we discuss ideas like this as they happen in more detail. All active investors are welcome to join on a free trial and ask any question in our chat room full of sophisticated traders and investors.Chimera Investment Corporation ( CIM ) continues to attract attention with its high-yield fixed-income instruments. We have already written about the company , but today we will look at the opportunities it offers and assign it a credit ratingArbitrage Trader, aka Denislav Iliev has been day trading for 15+ years ...

Investment Portfolio - As of September 30, 2025, approximately 73% of the investment portfolio was allocated to residential mortgage loans, 21% to Agency RMBS, and 6% to Non-Agency RMBS[281]. - The company purchased approximately $1.2 billion of Agency RMBS Pass-throughs, targeting a return on equity in the 12% to 14% range[302][303]. - The principal value of Agency RMBS Pass-through was $2,561,414 thousand with a weighted average yield of 4.9%[410]. - The principal value of Non-Agency RMBS Senior was $865,570 thousand with a weighted average yield of 5.7%[410]. - The principal value of Re-performing Loans was $9,204,848 thousand with a weighted average coupon of 5.5% and an average loss severity of 33.7%[410]. - The weighted average coupon for Non-Agency RMBS Subordinated was 4.3% as of September 30, 2025, with a principal value of $499,426 thousand[410]. Financial Performance - For the quarter ended September 30, 2025, the net loss available to common shareholders was $22 million, or $(0.27) per average basic common share, compared to a net income of $14 million, or $0.17 per average basic common share for the previous quarter[334]. - Net interest income for the quarter was $65 million, with interest income increasing by approximately $8 million, or 3.9%, to $209 million, primarily driven by Agency RMBS purchases[336]. - Interest expense increased by $9 million, or 6.5%, to $144 million for the quarter, mainly due to higher borrowings for purchasing $1.2 billion of Agency RMBS pass-throughs[338]. - For the nine months ended September 30, 2025, net income available to common shareholders was $138 million, or $1.69 per average basic common share, down from $259 million, or $3.20 per average basic common share in the same period last year[335]. - Economic net interest income for the quarter ended September 30, 2025, remained relatively unchanged at $69 million compared to the prior quarter[351]. - The book value per share decreased by 3.2% to $20.24 due to higher valuations on securitized debt liabilities and elevated transaction expenses[320]. Acquisition and Strategic Initiatives - The acquisition of HomeXpress was completed on October 1, 2025, for $240 million in cash, including an estimated adjusted book value of $120 million and a premium of $120 million[290]. - The HomeXpress Acquisition is expected to diversify revenue sources and support the company's investment strategy and dividend objectives[323]. - The company plans to continue evaluating opportunities to acquire mortgage servicing rights to balance duration risk and diversify earnings sources[324]. - The company executed asset sales to temporarily increase cash holdings in preparation for the HomeXpress Acquisition, which closed on October 1, 2025[416]. Market Conditions - Mortgage rates fell in the third quarter, with the Freddie Mac 30-year survey rate decreasing from 6.77% to 6.30%[292]. - The U.S. housing shortage is estimated at 5 million homes, with demand exceeding construction, particularly in high-growth markets[294]. - Credit spreads tightened moderately in the third quarter, supported by strong collateral performance and broad investor demand[288]. - The National Association of Retailers Housing Affordability Index improved modestly in the third quarter as housing prices and mortgage rates declined[293]. Expenses and Cash Flow - Operating expenses increased, with compensation expenses rising by $2 million and transaction expenses increasing by $10 million due to the HomeXpress Acquisition[315]. - Cash and cash equivalents increased to approximately $491 million as of September 30, 2025, up by $407 million from $84 million at December 31, 2024[421]. - Investing activities used $1.3 billion in cash for the nine months ended September 30, 2025, compared to $511 million in 2024, with significant purchases of $3.3 billion in Agency MBS[423]. - Financing activities provided $1.8 billion in cash for the nine months ended September 30, 2025, a substantial increase from $219 million in 2024, driven by $2.0 billion in net proceeds from secured financing agreements[424]. Debt and Financing - The carrying value of total interest-bearing debt was approximately $12.2 billion as of September 30, 2025, representing a leverage ratio of approximately 4.8:1[433]. - The weighted average borrowing rates for secured financing agreements collateralized by Agency RMBS and Agency CMBS were both 4.4% as of September 30, 2025, down from 4.8% at December 31, 2024[430]. - The company anticipates continuing to borrow funds through secured financing agreements to meet short-term liquidity needs[418]. - The company highlighted potential challenges in securing and maintaining financing agreements due to market conditions[417]. Risk Management - Credit risk is primarily associated with investments in Non-Agency RMBS and residential mortgage loans, particularly those rated below "AAA" or not rated[473]. - Significant estimates include current expected credit losses of Non-Agency RMBS and valuation of Loans held for investments, which could materially impact financial results[469]. - The company conducts independent reviews of mortgage files to assess origination and servicing quality, focusing on specific risk-based criteria[474].

