B
                
                Class
      C
                
                Capital
                
                Deficit
                
                TotalBalances,
      December 31, 2007
                
                $
                24,861
                
                
                $
                319
                
                
                $
                319
                
                
                $
                338,241,582
                
                
                $
                (315,383,637
                )
                
                $
                22,883,444Cumulative
      effect adjustment upon adoption of SFAS No. 159
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1,714,096
                
                
                
                1,714,096Net
      loss
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (39,664,425
                )
                
                
                (39,664,425
                )Issuance
      of Class A common shares for board compensation and equity plan share
      exercises, net
                
                
                489
                
                
                
                -
                
                
                
                -
                
                
                
                157,324
                
                
                
                -
                
                
                
                157,813Amortization
      of equity plan compensation
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                425,305
                
                
                
                -
                
                
                
                425,305Equity
      plan shares withheld for statutory minimum withholding
    taxes
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (861
                )
                
                
                -
                
                
                
                (861
                )Stock
      issuance costs, and other adjustments
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (943
                )
                
                
                -
                
                
                
                (943
                )Balances,
      June 30, 2008
                
                $
                25,350
                
                
                $
                319
                
                
                $
                319
                
                
                $
                338,822,407
                
                
                $
                (353,333,966
                )
                
                $
                (14,485,571
                )See
      Notes to Consolidated Financial Statements
 
   
 BIMINI
      CAPITAL MANAGEMENT, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS(Unaudited)Six
      Months Ended June 30,2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (39,664,425
              )
              
              $
              (240,537,441
              )Adjustments
      to reconcile loss from continuing operations
                to
      net cash  provided by operating activities:Net  loss
      from discontinued operations
              
              
              36,238,946
              
              
              
              153,310,569Other-than-temporary
      loss on mortgage backed securities
              
              
              -
              
              
              
              55,250,278Amortization
      of premium and discount on mortgage-backed securities, net
              
              
              -
              
              
              
              10,776,614Stock
      compensation
              
              
              583,118
              
              
              
              1,365,391Depreciation
      and amortization
              
              
              82,562
              
              
              
              432,246(Gain)
      loss on sale of mortgage-backed securities, net
              
              
              (708,319
              )
              
              
              19,388,377Fair
      value adjustment - held for trading securities
              
              
              134,831
              
              
              
              -From
      trading securities:Purchases
              
              
              (87,630,648
              )
              
              
              -Sales
              
              
              241,307,931
              
              
              
              -Principal
      repayments
              
              
              63,936,504
              
              
              
              -Changes
      in operating assets and liabilities:Decrease
      in accrued interest receivable
              
              
              1,359,715
              
              
              
              4,236,464Decrease
      (increase) in prepaids and other assets
              
              
              402,766
              
              
              
              (472,050
              )Decrease
      in accrued interest payable
              
              
              (1,410,488
              )
              
              
              (7,472,493
              )Increase
      in accounts payable, accrued expenses and other
              
              
              986,558
              
              
              
              1,547,010NET
      CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
              
              
              215,619,051
              
              
              
              (2,175,035
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:From
      available-for-sale securities:Purchases
              
              
              -
              
              
              
              (834,671,779
              )Sales
              
              
              -
              
              
              
              1,191,814,282Principal
      repayments
              
              
              -
              
              
              
              626,507,518Purchases
      of property and equipment, and other
              
              
              (12,152
              )
              
              
              1,500NET
      CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
              
              
              (12,152
              )
              
              
              983,651,521CASH
      FLOWS FROM FINANCING ACTIVITIES:Decrease
      in restricted cash
              
              
              8,800,000
              
              
              
              -Proceeds
      from repurchase agreements
              
              
              2,655,653,975
              
              
              
              10,106,181,385Principal
      payments on repurchase agreements
              
              
              (2,881,384,992
              )
              
              
              (11,064,529,569
              )Stock
      issuance costs, and other adjustments
              
              
              (943
              )
              
              
              -Cash
      dividends paid
              
              
              -
              
              
              
              (2,534,582
              )NET
      CASH USED IN FINANCING ACTIVITIES
              
              
              (216,931,960
              )
              
              
              (960,882,766
              )CASH
      FLOWS FROM DISCONTINUED OPERATIONS:Net
      cash provided by operating activities
              
              
              9,378,045
              
              
              
              638,596,359Net
      cash provided by investing activities
              
              
              -
              
              
              
              1,195,582Net
      cash used in financing activities
              
              
              (18,000,000
              )
              
              
              (701,234,602
              )NET
      CASH USED IN DISCONTINUED OPERATIONS
              
              
              (8,621,955
              )
              
              
              (61,442,661
              )NET
      DECREASE IN CASH AND CASH EQUIVALENTS
              
              
              (9,947,016
              )
              
              
              (40,848,941
              )CASH
      AND CASH EQUIVALENTS, Beginning of the period
              
              
              27,284,760
              
              
              
              82,751,795CASH
      AND CASH EQUIVALENTS, End of the period
              
              $
              17,337,744
              
              
              $
              41,902,854SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATION:Cash
      paid during the period for interest
              
              $
              19,938,708
              
              
              $
              82,795,933SUPPLEMENTAL
      SCHEDULE OF NONCASH INVESTING ACTIVITIES:Securities
      transferred from available-for-sale to trading (at fair
    value)
              
              $
              1,714,096
              
              
              $
              -See
      Notes to Consolidated Financial Statements
 
 
 
 BIMINI
CAPITAL MANAGEMENT, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 June
30, 2008
 
 
 NOTE
1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES
 
 Organization
and Business Description
 
 Bimini
Capital Management, Inc., a Maryland corporation (“Bimini Capital”), was
originally formed in September 2003 as Bimini Mortgage Management, Inc. (“Bimini
Mortgage”) for the purpose of creating and managing a leveraged investment
portfolio consisting of residential mortgage-backed securities (“MBS”). Bimini
Capital’s website is located at http://www.biminicapital.com. On February 10,
2006, Bimini Mortgage changed its name to Opteum Inc. (“Opteum”). On September
28, 2007, Opteum changed its name to Bimini Capital Management,
Inc.
 
 On
November 3, 2005, Bimini Capital acquired Opteum Financial Services,
LLC.  This entity, which was previously referred to as “OFS,” was
renamed Orchid Island TRS, LLC effective July 3, 2007.   Hereinafter,
any historical mention, discussion or references to Opteum Financial Services,
LLC or to OFS (such as in previously filed documents or Exhibits) now means
Orchid Island TRS, LLC or “OITRS.”  Upon closing of the transaction,
OITRS became a wholly-owned taxable REIT subsidiary of Bimini
Capital.
 
 On
December 21, 2006, Bimini Capital sold to Citigroup Global Markets Realty Corp.
(“Citigroup Realty”) a Class B non-voting limited liability company membership
interest in OITRS, representing 7.5% of all of OITRS’s outstanding limited
liability company membership interests, for $4.1 million.  Immediately
following the transaction, Bimini Capital held Class A voting Limited Liability
Company membership interests in OITRS representing 92.5% of all of OITRS’s
outstanding limited liability company membership interests.  In
connection with the transaction, Bimini Capital also granted Citigroup Realty an
option to acquire additional Class B non-voting limited liability company
membership interests in OITRS representing 7.49% of all of OITRS’s outstanding
limited liability company membership interests. This option expired unexercised
on December 20, 2007.   On May 27, 2008, Bimini Capital
repurchased Citigroup Realty’s interest in OITRS for $0.05 million.
 
 On April 18, 2007, the Board of
Managers of OITRS, at the recommendation of the Board of Directors ofBimini Capital, approved the closure of OITRS’s
wholesale and conduit mortgage loan origination channels in the second quarter
of 2007.  Also, during the second and third quarters of 2007,
substantially all of the other operating assets of OITRS were
sold.   Therefore,all of OITRS’s assets are considered
held for sale, and OITRS is reported as a discontinued operation for all periods
presented following applicable accounting standards (see Note 11). For financial
statement presentation purposes, Bimini Capital is now operating in a single
business segment, as areal estate investment trust
(“REIT”).
 
 Bimini
Capital has elected to be taxed as a REIT under the Internal Revenue Code of
1986, as amended (the “Code”).  As a REIT, Bimini Capital is generally
not subject to federal income tax on its REIT taxable income provided that it
distributes to its stockholders at least 90% of its REIT taxable income on an
annual basis.  OITRS has elected to be treated as a taxable REIT
subsidiary and, as such, is subject to federal, state and local income
taxation.  In addition, the ability of OITRS to deduct interest paid
or accrued to Bimini Capital for federal, state and local tax purposes is
subject to certain limitations.
 
 As used
in this document, discussions related to Bimini Capital, the parent company, the
registrant, and to REIT qualifying activities or the general management of
Bimini Capital’s portfolio of MBS refer to Bimini Capital Management,
Inc.  Further, discussions related to Bimini Capital’s taxable REIT
subsidiary or non-REIT eligible assets refer to OITRS and its consolidated
subsidiaries. Discussions relating to the “Company” refer to the consolidated
entity (the combination of Bimini Capital and OITRS). The assets and activities
that are not REIT eligible, such as mortgage origination, acquisition and
servicing activities, were formerly conducted by OITRS and are now reported as
discontinued operations.
 
 Liquidity
 
 The
financing market utilized by the Company to fund its MBS portfolio, as well as
the market for MBS securities, have yet to fully recover from the turbulence
experienced in the last quarter.  The volatility in the market
prompted intervention on the part of the Federal Reserve in an effort to restore
stability. While the actions of the Federal Reserve have been effective for the
most part so far, there can be no assurance such actions will be sufficient to
achieve long lasting stability, or that another source of market disruption will
not emerge. The Company has outstanding $452.4 million of obligations under
repurchase agreements with maturities through October 2008. Should the Company
be unable to extend the maturity of these repurchase obligations, it may be
forced to sell assets, which may result in losses upon such
sales.  Additionally, the Company may need to augment its existing
leveraged MBS portfolio with alternative investment strategies to the
extent that sufficient repurchase agreement funding is not available.  The
Company is currently evaluating alternative investment strategies that utilize
derivative mortgage backed securities collateralized by MBS with comparable
borrower and prepayment characteristics to the securities currently in the
portfolio.  Such securities would not be funded in the repurchase market
but instead would be owned free and clear.  If cash resources are, at
any time, insufficient to satisfy the Company’s liquidity requirements, such as
when cash flow from operations are materially negative, the Company may be
required to pledge additional assets to meet margin calls, liquidate assets,
sell additional debt or equity securities or pursue other financing
alternatives. The Company presently believes that its junior subordinated debt
capital, combined with the cash flow from operations and the utilization of
borrowings, will be sufficient to enable the Company to meet its anticipated
liquidity requirements. Continued disruptions in market conditions could,
however, adversely affect the Company’s liquidity, including the lack of
available financing for the Company’s MBS assets, increases in interest rates,
increases in prepayment rates substantially above expectations and decreases in
value of assets held for sale. Therefore, no assurances can be made regarding
the Company's ability to satisfy its liquidity and working capital
requirements.
 
 Interim
Financial Statements
 
 The
accompanying interim financial statements reflect all adjustments, consisting of
normal recurring items that, in the opinion of management, are necessary for a
fair presentation of the Company’s financial position, results of operations,
statement of stockholders’ equity and cash flows for the periods presented.
These interim financial statements have been prepared in accordance with
disclosure requirements for interim financial information and accordingly, they
do not include all of the information and footnotes required by United States
generally accepted accounting principles (“GAAP”) for annual financial
statements. The operating results for the interim period ended June 30, 2008 are
not necessarily indicative of results that can be expected for the year ended
December 31, 2008. The consolidated balance sheet as of December 31, 2007 was
derived from audited financial statements included in the Company’s 2007 Annual
Report on Form 10-K but does not include all disclosures required by
GAAP.  The financial statements included as part of this Form 10-Q
should be read in conjunction with the financial statements and notes thereto
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2007.
 
 Basis
of Presentation and Use of Estimates
 
 The
accompanying consolidated financial statements are in accordance with GAAP. The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates affecting the accompanying
financial statements include the fair values of MBS, and certain discontinued
operations related items including the deferred tax asset valuation allowance,
the valuation allowance on mortgage loans held for sale, the valuation of
retained interests, trading and the fair value of mortgage servicing
rights.
 
 Consolidation
 
 The
accompanying consolidated financial statements include the accounts of Bimini
Capital and its wholly-owned subsidiary, OITRS, as well as the wholly-owned and
majority-owned subsidiaries of OITRS.  OITRS is reported as a
discontinued operation for all periods presented.  All inter-company
accounts and transactions have been eliminated from the consolidated financial
statements.
 
 The results
for the second quarter of 2007 have been previously restated to adjust for the
elimination of interest income and interest expense on inter-company debt
reflected in the results of operations as originally filed. Interest income and
interest expense of $5.3 million and $2.0 million for the six months and three
months ended June 30, 2007, respectively, have been eliminated from the results
previously reported on August 14, 2007, which resulted in no change in net loss
for the second quarter of 2007.
 
 As
further described in Note 5, Bimini Capital has a common share investment in two
trusts used in connection with the issuance of Bimini Capital’s junior
subordinated notes.  Pursuant to the accounting guidance provided in
Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 46,
Consolidation of Variable
Interest Entities, Bimini Capital’s common share investments in the
trusts are not consolidated in the financial statements of Bimini Capital, and
accordingly, these investments are accounted for on the equity
method.
 
 Discontinued
Operations
 
 During
the second quarter of 2007, the Company closed OITRS’s wholesale and conduit
mortgage loan origination channels and sold substantially all of the operating
assets of OITRS.  All remaining assets and liabilities are reported as
held for sale on the consolidated financial statements.  Accordingly,
all current and prior financial information related to OITRS and the mortgage
banking business has been presented as discontinued operations in the
accompanying consolidated financial statements. Refer to Note 11 - Discontinued
Operations.
 
 Cash
and Cash Equivalents
 
 Cash and
cash equivalents include cash on hand and highly liquid investments with
original maturities of three months or less. The carrying amount of cash
equivalents approximates its fair value as of June 30, 2008 and December 31,
2007. Restricted cash represents cash held on deposit as collateral with certain
repurchase agreement counterparties (i.e. lenders). Such amounts may be used to
make principal and interest payments on the related repurchase
agreements.
 
 Valuation
of Mortgage-Backed Securities
 
 At June
30, 2008, the valuation of the Company’s investments in MBS is governed by
Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value
Measurements.  The definition of fair value in SFAS No. 157
focuses on the price that would be received to sell the asset or paid to
transfer the liability (i.e., an exit price), rather than the price that would
be paid to acquire the asset or received to assume the liability (i.e., an entry
price).  All REIT securities are reflected in the Company's financial
statements at their estimated fair value at June 30, 2008. Estimated fair values
for MBS are based on the average of third-party broker quotes received and/or
independent pricing sources when available.
 
 In
accordance with SFAS No. 115, Accounting for Certain Investments
in Debt and Equity Securities, the Company classified its investments in
MBS as either trading investments, available-for-sale investments or
held-to-maturity investments. Management determined the appropriate
classification of the securities at the time they were acquired and evaluates
the appropriateness of such classifications at each balance sheet date. The
Company classifies all of its securities acquired prior to June 30, 2007 as
available-for-sale.  All securities acquired after June 30, 2007 were
classified as trading securities.  On January 1, 2008, in connection
with the adoption of SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB
Statement 115, the Company transferred its remaining available-for-sale
securities to trading.
  Property
and Equipment, net
 
 Property
and equipment, net, consisting primarily of computer equipment with a
depreciable life of 3 years, office furniture and equipment with a depreciable
life of 8 to 20 years, leasehold improvements with a depreciable life of 15
years, land which has no depreciable life and building with a depreciable life
of 30 years, is recorded at acquisition cost and depreciated using the
straight-line method over the estimated useful lives of the assets.
 
 Bimini
Capital’s property and equipment as of June 30, 2008 and December 31, 2007, is
net of accumulated depreciation of$0.5 million and $0.4
million, respectively. Depreciation expense for the six and three months ended
June 30, 2008 was $0.08 million and $0.04 million, respectively.
 
 Repurchase
Agreements
 
 The
Company finances the acquisition of its MBS through the use of repurchase
agreements. Under these repurchase agreements, the Company sells securities to a
repurchase counterparty and agrees to repurchase the same securities in the
future for a price that is higher than the original sales price. The difference
between the sales price that the Company receives and the repurchase price that
the Company pays represents interest paid to the repurchase counterparty.
Although structured as a sale and repurchase obligation, a repurchase agreement
is accounted for as a financing under which the Company pledges its securities
as collateral to secure a loan which is equal in value to a specified percentage
of the estimated fair value of the pledged collateral. The Company retains
beneficial ownership of the pledged collateral. At the maturity of a repurchase
agreement, the Company is required to repurchase the underlying MBS and
concurrently receives back its pledged collateral from the repurchase
counterparty or, with the consent of the repurchase counterparty, the Company
may renew such agreement at the then prevailing rate. These repurchase
agreements may require the Company to pledge additional assets to the repurchase
counterparty in the event the estimated fair value of the existing pledged
collateral has declined. For the six months ended June 30, 2008 and for the year
ended December 31, 2007, the Company did not have any margin calls on its
repurchase agreements that it was not able to satisfy with either cash or
additional pledged collateral.
 
 Original
terms to maturity of the Company's repurchase agreements generally, but not
always, range from one month to twelve months; however, the Company is not
precluded from entering into repurchase agreements with shorter or longer
maturities. Repurchase agreement transactions are reflected in the financial
statements at their cost. Should a counterparty decide not to renew a repurchase
agreement at maturity, the Company must either refinance elsewhere or be in a
position to satisfy this obligation. If, during the term of a repurchase
agreement, a counterparty files for bankruptcy, the Company could experience
difficulty recovering its pledged assets and may have an unsecured claim against
the counterparty's assets for the difference between the amount received by the
Company and the estimated fair value of the collateral pledged to such
counterparty.
 
 Interest
Income Recognition on MBS
 
 All
securities in the MBS portfolio as of June 30, 2008 are classified as trading
securities. Income on trading securities is based on the stated interest rate of
the security. Changes in fair value during the period are recorded in earnings
and reported as fair value adjustment-held for trading securities in the
accompanying consolidated statement of operations.   Premium or
discount present at the date of purchase is not amortized.
 
