08-05-2025
CHIMERA INVESTMENT CORPORATION REPORTS 1ST QUARTER 2025 EARNINGS
NEW YORK--(BUSINESS WIRE)--Chimera Investment Corporation (NYSE:CIM) today announced its financial results for the first quarter ended March 31, 2025.
Financial Highlights (1):
1ST QUARTER GAAP NET INCOME OF $1.77 PER DILUTED COMMON SHARE
1ST QUARTER EARNINGS AVAILABLE FOR DISTRIBUTION (2) OF $0.41 PER DILUTED COMMON SHARE
GAAP BOOK VALUE OF $21.17 PER COMMON SHARE AND ECONOMIC RETURN (3) OF 9.20% AT MARCH 31, 2025
'This has been a strong quarter for Chimera. Earnings available for distribution improved by 11%, our book value increased by 7.4% and our economic return was 9.2%,' said Phillip Kardis II, President and CEO. 'We also made several impactful moves on our balance sheet. We successfully accomplished a cash-out refinancing of all the Company's outstanding non-Remic securitizations, which provided approximately $187 million in funds for new investment. We also extended two large non-mark to market secured financing facilities until 2027."
(1) All per share amounts, common shares outstanding and restricted shares for all periods presented reflect the Company's 1-for-3 reverse stock split, which was effective after the close of trading on May 21, 2024.
(2) Earnings available for distribution per adjusted diluted common share is a non-GAAP measure. See additional discussion on page 5.
(3) Our economic return is measured by the change in GAAP book value per common share plus common stock dividend.
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Other Information
Chimera is a publicly traded real estate investment trust, or REIT, that is primarily engaged in the business of investing for itself and for unrelated third parties through its investment management and advisory services in a diversified portfolio of real estate assets, including residential mortgage loans, Non-Agency RMBS, Agency RMBS, business purpose and investor loans, including RTLs, and other real estate-related assets such as Agency CMBS.
(dollars in thousands, except share and per share data)
(Unaudited)
March 31, 2025
December 31, 2024
Assets:
Cash and cash equivalents
$
253,349
$
83,998
Non-Agency RMBS, at fair value (net of allowance for credit losses of $32 million and $28 million, respectively)
1,059,840
1,064,169
Agency MBS, at fair value
656,335
519,218
Loans held for investment, at fair value
10,983,840
11,196,678
Accrued interest receivable
84,082
81,386
Other assets
167,880
170,924
Derivatives, at fair value
—
117
Total assets (1)
$
13,205,326
$
13,116,490
Liabilities:
Secured financing agreements ($4.2 billion and $4.1 billion pledged as collateral, respectively, and includes $321 million and $319 million at fair value, respectively)
$
2,994,191
$
2,824,371
Securitized debt, collateralized by Non-Agency RMBS ($225 million and $229 million pledged as collateral, respectively)
69,990
71,247
Securitized debt at fair value, collateralized by Loans held for investment ($10.3 billion and $10.2 billion pledged as collateral, respectively)
7,198,089
6,984,495
Long term debt
134,928
134,646
Payable for investments purchased
38,477
454,730
Accrued interest payable
38,164
41,472
Dividends payable
34,153
34,265
Accounts payable and other liabilities
53,030
45,075
Derivatives, at fair value, net
240
—
Total liabilities (1)
$
10,561,262
$
10,590,301
Stockholders' Equity:
Preferred Stock, par value of $0.01 per share, 100,000,000 shares authorized:
8.00% Series A cumulative redeemable: 5,800,000 shares issued and outstanding, respectively ($145,000 liquidation preference)
$
58
$
58
8.00% Series B cumulative redeemable: 13,000,000 shares issued and outstanding, respectively ($325,000 liquidation preference)
130
130
7.75% Series C cumulative redeemable: 10,400,000 shares issued and outstanding, respectively ($260,000 liquidation preference)
104
104
8.00% Series D cumulative redeemable: 8,000,000 shares issued and outstanding, respectively ($200,000 liquidation preference)
80
80
Common stock: par value $0.01 per share; 166,666,667 shares authorized, 80,970,256 and 80,922,221 shares issued and outstanding, respectively
810
809
Additional paid-in-capital
4,394,600
4,390,516
Accumulated other comprehensive income
157,770
159,449
Cumulative earnings
4,508,408
4,341,111
Cumulative distributions to stockholders
(6,417,896
)
(6,366,068
)
Total stockholders' equity
$
2,644,064
$
2,526,189
Total liabilities and stockholders' equity
$
13,205,326
$
13,116,490
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(1) The Company's consolidated statements of financial condition include assets of consolidated variable interest entities, or VIEs, that can only be used to settle obligations and liabilities of the VIE for which creditors do not have recourse to the primary beneficiary (Chimera Investment Corporation). As of March 31, 2025, and December 31, 2024, total assets of consolidated VIEs were $10,130,294 and $9,970,094, respectively, and total liabilities of consolidated VIEs were $6,990,372 and $6,766,505, respectively.