Financial Data and Key Metrics Changes - GAAP net loss for Q3 2025 was $22 million or $0.27 per share, with GAAP book value at $20.24 per share [11] - Economic return on GAAP book value was negative 1.4% for Q3, while year-to-date return was 8.3% [11] - Economic net interest income for Q3 was $69 million, with a yield on average interest-earning assets of 5.9% and an average cost of funds of 4.5% [11] Business Line Data and Key Metrics Changes - Home Express originated $2.4 billion by UPB in Q3, up 36% year-over-year, with expectations of around $1 billion in Q4 originations [9][10] - For 2026, projected originations are between $4 billion and $4.4 billion, with pre-tax earnings of $62 million to $80 million [10] Market Data and Key Metrics Changes - The non-QM market share is expected to grow from 1.1% in 2021 to 5.1% or more than $100 billion in 2025, indicating a five-fold increase [5] - Primary mortgage rates declined approximately 35 basis points to 6.32%, leading to a rise in refinance activity [18] Company Strategy and Development Direction - The acquisition of Home Express for $267 million is aimed at enhancing earnings, diversifying revenue streams, and supporting long-term growth [9][10] - The company is focused on building a balanced and diversified portfolio, reducing reliance on residential credit [21] Management's Comments on Operating Environment and Future Outlook - The U.S. economy remains mixed but resilient, with growth supported by non-residential investment and gradual cooling in labor conditions [17] - The Federal Reserve has shifted to a more growth-oriented policy, cutting rates to support employment [17] Other Important Information - The company ended Q3 with $752 million in total cash and unencumbered assets, up from $561 million at the end of Q2 [12] - The acquisition of Home Express is expected to create synergies and enhance the company's asset management capabilities [25] Q&A Session Summary Question: Can you walk through the change in book value? - Management explained that the change was due to a lag in the timing of spreads changing in the securitization markets compared to the loan market, along with the steepening yield curve affecting securitized debt more significantly [29][30] Question: What is the update on book value for the quarter? - Management reported a 2.4% increase in book value through October 31 [31] Question: Is Goodwill $120 million from the acquisition? - Management confirmed that the total premium was above the $120 million book value, with ongoing evaluations for purchase accounting [32] Question: How will Home Express's earnings impact dividends? - Management indicated that the board will consider various factors regarding the retention of earnings for growth versus dividend payouts [36][37] Question: What are the near-term expectations for loan retention and securitization? - Management stated the intent to retain loans without disrupting existing partnerships, with expectations of one securitization per quarter [40][42]

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Q3 2025 | INVESTOR PRESENTATION November 6, 2025 Disclaimer This presentation includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including as related to the expected impact (including related to Chimera's future earnings) of Chimera's acquisition of HomeXpress. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking stat ...