 MBS are
recorded at cost on the date the MBS are purchased or sold, which is generally
the trade date. Realized gains or losses from MBS transactions are determined
based on the specific identified carrying value of the MBS. Interest income is
accrued based on the outstanding principal amount of the MBS and their stated
contractual terms. Prior to January 1, 2008, with respect to securities
classified as available-for-sale, premiums and discounts associated with the
purchase of the MBS were amortized or accreted into interest income over the
estimated lives of the MBS adjusted for estimated prepayments using the
effective interest method. Adjustments were made using the retrospective method
to the effective interest computation each reporting period. The adjustment was
based on the actual prepayment experiences to date and the present expectation
of future prepayments of the underlying mortgages and/or the current value of
the indices underlying adjustable rate mortgage securities versus index values
in effect at the time of purchase or the last adjustment period.  For
securities classified as trading, interest income is based on the stated
interest rate and the outstanding principal balance; premium or discount
associated with the purchase of the MBS classified as trading securities are not
amortized.
 
 Comprehensive
Loss
  In
accordance with SFAS No. 130,Reporting Comprehensive
Income, the Company is required to separately report its comprehensive
income (loss) each reporting period. Other comprehensive income refers to
revenue, expenses, gains and losses that, under GAAP, are included in
comprehensive income but are excluded from net income, as these amounts are
recorded directly as an adjustment to stockholders' equity. Other comprehensive
income for the period ended June 30, 2007 arose from unrealized gains from
changes in market values of securities classified as
available-for-sale.  Comprehensive loss is as
follows:
 
 (in
thousands)
 
 (Unaudited)
              
              
              (Unaudited)Six
      Months Ended June 30,
              
              
              Three
      Months Ended June 30,2008
              
              
              2007
              
              
              2008
              
              
              2007Net
      loss
              
              $
              (39,664
              )
              
              $
              (240,537
              )
              
              $
              (34,560
              )
              
              $
              (162,467
              )Reclassify
      net realized loss on MBS
              
              
              -
              
              
              
              19,388
              
              
              
              -
              
              
              
              18,568Reclassify
      other-than-temporary loss on MBS
              
              
              -
              
              
              
              55,250
              
              
              
              -
              
              
              
              55,250Unrealized
      gain on available-for-sale securities, net
              
              
              -
              
              
              
              2,135
              
              
              
              -
              
              
              
              (1,043
              )Comprehensive
      loss
              
              $
              (39,664
              )
              
              $
              (163,764
              )
              
              $
              (34,560
              )
              
              $
              (89,692
              )
 
 Stock-Based
Compensation
 
 The
Company adopted SFAS No. 123(R),Share-Based Payment, on
January 1, 2006, and this adoption did not have an impact on the Company, as the
Company had previously accounted for stock-based compensation using the fair
value based method prescribed by SFAS No. 123,Accounting for Stock-Based
Compensation. For stock and stock-based awards issued to employees, a
compensation charge is recorded against earnings based on the fair value of the
award. For transactions with non-employees in which services are performed in
exchange for the Company's common stock or other equity instruments, the
transactions are recorded on the basis of the fair value of the service received
or the fair value of the equity instruments issued, whichever is more readily
measurable at the date of issuance. Stock-based compensation was approximately
$0.6 million and $0.2 million for the six and three months ended June 30, 2008
and $1.5 million and $0.7 million for the six and three months ended June 30,
2007, respectively.
 
 Earnings
Per Share
 
 The
Company follows the provisions of SFAS No. 128,Earnings per Share, and the
guidance provided in the FASB's Emerging Issues Task Force (“EITF”) Issue No.
03-6,Participating
Securities and the Two-Class Method under FASB Statement No. 128, Earnings
Per Share, which requires companies with complex capital structures,
common stock equivalents or two (or more) classes of securities that participate
in the declared dividends to present both basic and diluted earnings per share
(“EPS”) on the face of the consolidated statement of operations. Basic EPS is
calculated as income available to common stockholders divided by the weighted
average number of common shares outstanding during the period. Diluted EPS is
calculated using the “if converted” method for common stock equivalents.
However, the common stock equivalents are not included in computing diluted EPS
if the result is anti-dilutive.
 
 Income
Taxes
 
 Bimini
Capital has elected to be taxed as a REIT under the Code. As further described
in Note 11, Discontinued Operations, OITRS is a taxpaying entity for income tax
purposes and is taxed separately from Bimini Capital. Bimini Capital will
generally not be subject to federal income tax on its REIT taxable income to the
extent that Bimini Capital distributes its REIT taxable income to its
stockholders and satisfies the ongoing REIT requirements, including meeting
certain asset, income and stock ownership tests. A REIT must generally
distribute at least 90% of its REIT taxable income to its stockholders, of which
85% generally must be distributed within the taxable year, in order to avoid the
imposition of an excise tax. The remaining balance may be distributed up to the
end of the following taxable year, provided the REIT elects to treat such amount
as a prior year distribution and meets certain other requirements.
 
 Recent
Accounting Pronouncements
 
 In June
2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities.  The FSP addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting
and, therefore, need to be included in the earnings allocation in computing
earnings per share (EPS) under the two-class method.   The FASB
Emerging Issues Task Force (EITF) in Issue No. 03-6, Participating Securities and the
Two-Class Method under FASB Statement No. 128, previously reached a
consensus that, share-based payment awards containing a right to receive
dividends declared on common stock represent participating securities if such
awards are fully vested.Issue No. 03-6 does not,
however, provide guidance on share-based payment awards that are not fully
vested (i.e., the requisite service for vesting has not yet been rendered). TheFSP has been issued to clarify that unvested instruments
granted in share-based payment transactions containing non-forfeitable rights to
dividends or dividend equivalents (whether paid or unpaid) represent
participating securities that should be included in the computation of EPS
according to the two-class method.  This FSP shall be effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those years. Early application is not
permitted.  The Company has not issued share-based awards containing
non-forfeitable rights to dividends or dividend equivalents; therefore, the
adoption of FSP EITF 03-6-1 is not expected to have any impact.
 
 In
February 2008, the FASB issued FSP FAS 140-3, Accounting for Transfers of
Financial Assets and Repurchase Financing Transactions. The FSP addresses
whether there are circumstances that would permit a transferor and a transferee
to evaluate the accounting for the transfer of a financial asset separately from
a repurchase financing when the counterparties to the two transactions are the
same. The FSP presumes that the initial transfer of a financial asset and a
repurchase financing are considered part of the same arrangement (a linked
transaction) under FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
(Statement 140). However, if certain criteria specified in the FSP are met, the
initial transfer and repurchase financing may be evaluated separately under
Statement 140.  The FSP is effective for fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years. Earlier
application is not permitted.  The Company is currently evaluating FSP
FAS 140-3 but does not expect its application to have a significant impact on
its financial reporting.
 
 In
December 2007, the FASB issued statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements(“SFAS 160”), amendment to ARB No.
51.  This standard establishes accounting and reporting standards that
require: (1)the
ownership interests in subsidiaries held by parties other than the parent be
clearly identified, labeled, and presented in the consolidated statement of
financial position within equity, but separate from the parent’s equity; (2) the
amount of consolidated net income attributable to the parent and to the
noncontrolling interest be clearly identified and presented on the face of the
consolidated statement of income; (3) changes in a parent’s ownership interest
while the parent retains its controlling financial interest in its subsidiary be
accounted for consistently; (4) when a subsidiary is deconsolidated, any
retained noncontrolling equity investment in the former subsidiary be initially
measured at fair value; and (4) entities provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the noncontrolling owners.  SFAS 160 is effective as of
the beginning of the fiscal year that begins on or after December 15,
2008.  Management is currently evaluating the effects, if any, that
SFAS 160 will have upon adoption of this standard.
 
 In June
2007, the FASB ratified the consensus reached in EITF 06-11, Accounting for Income Tax Benefits
of Dividends on Share-Based Payment Awards. EITF 06-11 applies to
entities that have share-based payment arrangements that entitle employees to
receive dividends or dividend equivalents on equity-classified nonvested shares
when those dividends or dividend equivalents are charged to retained earnings
and result in an income tax deduction. Entities that have share-based payment
arrangements that fall within the scope of EITF 06-11 will be required to
increase capital surplus for any realized income tax benefit associated with
dividends or dividend equivalents paid to employees for equity classified
nonvested equity awards. Any increase recorded to capital surplus is required to
be included in an entity’s pool of excess tax benefits that are available to
absorb potential future tax deficiencies on share-based payment awards. The
Company adopted EITF 06-11 on January 1, 2008 for dividends declared
on share-based payment awards subsequent to this date. The adoption did not have
a material impact.
 
 In
February 2007, the FASB issued statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities — Including an Amendment of FASB Statement
No. 115 (“SFAS 159”).  This standard permits an entity to
measure financial instruments and certain other items at estimated fair value.
Most of the provisions of SFAS No. 159 are elective; however, the amendment
to SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, applies to all entities that own trading and available-for-sale
securities.  The fair value option created by SFAS 159 permits an entity to
measure eligible items at fair value as of specified election dates. The fair
value option is generally applied instrument by instrument, is irrevocable
unless a new election date occurs, and must be applied to the entire instrument
and not to only a portion of the instrument.  SFAS 159 is effective as of
the beginning of the first fiscal year that begins after November 15,
2007.  On January 1, 2008, the Company elected the fair value
option for its available-for-sale portfolio of mortgage-backed securities.
Previously, these securities were considered to be other than temporarily
impaired and carried at lower-of-cost or market. As of the adoption date, the
carrying value of the existing mortgage-backed securities classified as
available-for-sale were adjusted to fair value through a cumulative-effect
adjustment to the beginning balance of retained earnings. This adjustment
represented an increase in the carrying value of the securities of approximately
$1.7 million.
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, to
eliminate the diversity in practice that exists due to the different definitions
of fair value that are dispersed among the many accounting pronouncements that
require fair value measurements, and the limited guidance for applying those
definitions.  SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years.  The Company adopted SFAS 157 on
January 1, 2008, and the adoption did not have a material impact on
financial condition or results of operations.
 
 NOTE
2.   MORTGAGE-BACKED SECURITIES
 
 As of
December 31, 2007, all of Bimini Capital's MBS were classified as either trading
or available-for-sale. On January 1, 2008, the entire available-for-sale
securities portfolio was transferred to trading in conjunction with the
Company’s comprehensive review of its balance sheet management strategies and
adoption of SFAS No. 159.  Accordingly, fluctuations in the
portfolio’s fair value are recorded directly to income effective January 1,
2008.
  The
following are the carrying values of Bimini Capital's MBS portfolio as of June
30, 2008 and December 31, 2007:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Hybrid
      Arms
              
              $
              303,487
              
              
              $
              398,982Adjustable
      Rate Mortgages
              
              
              147,872
              
              
              
              177,608Fixed
      Rate Mortgages
              
              
              72,552
              
              
              
              113,989Totals
              
              $
              523,911
              
              
              $
              690,579
 
 The
following table presents the components of the carrying value of Bimini
Capital’s MBS portfolio as of June 30, 2008 and December 31, 2007:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Available-for-Sale
      SecuritiesPrincipal
      balance
              
              $
              -
              
              
              $
              291,579Unamortized
      premium
              
              
              -
              
              
              
              3,134Unaccreted
      discount
              
              
              -
              
              
              
              (309
              )Trading
      SecuritiesPrincipal
      balance
              
              
              513,361
              
              
              
              385,849Premium
              
              
              10,944
              
              
              
              10,326Discount
              
              
              (394
              )
              
              
              -Carrying
      value/estimated fair value
              
              $
              523,911
              
              
              $
              690,579
 
 As of
June 30, 2008, all of Bimini Capital's MBS investments have contractual
maturities greater than 39months. Actual
maturities of MBS investments are generally shorter than stated contractual
maturities. Actual maturities of Bimini Capital's MBS investments are affected
by the contractual lives of the underlying mortgages, periodic payments of
principal, and prepayments of principal.
 
 NOTE
3.   EARNINGS PER SHARE
 
 The
Company follows the provisions of SFAS No. 128,Earnings per Share, and the
guidance provided in the FASB's Emerging Issues Task Force (“EITF”) Issue No.
03-6,Participating Securities
and the two-class method under FASB Statement No. 128, Earnings Per
Share, which requires companies with complex capital structures, common
stock equivalents, or two classes of participating securities to present both
basic and diluted EPS on the face of the statement of operations. Basic EPS is
calculated as income available to common stockholders divided by the weighted
average number of common shares outstanding during the period. Diluted EPS is
calculated using the “if converted” method for common stock
equivalents.
  Shares of
Class B Common Stock, participating and convertible into Class A
Common Stock, are entitled to receive dividends in an amount equal to the
dividends declared on each share of Class A Common Stock if, and when
authorized and declared by the Board of Directors. Following the provisions of
EITF 03-6, the Class B Common Stock is included in the computation of basic
EPS using the two-class method, and consequently is presented separately from
Class A Common Stock. Class B common shares are not included in the
computation of diluted Class A EPS as the conditions for conversion to
Class A shares were not met.
  
 The
Class C common shares are not included in the basic EPS computation as
these shares do not have participation rights. The Class C common shares
totaling 319,388 are not included in the computation of diluted Class A EPS
as the conditions for conversion to Class A shares were not
met.
 
 The
Company has dividend eligible stock incentive plan shares that were outstanding
during the six months ended June 30, 2008 and 2007. These stock incentive plan
shares have dividend participation rights, but no contractual obligation to
share in losses. Since there is no such obligation, these incentive plan shares
are not included, pursuant to EITF 03-6, in the six months ended June 30, 2008
and 2007, basic EPS computations for the Class A Common Stock, even though they
are participating securities. For the computation of diluted EPS for the Class A
Common Stock for the periods ended June 30, 2008 and 2007, 48,491 and 414,991
phantom shares, respectively, are excluded as their inclusion would be
anti-dilutive.
 
 The table
below reconciles the numerators and denominators of the basic and diluted
EPS.
 (in
thousands, except per share data)
 
 (Unaudited)
              
              
              (Unaudited)Six
      Months Ended June 30,
              
              
              Three
      Months Ended June 30,2008
              
              
              2007
              
              
              2008
              
              
              2007Basic
      and diluted EPS per Class A common share:Numerator:
      net loss allocated to the Class A common shares
              
              $
              (39,171
              )
              
              $
              (237,455
              )
              
              $
              (34,130
              )
              
              $
              (160,385
              )Denominator:
      basic and diluted:Class
      A common shares outstanding at the balance sheet date
              
              
              25,350
              
              
              
              24,603
              
              
              
              25,350
              
              
              
              24,603Effect
      of weighting
              
              
              (326
              )
              
              
              (47
              )
              
              
              (232
              )
              
              
              (26
              )Weighted
      average shares-basic and diluted
              
              
              25,024
              
              
              
              24,556
              
              
              
              25,118
              
              
              
              24,577Basic
      and diluted EPS per Class A common share
              
              $
              (1.57
              )
              
              $
              (9.67
              )
              
              $
              (1.36
              )
              
              $
              (6.53
              )Basic
      and diluted EPS per Class B common share:Numerator:
      net loss allocated to Class B common shares
              
              $
              (493
              )
              
              $
              (3,082
              )
              
              $
              (430
              )
              
              $
              (2,082
              )Denominator:
      basic and diluted:Class
      B common shares outstanding at the balance sheet date
              
              
              319
              
              
              
              319
              
              
              
              319
              
              
              
              319Effect
      of weighting
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Weighted
      average shares-basic and diluted
              
              
              319
              
              
              
              319
              
              
              
              319
              
              
              
              319Basic
      and diluted EPS per Class B common share
              
              $
              (1.54
              )
              
              $
              (9.65
              )
              
              $
              (1.35
              )
              
              $
              (6.52
              )
 
 NOTE
4.   REPURCHASE AGREEMENTS
 
 Bimini
Capital has entered into repurchase agreements to finance most of its MBS
purchases. The repurchase agreements are short-term borrowings that bear
interest at rates that have historically moved in close relationship to the
forward London Interbank Offered Rate (“LIBOR”) interest rate curve. As of June
30, 2008, Bimini Capital had outstanding repurchase obligations of $452.4million
with a net weighted average borrowing rate of4.72% and these
obligations were collateralized by MBS with a fair value of$462.2million.
As of December 31, 2007, Bimini Capital had outstanding repurchase
obligations of $678.2million
with a net weighted average borrowing rate of 5.07%. These obligations were
collateralized by MBS with a fair value of $683.9 million.
  As of
June 30, 2008 and December 31, 2007, Bimini Capital’s repurchase agreements and
the collateral agreements thereon had remaining maturities as summarized
below:
 
 (in
thousands)
 
 OVERNIGHT
                (1
      DAY OR LESS)
              
              
              BETWEEN
      2 AND
                30
      DAYS
              
              
              BETWEEN
      31 AND
                90
      DAYS
              
              
              GREATER
      THAN
                90
      DAYS
              
              
              TOTALJune
      30, 2008Agency-Backed
      Mortgage-Backed Securities:Amortized
      cost of securities sold, including accrued interest
    receivable
              
              $
              -
              
              
              $
              54,807
              
              
              $
              407,430
              
              
              $
              -
              
              
              $
              462,237Fair
      market value of securities sold, including accrued interest
      receivable
              
              $
              -
              
              
              $
              54,807
              
              
              $
              407,430
              
              
              $
              -
              
              
              $
              462,237Repurchase
      agreement liabilities associated with these securities
              
              $
              -
              
              
              $
              53,380
              
              
              $
              399,067
              
              
              $
              -
              
              
              $
              452,447Net
      weighted average borrowing rate
              
              
              -
              
              
              
              2.97
              %
              
              
              4.96
              %
              
              
              -
              
              
              
              4.72
              %December 31,
      2007Agency-Backed
      Mortgage-Backed Securities:Amortized
      cost of securities sold, including accrued interest
    receivable
              
              $
              -
              
              
              $
              249,124
              
              
              $
              37,559
              
              
              $
              397,260
              
              
              $
              683,943Fair
      market value of securities sold, including accrued interest
      receivable
              
              $
              -
              
              
              $
              249,124
              
              
              $
              37,559
              
              
              $
              397,260
              
              
              $
              683,943Repurchase
      agreement liabilities associated with these securities
              
              $
              -
              
              
              $
              244,379
              
              
              $
              37,577
              
              
              $
              396,222
              
              
              $
              678,178Net
      weighted average borrowing rate
              
              
              -
              
              
              
              5.21
              %
              
              
              5.34
              %
              
              
              4.96
              %
              
              
              5.07
              %
  The
following summarizes information regarding the Company’s amounts at risk with
individual counterparties greater than 10% of the Company’s equity as of June
30, 2008 and December 31, 2007.
 