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(dollars in thousands, except share and per share data)
(Unaudited)
For the Quarters Ended
March 31, 2025
March 31, 2024
Net interest income:
Interest income (1)
$
190,616
$
186,574
Interest expense (2)
121,397
121,468
Net interest income
69,219
65,106
Increase (decrease) in provision for credit losses
3,387
1,347
Other income (losses):
Net unrealized gains (losses) on derivatives
(6,469
)
5,189
Realized gains (losses) on derivatives
82
—
Periodic interest on derivatives, net
4,135
5,476
Net gains (losses) on derivatives
(2,252
)
10,665
Investment management and advisory fees
8,936
—
Net unrealized gains (losses) on financial instruments at fair value
128,895
76,765
Net realized gains (losses) on sales of investments
—
(3,750
)
Gains (losses) on extinguishment of debt
2,122
—
Other investment gains (losses)
(417
)
4,686
Total other income (losses)
137,284
88,366
Other expenses:
Compensation and benefits
13,085
9,213
General and administrative expenses
6,907
5,720
Servicing and asset manager fees
7,431
7,663
Amortization of intangibles and depreciation expenses
951
—
Transaction expenses
5,688
67
Total other expenses
34,062
22,663
Income before income taxes
169,052
129,462
Income tax expense
1,755
8
Net income
$
167,297
$
129,454
Dividends on preferred stock
21,357
18,438
$
145,940
$
111,016
Net income per share available to common shareholders:
Basic
$
1.79
$
1.37
Diluted
$
1.77
$
1.36
Weighted average number of common shares outstanding:
Basic
81,350,497
81,239,381
Diluted
82,394,218
81,718,214
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(1) Includes interest income of consolidated VIEs of $144,402 and $146,917 for the quarters ended March 31, 2025, and 2024, respectively.
(2) Includes interest expense of consolidated VIEs of $69,651 and $73,123 for the quarters ended March 31, 2025, and 2024, respectively.
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Earnings available for distribution
Earnings available for distribution is a non-GAAP measure and is defined as GAAP net income excluding (i) unrealized gains or losses on financial instruments carried at fair value with changes in fair value recorded in earnings, (ii) realized gains or losses on the sales of investments, (iii) gains or losses on the extinguishment of debt, (iv) changes in the provision for credit losses, (v) unrealized gains or losses on derivatives, (vi) realized gains or losses on derivatives, (vii) transaction expenses, (viii) stock compensation expenses for retirement eligible awards, (ix) amortization of intangibles and depreciation expenses, (x) non-cash imputed compensation expense related to business acquisitions, and (xi) other gains and losses on equity investments.
Non-cash imputed compensation expense reflects the portion of the consideration paid in the Palisades Acquisition that pursuant to the seller's contractual arrangements is distributable to the seller's legacy employees (who are now our employees) and that for GAAP purposes is recorded as non-cash imputed compensation expense with an offsetting entry recorded as non-cash contribution from a related party to our shareholder's equity. The excluded amounts do not include any normal, recurring compensation paid to our employees.
Transaction expenses are primarily comprised of costs only incurred at the time of execution of our securitizations, certain structured secured financing agreements, and business combination transactions and include costs such as underwriting fees, legal fees, diligence fees, accounting fees, bank fees and other similar transaction-related expenses. These costs are all incurred prior to or at the execution of the transaction and do not recur. Recurring expenses, such as servicing fees, custodial fees, trustee fees and other similar ongoing fees are not excluded from earnings available for distribution. We believe that excluding these costs is useful to investors as it is generally consistent with our peer group's treatment of these costs in their non-GAAP measures presentation, mitigates period to period comparability issues tied to the timing of securitization and structured finance transactions, and is consistent with the accounting for the deferral of debt issue costs prior to the fair value election option made by us. In addition, we believe it is important for investors to review this metric which is consistent with how management internally evaluates the performance of the Company. Stock compensation expense charges incurred on awards to retirement eligible employees is reflected as an expense over a vesting period (generally 36 months) rather than reported as an immediate expense.