Financial Performance - GAAP net loss of $0.27 per diluted common share for Q3 2025, with GAAP net income of $1.67 per diluted common share for the nine months ended September 30, 2025[3] - Net (loss) income available to common shareholders was $(21.99) million for Q3 2025, compared to $113.67 million in Q3 2024[12] - Comprehensive (loss) income available to common stock shareholders was $(25.00) million for Q3 2025, compared to $123.22 million in Q3 2024[15] - GAAP net income available to common stockholders for Q3 2025 was $(21,997) thousand, compared to $14,024 thousand in Q2 2025 and $145,940 thousand in Q1 2025[22] - Earnings available for distribution for Q3 2025 was $30,255 thousand, a decrease from $32,111 thousand in Q2 2025 and $33,526 thousand in Q1 2025[22] - The company reported a GAAP net income (loss) per diluted common share of $(0.27) for Q3 2025, compared to $0.17 in Q2 2025 and $1.77 in Q1 2025[22] Assets and Liabilities - Total assets increased to $15.12 billion as of September 30, 2025, compared to $13.12 billion at December 31, 2024[10] - Total liabilities increased to $12.54 billion as of September 30, 2025, from $10.59 billion at December 31, 2024[10] - Cash and cash equivalents rose to $491.48 million from $83.99 million at the end of 2024[10] - Total interest-earning assets at period-end increased to $14,111,113 thousand as of September 30, 2025, up from $12,780,065 thousand at December 31, 2024[30] - Total interest-bearing liabilities at period-end rose to $12,218,502 thousand as of September 30, 2025, compared to $10,014,759 thousand at December 31, 2024[30] Acquisition - Completed the acquisition of HomeXpress on October 1, 2025, for $240 million in cash, including an estimated adjusted book value of $120 million and a premium of $120 million[3] - The company completed the acquisition of HomeXpress, which is expected to impact future earnings positively[41] Income and Yield - Net interest income for Q3 2025 was $65.01 million, a slight decrease from $66.45 million in Q3 2024[12] - Economic net interest income for the quarter ended September 30, 2025, was $68,558,000, reflecting a net interest rate spread of 1.4%[34] - The economic average cost of funds was 4.5% for the quarter ended September 30, 2025[36] - The weighted average yield at period-end for Non-Agency RMBS senior class was 5.7% as of September 30, 2025, consistent with the previous quarter[25] Portfolio Composition - Loans held for investment represented 73.5% of the portfolio composition as of September 30, 2025[31] - The fixed-rate percentage of the portfolio was 86.0% as of September 30, 2025, compared to 87.9% at the end of December 2024[31] - Non-Agency RMBS portfolio's accretable discount balance decreased to $89,297,000 by the end of September 2025[40] Financial Metrics - GAAP book value of $20.24 per common share at September 30, 2025, with an economic return of (1.4)% for the quarter and 8.3% for the nine months[3] - The company's return on average equity for the quarter ended September 30, 2025, was (0.09)%[39] - Average interest-earning assets increased to $13,954,447,000 with a yield of 5.9% for the quarter ended September 30, 2025[36] - The average debt balance for the quarter ended September 30, 2025, was $12,278,733,000[36] Regulatory and Cautionary Statements - The company plans to maintain its REIT qualification by distributing at least 90% of its REIT taxable income annually[20] - Earnings available for distribution is a key metric used by the Board of Directors to determine dividends, alongside other metrics such as REIT taxable income and cash generated from the portfolio[20] - Chimera cautions readers not to place undue reliance on forward-looking statements, which are only valid as of the date made[42] - Financial information in the press release is based on Company data available at the time and may not have been audited[43]