 (in
thousands)
 
 Repurchase
      Agreement Counterparties
              
              Amount
                at
      Risk(1)
              
              
              Weighted
      Average
                Maturity
      of
                Repurchase
                Agreements
                in
      DaysJune
      30, 2008Deutsche
      Bank Securities, Inc.
              
              $
              6,432
              
              
              
              67JP
      Morgan Securities
              
              
              6,376
              
              
              
              67RBS
      Greenwich Capital
              
              
              1,769
              
              
              
              25MF
      Global Inc.
              
              
              658
              
              
              
              13December
      31, 2007Deutsche
      Bank Securities, Inc.
              
              $
              8,823
              
              
              
              193Goldman
      Sachs
              
              
              2,931
              
              
              
              19
 
 (1)
              Equal
      to the fair value of securities sold, plus accrued interest income, minus
      the sum of repurchase agreement liabilities, plus accrued interest
      expense.
 
 NOTE
5.  TRUST PREFERRED SECURITIES
 
 At June
30, 2008, Bimini Capital sponsored two statutory trusts, of which 100% of the
common equity is owned by the Company, formed for the purpose of issuing trust
preferred capital securities to third-party investors and investing the proceeds
from the sale of such capital securities solely in junior subordinated debt
securities of the Company. The debt securities held by each trust are the sole
assets of that trust. Obligations related to these statutory trusts are
presented below.
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Junior
      subordinated notes owed to Bimini Capital Trust I (BCTI)
              
              $
              51,550
              
              
              $
              51,550Junior
      subordinated notes owed to Bimini Capital Trust II (BCTII)
              
              $
              51,547
              
              
              $
              51,547
 
 The BCTI
trust preferred securities and Bimini Capital's BCTI Junior Subordinated Notes
have a fixed rate of interest until March 30, 2010, of 7.61% and
thereafter, through maturity in 2035, the rate will float at a spread of 3.30%
over the prevailing three-month LIBOR rate.  The BCTI trust preferred
securities and Bimini Capital's BCTI Junior Subordinated Notes require quarterly
interest distributions and are redeemable at Bimini Capital's option, in whole
or in part and without penalty, beginning March 30, 2010 and at any date
thereafter.  Bimini Capital's BCTI Junior Subordinated Notes are
subordinate and junior in right of payment of all present and future senior
indebtedness.
  The BCTII
trust preferred securities and Bimini Capital's BCTII Junior Subordinated Notes
have a fixed rate of interest until December 15, 2010, of 7.8575% and
thereafter, through maturity in 2035, the rate will float at a spread of 3.50%
over the prevailing three-month LIBOR rate. The BCTII trust preferred securities
and Bimini Capital's BCTII Junior Subordinated Notes require quarterly interest
distributions and are redeemable at Bimini Capital's option, in whole or in part
and without penalty, beginning December 15, 2010, and at any date thereafter.
Bimini Capital's BCTII Junior Subordinated Notes are subordinate and junior in
right of payment of all present and future senior indebtedness.
 
 Each
trust is a variable interest entity pursuant to FIN No. 46 because the
holders of the equity investment at risk do not have adequate decision making
ability over the trust's activities. Since Bimini Capital's investment in each
trust's common equity securities was financed directly by the applicable trust
as a result of its loan of the proceeds to Bimini Capital, that investment is
not considered to be an equity investment at risk pursuant to FIN No. 46. Since
Bimini Capital's common share investments in BCTI and BCTII are not a variable
interest, Bimini Capital is not the primary beneficiary of the trusts.
Therefore, Bimini Capital has not consolidated the financial statements of BCTI
and BCTII into its financial statements.  Based on the aforementioned
accounting guidance, the accompanying consolidated financial statements present
Bimini Capital's BCTI and BCTII Junior Subordinated Notes issued to the trusts
as liabilities and Bimini Capital's investments in the common equity securities
of BCTI and BCTII as assets. For financial statement purposes, Bimini Capital
records payments of interest on the Junior Subordinated Notes issued to BCTI and
BCTII as interest expense.
 
 NOTE
6.  CAPITAL STOCK
 
 During
the six and three months ended June 30, 2008, the Company issued a total of
426,615 and 301,613 shares of Class A Common Stock to its independent directors
for the payment of director fees for services rendered.
 
 During
the six and three months ended June 30, 2008, the Company issued 62,181 and
35,488 shares of its Class A Common Stock to employees pursuant to the terms of
the stock incentive plan phantom share grants (see Note 7).
 
 NOTE
7.    STOCK INCENTIVE PLANS
  On
December 1, 2003, Bimini Capital adopted the 2003 Long Term Incentive
Compensation Plan (the “2003 Plan”) to provide Bimini Capital with the
flexibility to use stock options and other awards as part of an overall
compensation package to provide a means of performance-based compensation to
attract and retain qualified personnel. The 2003 Plan was amended and restated
in March 2004. Key employees, directors and consultants are eligible to be
granted stock options, restricted stock, phantom shares, dividend equivalent
rights and other stock-based awards under the 2003 Plan. Subject to adjustment
upon certain corporate transactions or events, a maximum of 4,000,000 shares of
the Class A Common Stock (but not more than 10% of the Class A Common Stock
outstanding on the date of grant) may be subject to stock options, shares of
restricted stock, phantom shares and dividend equivalent rights under the 2003
Plan.
 
 Phantom
share awards represent a right to receive a share of Bimini's Class A
Common Stock.These awardsdo not have an exercise
price and are valued at the fair value of Bimini Capital’s Class A Common
Stock at the date of the grant. The grant date value is being amortized to
compensation expense on a straight-line basis over the vesting period of the
respective award.  The phantom shares vest, based on the employees’
continuing employment, following a schedule as provided in the grant
agreements, for periods through December 31, 2010. The Company recognizes
compensation expense over the vesting period. Compensation expense recognized
for phantom shares during the six months ended June 30, 2008 and 2007 totaled
approximately, $0.4 and $1.4 million, respectively.Phantom share awards may
or may not include dividend equivalent rights.  Dividends paid on
unsettled phantom shares are charged to retained earnings when
declared.
 
 A summary
of phantom share activity during the six month periods ended June 30, 2008 and
2007is presented
below:
 
 Six
      Months Ended June 30,2008
              
              
              2007Shares
              
              
              Weighted-Average
      Grant-Date Fair Value
              
              
              Shares
              
              
              Weighted-Average
      Grant-Date Fair ValueNonvested,
      at January 1
              
              
              127,372
              
              
              $
              11.36
              
              
              
              339,862
              
              
              $
              12.60Granted
              
              
              250,000
              
              
              
              0.26
              
              
              
              25,607
              
              
              
              7.61Vested
              
              
              (80,125
              )
              
              
              6.33
              
              
              
              (113,185
              )
              
              
              12.97Forfeited
              
              
              (106,255
              )
              
              
              5.82
              
              
              
              (1,575
              )
              
              
              8.66Nonvested,
      at June 30
              
              
              190,992
              
              
              $
              2.03
              
              
              
              250,709
              
              
              $
              12.08
 
 There
were a total of 15,833 and 164,782 phantom shares that were vested and unissued
as of June 30, 2008 and 2007, respectively. The total number of outstanding
(vested and nonvested) phantom share awards that include dividend equivalent
rights as of June 30, 2008 and 2007 were 48,491 and 414,991, respectively. As of
June 30, 2008, there was approximately $322,845 of total unrecognized
compensation cost related to nonvested phantom share awards.  The cost
is expected to be recognized over a weighted-average period of 7.5
months.
 
 Bimini
Capital also has adopted the 2004 Performance Bonus Plan (the “Performance Bonus
Plan”).  The Performance Bonus Plan is an annual bonus plan that
permits the issuance of the Company’s Class A Common Stock in payment of
stock-based awards made under the plan.  No stock-based awards have been
made under and no shares of the Company’s stock have been issued under the
Performance Bonus Plan.
 
 NOTE
8.  COMMITMENTS AND CONTINGENCIES
 
 Outstanding Litigation. On
September 17, 2007, a complaint was filed in the U.S. District Court for the
Southern District of Florida by William Kornfeld against the Company, certain of
the Company’s current and former officers and directors, Flagstone Securities,
LLC and BB&T Capital Markets alleging various violations of the federal
securities laws and seeking class action certification.  On October 9,
2007, a complaint was filed in the U.S. District Court for the Southern District
of Florida by Richard and Linda Coy against the Company, certain of the
Company’s current and former officers and directors, Flagstone Securities, LLC
and BB&T Capital Markets alleging various violations of the federal
securities laws and seeking class action certification.  The Company
believes the plaintiffs’ claims in these actions are without merit, has filed a
motion to consolidate these actions and intends to vigorously defend the
cases.
 
 Guarantees. Bimini Capital has
guaranteed the performance of OITRS with respect to certain contractual
obligations arising in connection with the sale of mortgage servicing rights by
OITRS.
 
 NOTE
9.  INCOME TAXES
 
 Taxable
income, as generated by Bimini Capital’s qualifying REIT activities, is computed
differently from Bimini Capital’s financial statement net income as computed in
accordance with GAAP. Depending on the number and size of the various items or
transactions being accounted for differently, the differences between Bimini
Capital’s REIT taxable income (loss) and Bimini Capital’s financial statement
net income (loss) can be substantial and each item can affect several years.
 
 During
the six months ended June 30, 2008, book gains of approximately $0.7million
on MBS sales were realized; tax capital losses are available to offset the gain
from these MBS sales, and therefore they do not increase REIT taxable
income.   At June 30, 2008, the REIT has approximately $68.7
million of tax capital loss carryforwards available to offset future tax capital
gains. As of June 30, 2008 the REIT has a tax net operating loss carryforward of
approximately $11.6 million that is immediately available to offset future REIT
taxable income.
 
 NOTE
10.   FAIR VALUE
 
 In
connection with the adoption of SFAS No. 159, Bimini Capital elected to transfer
its available-for-sale portfolio of MBS to trading.  The
securities transferred have similar characteristics to the Company’s existing
trading portfolio, including issuer, credit quality, yield, duration and
remaining term.
  The
securities transferred were previously considered to be other than temporarily
impaired and carried at lower-of-cost-or-market.  As such, decreases
in fair value were charged directly to earnings, while increases in fair value
were not recorded.  As a result of electing to record these securities
at fair value pursuant to the provisions of SFAS No. 159, the Company recorded
the following to opening retained earnings:
  (in
thousands)
 
 Balance
      at January 1, 2008 (after adoption)
              
              $
              296,118Balance
      at December 31, 2007 (prior to adoption)
              
              
              (294,404
              )Cumulative
      effect of adopting the fair value option
              
              $
              1,714
  
 The Company
measures or monitors all of its MBS on a fair value basis. Fair value is
the price that would be received to sell an asset or transfer a liability in an
orderly transaction between market participants at the measurement date. When
determining the fair value measurements for its mortgage-backed securities, the
Company considers the principal or most advantageous market in which it would
transact and considers assumptions that market participants would use when
pricing the asset. When possible, the Company looks to active and observable
markets to price identical assets.  When identical assets are not
traded in active markets, the Company looks to market observable data for
similar assets. Nevertheless, certain assets are not actively traded in
observable markets and the Company must use alternative valuation techniques to
derive a fair value measurement.
  All of
the fair value amounts included in losses from continuing operations resulted
from Level 2 fair value methodologies; that is, the Company is able to value the
assets based on observable market data for similar instruments. The securities
in the Company’s trading portfolio are priced via independent providers, whether
those are pricing services or quotations from market-makers in the specific
instruments. In obtaining such valuation information from third parties, the
Company has evaluated the valuation methodologies used to develop the fair
values in order to determine whether such valuations are representative of an
exit price in the Company’s principal markets.
  Fair
value is used to measure the trading portfolio on a recurring
basis.  The fair value as of June 30, 2008 is determined as
follows:
 
 (in
thousands)
 
 Fair
      Value Measurements at June 30, 2008, UsingQuoted
      Prices in Active Markets for Identical Assets (Level 1)
              
              $
              -Significant
      Other Observable Inputs (Level 2)
              
              
              523,911Significant
      Unobservable Inputs (Level 3)
              
              
              -Total
      Fair Value Measurements
              
              $
              523,911
 
 NOTE
11.   DISCONTINUED OPERATIONS
 
 OITRS
 
 The
results of discontinued operations of OITRS included in the accompanying
consolidated statements of operations for the six and three months ended June
30, 2008 and 2007 were as follows:
 
 (in
thousands)
 
 Six
      Months Ended June 30,
              
              
              Three
      Months ended June 30,2008
              
              
              2007
              
              
              2008
              
              
              2007RevenuesInterest
      income
              
              $
              3
              
              
              $
              16,407
              
              
              $
              2
              
              
              $
              4,746Interest
      expense
              
              
              (15
              )
              
              
              (11,789
              )
              
              
              (10
              )
              
              
              (2,681
              )Net
      interest income (deficiency)
              
              
              (12
              )
              
              
              4,618
              
              
              
              (8
              )
              
              
              2,065Loss
      on discontinued mortgage banking activitiesFair
      value adjustment on retained interest, trading
              
              
              (34,830
              )
              
              
              (27,492
              )
              
              
              (32,710
              )
              
              
              (26,168
              )Other
      discontinued mortgage banking activities
              
              
              (47
              )
              
              
              (34,323
              )
              
              
              (106
              )
              
              
              (17,687
              )Other
      income and expenses, net of non-recurring items
              
              
              1,837
              
              
              
              (9,652
              )
              
              
              1,591
              
              
              
              (9,652
              )Net
      servicing income (loss)
              
              
              965
              
              
              
              (10,618
              )
              
              
              790
              
              
              
              (5,975
              )Other
      interest income (expense) and loss reserves
              
              
              (1,241
              )
              
              
              2,254
              
              
              
              (56
              )
              
              
              886Deficiency
      of revenues
              
              
              (33,328
              )
              
              
              (75,213
              )
              
              
              (30,499
              )
              
              
              (56,531
              )ExpensesGeneral
      and administrative expenses
              
              
              (2,911
              )
              
              
              (66,635
              )
              
              
              (1,406
              )
              
              
              (21,876
              )Loss
      before provision for income taxes
              
              
              (36,239
              )
              
              
              (141,848
              )
              
              
              (31,905
              )
              
              
              (78,407
              )Provision
      for income taxes and valuation allowance
              
              
              -
              
              
              
              (11,463
              )
              
              
              -
              
              
              
              -Loss
      from discontinued operations, net of taxes
              
              $
              (36,239
              )
              
              $
              (153,311
              )
              
              $
              (31,905
              )
              
              $
              (78,407
              )
 
 During
the quarter ended June 30, 2008, OITRS’s 51% membership interest in Interactive
Mortgage Advisors, LLC, a Delaware limited liability company (“IMA”), was sold
for $500,000 as evidenced by a promissory note.  The note, which
is secured by the assets of IMA and guaranteed by certain affiliates of IMA,
bears interest at a rate of 8% per annum and is payable in full on December 31,
2008.  The sale of OITRS’ membership interest resulted in a loss of
approximately $285,000.  This loss is included in the table above
under “Other income and expenses, net of non-recurring items.”
 
 The
assets and liabilities of OITRS included in the consolidated balance sheet as of
June 30, 2008 and December 31, 2007 were as follows:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007AssetsCash
      and cash equivalents
              
              $
              81
              
              
              $
              705Mortgage
      loans held for sale
              
              
              527
              
              
              
              983Retained
      interests, trading
              
              
              23,800
              
              
              
              69,301Securities
      held for sale
              
              
              15
              
              
              
              173Originated
      mortgage servicing rights
              
              
              2,294
              
              
              
              3,073Receivables
              
              
              17,388
              
              
              
              17,868Property
      and equipment, net
              
              
              250
              
              
              
              285Prepaids
      and other assets
              
              
              4,183
              
              
              
              4,232Assets
      held for sale
              
              $
              48,538
              
              
              $
              96,620LiabilitiesSecured
      borrowings
              
              $
              -
              
              
              $
              18,000Accounts
      payable, accrued expenses and other
              
              
              7,378
              
              
              
              9,842Liabilities
      related to assets held for sale
              
              $
              7,378
              
              
              $
              27,842
  (a)
- Mortgage Loans Held for Sale
 
 Prior to
ceasing operations, upon the closing of a residential mortgage loan or shortly
thereafter, OITRS would sell or securitize the majority of its mortgage loan
originations. OITRS also sold mortgage loans insured or guaranteed by various
government-sponsored entities and private insurance agencies. The insurance or
guaranty is provided primarily on a nonrecourse basis to OITRS, except where
limited by the Federal Housing Administration and Veterans Administration and
their respective loan programs.  Mortgage loans held for sale consist
of the following as of June 30, 2008 and December 31, 2007:
  (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Mortgage
      loans held for sale, and other, net
              
              $
              3,952
              
              
              $
              4,780Valuation
      allowance
              
              
              (3,425
              )
              
              
              (3,797
              )Total
              
              $
              527
              
              
              $
              983
 
 (b)
– Retained interest, trading
 
 Retained interest, trading is the subordinated interests retained by
OITRS resulting from securitizations and includes the over-collateralization and
residual net interest spread remaining after payments to the Public Certificates
and NIM Notes. Retained interest, trading represents the present value of
estimated cash flows to be received from these subordinated interests in the
future. The subordinated interests retained are classified as “trading
securities” and are reported at fair value with unrealized gains or losses
reported in earnings.
  
 All of
OITRS’s securitizations were structured and are accounted for as sales in
accordance with SFAS No. 140,Accounting for Transfers andServicingof Financial Assets and
Extinguishments of Liabilities. Generally, to meet the sale treatment
requirements of SFAS No. 140, the REMIC trust is structured as a “qualifying
special purpose entity” or QSPE, which specifically limits the REMIC trust's
activities, and OITRS surrenders control over the mortgage loans upon their
transfer to the REMIC trust.
 