We view Earnings available for distribution as one measure of our investment portfolio's ability to generate income for distribution to common stockholders. Earnings available for distribution is one of the metrics, but not the exclusive metric, that our Board of Directors uses to determine the amount, if any, of dividends on our common stock. Other metrics that our Board of Directors may consider when determining the amount, if any, of dividends on our common stock include, among others, REIT taxable income, dividend yield, book value, cash generated from the portfolio, reinvestment opportunities and other cash needs. To maintain our qualification as a REIT, U.S. federal income tax law generally requires that we distribute at least 90% of our REIT taxable income (subject to certain adjustments) annually. Earnings available for distribution, however, is different than REIT taxable income, and the determination of whether we have met the requirement to distribute at least 90% of our annual REIT taxable income is not based on Earnings available for distribution. Therefore, Earnings available for distribution should not be considered as an indication of our REIT taxable income, a guaranty of our ability to pay dividends, or as a proxy for the amount of dividends we may pay. We believe Earnings available for distribution helps us and investors evaluate our financial performance period over period without the impact of certain non-recurring transactions. Therefore, Earnings available for distribution should not be viewed in isolation and is not a substitute for or superior to net income or net income per basic share computed in accordance with GAAP. In addition, our methodology for calculating Earnings available for distribution may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and accordingly, our Earnings available for distribution may not be comparable to the Earnings available for distribution reported by other REITs.
The following table provides GAAP measures of net income and net income per diluted share available to common stockholders for the periods presented and details with respect to reconciling the line items to Earnings available for distribution and related per average diluted common share amounts. Earnings available for distribution is presented on an adjusted dilutive shares basis.
(1) As a result of the Palisades Acquisition, we updated the determination of earnings available for distribution to exclude non-recurring acquisition-related transaction expenses, non-cash amortization of intangibles and depreciation expenses, and non-cash imputed compensation expenses. These expenses are excluded as they relate to the Palisades Acquisition and are not directly related to generation of our portfolio's investment income.
(2) Non-cash amortization of intangibles and depreciation expenses related to Palisades Acquisition
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The following tables provide a summary of the Company's MBS portfolio at March 31, 2025 and December 31, 2024.
(1) Bond Equivalent Yield at period end.
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December 31, 2024
Principal or
Notional Value at
Period-End
(dollars in
thousands)
Weighted
Average
Amortized
Cost Basis
Weighted
Average Fair
Value
Weighted
Average
Coupon
Weighted Average
Yield at Period-
End (1)
Non-Agency RMBS
Senior
$
1,010,128
$
45.11
$
60.83
5.7
%
17.6
%
Subordinated
648,977
59.18
57.99
4.5
%
8.0
%
Interest-only
2,644,741
5.81
2.77
0.7
%
6.6
%
Agency RMBS
CMO
464,640
99.97
99.36
5.8
%
5.8
%
Interest-only
380,311
5.15
4.41
0.7
%
6.9
%
Agency CMBS
Project loans
40,882
101.51
84.07
3.5
%
3.4
%
Interest-only
449,437
1.36
1.43
0.5
%
8.9
%
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(1) Bond Equivalent Yield at period end.
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At March 31, 2025 and December 31, 2024, the secured financing agreements collateralized by MBS and Loans held for investment had the following remaining maturities and borrowing rates.
(1) The values for secured financing agreements in the table above is net of $1 million of deferred financing costs as of March 31, 2025.
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The following table summarizes certain characteristics of our portfolio at March 31, 2025 and December 31, 2024.
March 31, 2025
December 31, 2024
March 31, 2025
December 31, 2024
Portfolio Composition
Amortized Cost
Fair Value
Non-Agency RMBS
7.9
%
7.9
%
8.3
%
8.3
%
Senior
3.7
%
3.7
%
4.7
%
4.8
%
Subordinated
3.0
%
3.0
%
3.0
%
2.9
%
Interest-only
1.2
%
1.2
%
0.6
%
0.6
%
Agency RMBS
4.9
%
3.7
%
4.8
%
3.7
%
Pass-through
1.2
%
—
%
1.2
%
—
%
CMO
3.5
%
3.6
%
3.5
%
3.6
%
Interest-only
0.2
%
0.1
%
0.1
%
0.1
%
Agency CMBS
0.4
%
0.4
%
0.4
%
0.4
%
Project loans
0.3
%
0.3
%
0.3
%
0.3
%
Interest-only
0.1
%
0.1
%
0.1
%
0.1
%
Loans held for investment
86.8
%
88.0
%
86.5
%
87.6
%
Fixed-rate percentage of portfolio
82.5
%
87.9
%
81.9
%
87.3
%
Adjustable-rate percentage of portfolio
17.5
%
12.1
%
18.1
%
12.7
%
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Economic Net Interest Income
Our Economic net interest income is a non-GAAP financial measure that equals GAAP net interest income adjusted for net periodic interest cost of derivatives and excludes interest earned on cash. For the purpose of computing economic net interest income and ratios relating to cost of funds measures throughout this section, interest expense includes net payments on our derivatives, which is presented as a part of Net gains (losses) on derivatives in our Consolidated Statements of Operations. Interest rate swaps and swap futures are used to manage the increase in interest paid on secured financing agreements in a rising rate environment. Presenting the net contractual interest payments on interest rate derivatives with the interest paid on interest-bearing liabilities reflects our total contractual interest payments. We believe this presentation is useful to investors because it depicts the economic value of our investment strategy by showing all components of interest expense and net interest income of our investment portfolio. However, Economic net interest income should not be viewed in isolation and is not a substitute for net interest income computed in accordance with GAAP. Where indicated, interest expense, adjusting for any interest earned on cash, is referred to as Economic interest expense. Where indicated, net interest income reflecting net periodic interest cost of interest rate swaps and any interest earned on cash, is referred to as Economic net interest income.