Core Insights - Chimera Investment Corporation reported its financial results for Q3 2025, highlighting a significant transition in its business strategy with the acquisition of HomeXpress, which is expected to enhance earnings diversification and growth moving into 2026 [3][7]. Financial Performance - The company recorded a GAAP net loss of $0.27 per diluted common share for Q3 2025, while the GAAP net income for the nine months ended September 30, 2025, was $1.67 per diluted common share [7][10]. - Earnings available for distribution were reported at $0.37 per adjusted diluted common share [7][10]. - The GAAP book value per common share stood at $20.24 as of September 30, 2025, reflecting an economic return of -1.4% for the quarter and 8.3% for the nine months [7][10]. Acquisition Details - The acquisition of HomeXpress was completed on October 1, 2025, for a total cash consideration of $240 million, which included an estimated adjusted book value of $120 million and a premium of $120 million, along with the issuance of 2,077,151 shares of common stock [7][10]. Asset and Liability Overview - Total assets as of September 30, 2025, were reported at $15.12 billion, an increase from $13.12 billion at the end of 2024 [9]. - Total liabilities amounted to $12.54 billion, up from $10.59 billion at the end of 2024 [9]. Income Statement Highlights - For Q3 2025, net interest income was $65.01 million, with interest income of $209.1 million and interest expense of $144.1 million [10]. - The company experienced a net loss of $580,000 for the quarter, with total other income (losses) reported at -$24.19 million [10][11]. Portfolio Composition - As of September 30, 2025, the company held a diversified mortgage-backed securities (MBS) portfolio, including Non-Agency RMBS and Agency RMBS, with significant principal values and varying yields [19][20].

Core Viewpoint - Chimera Investment Corporation has declared its fourth quarter 2025 cash dividends for various series of preferred stock, reflecting its commitment to providing returns to shareholders [2][3][4][5]. Dividend Declarations - The Board of Directors declared a cash dividend of $0.50 per share for the 8.00% Series A Cumulative Redeemable Preferred Stock, payable on December 30, 2025, to shareholders of record on December 1, 2025, with an ex-dividend date of December 1, 2025 [2]. - A cash dividend of $0.6274 per share was declared for the 8.00% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, reflecting a rate of 10.03786%, also payable on December 30, 2025, to shareholders of record on December 1, 2025, with the same ex-dividend date [3]. - The 7.75% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock will have a cash dividend of $0.5681 per share, reflecting a rate of 8.98986%, payable on December 30, 2025, to shareholders of record on December 1, 2025 [4]. - For the 8.00% Series D Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, a cash dividend of $0.6083 per share was declared, reflecting a rate of 9.62586%, payable on December 30, 2025, to shareholders of record on December 1, 2025 [5]. Company Overview - Chimera Investment Corporation is a publicly traded real estate investment trust (REIT) focused on providing attractive risk-adjusted returns and distributable income through investments linked to mortgage credit fundamentals [6]. - The company operates a fully integrated mortgage business that originates, manages, and invests in a diversified range of mortgage assets, including residential mortgage loans and various types of mortgage-backed securities [6].

Core Insights - Chimera Investment has been recognized as a Top 10 Real Estate Investment Trust (REIT) by Dividend Channel, highlighting its attractive valuation and strong profitability metrics [1] - The current share price of Chimera Investment is $12.76, with a price-to-book ratio of 0.4 and an annual dividend yield of 11.60%, significantly higher than the average yields and price-to-book ratios of other stocks in the coverage universe [1] - The company has a strong quarterly dividend history and favorable long-term growth rates in key fundamental data points [1] Valuation and Profitability - Dividend Channel's report emphasizes the importance of researching profitable companies that are trading at attractive valuations for dividend investors [2] - REITs are required to distribute at least 90% of their taxable income as dividends, which can lead to high yields but also introduces volatility in dividend payments [2] Dividend History - Chimera Investment currently pays an annualized dividend of $1.48 per share, distributed quarterly, with the most recent ex-dividend date on September 30, 2025 [3] - The long-term dividend history is considered crucial for assessing the sustainability of current dividend payments [3]

Core Insights - Rida Morwa has over 35 years of experience in investment and commercial banking, focusing on high-yield investment strategies since 1991 [1] - The Investing Group High Dividend Opportunities aims for a targeted safe yield of over 9% through various high-yield investments [1] Features of the Service - The service includes a model portfolio with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and active chat access to service leaders [2] - It emphasizes community and education, promoting the idea that investors should not invest alone [2]