 Valuation of Investments.OITRS classifies its retained interests as trading securities and
therefore records these securities at their estimated fair value. In order to
value these unrated, unquoted securities, OITRS records these assets at their
estimated fair value utilizing pricing information available directly from
dealers, when available, and the present value calculated by projecting the
future cash flows of a security on a publicly available analytical system. When
a publicly available analytical system is utilized, OITRS will input the
following variable factors which will have an impact on determining the fair
value:
 
 Interest Rate Forecast. LIBOR
interest rate curve.
 
 Discount Rate. The present
value of all future cash flows utilizing a discount rate assumption established
at the discretion of OITRS to represent market conditions and value of similar
instruments with similar risks.  Discount rates used will vary over
time.  Management observes discount rates used for assets with similar
risk profiles.  In selecting which assets to monitor for variations in
discount rates, management seeks to identify assets that share most, if not all
of the risk attributes of the Company’s retained interests,
trading.  Such assets are typically traded between market participants
whereby the discount rate is the primary variable.
 
 Prepayment Forecast. The
prepayment forecast may be expressed by OITRS in accordance with one of the
following standard market conventions: 1) Constant Prepayment Rate (CPR) or 2)
Percentage of a Prepayment Vector (PPV). Prepayment forecasts may be changed as
OITRS observes trends in the underlying collateral as delineated in the
Statement to Certificate Holders generated by the REMIC trust’s Trustee for each
underlying security.  Prepayment forecast will also vary over time as
the level of interest rates change, the difference between rates available to
borrowers on adjustable rate versus fixed rate mortgages change and non-interest
rate related variables fluctuate such as home price appreciation, among
others.
 
 Credit Performance Forecast.A forecast of future credit performance of the underlying collateral pool
will include an assumption of default frequency, loss severity, and a recovery
lag. In general, OITRS will utilize the combination of default frequency and
loss severity in conjunction with a collateral prepayment assumption to arrive
at a target cumulative loss to the collateral pool over the life of the pool
based on historical performance of similar collateral by the originator. The
target cumulative loss forecast will be developed and noted at the pricing date
of the individual security but may be updated by OITRS consistent with
observations of the actual collateral pool performance.
 
 Default
Frequency may be expressed by OITRS in accordance with any of three standard
market conventions: 1) Constant Default Rate (CDR) 2) Percentage of a Standard
Default Assumption (SDA) curve, or 3) a vector or curve established to meet
forecasted performance for specific collateral pools.
 
 Loss
Severity will be expressed by OITRS in accordance with historical performance of
similar collateral and the standard market conventions of a percentage of the
unpaid principal balance of the forecasted defaults lost during the foreclosure
and liquidation process.
 
 During
the first year of a new issue OITRS may balance positive or adverse effects of
the prepayment forecast and the credit performance forecast allowing for
deviation between actual and forecasted performance of the collateral pool.
After the first year, OITRS will generally adjust the Prepayment and Credit
Performance Forecasts to replicate actual performance trends without balancing
adverse and positive effects.
 
 The
following table summarizes OITRS’s residual interests in securitizations as of
June 30, 2008 and December 31, 2007:
 
 (in
thousands)
 
 Series
              Issue
      Date
              
              June
      30, 2008
              
              
              December
      31, 2007HMAC
      2004-1
              March
      4, 2004
              
              $
              1,632
              
              
              $
              2,460HMAC
      2004-2
              May
      10, 2004
              
              
              1,538
              
              
              
              1,408HMAC
      2004-3
              June
      30, 2004
              
              
              166
              
              
              
              880HMAC
      2004-4
              August
      16, 2004
              
              
              1,080
              
              
              
              1,506HMAC
      2004-5
              September
      28, 2004
              
              
              1,762
              
              
              
              3,043HMAC
      2004-6
              November
      17, 2004
              
              
              1,171
              
              
              
              5,181OMAC
      2005-1
              January
      31, 2005
              
              
              2,597
              
              
              
              6,948OMAC
      2005-2
              April
      5, 2005
              
              
              1,873
              
              
              
              7,046OMAC
      2005-3
              June
      17, 2005
              
              
              6,039
              
              
              
              10,736OMAC
      2005-4
              August
      25, 2005
              
              
              2,163
              
              
              
              9,752OMAC
      2005-5
              November
      23, 2005
              
              
              1,139
              
              
              
              7,717OMAC
      2006-1
              March
      23, 2006
              
              
              2,315
              
              
              
              10,835OMAC
      2006-2
              June
      26, 2006
              
              
              325
              
              
              
              1,789Total
              
              
              $
              23,800
              
              
              $
              69,301
 
 As of June
30, 2008 and December 31, 2007, key economic assumptions and the sensitivity of
the current fair value of residual cash flows to the immediate 10% and 20%
adverse change in those assumptions are as follows:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Balance
      sheet carrying value of retained interests – fair value
              
              $
              23,800
              
              
              $
              69,301Weighted
      average life (in years)
              
              
              5.27
              
              
              
              4.09Prepayment
      assumption (annual rate)
              
              
              18.13
              %
              
              
              26.37
              %Impact
      on fair value of 10% adverse change
              
              $
              (2,251
              )
              
              $
              (6,908
              )Impact
      on fair value of 20% adverse change
              
              $
              (3,966
              )
              
              $
              (12,577
              )Expected
      credit losses (% of original unpaid principal balance)
              
              
              2.74
              %
              
              
              1.22
              %Impact
      on fair value of 10% adverse change
              
              $
              (5,484
              )
              
              $
              (6,409
              )Impact
      on fair value of 20% adverse change
              
              $
              (6,073
              )
              
              $
              (13,633
              )Residual
      cash-flow discount rate
              
              
              27.50
              %
              
              
              20.00
              %Impact
      on fair value of 10% adverse change
              
              $
              (2,771
              )
              
              $
              (4,138
              )Impact
      on fair value of 20% adverse change
              
              $
              (5,078
              )
              
              $
              (7,907
              )Interest
      rates on variable and adjustable loans and bonds
              
              Forward
      LIBOR Yield Curve
              
              
              Forward
      LIBOR Yield CurveImpact
      on fair value of 10% adverse change
              
              $
              (8,085
              )
              
              $
              (14,906
              )Impact
      on fair value of 20% adverse change
              
              $
              (13,271
              )
              
              $
              (28,225
              )
  These
sensitivities are hypothetical and should be used with caution. As the figures
indicate, changes in fair value based upon a 10% variation in assumptions
generally cannot be extrapolated because the relationship of the change in
assumption to the change in fair value may not be linear. Also, in this table,
the effect of the variation in a particular assumption on the fair value of the
retained interest is calculated without changing any other assumption; in
reality, changes in one factor may result in changes in another which may
magnify or counteract the sensitivities. To estimate the impact of a 10% and 20%
adverse change of the Forward LIBOR curve, a parallel shift in the Forward LIBOR
curve was assumed based on the Forward LIBOR curve as of June 30, 2008 and
December 31, 2007.
 
 Credit loss
percentages are calculated by using the original unpaid principal balance of
each pool of assets as the denominator. The following credit loss percentages
are calculated based upon all OITRS securitizations that have been completed to
date:
 
 (in
thousands)
 
 Series
              Issue
      Date
              
              Original
      Unpaid Principal Balance
              
              
              Actual
      Losses Through June 30, 2008
              
              
              Projected
      Future Credit Losses as of June 30, 2008
              
              
              Projected
      Total Credit Losses as of June 30, 2008HMAC
      2004-1
              March
      4, 2004
              
              $
              309,710
              
              
              
              0.50
              %
              
              
              0.49
              %
              
              
              0.99
              %HMAC
      2004-2
              May
      10, 2004
              
              
              388,737
              
              
              
              0.73
              %
              
              
              0.40
              %
              
              
              1.13
              %HMAC
      2004-3
              June
      30, 2004
              
              
              417,055
              
              
              
              0.47
              %
              
              
              0.94
              %
              
              
              1.41
              %HMAC
      2004-4
              August
      16, 2004
              
              
              410,123
              
              
              
              0.43
              %
              
              
              0.58
              %
              
              
              1.01
              %HMAC
      2004-5
              September
      28, 2004
              
              
              413,875
              
              
              
              0.54
              %
              
              
              0.94
              %
              
              
              1.48
              %HMAC
      2004-6
              November
      17, 2004
              
              
              761,027
              
              
              
              0.78
              %
              
              
              1.35
              %
              
              
              2.13
              %OMAC
      2005-1
              January
      31, 2005
              
              
              802,625
              
              
              
              0.56
              %
              
              
              1.72
              %
              
              
              2.28
              %OMAC
      2005-2
              April
      5, 2005
              
              
              883,987
              
              
              
              0.49
              %
              
              
              1.67
              %
              
              
              2.16
              %OMAC
      2005-3
              June
      17, 2005
              
              
              937,117
              
              
              
              0.49
              %
              
              
              1.55
              %
              
              
              2.04
              %OMAC
      2005-4
              August
      25, 2005
              
              
              1,321,739
              
              
              
              0.50
              %
              
              
              2.58
              %
              
              
              3.08
              %OMAC
      2005-5
              November
      23, 2005
              
              
              986,277
              
              
              
              0.49
              %
              
              
              3.38
              %
              
              
              3.87
              %OMAC
      2006-1
              March
      23, 2006
              
              
              934,441
              
              
              
              0.52
              %
              
              
              3.57
              %
              
              
              4.09
              %OMAC
      2006-2
              June
      26, 2006
              
              
              491,572
              
              
              
              0.75
              %
              
              
              6.36
              %
              
              
              7.11
              %Total
              
              
              $
              9,058,285
              
              
              
              0.55
              %
              
              
              2.19
              %
              
              
              2.74
              %
 
 The table
below summarizes certain cash flows received from and paid to securitization
trusts:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              June
      30, 2007Servicing
      fees received
              
              $
              845
              
              
              $
              9,691Servicing
      advances and repayments
              
              
              786
              
              
              
              (1,433
              )Cash
      flows received on retained interests
              
              
              10,671
              
              
              
              2,909
 
 The
following information presents quantitative information about delinquencies and
credit losses on securitized financial assets as of June 30, 2008 and December
31, 2007:
 
 (in
thousands)
 
 As
      of Date
              
              Total
      Principal Amount of Loans
              
              
              Principal
      Amount of Loans 60 Days or more delinquent
              
              
              Net
      Credit LossesJune
      30, 2008
              
              $
              4,222,116
              
              
              $
              685,368
              
              
              $
              49,636December
      31, 2007
              
              
              4,528,481
              
              
              
              457,872
              
              
              
              23,639
 
 (c)
– Mortgage Servicing Rights, Net
 
 OITRS
has elected to account for all originated MSRs as one class and, therefore, all
MSRs are carried at fair value. In addition, changes in value due to run-off of
the portfolio are recorded as valuation adjustments instead of
amortization.
  The fair
value of MSRs is determined using discounted cash flow techniques based on
market assumptions. Changes in fair value are the result of changes in market
conditions, changes in valuation assumptions and run-off of the underlying
mortgage loans. Changes in fair value due to run-off of the underlying mortgage
loans and changes in value due to changes in market conditions are grouped
together above. When the underlying assumptions used for valuation purposes are
changed, the effect on fair value is presented separately.
  Activities
for MSRs are summarized as follows for the six months ended June 30, 2008 and
for 2007:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              June
      30, 2007Balance
      at beginning of period (at cost)
              
              $
              3,062
              
              
              $
              98,859Additions
              
              
              -
              
              
              
              7,693Sales,
      net of reserve for prepayment protection
              
              
              (1,344
              )
              
              
              (57,447
              )Changes
      in fair value:Due
      to changes in market conditions and run-off
              
              
              576
              
              
              
              (12,330
              )Due
      to change in valuation assumptions
              
              
              -
              
              
              
              (4,630
              )Balance
      at end of period
              
              $
              2,294
              
              
              $
              32,145
  Estimates of
fair value involve several assumptions, including the key valuation assumptions
about market expectations of future prepayment rates, interest rates and
discount rates. Prepayment rates are projected using a prepayment model. The
model considers key factors, such as refinance incentive, housing turnover,
seasonality and aging of the pool of loans. Prepayment speeds incorporate
expectations of future rates implied by the forward LIBOR/swap curve, as well as
collateral specific information.
 
 As of
June 30, 2008 and December 31, 2007, key economic assumptions and the
sensitivity of the current fair value of MSR cash flows to the immediate 10% and
20% adverse change in those assumptions are as follows:  (Note - base
case prepayment and discount rate assumptions are a weighted average of the
values applied to the various mortgage loans).
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Prepayment
      assumption (annual rate) (PSA)
              
              
              478.5
              
              
              
              557.3Impact
      on fair value of 10% adverse change
              
              $
              (125
              )
              
              $
              (129
              )Impact
      on fair value of 20% adverse change
              
              $
              (239
              )
              
              $
              (242
              )MSR
      Cash-Flow Discount Rate
              
              
              14.54
              %
              
              
              13.46
              %Impact
      on fair value of 10% adverse change
              
              $
              (126
              )
              
              $
              (105
              )Impact
      on fair value of 20% adverse change
              
              $
              (224
              )
              
              $
              (201
              )
 
 These
sensitivities are entirely hypothetical and should be used with caution. As the
figures indicate, changes in fair value based upon 10% and 20% variations in
assumptions generally cannot be extrapolated to greater or lesser percentage
variation because the relationship of the change in assumption to the change in
fair value may not be linear. Also, in this table, the effect of the variation
in a particular assumption on the fair value of the MSR is calculated without
changing any other assumption. In reality, changes in one factor may result in
changes in another which may magnify or counteract the
sensitivities.
 
 (d) –
Receivables
 
 A summary
of receivables as June 30, 2008 and December 31, 2007 is presented
below:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Servicing
      advances (principal and interest)
              
              $
              4,212
              
              
              $
              5,636Servicing
      advances (taxes and insurance)
              
              
              8,134
              
              
              
              7,495Servicing
      sale receivable
              
              
              4,257
              
              
              
              4,681Other
      receivables
              
              
              785
              
              
              
              56Totals
              
              $
              17,388
              
              
              $
              17,868
  (e)
– Secured Borrowings
 
 Secured
      borrowings consisted of the following as of June 30, 2008 and December 31,
      2007:
  (in
thousands)
  June
      30, 2008
              
              December
      31, 2007Citigroup
      Global Markets Realty Corp., line of credit for $80.0 million secured by
      the retained interests in securitizations. The facility was extended on
      December 19, 2007 through February 26, 2008 and the limit reduced in
      stages, ultimately to $11.0 million.  The facility was extended
      again through May 26, 2008 and the limit further reduced in stages,
      initially to $8.0 million through March 26, 2008, $5.0 million through
      April 30, 2008 and $0.0 million as of May 26, 2008.  The line
      was paid in full on May 26, 2008.  The agreement provided for
      interest rate based on LIBOR plus 3.00%.
              $
              -
              $
              18,000
 
 (f)  -
Income taxes
 
 OITRS is
a taxpaying entity for income tax purposes and is taxed separately from Bimini
Capital.  Therefore, OITRS separately reports an income tax provision or
benefit based on its own taxable activities.  As of June 30, 2008, all
deferred tax assets, net of deferred tax liabilities, are offset in their
entirety by a deferred tax asset valuation allowance.  Substantially all of
the net deferred tax assets are a result of net tax losses incurred. The amount
of the gross tax benefit generated by these losses are reduced by an offsetting
valuation allowance of the same amount.
 
 During
the six month period ended June 30, 2007, OITRS recorded a deferred tax asset
valuation allowance of approximately $37.4 million; there was no allowance
recorded previously.  As of December 31, 2006, OITRS had recorded net
deferred tax assets of approximately $7.1 million. The recording of the
valuation allowance (among other items) during the six months ended June 30,
2007 resulted in OITRS recording an income tax provision of $11.5 million, and
reduced the December 31, 2006 net deferred tax asset to a net deferred tax
liability as of June 30, 2007 of approximately $4.3 million.
 
 The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income within OITRS.  Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable
income, and tax planning strategies in making this assessment.  At this
time, management believes it is more likely than not that the Company will not
realize the full benefits of all of the federal and state tax loss
carryforwards, and that the Company will not realize any benefit of the other
deferred tax assets.  Therefore, the Company has recorded a valuation
allowance against all the net deferred tax assets of OITRS.
 
 (g)
– Commitments and Contingencies
 
 Loans Sold to Investors.
Generally, OITRS is not exposed to significant credit risk on its loans sold to
investors. In the normal course of business, OITRS provides certain
representations and warranties during the sale of mortgage loans which obligate
it to repurchase loans which are subsequently unable to be sold through the
normal investor channels. The repurchased loans are secured by the related real
estate properties, and can usually be sold directly to other permanent
investors. There can be no assurance, however, that OITRS will be able to
recover the repurchased loan value either through other investor channels or
through the assumption of the secured real estate.
 
 OITRS
recognizes a liability for the estimated fair value of this obligation at the
inception of each mortgage loan sale based on the anticipated repurchase levels
and historical experience. The liability is recorded as a reduction of the gain
on sale of mortgage loans and included as part of other liabilities in the
accompanying financial statements.
  Changes
in the liability during the six months ended June 30, 2008 and
2007:
 
 (in
thousands)
 
 For
      the Six Months Ended June 30,2008
              
              
              2007Balance—Beginning
      of period
              
              $
              5,260
              
              
              $
              7,136Reclassification
      from other liabilities
              
              
              1,700
              
              
              
              -Provision
              
              
              1,000
              
              
              
              16,010Charge-Offs
              
              
              (1,416
              )
              
              
              (10,492
              )Balance—End
      of period
              
              $
              6,544
              
              
              $
              12,654
 
 Outstanding Litigation. OITRS
is involved in various lawsuits and claims, both actual and potential, including
some that it has asserted against others, in which monetary and other damages
are sought.  These lawsuits and claims relate primarily to contractual
disputes arising out of the ordinary course of OITRS's business as previously
conducted.  The outcome of such lawsuits and claims is inherently
unpredictable.  However, management believes that, in the aggregate, the
outcome of all lawsuits and claims involving OITRS will not have a material
effect on the Company's consolidated financial position or liquidity; however,
any such outcome may be material to the results of operations of any particular
period in which costs, if any are recognized.
   On June
14, 2007, a complaint was filed in the Circuit Court of the Twelfth Judicial
District in and for Manatee County, Florida by Coast Bank of Florida against
OITRS, seeking specific performance and alleging breach of contract for
allegedly failing to repurchase certain loans.  OITRS believes the
plaintiff’s claim is without merit and intends to vigorously defend the
case.
 