The following table reconciles the Economic net interest income to GAAP net interest income and Economic interest expense to GAAP interest expense for the periods presented.
(1) Primarily interest income on cash and cash equivalents
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The table below shows our average earning assets held, interest earned on assets, yield on average interest earning assets, average debt balance, economic interest expense, economic average cost of funds, economic net interest income, and net interest rate spread for the periods presented.
(1) Interest-earning assets at amortized cost.
(2) Interest includes periodic interest on derivatives, net
(3) These amounts have been adjusted to reflect the daily outstanding averages for which the financial instruments were held during the period.
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The table below shows our Net Income and Economic net interest income as a percentage of average stockholders' equity and Earnings available for distribution as a percentage of average common stockholders' equity. Return on average equity is defined as our GAAP net income (loss) as a percentage of average equity. Average equity is defined as the average of our beginning and ending stockholders' equity balance for the period reported. Economic Net Interest Income and Earnings available for distribution are non-GAAP measures as defined in previous sections.
(Ratios have been annualized)
For the Quarter Ended March 31, 2025
25.89
%
11.19
%
8.10
%
For the Quarter Ended December 31, 2024
(22.27
)%
10.52
%
7.16
%
For the Quarter Ended September 30, 2024
20.30
%
10.64
%
6.79
%
For the Quarter Ended June 30, 2024
8.57
%
11.06
%
7.08
%
For the Quarter Ended March 31, 2024
19.90
%
10.45
%
7.31
%
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The following table presents changes to Accretable Discount (net of premiums) as it pertains to our Non-Agency RMBS portfolio, excluding premiums on interest-only investments, during the previous five quarters.
Disclaimer
In this press release references to 'we,' 'us,' 'our' or 'the Company' refer to Chimera Investment Corporation and its subsidiaries unless specifically stated otherwise or the context otherwise indicates. This press release includes 'forward-looking statements' within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as 'goal,' 'expect,' 'target,' 'assume,' 'estimate,' 'project,' 'budget,' 'forecast,' 'anticipate,' 'intend,' 'plan,' 'may,' 'would,' 'will,' 'could,' 'should,' 'believe,' 'predict,' 'potential,' 'continue,' or similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results, including, among other things, those described in our most recent Annual Report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, under the caption 'Risk Factors.' Factors that could cause actual results to differ include, but are not limited to: our ability to obtain funding on favorable terms and access the capital markets; our ability to achieve optimal levels of leverage and effectively manage our liquidity; changes in inflation, the yield curve, interest rates and mortgage prepayment rates; our ability to manage credit risk related to our investments and comply with the Risk Retention Rules; rates of default, delinquencies, forbearance, deferred payments or decreased recovery rates on our investments; the concentration of properties securing our securities and residential loans in a small number of geographic areas; our ability to execute on our business and investment strategy; our ability to determine accurately the fair market value of our assets; changes in our industry, the general economy or geopolitical conditions; our ability to successfully integrate and realize the anticipated benefits of any acquisitions, including the Palisades Acquisition; our ability to operate our investment management and advisory services and manage any regulatory rules and conflicts of interest; the degree to which our hedging strategies may or may not be effective; our ability to effect our strategy to securitize residential mortgage loans; our ability to compete with competitors and source target assets at attractive prices; our ability to find and retain qualified executive officers and key personnel; the ability of servicers and other third parties to perform their services at a high level and comply with applicable law and expanding regulations; our dependence on information technology and its susceptibility to cyber-attacks; our ability to comply with extensive government regulation; the impact of and changes in governmental regulations, tax law and rates, accounting guidance, and similar matters; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; our ability to maintain our classification as a real estate investment trust for U.S. federal income tax purposes; the volatility of the market price and trading volume of our shares; and our ability to make distributions to our stockholders in the future.
Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Chimera does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these, and other risk factors, is contained in Chimera's most recent filings with the Securities and Exchange Commission (SEC). All subsequent written and oral forward-looking statements concerning Chimera or matters attributable to Chimera or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.
Readers are advised that any financial information in this press release is based on Company data available at the time of this presentation and, in certain circumstances, may not have been audited by the Company's independent auditors.