 (h)
– Fair Value
  OITRS
measures or monitors many of its assets on a fair value basis. Fair value is
used on a recurring basis for certain assets in which fair value is the primary
basis of accounting. Examples of these include, loans held for sale, retained
interests, trading, securities held for sale and mortgage servicing rights.
Additionally, fair value is used on a non-recurring basis to evaluate assets for
impairment.  Examples of these non-recurring uses of fair value
include goodwill, and long-lived assets. Depending on the nature of the asset or
liability, OITRS uses various valuation techniques and assumptions when
estimating the instrument’s fair value. These valuation techniques and
assumptions are in accordance with SFAS No. 157.
  Fair
value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. When determining the fair value measurements for assets and
liabilities required or permitted to be recorded at and/or marked to fair value,
OITRS considers the principal or most advantageous market in which it would
transact and considers assumptions that market participants would use when
pricing the asset or liability. When possible, OITRS looks to active and
observable markets to price identical assets or liabilities. When identical
assets and liabilities are not traded in active markets, OITRS looks to market
observable data for similar assets and liabilities. Nevertheless, certain assets
and liabilities are not actively traded in observable markets and OITRS must use
alternative valuation techniques to derive a fair value
measurement.
 
 The following table presents financial assets measured at fair value on a
recurring basis:
 
 (in
thousands)
 
 Fair
      Value Measurements at June 30, 2008, UsingFair
      Value Measurements
                June
      30, 2008
              
              
              Quoted
      Prices
                in
      Active
                Markets
      for
                Identical
                Assets
                (Level
      1)
              
              
              Significant
                Other
                Observable
                Inputs
                (Level
      2)
              
              
              Significant
                Unobservable
                Inputs
                (Level
      3)Mortgage
      loans held for sale
              
              $
              527
              
              
              $
              -
              
              
              $
              -
              
              
              $
              527Retained
      interests, trading
              
              
              23,800
              
              
              
              -
              
              
              
              -
              
              
              
              23,800Securities
      held for sale
              
              
              15
              
              
              
              -
              
              
              
              -
              
              
              
              15Originated
      mortgage servicing rights
              
              
              2,294
              
              
              
              -
              
              
              
              -
              
              
              
              2,294
  A
reconciliation of activity for the six months ended June 30, 2008 for assets
measured at fair value based on significant unobservable (non-market)
information (Level 3) is presented in the following table:
 
 (in
thousands)
 
 Mortgage
      Loans Held for Sale
              
              
              Retained
      Interests, Trading
              
              
              Securities
      Held for Sale
              
              
              Originated
      Mortgage Servicing RightsBeginning
      balance
              
              $
              983
              
              
              $
              69,301
              
              
              $
              173
              
              
              $
              3,062Gains
      (losses) included in earnings
              
              
              52
              
              
              
              (34,830
              )
              
              
              (27
              )
              
              
              576Purchases,
      issuances and settlements
              
              
              (508
              )
              
              
              (10,671
              )
              
              
              (131
              )
              
              
              (1,344
              )Ending
      Balance
              
              $
              527
              
              
              $
              23,800
              
              
              $
              15
              
              
              $
              2,294
 
 Gains and
losses included in earnings for the six months ended June 30, 2008 are reported
in loss on discontinued mortgage banking activities.
 
 
 
 
 ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 
 FORWARD-LOOKING
STATEMENTS
  When used
in this Quarterly Report on Form 10-Q, in future filings with the
Securities and Exchange Commission (the “Commission”) or in press releases or
other written or oral communications, statements which are not historical in
nature, including those containing words such as “anticipate,” “estimate,”
“should,” “expect,” “believe,” “intend” and similar expressions, are intended to
identify “forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).
  These
forward-looking statements are subject to various risks and uncertainties,
including, but not limited to, those described or incorporated by reference in
Part II - Item 1A - Risk Factors of this Form 10-Q. These and other risks,
uncertainties and factors, including those described in reports that the Company
files from time to time with the Commission, could cause the Company’s actual
results to differ materially from those reflected in such forward-looking
statements. All forward-looking statements speak only as of the date they are
made and the Company does not undertake, and specifically disclaims, any
obligation to update or revise any forward-looking statements to reflect events
or circumstances occurring after the date of such statements.
 
 The
following discussion of the financial condition and results of operations should
be read in conjunction with the Company’s consolidated financial statements and
related notes included elsewhere in this report.
 
 Introduction
 
 As used
in this document, discussions related to “Bimini Capital,” the parent company,
the registrant, and to real estate investment trust (“REIT”) qualifying
activities or the general management of Bimini Capital’s portfolio of
mortgage-backed securities (“MBS”) refer to “Bimini Capital Management,
Inc.”  Further, discussions related to Bimini Capital’s taxable REIT
subsidiary or non-REIT eligible assets refer to Orchid Island TRS, LLC and its
consolidated subsidiaries. This entity, which was previously named Opteum
Financial Services, LLC, and referred to as “OFS,” was renamed Orchid Island
TRS, LLC effective July 3, 2007.   Hereinafter, any historical
mention, discussion or references to Opteum Financial Services, LLC or to OFS
(such as in previously filed documents or Exhibits) now means Orchid Island TRS,
LLC or “OITRS.”  Discussions relating to the “Company” refer to the
consolidated entity (the combination of Bimini Capital and OITRS).
 
 Bimini
Capital Management, Inc., formerly Opteum Inc. and Bimini Mortgage Management,
Inc., was formed in September 2003 to invest primarily in but not limited to,
residential mortgage related securities issued by the Federal National Mortgage
Association (more commonly known as Fannie Mae), the Federal Home Loan Mortgage
Corporation (more commonly known as Freddie Mac) and the Government National
Mortgage Association (more commonly known as Ginnie Mae). Bimini Capital
attempts to earn a return on the spread between the yield on its assets and its
costs, including the interest expense on the funds it borrows. It generally
intends to borrow between eight and twelve times the amount of its equity
capital in an attempt to enhance its returns to stockholders. This leverage may
be adjusted above or below this range to the extent management or the Company’s
Board of Directors deems necessary or appropriate.  For purposes of
this calculation, Bimini Capital treats its junior subordinated notes as an
equity capital equivalent. Bimini Capital is self-managed and self-advised and
has elected to be taxed as a REIT for U.S. federal income tax
purposes.
 
 On April
18, 2007, the Board of Managers of OITRS, at the recommendation of the Board of
Directors of the Company, approved the closure of the wholesale and conduit
mortgage loan origination channels.  Both channels ceased accepting
new applications for mortgage loans on April 20, 2007.  On May 7,
2007, OITRS signed a binding agreement to sell its retail mortgage loan
origination channel to a third party as well.  On June 30, 2007, OITRS
completed such sale and ceased its mortgage loan origination business and
therefore the results of the mortgage origination business are reported as
discontinued operations for the six months ended June 30, 2007. The results of
the ongoing activities associated with the wind-down of the mortgage loan
origination business for the six months ended June 30, 2008 are likewise
reported as discontinued operations.
 
 DIVIDENDS
TO STOCKHOLDERS
 
 In order
to maintain its qualification as a REIT, Bimini Capital is required (among other
provisions) to annually distribute dividends to its stockholders in an amount at
least equal to, generally, 90% of Bimini Capital’s REIT taxable income. REIT
taxable income is a term that describes Bimini Capital’s operating results
calculated in accordance with rules and regulations promulgated pursuant to the
Internal Revenue Code.  As a REIT, Bimini Capital may be subject to a
federal excise tax if Bimini Capital distributes less than 85% of its taxable
income by the end of the calendar year.
 
 Bimini
Capital’s REIT taxable income is computed differently from net income as
computed in accordance with generally accepted accounting principles ("GAAP net
income"), as reported in the Company’s accompanying consolidated financial
statements.  Depending on the number and size of the various items or
transactions being accounted for differently, the differences between REIT
taxable income and GAAP net income can be substantial and each item can affect
several reporting periods. Generally, these items are timing or temporary
differences between years; for example, an item that may be a deduction for GAAP
net income in the current year may not be a deduction for REIT taxable income
until a later year.
 
 The
Company has negative retained earnings (titled “Accumulated deficit” in the
stockholders’ equity section of the financial statements) as of June 30,
2008.  This deficit is computed on a GAAP basis, and does not directly
affect the REIT’s ability to pay dividends.  As described in Note 9 to
the accompanying consolidated financial statements, the differences between GAAP
results and REIT taxable income is substantial;  from inception to
June 30, 2008, Bimini Capital’s REIT taxable income is approximately $77.5
million greater than Bimini Capital’s results as reported in its GAAP financial
statements.
 
 Results
of Operations
 
 PERFORMANCE
OVERVIEW
 
 Described
below are the Company’s results of operations for the six and three months ended
June 30, 2008, as compared to the Company’s results of operations for the six
and three months ended June 30, 2007.   During the year ended
December 31, 2007, the Company ceased all mortgage origination business at
OITRS. As stated above, results of those operations are reported in the
financial statements as discontinued operations.
 
 Consolidated
net loss for the six and three months ended June 30, 2008, was $39.7 million and
$34.6 million,compared to a
consolidated net loss of$240.5 million and
$162.5 million, respectively, for the six and three months ended June 30, 2007.
The consolidated net loss for the six and three months ended June 30, 2008 was
primarily the result of negative mark to market adjustments to the retained
interests, trading of OITRS of $34.8 million and $32.7 million, respectively.
The consolidated net loss for the six and three months ended June 30, 2007 was
primarily the result of an other-than-temporary impairment of $55.3 million
taken on the Company’s MBS portfolio during the three months ended June 30, 2007
and a loss from discontinued operations at OITRS of $142.8 million and $67.9
million, respectively, for the six and three month periods ended June 30, 2007.
Consolidated net loss per basic and diluted share of Class A Common Stock
was $1.57 and $1.36, respectively, for the six and three months ended June 30,
2008, compared to a consolidated net loss per basic and diluted share of Class A
Common Stock of $9.67 and $6.53, respectively, for the comparable prior
period.
 
 For the
six and three months ended June 30, 2008, comprehensive loss was$39.7 million and $34.6
million, respectively.  For the six and three months ended June 30,
2007, comprehensive loss was $163.8 million and $89.7 million, including the net
unrealized gain on available-for-sale securities of $2.1 million and ($1.0)
million and the reclassification of other-than-temporary loss on MBS of $55.3
million.
 
 Unrealized
gains/(losses) on available-for-sale securities is a component of accumulated
other comprehensive loss, which is included in stockholders’ equity on the
consolidated balance sheet.  The unrealized gains/(losses) on
available-for-sale securities is the difference between the fair market value of
the portfolio of mortgage-backed securities (“MBS”) securities and their cost
basis.  The unrealized gain on available-for-sale securities for the
six months ended June 30, 2007, was driven by a combination of a decrease in
short term rates for the period, which tends to increase the fair market value
of the Company’s portfolio of MBS securities, and increased amortization of net
premium for the period, which lowers the cost basis in the portfolio of MBS
securities.  The increased amortization for the period was the result
of the continued upward resetting of ARM securities in the portfolio, which
results in higher coupons on the securities relative to their booked yields, and
therefore greater amortization.
 
 On
February 15, 2007, the FASB issued statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities — Including an Amendment of FASB Statement
No. 115 (“SFAS 159”).  This standard permits an entity to
measure financial instruments and certain other items at estimated fair value.
The fair value option created by SFAS 159 permits an entity to measure eligible
items at fair value as of specified election dates. The Company adopted
SFAS 159 on January 1, 2008, and in connection with the adoption of
SFAS No. 159, the Company elected to record available-for-sale mortgage-backed
securities at fair value and to transfer these securities to its trading
portfolio.  As a result, fluctuations in value of the entire MBS
portfolio are recorded in earnings effective January 1, 2008.
 
 PERFORMANCE OF BIMINI
CAPITAL’S MBS PORTFOLIO
 
 For the
six and three months ended June 30, 2008, Bimini Capital generated $3.8 million
and $1.3 million, respectively, of net interest income.  Included in
these results were $16.9 million and $6.8 million, respectively, of interest
income, offset by $13.1 million and $5.5 million, respectively, of interest
expense.  Net interest income is up approximately $8.8 million and
$7.4 million, respectively, compared to the six and three months ended June 30,
2007.  The increase is due to higher net interest margin available in
the market in 2008, offset to some extent by a substantially reduced
portfolio.
 
 For the
six and three months ended June 30, 2008, Bimini Capital’s general and
administrative costs were approximately $3.3 million and $1.4, respectively. For
the six and three months ended June 30, 2008, compensation and related benefits
were $0.7 million and $0.3 million, respectively, lower than for the same period
in 2007, while costs associated with the Company’s evaluation of possible
strategic options caused other administrative expenses to increase $0.4 million
and $0.1 million, respectively.
 
 Bimini
Capital had $0.7 million and $0.4 million, respectively, in realized gains from
the sales of securities in the MBS portfolio during the six and three months
ended June 30, 2008, compared to losses of ($19.4) million and ($18.6) million,
respectively, during the six and three months ended June 30, 2007.
 
 For the
six and three months ended June 30, 2008, Bimini Capital had a loss from
continuing operations of $3.4 million and $2.7 million,
respectively.
 
 As of
June 30, 2008, the MBS portfolio consisted of $523.9 million of agency or
government MBS at fair value and had a weighted average coupon on assets of
5.87% and a net weighted average borrowing cost of 4.72%.  The
following tables summarize Bimini Capital’s agency and government mortgage
related securities as of June 30, 2008 and December 31, 2007:
 
 (in
thousands)
 
 Asset
      Category
              
              Market
      Value
              
              
              Percentage
      of
                Entire
                Portfolio
              
              
              Weighted
                Average
                Coupon
              
              
              Weighted
                Average
                Maturity
      in
                Months
              
              Longest
                Maturity
              
              Weighted
                Average
      Coupon
                Reset
      in Months
              
              
              Weighted
                Average
                Lifetime
      Cap
              
              
              Weighted
                Average
                Periodic
      CapJune
      30, 2008Adjustable-Rate
      MBS
              
              $
              147,872
              
              
              
              28.22
              %
              
              
              5.14
              %
              
              
              300
              
              1-Jan-41
              
              
              6.26
              
              
              
              10.15
              %
              
              
              5.30
              %Fixed-Rate
      MBS
              
              
              72,552
              
              
              
              13.85
              %
              
              
              6.64
              %
              
              
              336
              
              1-Jul-38
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aHybrid
      Adjustable-Rate MBS
              
              
              303,487
              
              
              
              57.93
              %
              
              
              6.05
              %
              
              
              341
              
              1-Apr-38
              
              
              43.49
              
              
              
              11.77
              %
              
              
              3.44
              %Total
      Portfolio
              
              $
              523,911
              
              
              
              100.00
              %
              
              
              5.87
              %
              
              
              329
              
              1-Jan-41
              
              
              31.29
              
              
              
              11.24
              %
              
              
              3.50
              %December
      31, 2007Adjustable-Rate
      MBS
              
              $
              177,608
              
              
              
              25.72
              %
              
              
              6.58
              %
              
              
              294
              
              1-Apr-44
              
              
              5.49
              
              
              
              10.61
              %
              
              
              2.47
              %Fixed-Rate
      MBS
              
              
              110,297
              
              
              
              15.97
              %
              
              
              6.98
              %
              
              
              335
              
              1-Oct-37
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aHybrid
      Adjustable-Rate MBS
              
              
              398,982
              
              
              
              57.78
              %
              
              
              6.11
              %
              
              
              344
              
              1-Sep-37
              
              
              39.62
              
              
              
              11.92
              %
              
              
              3.62
              %Fixed-Rate
      CMO
              
              
              3,692
              
              
              
              0.53
              %
              
              
              7.00
              %
              
              
              233
              
              18-May-27
              
              
              n/a
              
              
              
              n/a
              
              
              
              n/aTotal
      Portfolio
              
              $
              690,579
              
              
              
              100.00
              %
              
              
              6.37
              %
              
              
              329
              
              1-Apr-44
              
              
              29.11
              
              
              
              11.52
              %
              
              
              3.41
              %
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Agency
              
              Market
      Value
              
              
              Percentage
      of
                Entire
      Portfolio
              
              
              Market
      Value
              
              
              Percentage
      of
                Entire
      PortfolioFannie
      Mae
              
              $
              490,417
              
              
              
              93.61
              %
              
              $
              638,763
              
              
              
              92.50
              %Freddie
      Mac
              
              
              28,495
              
              
              
              5.44
              %
              
              
              46,318
              
              
              
              6.70
              %Ginnie
      Mae
              
              
              4,999
              
              
              
              0.95
              %
              
              
              5,498
              
              
              
              0.80
              %Total
      Portfolio
              
              $
              523,911
              
              
              
              100.00
              %
              
              $
              690,579
              
              
              
              100.00
              %
 
 
 Entire
      Portfolio
              
              June
      30, 2008
              
              
              December
      31, 2007Weighted
      Average Purchase Price
              
              $
              102.35
              
              
              $
              102.32Weighted
      Average Current Price
              
              $
              102.05
              
              
              $
              101.94Effective
      Duration (1)
              
              
              2.098
              
              
              
              1.267
 
 (1) Effective
duration of 2.098 indicates that an interest rate increase of 1% would be
expected to cause a 2.098% decline in the value of the MBS in the Company’s
investment portfolio at June 30, 2008.  Effective duration of 1.267
indicates that an interest rate increase of 1% would be expected to cause a
1.267% decline in the value of the MBS in the Company’s investment portfolio at
December 31, 2007.
 
 In
evaluating the MBS portfolio assets and their performance, Bimini Capital’s
management team primarily evaluates these critical factors: asset performance in
differing interest rate environments, duration of the security, yield to
maturity, potential for prepayment of principal and the market price of the
investment.
 
 Bimini
Capital’s portfolio of MBS will typically be comprised of adjustable-rate MBS,
fixed-rate MBS, hybrid adjustable-rate MBS and balloon maturity MBS. Bimini
Capital seeks to acquire low duration assets. Although the duration of an
individual asset can change as a result of changes in interest rates, Bimini
Capital strives to maintain a portfolio with an effective duration of less than
2.0. The stated contractual final maturity of the mortgage loans underlying
Bimini Capital’s portfolio of MBS generally ranges up to 30 years. However,
the effect of prepayments of the underlying mortgage loans tends to shorten the
resulting cash flows from investments substantially. Prepayments occur for
various reasons, including refinancing of underlying mortgages and loan payoffs
in connection with home sales.
 
 Prepayments
on the loans underlying MBS can alter the timing of the cash flows from the
underlying loans to the Company. As a result, Bimini Capital gauges the interest
rate sensitivity of its assets by measuring their effective duration. While
modified duration measures the price sensitivity of a bond to movements in
interest rates, effective duration captures both the movement in interest rates
and the fact that cash flows to a mortgage related security are altered when
interest rates move. Accordingly, when the contract interest rate on a mortgage
loan is substantially above prevailing interest rates in the market, the
effective duration of securities collateralized by such loans can be quite low
because of expected prepayments. Although some of the fixed-rate MBS in Bimini
Capital’s portfolio are collateralized by loans with a lower propensity to
prepay when the contract rate is above prevailing rates, their price movements
track securities with the same contract rates but lack such lower propensity to
prepay, and therefore exhibit similar effective duration.
 
 As of
June 30, 2008, approximately57.9% of Bimini
Capital’s portfolio is comprised of hybrid adjustable rate
MBS.   Bimini Capital favors such securities since they offer
superior income potential in the current slow prepayment
environment.  Going forward, to the extent such superior relative
income potential is not available, the composition of the portfolio may be
changed to better take advantage of opportunities in the market at that
time.
 
 The value
of the MBS portfolio changes as interest rates rise or fall.  Bimini
Capital faces the risk that the market value of its assets will increase or
decrease at different rates than that of its liabilities.  Bimini
Capital primarily assesses its interest rate risk by estimating the duration of
its assets and the duration of its liabilities. Duration essentially measures
the market price volatility of financial instruments as interest rates change.
Bimini Capital generally calculates duration using various financial models and
empirical data and different models and methodologies can produce different
duration numbers for the same securities.
 
 The following sensitivity analysis shows the estimated impact on the fair value
of Bimini Capital's interest rate-sensitive investments as of June 30, 2008,
assuming rates instantaneously fall 100 basis points, rise 100 basis points and
rise 200 basis points:
 
 (in
thousands)
 Interest
      Rates Fall 100 BPS
              
              
              Interest
      Rates Rise 100 BPS
              
              
              Interest
      Rates Rise 200 BPSAdjustable
      Rate MBSFair
      Value
              
              $
              147,872Change
      in fair Value
              
              
              
              
              
              $
              1,414
              
              
              $
              (1,414
              )
              
              $
              (2,828
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              0.96
              %
              
              
              (0.96
              %)
              
              
              (1.91
              %)Fixed
      Rate MBSFair
      Value
              
              $
              72,552Change
      in fair Value
              
              
              
              
              
              $
              2,437
              
              
              $
              (2,437
              )
              
              $
              (4,873
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              3.36
              %
              
              
              (3.36
              %)
              
              
              (6.72
              %)Hybrid
      Adjustable Rate MBSFair
      Value
              
              $
              303,487Change
      in fair Value
              
              
              
              
              
              $
              7,140
              
              
              $
              (7,140
              )
              
              $
              (14,280
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              2.35
              %
              
              
              (2.35
              %)
              
              
              (4.71
              %)Portfolio
      TotalFair
      Value
              
              $
              523,911Change
      in fair Value
              
              
              
              
              
              $
              10,991
              
              
              $
              (10,991
              )
              
              $
              (21,981
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              2.10
              %
              
              
              (2.10
              %)
              
              
              (4.20
              %)CashFair
      Value
              
              $
              17,338
 
 The table
below reflects the same analysis presented above but with the figures in the
columns that indicate the estimated impact of a 100 basis point fall or rise
adjusted to reflect the impact of convexity.
 
 (in
thousands)
 Interest
      Rates Fall 100 BPS
              
              
              Interest
      Rates Rise 100 BPS
              
              
              Interest
      Rates Rise 200 BPSAdjustable
      Rate MBSFair
      Value
              
              $
              147,872Change
      in fair Value
              
              
              
              
              
              $
              1,197
              
              
              $
              (1,708
              )
              
              $
              (4,075
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              0.81
              %
              
              
              (1.16
              %)
              
              
              (2.76
              %)Fixed
      Rate MBSFair
      Value
              
              $
              72,552Change
      in fair Value
              
              
              
              
              
              $
              1,707
              
              
              $
              (3,057
              )
              
              $
              (6,791
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              2.35
              %
              
              
              (4.21
              %)
              
              
              (9.36
              %)Hybrid
      Adjustable Rate MBSFair
      Value
              
              $
              303,487Change
      in fair Value
              
              
              
              
              
              $
              5,624
              
              
              $
              (8,311
              )
              
              $
              (18,068
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              1.85
              %
              
              
              (2.74
              %)
              
              
              (5.95
              %)Portfolio
      TotalFair
      Value
              
              $
              523,911Change
      in fair Value
              
              
              
              
              
              $
              8,528
              
              
              $
              (13,076
              )
              
              $
              (28,934
              )Change
      as a % of Fair Value
              
              
              
              
              
              
              1.63
              %
              
              
              (2.50
              %)
              
              
              (5.52
              %)CashFair
      Value
              
              $
              17,338
 
 In
addition to changes in interest rates, other factors impact the fair value of
Bimini Capital's interest rate-sensitive investments and hedging instruments,
such as the shape of the yield curve, market expectations as to future interest
rate changes and other more recent disruptions in the financial markets.
Accordingly, in the event of changes in actual interest rates, the change in the
fair value of Bimini Capital's assets would likely differ from that shown above
and such difference might be material and adverse to Bimini Capital's
stockholders.
 
 Given the
current difficulties in the market with respect to the availability of funding
via the repurchase market, the Company may need to augment its existing
leveraged MBS portfolio with alternative sources of income to the extent
sufficient repurchase agreement funding is not available. The Company is
currently evaluating alternative investment strategies utilizing derivative
mortgage backed securities collateralized by MBS with comparable borrower and
prepayment characteristics to the securities currently in the portfolio. Such
securities would not be funded in the repurchase market but instead would be
owned free and clear. The leverage inherent in the securities would replace the
leverage obtained by acquiring pass-through securities and funding them in the
repurchase market.
 
 The table
below shows Bimini Capital’s average investments held, total interest income,
yield on average earning assets, average repurchase obligations outstanding,
interest expense, average cost of funds, net interest income and net interest
spread for the quarter ended June 30, 2008, and the seventeen previous quarters
for Bimini Capital’s portfolio of MBS securities only. The data in the table
below does not include information pertaining to discontinued operations at
OITRS.
 
 RATIOS
FOR THE QUARTERS HAVE BEEN ANNUALIZED
 (in
thousands)
 Quarter
      Ended
              
              Average
                Investment
                Securities
      Held
              
              
              Total
      Interest Income
              
              
              Quarterly
      Retrospective Adj.
              
              
              Premium
      Lost due to Paydowns
              
              
              Yield
      on Average Interest Earning Assets (1)
              
              
              Average
      Balance of Repurchase Agreements Outstanding
              
              
              Interest
      Expense (2)
              
              
              Average
      Cost of Funds (2)
              
              
              Net
      Interest Income
              
              
              Net
      Interest Spread
              
              
              Trust
      Preferred Interest ExpenseJune
      30, 2008
              
              $
              519,614
              
              
              
              6,787
              
              
              
              -
              
              
              
              415
              
              
              
              4.91
              %
              
              $
              471,732
              
              
              
              5,448
              
              
              
              4.62
              %
              
              $
              1,339
              
              
              
              0.29
              %
              
              $
              1,933March
      31, 2008
              
              
              602,948
              
              
              
              10,112
              
              
              
              -
              
              
              
              652
              
              
              
              6.28
              %
              
              
              584,597
              
              
              
              7,590
              
              
              
              5.19
              %
              
              
              2,522
              
              
              
              1.08
              %
              
              
              1,933December
      31, 2007
              
              
              972,236
              
              
              
              11,364
              
              
              
              (345
              )
              
              
              -
              
              
              
              4.68
              %
              
              
              944,832
              
              
              
              10,531
              
              
              
              4.46
              %
              
              
              833
              
              
              
              0.22
              %
              
              
              1,933September
      30, 2007
              
              
              1,536,265
              
              
              
              24,634
              
              
              
              (404
              )
              
              
              -
              
              
              
              6.41
              %
              
              
              1,497,409
              
              
              
              20,998
              
              
              
              5.61
              %
              
              
              3,636
              
              
              
              0.81
              %
              
              
              1,933June
      30, 2007
              
              
              2,375,216
              
              
              
              26,970
              
              
              
              (6,182
              )
              
              
              -
              
              
              
              4.54
              %
              
              
              2,322,727
              
              
              
              33,444
              
              
              
              5.76
              %
              
              
              (6,475
              )
              
              
              (1.22
              %)
              
              
              1,933March
      31, 2007
              
              
              2,870,265
              
              
              
              38,634
              
              
              
              1,794
              
              
              
              -
              
              
              
              5.38
              %
              
              
              2,801,901
              
              
              
              37,405
              
              
              
              5.34
              %
              
              
              1,229
              
              
              
              0.04
              %
              
              
              1,933December
      31, 2006
              
              
              2,944,397
              
              
              
              31,841
              
              
              
              (4,013
              )
              
              
              -
              
              
              
              4.33
              %
              
              
              2,869,210
              
              
              
              39,448
              
              
              
              5.50
              %
              
              
              (7,607
              )
              
              
              (1.17
              %)
              
              
              1,933September
      30, 2006
              
              
              3,243,674
              
              
              
              43,051
              
              
              
              3,523
              
              
              
              -
              
              
              
              5.31
              %
              
              
              3,151,813
              
              
              
              42,683
              
              
              
              5.42
              %
              
              
              368
              
              
              
              (0.11
              %)
              
              
              1,933June
      30, 2006
              
              
              3,472,921
              
              
              
              54,811
              
              
              
              13,395
              
              
              
              -
              
              
              
              6.31
              %
              
              
              3,360,421
              
              
              
              41,674
              
              
              
              4.96
              %
              
              
              13,137
              
              
              
              1.35
              %
              
              
              1,933March
      31, 2006
              
              
              3,516,292
              
              
              
              40,512
              
              
              
              1,917
              
              
              
              -
              
              
              
              4.61
              %
              
              
              3,375,777
              
              
              
              36,566
              
              
              
              4.33
              %
              
              
              3,946
              
              
              
              0.28
              %
              
              
              1,933December
      31, 2005
              
              
              3,676,175
              
              
              
              43,140
              
              
              
              3,249
              
              
              
              -
              
              
              
              4.69
              %
              
              
              3,533,486
              
              
              
              35,337
              
              
              
              4.00
              %
              
              
              7,803
              
              
              
              0.69
              %
              
              
              1,858September
      30, 2005
              
              
              3,867,263
              
              
              
              43,574
              
              
              
              4,348
              
              
              
              -
              
              
              
              4.51
              %
              
              
              3,723,603
              
              
              
              32,345
              
              
              
              3.48
              %
              
              
              11,230
              
              
              
              1.03
              %
              
              
              973June 30,
      2005
              
              
              3,587,629
              
              
              
              36,749
              
              
              
              2,413
              
              
              
              -
              
              
              
              4.10
              %
              
              
              3,449,744
              
              
              
              26,080
              
              
              
              3.02
              %
              
              
              10,668
              
              
              
              1.07
              %
              
              
              454March 31,
      2005
              
              
              3,136,142
              
              
              
              31,070
              
              
              
              1,013
              
              
              
              -
              
              
              
              3.96
              %
              
              
              2,976,409
              
              
              
              19,731
              
              
              
              2.65
              %
              
              
              11,339
              
              
              
              1.31
              %
              
              
              -December 31,
      2004
              
              
              2,305,748
              
              
              
              20,463
              
              
              
              1,250
              
              
              
              -
              
              
              
              3.55
              %
              
              
              2,159,891
              
              
              
              10,796
              
              
              
              2.00
              %
              
              
              9,667
              
              
              
              1.55
              %
              
              
              -September 30,
      2004
              
              
              1,573,343
              
              
              
              11,017
              
              
              
              -
              
              
              
              -
              
              
              
              2.80
              %
              
              
              1,504,919
              
              
              
              4,253
              
              
              
              1.13
              %
              
              
              6,764
              
              
              
              1.67
              %
              
              
              -June 30,
      2004
              
              
              1,512,481
              
              
              
              10,959
              
              
              
              -
              
              
              
              -
              
              
              
              2.90
              %
              
              
              1,452,004
              
              
              
              4,344
              
              
              
              1.20
              %
              
              
              6,615
              
              
              
              1.70
              %
              
              
              -March 31,
      2004
              
              
              871,140
              
              
              
              7,194
              
              
              
              -
              
              
              
              -
              
              
              
              3.30
              %
              
              
              815,815
              
              
              
              2,736
              
              
              
              1.34
              %
              
              
              4,458
              
              
              
              1.96
              %
              
              
              -
  (1)
              Adjusted
      for premium lost on paydowns
 (2)
              Excludes
      Trust Preferred Interest
  
 The net interest figures in the table above exclude interest associated with the
trust preferred debt, such figures are reflected in the last column separately.
The net interest figures do reflect the quarterly retrospective adjustment,
where applicable.  As a result of the entire MBS portfolio being
classified as held for trading for the three months ended June 30, 2008, there
are no longer quarterly retrospective adjustments.  For the three
months ended June 30, 2008, the net margin was 29 basis points on a portfolio of
MBS securities classified entirely as held for trading.   For the
three months ended June 30, 2007, ($6.2) million of the $27.0 million of
interest income was attributable to the quarterly retrospective adjustment. As a
result of the retrospective adjustment, the yield on average interest earning
assets for the period was reduced by 104.1 basis points to 454.2 basis
points.
 
 
 PERFORMANCE OF DISCONTINUED
OPERATIONS OF OITRS
 
 As stated
above, the Company has sold or discontinued all residential mortgage origination
activities at OITRS. The principal business activities of OITRS were the
origination and sale of mortgage loans.  In addition, as part of the
securitization of loans sold, OITRS retained an interest in the resulting
residual interest cash flows more fully described below.  Finally,
OITRS serviced the loans securitized as well as some loans sold on a whole loan
basis.
 
 Currently,
there are no operating activities at OITRS and all income and expenses at OITRS
are attributable to mark to market adjustments on the retained interest, trading
(market value of $23.8 million at June 30, 2008), the remaining originated
mortgage servicing rights (market value at June 30, 2008 of $2.3 million), the
remaining mortgage loans held for sale (market value at June 30, 2008 of $0.5
million) and general and administrative expenses associated with the wind down
of their operations.
 
 The
retained interests in securitizations represent residual interest in pools of
loans securitized.  The total fair value of these retained interests
was approximately $23.8 million as of June 30, 2008. Fluctuations in value of
retained interests are primarily driven by projections of future interest rates
(the forward LIBOR curve), the discount rate used to determine the present value
of the residual cash flows and prepayment and loss estimates on the underlying
mortgage loans. Due to higher loss severity assumptions and discount rates, the
fair value of the retained interests decreased by $34.8 million and $32.7
million for the six and three months ended June 30, 2008, respectively. Due to
higher forward LIBOR rates and increased loss assumptions on the underlying
mortgage loans, the fair value of the retained interests decreased by $27.5
million and $26.2 million for the six and three months ended June 30,
2007.
 
 As of
June 30, 2008, OITRS owned $0.5 million of mortgage loans, net of fair value
adjustments, which were classified as mortgage loans held for
sale.  As stated above, OITRS no longer originates mortgage loans and
the remaining loan inventory is being liquidated.  Losses realized on
the discontinued mortgage banking activities for the six months ended June 30,
2008, were $34.9 million and consist primarily of fair value adjustments on the
retained interests, trading.
 
 The table
below provides details of OITRS’s loss on discontinued mortgage banking
activities for the three and six months ended June 30, 2008 and
2007.  OITRS recognizes a gain or loss on sale of mortgages held for
sale only when the loans are actually sold.
 
 (in
thousands)
 
 Six
      Months Ended
              
              
              Three
      Months EndedJune
      30, 2008
              
              
              June
      30, 2007
              
              
              June
      30, 2008
              
              
              June
      30, 2007Fair
      value adjustment of retained interests, trading
              
              $
              (34,830
              )
              
              $
              (27,492
              )
              
              $
              (32,710
              )
              
              $
              (26,168
              )Gains/(losses)
      on sales of mortgage loans
              
              
              (35
              )
              
              
              4,942
              
              
              
              (93
              )
              
              
              (9,571
              )Fees
      on brokered loans
              
              
              -
              
              
              
              1,749
              
              
              
              -
              
              
              
              892Loss
      on derivatives
              
              
              -
              
              
              
              (4,719
              )
              
              
              -
              
              
              
              (83
              )Direct
      loan origination expenses, deferred
              
              
              
              
              
              
              (5,495
              )
              
              
              -
              
              
              
              (4,003
              )Fees
      earned, brokering
              
              
              -
              
              
              
              705
              
              
              
              -
              
              
              
              270Direct
      loan origination expenses, reclassified
              
              
              -
              
              
              
              (22,181
              )
              
              
              -
              
              
              
              (9,942
              )Change
      in market value of IRLC’s
              
              
              -
              
              
              
              14
              
              
              
              -
              
              
              
              (190
              )Change
      in market value of mortgage loans held for sale
              
              
              (12
              )
              
              
              (9,338
              )
              
              
              (12
              )
              
              
              4,940Loss
      on discontinued mortgage banking activities
              
              $
              (34,877
              )
              
              $
              (61,815
              )
              
              $
              (32,815
              )
              
              $
              (43,855
              )
 
 For the
six months ended June 30, 2007, losses realized on the discontinued mortgage
banking activities were $61.8 million.  Mark to market losses of loans held
for sale of $9.3 million were the result of a sharp deterioration in the
secondary market for the loans originated and sold.  Losses from
discontinued mortgage banking activities also include changes in the fair value
of retained interests in securitizations and the associated hedge gains or
losses.  Excluding changes in fair value of retained interests in
securitizations net of hedge gains and losses, OITRS had losses from sales of
mortgages held for sale of$29.6 million for the
six months ended June 30, 2007.
 
 For the
six and three months ended June 30, 2007, OITRS originated $1.5 billion and $0.4
billion, respectively, and sold $2.0 billion and $0.7 billion, respectively, of
mortgage loans.  Of the originated mortgage loans sold during the six
and three months ended June 30, 2007, $0.8 billion and $0.3 billion,
respectively, were sold on a servicing retained basis.
 
 For the
six months ended June 30, 2007, OITRS had net servicing loss of $10.6million.  The
results were driven primarily by negative fair valueadjustments to the MSRs
(inclusive of run-off of the servicing portfolio).
 
 Liquidity
and Capital Resources
 
 Our
principal sources of cash generally consist of borrowings under repurchase
agreements, payments of principal and interest we receive on our MBS portfolio,
and cash flows received by OITRS from the residual interests that are used to
repay intercompany debt.  Our principal uses of cash are the repayment
of principal and interest on our repurchase agreements, purchases of MBS,
funding our operations and, to the extent dividends are declared, making
dividend payments on our capital stock.
 
 During
the three months ended June 30, 2008, we purchased $114.4 million of MBS, using
proceeds from repurchase agreements, prepayments and sales of MBS and existing
cash.  During the second quarter of 2008, we received cash of $22.7
million from prepayments on our MBS. During the six months ended June 30, 2008,
we generated net proceeds of $82.7 million from the sale of
MBS.  Also, the residual interests at OITRS generated $10.7 million
and $7.3 million, respectively, in cash flows for the six and three months ended
June 30, 2008.
 
 As of
June 30, 2008, Bimini Capital had outstanding balances under master repurchase
agreements with various counterparties.  None of the counterparties to
these agreements are affiliates of Bimini Capital. These agreements are secured
by Bimini Capital’s MBS and bear interest rates that are based on a spread to
LIBOR.
 
 As of
June 30, 2008, Bimini Capital had obligations outstanding under its repurchase
agreements totaling $452.4 million with a net weighted average borrowing cost of
4.72%.  As of June 30, 2008, all of Bimini Capital’s outstanding
repurchase agreement obligations are due in less than 6 months with $0.0 million
maturing overnight, $53.4 million maturing between 2 and 30 days and the
remaining $399.1 million maturing between 31 and
90 days.  Securing these repurchase agreement obligations as of
June 30, 2008, were MBS with an estimated fair value of $462.2 million and a
weighted average maturity of 329 months.
 
 The
following summarizes information regarding the Company’s amounts at risk with
individual counterparties greater than 10% of the Company’s equity as of June
30, 2008 and December 31, 2007.
 
 (in
thousands)
 
 Repurchase
      Agreement Counterparties
              
              Amount
                at
      Risk(1)
              
              
              Weighted
      Average
                Maturity
      of
                Repurchase
                Agreements
                in
      DaysJune
      30, 2008Deutsche
      Bank Securities, Inc.
              
              $
              6,432
              
              
              
              67JP
      Morgan Securities
              
              
              6,376
              
              
              
              67RBS
      Greenwich Capital
              
              
              1,769
              
              
              
              25MF
      Global Inc.
              
              
              658
              
              
              
              13December
      31, 2007Deutsche
      Bank Securities, Inc.
              
              
              8,823
              
              
              
              193Goldman
      Sachs
              
              
              2,931
              
              
              
              19
 
 (1)
              Equal
      to the fair value of securities sold, plus accrued interest income, minus
      the sum of repurchase agreement liabilities, plus accrued interest
      expense.
  
 Bimini
Capital’s master repurchase agreements have no stated expiration, but can be
terminated at any time at Bimini Capital’s option or at the option of the
counterparty. However, once a definitive repurchase agreement under a master
repurchase agreement has been entered into, it generally may not be terminated
by either party absent an event of default.  A negotiated termination
can occur, but may involve a fee to be paid by the party seeking to terminate
the repurchase agreement transaction.
 
 As
discussed above, increases in short-term interest rates could negatively impact
the valuation of Bimini Capital’s MBS portfolio.  Should this occur,
Bimini Capital’s repurchase agreement counterparties could initiate margin
calls, thus inhibiting its liquidity or forcing us to sell assets.
 
 During
the six month period ended June 30, 2008, the Company undertook a series of
asset sales intended to raise funds necessary to service the residual financing
line of OITRS and maintain adequate liquidity during the continuing period of
disruption in the mortgage market.  Such sales ceased during the three
months ended June 30, 2008, and the MBS portfolio size has
stabilized.
 
 Given the
current difficulties with respect to the availability of funding via the
repurchase market, the Company may need to augment its existing leveraged MBS
portfolio with alternative sources of income to the extent sufficient repurchase
agreement funding is not available.  The Company is currently
evaluating alternative investment strategies utilizing derivative mortgage
backed securities collateralized by MBS with comparable borrower and prepayment
characteristics to the securities currently in the portfolio.  Such
securities would not be funded in the repurchase market but instead would be
owned free and clear.  The leverage inherent in the securities would
replace the leverage obtained by acquiring pass-through securities and funding
them in the repurchase market.
 
 In
May 2005, Bimini Capital completed a private offering of $51.6 million of
trust preferred securities of Bimini Capital Trust I (“BCTI”) resulting in the
issuance by Bimini Capital of $51.6 million of junior subordinated notes. The
interest rate payable by Bimini Capital on the BCTI junior subordinated notes is
fixed for the first five years at 7.61% and then floats at a spread of 3.30%
over three-month LIBOR for the remaining 25 years. However, the BCTI junior
subordinated notes and the corresponding BCTI trust preferred securities are
redeemable at Bimini Capital’s option at the end of the first five year period
and at any subsequent date that Bimini Capital chooses.
 
 In
addition, in October 2005, Bimini Capital completed a private offering of an
additional $51.5 million of trust preferred securities of Bimini Capital Trust
II (“BCTII”) resulting in the issuance by Bimini Capital of an additional $51.5
million of junior subordinated notes. The interest rate on the BCTII junior
subordinated notes and the corresponding BCTII trust preferred securities is
fixed for the first five years at 7.8575% and then floats at a spread of 3.50%
over three-month LIBOR for the remaining 25 years. However, the BCTII junior
subordinated notes and the corresponding BCTII trust preferred securities are
redeemable at Bimini Capital’s option at the end of the first five year period
and at any subsequent date that Bimini Capital chooses.
 
 The
Company presently believes that its equity and junior subordinated debt capital,
combined with the cash flow from operations and retained interests, will be
sufficient to enable the Company to meet its anticipated liquidity requirements.
Continued disruptions in market conditions could, however, adversely affect the
Company’s liquidity, including the lack of available financing for the Company’s
MBS assets, increases in interest rates, increases in prepayment rates
substantially above expectations and decreases in value of assets held for sale.
Therefore, in spite of the efforts contemplated above to address any potential
loss of sufficient repurchase agreement funding, no assurances can be made
regarding the Company's ability to satisfy its liquidity and working capital
requirements.
 
 On April
14, 2008, there were changes made to senior management of the
Company.  The cost savings associated with these changes are estimated
to be approximately $0.4 million in 2008.
 
 Outlook
 
 The
Company's results of operations for the six months ended June 30, 2008 were
impacted by disruptions in the residential mortgage market, the mortgage-backed
securities market and a general tightening of credit conditions brought about by
adverse actions taken by ratings agencies, liquidations of various investment
funds and substantial losses incurred by various market
participants.  As a result of these events, the Federal Reserve Open
Market Committee has adjusted their target for overnight lending rates which has
positively impacted the Company’s borrowing rates.
 
 The
funding costs of the MBS portfolio seem to have stabilized and the coupon on the
MBS assets now exceeds the funding costs mainly as a result of Federal Reserve
actions mentioned above. The need to fund negative cash flow operations at OITRS
precluded the Company from reinvesting monthly pay-downs and also required the
Company to sell MBS assets to generate funds throughout much of 2006 and
2007.  Further, OITRS has exposure to early payment default claims
that have been received from buyers of mortgage loans sold in the
past.  The settlement of such claims also had to be funded, and some
claims remain.
 
 Going
forward, at current interest rate levels, the lack of cash flow needs for OITRS
and resulting halt of asset sales should allow the net interest margin, (“NIM”)
of the MBS portfolio to remain positive. To the extent the Company is able to
refinance its existing repurchase funding agreements as they come due in the
third quarter, and at rates comparable to current market conditions, the NIM
should expand.  However, no assurance can be made of its ability to do
so or for rates to remain at current levels.  Also, the Company
intends to utilize any cash flows received from the retained interests, trading
of OITRS primarily to repay intercompany debt so as to fund growth of the
portfolio.  Nonetheless, even with any potential for an expanded NIM
and residual cash flows from the retained interests, the reduced size of the
portfolio in relation to the Company’s operating expenses will constrain the
earnings potential of the Company in the near term.
 
 Critical
Accounting Policies
 
 The
Company’s financial statements are prepared in accordance with U.S. generally
accepted accounting principles (“GAAP”).  The Company’s significant
accounting policies are described in Note1 to the Company’s
accompanying consolidated financial statements.
 
 GAAP
requires the Company’s management to make some complex and subjective decisions
and assessments. The Company’s most critical accounting policies involve
decisions and assessments which could significantly affect reported assets and
liabilities, as well as reported revenues and expenses. The Company believes
that all of the decisions and assessments upon which its financial statements
are based were reasonable at the time made based upon information available to
it at that time. Management has identified its most critical accounting policies
to be the following:
 
 MORTGAGE-BACKED
SECURITIES
 
 The
Company’s investments in MBS are classified as held for
trading.  Changes in fair value of securities held for trading are
recorded through the statement of operations. The Company’s MBS have fair values
determined by management based on the average of third-party broker quotes
received and/or by independent pricing sources when available. Because the price
estimates may vary to some degree between sources, management must make certain
judgments and assumptions about the appropriate price to use to calculate the
fair values for financial reporting purposes. Alternatively, management could
opt to have the value of all of its positions in MBS determined by either an
independent third-party pricing source or do so internally based on management’s
own estimates. Management believes pricing on the basis of third-party broker
quotes is the most consistent with the definition of fair value described in
SFAS No. 107, Disclosures
about the Fair Value of Financial Instruments.
 
 RETAINED INTEREST,
TRADING
 
 Retained
interest, trading is the subordinated interests retained by the Company from the
Company’s various securitizations and includes the over-collateralization and
residual net interest spread remaining after payments to the Public Certificates
and NIM Notes (see Note 11 of the accompanying consolidated financial
statements). Retained interest, trading represents the present value of
estimated cash flows to be received from these subordinated interests in the
future.  The subordinated interests retained are classified as
“trading securities” and are reported at fair value with unrealized gains or
losses reported in earnings.  In order to value these unrated and
unquoted retained interests, the Company utilizes either pricing available
directly from dealers, when available, or calculates their present value by
projecting their future cash flows on a publicly-available analytical system.
When a publicly-available analytical system is employed, the Company uses the
following variable factors in estimating the fair value of these
assets:
 
 InterestRate Forecast. LIBOR
interest rate curve.
 
 Discount Rate. The present
value of all future cash flows utilizing a discount rate assumption established
at the discretion of the Company to represent market conditions and
value.
 
 Prepayment Forecast. The
prepayment forecast may be expressed by the Company in accordance with one of
the following standard market conventions: Constant Prepayment Rate (“CPR”) or
Percentage of a Prepayment Vector. Prepayment forecasts are made utilizing
Citigroup Global Markets Yield Book and/or management estimates based on
historical experience. Conversely, prepayment speed forecasts could have been
based on other market conventions or third-party analytical systems. Prepayment
forecasts may be changed as OITRS observes trends in the underlying collateral
as delineated in the Statement to Certificate Holders generated by the
securitization trust’s Trustee for each underlying security.
 
 Credit Performance Forecast.
A forecast of future credit performance of the underlying collateral pool will
include an assumption of default frequency, loss severity and a recovery lag. In
general, the Company will utilize the combination of default frequency and loss
severity in conjunction with a collateral prepayment assumption to arrive at a
target cumulative loss to the collateral pool over the life of the pool based on
historical performance of similar collateral by the originator. The target
cumulative loss forecast will be developed and noted at the pricing date of the
individual security but may be updated by the Company consistent with
observations of the actual collateral pool performance.
 
 As of June 30, 2008, and December 31, 2007, key economic assumptions and the
sensitivity of the current fair value of retained interests to the immediate 10%
and 20% adverse change in those assumptions are as follows:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              December
      31, 2007Balance
      Sheet Carrying value of retained interests – fair value
              
              $
              23,800
              
              
              $
              69,301Weighted
      average life (in years)
              
              
              5.27
              
              
              
              4.09Prepayment
      assumption (annual rate)
              
              
              18.13
              %
              
              
              26.37
              %Impact
      on fair value of 10% adverse change
              
              $
              (2,251
              )
              
              $
              (6,908
              )Impact
      on fair value of 20% adverse change
              
              $
              (3,966
              )
              
              $
              (12,577
              )Expected
      Credit losses (annual rate)
              
              
              2.74
              %
              
              
              1.22
              %Impact
      on fair value of 10% adverse change
              
              $
              (5,484
              )
              
              $
              (6,409
              )Impact
      on fair value of 20% adverse change
              
              $
              (6,073
              )
              
              $
              (13,633
              )Residual
      Cash-Flow Discount Rate
              
              
              27.50
              %
              
              
              20.00
              %Impact
      on fair value of 10% adverse change
              
              $
              (2,771
              )
              
              $
              (4,138
              )Impact
      on fair value of 20% adverse change
              
              $
              (5,078
              )
              
              $
              (7,907
              )Interest
      rates on variable and adjustable loans and bonds
              
              Forward
      LIBOR Yield Curve
              
              
              Forward
      LIBOR Yield CurveImpact
      on fair value of 10% adverse change
              
              $
              (8,085
              )
              
              $
              (14,906
              )Impact
      on fair value of 20% adverse change
              
              $
              (13,271
              )
              
              $
              (28,225
              )
 
 These
sensitivities are entirely hypothetical and should be used with caution. As the
figures indicate, changes in fair value based upon 10% and 20% variations in
assumptions generally cannot be extrapolated to greater or lesser percentage
variations because the relationship of the change in assumption to the change in
fair value may not be linear. Also, in this table, the effect of the variation
in a particular assumption on the fair value of the subordinated interest is
calculated without changing any other assumption.  In reality, changes
in one factor may result in changes in another that may magnify or counteract
the sensitivities. To estimate the impact of a 10% and 20% adverse change of the
forward LIBOR curve, a parallel shift in the forward LIBOR curve was assumed
based on the forward LIBOR curve as of June 30, 2008, and December 31,
2007.
 
 INCOMERECOGNITION
 
 For
securities classified as held for trading, interest income is based on the
stated interest rate and the outstanding principal balance; premium or discount
associated with the purchase of the MBS are not amortized.  As of
January 1, 2008 all MBS portfolio securities are classified as held for
trading.
 
 INCOME
TAXES
 
 Bimini
Capital has elected to be taxed as a REIT under the Code. As further described
below, Bimini Capital’s subsidiary, OITRS a taxpaying entity for income tax
purposes and is taxed separately from Bimini Capital. Bimini Capital will
generally not be subject to federal income tax on its REIT taxable income to the
extent that Bimini Capital distributes its REIT taxable income to its
stockholders and satisfies the ongoing REIT requirements, including meeting
certain asset, income and stock ownership tests. A REIT must generally
distribute at least 90% of its REIT taxable income to its stockholders, of which
85% generally must be distributed within the taxable year, in order to avoid the
imposition of an excise tax. The remaining balance may be distributed up to the
end of the following taxable year, provided the REIT elects to treat such amount
as a prior year distribution and meets certain other requirements.
 
 OITRS and
its activities are subject to corporate income taxes and the applicable
provisions of SFAS No. 109,Accounting for Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.  In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized.  To the extent
management believes deferred tax assets will not be fully realized in future
periods, a provision is recorded so as to reflect the net portion, if any, of
the deferred tax asset management expects to realize.
 
 FAIR
VALUES
 
 The
Company measures or monitors many of its assets on a fair value basis. Fair
value is used on a recurring basis for certain assets and liabilities in which
fair value is the primary basis of accounting. Examples of these include trading
securities, loans held for sale, retained interests and mortgage servicing
rights (MSRs).  Additionally, fair value is used on a non-recurring
basis to evaluate assets or liabilities for impairment.
 
 Fair
value is the price that could be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. If observable
market prices are not available, then fair value is estimated using modeling
techniques such as discounted cash flow analyses. These modeling techniques
utilize assumptions that market participants would use in pricing the asset or
the liability, including assumptions about the risk inherent in a particular
valuation technique, the effect of a restriction on the sale or use of an asset,
and the risk of nonperformance. To increase consistency and comparability in
fair value measures, SFAS No. 157 establishes a three-level hierarchy to
prioritize the inputs used in valuation techniques between observable inputs
that reflect quoted prices in active markets, inputs other than quoted prices
with observable market data, and unobservable data such as the Company’s own
data.
 
 Off-Balance
Sheet Arrangements
 
 As
previously discussed, OITRS previously pooled loans originated or purchased and
then sold them or securitized them to obtain long-term financing for its assets.
Securitized loans are transferred to a trust where they serve as collateral for
asset-backed bonds, which the trust primarily issues to the public. Since
mid-2006, OITRS has not executed a securitization and is not expected to do so
in the future. However, OITRS held approximately $23.8 million of retained
interests from securitizations as of June 30, 2008.
 
 The cash
flows associated with OITRS’s securitization activities over the six months
ended June 30, 2008 and 2007, were as follows:
 
 (in
thousands)
 
 June
      30, 2008
              
              
              June
      30, 2007Servicing
      fees received
              
              $
              845
              
              
              $
              9,691Servicing
      advances and repayments
              
              
              786
              
              
              
              (1,433
              )Cash
      flows received on retained interests
              
              
              10,671
              
              
              
              2,909
 
 ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
 
 Not
Applicable.
 
 ITEM
4.  CONTROLS AND PROCEDURES.
 
 Evaluation
of Disclosure Controls and Procedures
 
 The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company’s reports under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms and that such information is accumulated and
communicated to the Company’s management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.  In designing and evaluating the disclosure controls
and procedures, management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives and management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.
 
 As of the
end of the period covered by this report, the Company’s management carried out
an evaluation, under the supervision and with the participation of the Company’s
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures. 
Based on such evaluation, the Company’s Chief Executive Officer and Chief
Financial Officer concluded that the Company’s disclosure controls and
procedures were effective.
  
 Changes
in Internal Controls over Financial Reporting
 
 There was
no change in the Company’s internal control over financial reporting that
occurred during the Company’s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
 
 ITEM
4T.  CONTROLS AND PROCEDURES.
 
 Not
Applicable.
 
 PART
II. OTHER INFORMATION
 
 ITEM
1.  LEGAL PROCEEDINGS.
 
 The
Company is involved in various lawsuits and claims, both actual and potential,
including some that it has asserted against others, in which monetary and other
damages are sought. Except as described below, these lawsuits and claims relate
primarily to contractual disputes arising out of the ordinary course of the
Company’s business. The outcome of such lawsuits and claims is inherently
unpredictable. However, management believes that, in the aggregate, the outcome
of all lawsuits and claims involving the Company will not have a material effect
on the Company’s consolidated financial position or liquidity; however, any such
outcome may be material to the results of operations of any particular period in
which costs, if any, are recognized. See also Notes8 and 11 to the
Company’s accompanying consolidated financial statements.
 
 On
September 17, 2007, a complaint was filed in the U.S. District Court for the
Southern District of Florida by William Kornfeld against the Company, certain of
the Company’s current and former officers and directors, Flagstone Securities,
LLC and BB&T Capital Markets alleging various violations of the federal
securities laws and seeking class action certification.  On October 9,
2007, a complaint was filed in the U.S. District Court for the Southern District
of Florida by Richard and Linda Coy against the Company, certain of the
Company’s current and former officers and directors, Flagstone Securities, LLC
and BB&T Capital Markets alleging various violations of the federal
securities laws and seeking class action certification.  The Company
believes the plaintiffs’ claims in these actions are without merit, has filed a
motion to consolidate these actions and intends to vigorously defend the
cases.
 
 ITEM
1A.  RISK FACTORS.
 
 During
the period covered by this report, and except as described below, there were no
material changes to the risk factors previously disclosed under  Item
1A – Risk Factors in the Company’s Annual Report on Form 10-K for the period for
the period December 31, 2007 as filed on March 14, 2008.  The
information set forth under Item 1A – Risk Factors in the Company’s Annual
Report on Form 10-K for the period ended December 31, 2007, is incorporated
herein by reference.
 
 As stated
in the accompanying consolidated financial statements, the Company currently has
negative consolidated net worth.  The lack of positive consolidated
net worth could further hamper the Company’s ability to obtain sufficient access
to funding for the MBS portfolio.  To the extent the Company is unable
to obtain other sources of revenue, our ability to cover expenses and/or
generate earnings will be impaired. The Company may need to alter its investment
strategy if it is unable to obtain sufficient access to funding for its MBS
portfolio.
  ITEM
2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
 
 ISSUER
PURCHASES OF EQUITY SECURITIES
 
 Except as
described below, the Company has not repurchased any shares of its equity
securities during 2008.  The following table shows shares of common
stock deemed to have been repurchased in connection with the withholding of a
portion of shares of Class A Common Stock to cover taxes on vested phantom
shares for each calendar month during the quarter ended June 30,
2008.
 
 Calendar
      Month
              
              Total
      Number of Shares Purchased
              
              
              Average
      Price Paid per Share
              
              
              Total
      Number of Shares Purchased as Part of Publicly Announced Plans or
      Programs
              
              
              Maximum
      Amount That May Yet Be Purchased Under the Plans or
    ProgramsApril
      2008
              
              
              1,287
              
              
              $
              0.31
              
              
              
              -
              
              
              
              -May
      2008
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -June
      2008
              
              
              16
              
              
              
              0.31
              
              
              
              -
              
              
              
              -Total
              
              
              1,303
              
              
              $
              0.31
              
              
              
              -
              
              
              
              -
 
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 At the
Company’s 2008 Annual Meeting of Stockholders held on May 27, 2008, the
following matters were submitted to a vote of the Company’s
stockholders:
 
 1. Election of Directors. 
Robert E. Cauley and Robert J. Dwyer were each re-elected as directors of the
Company.  Mr. Cauley was re-elected as a Class II director to serve
until the Company's 2011 Annual Meeting of Stockholders.  Mr. Dwyer
was re-elected as a Class III director to serve until the Company's 2009 Annual
Meeting of Stockholders.  For each director nominee, votes were cast
as follows:
 
 NOMINEE
              
              FOR
              
              
              ABSTAINRobert
      E. Cauley
              
              
              18,003,917
              
              
              
              1,895,658Robert
      J. Dwyer
              
              
              18,334,436
              
              
              
              1,565,139
 
 The
following directors continued in office after the meeting:
  Kevin L.
Bespolka and W. Christopher Mortenson.
 
 2.Amendment of the Company’s
Charter.  The proposal to amend the Company’s Charter was approved
by the Company’s stockholders.  The number of votes cast for and
against the proposal to amend the Company’s Charter and the number of
abstentions and broker non-votes were as follows:
 
 FOR
              
              AGAINST
              
              ABSTAIN
              
              BROKER
                NON-VOTES14,049,700
              
              5,212,325
              
              637,549
              
              0
 
 
 ITEM
6.                        EXHIBITS.
 
 Exhibit
No.
 
 3.1
              
              Articles
      of Amendment and Restatement, incorporated by reference to Exhibit 3.1 to
      the Company’s Form S-11/A, filed with the SEC on April 29,
      20043.2
              
              Articles
      Supplementary, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated November 3, 2005, filed with the SEC on
      November 8, 20053.3
              
              Articles
      of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated February 10, 2006, filed with the SEC on
      February 15, 20063.4
              
              Articles
      of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated September 24, 2007, filed with the SEC
      on September 24, 20073.5
              
              Certificate
      of Notice, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated January 28, 2008, filed with the SEC on
      February 1, 20083.6
              
              Articles
      of Amendment, incorporated by reference to Exhibit 10.3 to the Company’s
      Current Report on Form 8-K, dated May 27, 2008, filed with the SEC on May
      29, 20083.7
              
              Amended
      and Restated Bylaws, incorporated by reference to Exhibit 3.2 to the
      Company’s Current Report on Form 8-K, dated September 24, 2007, filed with
      the SEC on September 24, 2007†10.1
              
              Bimini
      Capital Management, Inc. 2003 Long Term Incentive Compensation Plan, as
      amended September 28, 2007, incorporated by reference to Exhibit 10.3 to
      the Company’s Quarterly Report on Form 10-Q for the period ended September
      30, 2007, filed with the SEC on November 8, 2007†10.2
              
              Bimini
      Capital Management, Inc. 2004 Performance Bonus Plan, as amended September
      28, 2007, incorporated by reference to Exhibit 10.4 to the Company’s
      Quarterly Report on Form 10-Q for the period ended September 30, 2007,
      filed with the SEC on November 8, 2007†10.3
              
              Form
      of Phantom Share Award Agreement incorporated by reference to Exhibit 10.5
      to the Company’s Quarterly Report on Form 10-Q for the period ended
      September 30, 2007, filed with the SEC on November 8,
  2007†10.4
              
              Form
      of Restricted Stock Award Agreement incorporated by reference to Exhibit
      10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended
      September 30, 2007, filed with the SEC on November 8,
  2007†10.5
              
              Separation
      Agreement and General Release, dated as of June 29, 2007, by and among
      Opteum Inc., Opteum Financial Services, LLC and Peter R. Norden,
      incorporated by reference to Exhibit 10.2 to the Company’s Current Report
      on Form 8-K, dated June 30, 2007, filed with the SEC on July 5,
      2007†10.6
              
              Separation
      Agreement and General Release by and between Bimini Capital
      Management, Inc. and Jeffrey J. Zimmer, incorporated by reference to
      Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 14,
      2008, filed with the SEC on April 16, 2008†10.7
              
              Retention
      and Severance Agreement between Bimini Capital Management, Inc. and
      G. Hunter Haas, IV, incorporated by reference to Exhibit 10.1 to the
      Company’s Current Report on Form 8-K, dated April 18, 2008, filed with the
      SEC on April 18, 2008†10.8
              
              Retention
      and Severance Agreement between Bimini Capital Management, Inc. and
      J. Christopher Clifton, incorporated by reference to Exhibit 10.2 to the
      Company’s Current Report on Form 8-K, dated April 18, 2008, filed with the
      SEC on April 18, 2008†*10.9
              
              Employment
      Agreement dated as of April 27, 2006, by and between Opteum Inc. and J.
      Christopher Clifton10.10
              
              Voting
      Agreement, among certain stockholders of Bimini Mortgage Management, Inc.,
      Jeffrey J. Zimmer, Robert E. Cauley, Amber K. Luedke, George H. Haas, IV,
      Kevin L. Bespolka, Maureen A. Hendricks, W. Christopher Mortenson, Buford
      H. Ortale, Peter Norden, certain of Mr. Norden’s affiliates, Jason Kaplan,
      certain of Mr. Kaplan’s affiliates and other former owners of Opteum
      Financial Services, LLC, incorporated by reference to Exhibit 99(D) to the
      Schedule 13D, dated November 3, 2005, filed with the SEC on November 14,
      200510.11
              
              Membership
      Interest Purchase, Option and Investor Rights Agreement among Opteum Inc.,
      Opteum Financial Services, LLC and Citigroup Global Markets Realty Corp.
      dated as of December 21, 2006, incorporated by reference to Exhibit 10.1
      to the Company’s Current Report on Form 8-K, dated December 21, 2006,
      filed with the SEC on December 21, 200610.12
              
              Seventh
      Amended and Restated Limited Liability Company Agreement of Orchid Island
      TRS, LLC, dated as of July 20, 2007, made and entered into by Opteum Inc.
      and Citigroup Global Markets Realty Corp., incorporated by reference to
      Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the
      period ended June 30, 2007, filed with the SEC on August 14,
      200710.13
              
              Asset
      Purchase Agreement, dated May 7, 2007, by and among Opteum Financial
      Services, LLC, Opteum Inc. and Prospect Mortgage Company, LLC,
      incorporated by reference to Exhibit 10.1 to the Company’s Current Report
      on Form 8-K, dated May 7, 2007, filed with the SEC on May 7,
      200710.14
              
              First
      Amendment to Purchase Agreement, dated June 30, 2007, by and among
      Metrocities Mortgage, LLC – Opteum Division, Opteum Financial Services,
      LLC and Opteum Inc., incorporated by reference to Exhibit 10.1 to the
      Company’s Current Report on Form 8-K, dated June 30, 2007, filed with the
      SEC on July 5, 200710.15
              
              Membership
      Interest Purchase Agreement, dated May 27, 2008, by and among Bimini
      Capital Management, Inc., Orchid Island TRS, LLC and Citigroup Global
      Markets Realty Corp., incorporated by reference to Exhibit 10.1 to the
      Company’s Current Report on Form 8-K, dated May 27, 2008, filed with the
      SEC on May 29, 200810.16
              
              Eighth
      Amended and Restated Limited Liability Company of Orchid Island TRS, LLC,
      dated as of May 27, 2008, incorporated by reference to Exhibit 10.2 to the
      Company’s Current Report on Form 8-K, dated May 27, 2008, filed with the
      SEC on May 29, 2008*31.1
              
              Certification
      of the Principal Executive Officer, pursuant to Rule 13a-14(a) or
      15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002*31.2
              
              Certification
      of the Principal Financial Officer, pursuant to Rule 13a-14(a) or
      15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002*32.1
              
              Certification
      of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002*32.2
              
              Certification
      of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002*
      Filed herewith.
                † Management
      compensatory plan or arrangement required to be filed by Item 601 of
      Regulation S-K.
  
 
 
 
 Signatures
 
 Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 BIMINI CAPITAL MANAGEMENT,
INC.
 
 
 Date:                      August
11,
2008                                                                   
By:           /s/ G.
Hunter Haas, IV
 G. Hunter Haas, IV
 Executive Vice President, Chief
Investment Officer
 Interim Chief Financial Officer and
Treasurer
 
  
  EXHIBIT
INDEX
 Exhibit
No.
 
 3.1
              
              Articles
      of Amendment and Restatement, incorporated by reference to Exhibit 3.1 to
      the Company’s Form S-11/A, filed with the SEC on April 29,
      20043.2
              
              Articles
      Supplementary, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated November 3, 2005, filed with the SEC on
      November 8, 20053.3
              
              Articles
      of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated February 10, 2006, filed with the SEC on
      February 15, 20063.4
              
              Articles
      of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated September 24, 2007, filed with the SEC
      on September 24, 20073.5
              
              Certificate
      of Notice, incorporated by reference to Exhibit 3.1 to the Company’s
      Current Report on Form 8-K, dated January 28, 2008, filed with the SEC on
      February 1, 20083.6
              
              Articles
      of Amendment, incorporated by reference to Exhibit 10.3 to the Company’s
      Current Report on Form 8-K, dated May 27, 2008, filed with the SEC on May
      29, 20083.7
              
              Amended
      and Restated Bylaws, incorporated by reference to Exhibit 3.2 to the
      Company’s Current Report on Form 8-K, dated September 24, 2007, filed with
      the SEC on September 24, 2007†10.1
              
              Bimini
      Capital Management, Inc. 2003 Long Term Incentive Compensation Plan, as
      amended September 28, 2007, incorporated by reference to Exhibit 10.3 to
      the Company’s Quarterly Report on Form 10-Q for the period ended September
      30, 2007, filed with the SEC on November 8, 2007†10.2
              
              Bimini
      Capital Management, Inc. 2004 Performance Bonus Plan, as amended September
      28, 2007, incorporated by reference to Exhibit 10.4 to the Company’s
      Quarterly Report on Form 10-Q for the period ended September 30, 2007,
      filed with the SEC on November 8, 2007†10.3
              
              Form
      of Phantom Share Award Agreement incorporated by reference to Exhibit 10.5
      to the Company’s Quarterly Report on Form 10-Q for the period ended
      September 30, 2007, filed with the SEC on November 8,
  2007†10.4
              
              Form
      of Restricted Stock Award Agreement incorporated by reference to Exhibit
      10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended
      September 30, 2007, filed with the SEC on November 8,
  2007†10.5
              
              Separation
      Agreement and General Release, dated as of June 29, 2007, by and among
      Opteum Inc., Opteum Financial Services, LLC and Peter R. Norden,
      incorporated by reference to Exhibit 10.2 to the Company’s Current Report
      on Form 8-K, dated June 30, 2007, filed with the SEC on July 5,
      2007†10.6
              
              Separation
      Agreement and General Release by and between Bimini Capital
      Management, Inc. and Jeffrey J. Zimmer, incorporated by reference to
      Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 14,
      2008, filed with the SEC on April 16, 2008†10.7
              
              Retention
      and Severance Agreement between Bimini Capital Management, Inc. and
      G. Hunter Haas, IV, incorporated by reference to Exhibit 10.1 to the
      Company’s Current Report on Form 8-K, dated April 18, 2008, filed with the
      SEC on April 18, 2008†10.8
              
              Retention
      and Severance Agreement between Bimini Capital Management, Inc. and
      J. Christopher Clifton, incorporated by reference to Exhibit 10.2 to the
      Company’s Current Report on Form 8-K, dated April 18, 2008, filed with the
      SEC on April 18, 2008†*10.9
              
              Employment
      Agreement dated as of April 27, 2006, by and between Opteum Inc. and J.
      Christopher Clifton10.10
              
              Voting
      Agreement, among certain stockholders of Bimini Mortgage Management, Inc.,
      Jeffrey J. Zimmer, Robert E. Cauley, Amber K. Luedke, George H. Haas, IV,
      Kevin L. Bespolka, Maureen A. Hendricks, W. Christopher Mortenson, Buford
      H. Ortale, Peter Norden, certain of Mr. Norden’s affiliates, Jason Kaplan,
      certain of Mr. Kaplan’s affiliates and other former owners of Opteum
      Financial Services, LLC, incorporated by reference to Exhibit 99(D) to the
      Schedule 13D, dated November 3, 2005, filed with the SEC on November 14,
      200510.11
              
              Membership
      Interest Purchase, Option and Investor Rights Agreement among Opteum Inc.,
      Opteum Financial Services, LLC and Citigroup Global Markets Realty Corp.
      dated as of December 21, 2006, incorporated by reference to Exhibit 10.1
      to the Company’s Current Report on Form 8-K, dated December 21, 2006,
      filed with the SEC on December 21, 200610.12
              
              Seventh
      Amended and Restated Limited Liability Company Agreement of Orchid Island
      TRS, LLC, dated as of July 20, 2007, made and entered into by Opteum Inc.
      and Citigroup Global Markets Realty Corp., incorporated by reference to
      Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the
      period ended June 30, 2007, filed with the SEC on August 14,
      200710.13
              
              Asset
      Purchase Agreement, dated May 7, 2007, by and among Opteum Financial
      Services, LLC, Opteum Inc. and Prospect Mortgage Company, LLC,
      incorporated by reference to Exhibit 10.1 to the Company’s Current Report
      on Form 8-K, dated May 7, 2007, filed with the SEC on May 7,
      200710.14
              
              First
      Amendment to Purchase Agreement, dated June 30, 2007, by and among
      Metrocities Mortgage, LLC – Opteum Division, Opteum Financial Services,
      LLC and Opteum Inc., incorporated by reference to Exhibit 10.1 to the
      Company’s Current Report on Form 8-K, dated June 30, 2007, filed with the
      SEC on July 5, 200710.15
              
              Membership
      Interest Purchase Agreement, dated May 27, 2008, by and among Bimini
      Capital Management, Inc., Orchid Island TRS, LLC and Citigroup Global
      Markets Realty Corp., incorporated by reference to Exhibit 10.1 to the
      Company’s Current Report on Form 8-K, dated May 27, 2008, filed with the
      SEC on May 29, 200810.16
              
              Eighth
      Amended and Restated Limited Liability Company of Orchid Island TRS, LLC,
      dated as of May 27, 2008, incorporated by reference to Exhibit 10.2 to the
      Company’s Current Report on Form 8-K, dated May 27, 2008, filed with the
      SEC on May 29, 2008*31.1
              
              Certification
      of the Principal Executive Officer, pursuant to Rule 13a-14(a) or
      15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002*31.2
              
              Certification
      of the Principal Financial Officer, pursuant to Rule 13a-14(a) or
      15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002*32.1
              
              Certification
      of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002*32.2
              
              Certification
      of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002*
      Filed herewith.
                † Management
      compensatory plan or arrangement required to be filed by Item 601 of
      Regulation S-K.