Chimera Investment(CIM) - 2025 Q2 - Quarterly Results

Financial Highlights & Management Commentary Chimera Investment Corporation reported a GAAP Net Income of $0.17 per diluted common share and Earnings Available for Distribution (EAD) of $0.39 per share for Q2 2025, while announcing the acquisition of HomeXpress Mortgage Corporation to become a diversified hybrid residential mortgage REIT Q2 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | GAAP Net Income per Diluted Common Share | $0.17 | | Earnings Available for Distribution per Adjusted Diluted Common Share | $0.39 | | GAAP Book Value per Common Share (as of June 30, 2025) | $20.91 | | Economic Return for the Quarter | 0.5% | | Economic Return for Six Months Ended June 30, 2025 | 9.8% | - Announced a definitive agreement to acquire HomeXpress Mortgage Corporation, a leading non-QM mortgage originator[1][3] - Management is executing a strategy to become a diversified and resilient hybrid residential mortgage REIT through acquisitions (Palisades, HomeXpress) and portfolio diversification into Agency RMBS and MSRs[3] Financial Statements Total assets increased to $14.86 billion from $13.12 billion at year-end 2024, driven by Agency MBS, while Q2 2025 net income decreased to $35.5 million from $56.7 million year-over-year Consolidated Statements of Financial Condition (Balance Sheet) Total assets reached $14.86 billion as of June 30, 2025, up from $13.12 billion at year-end 2024, primarily due to a significant increase in Agency MBS holdings Balance Sheet Summary (in thousands) | Account | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $14,863,229 | $13,116,490 | | Agency MBS, at fair value | $2,675,280 | $519,218 | | Loans held for investment, at fair value | $10,640,298 | $11,196,678 | | Total Liabilities | $12,238,698 | $10,590,301 | | Secured financing agreements | $4,563,063 | $2,824,371 | | Total Stockholders' Equity | $2,624,531 | $2,526,189 | Consolidated Statements of Operations (Income Statement) Net income available to common shareholders for Q2 2025 decreased to $14.0 million ($0.17/share) from $33.9 million ($0.41/share) in Q2 2024, primarily due to lower other income and higher expenses Q2 2025 vs Q2 2024 Income Statement (in thousands, except per share data) | Account | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | | Net Interest Income | $66,010 | $67,295 | | Total Other Income (Losses) | $1,378 | $13,841 | | Total Other Expenses | $27,120 | $20,757 | | Net Income | $35,450 | $56,664 | | Net Income Available to Common Shareholders | $14,024 | $33,913 | | Diluted EPS | $0.17 | $0.41 | Consolidated Statements of Comprehensive Income Comprehensive income available to common shareholders for Q2 2025 was $8.7 million, a decrease from $22.6 million in Q2 2024, impacted by unrealized losses on available-for-sale securities Q2 Comprehensive Income (in thousands) | Account | Q2 2025 (in thousands) | Q2 2024 (in thousands) | | :--- | :--- | :--- | | Net Income | $35,450 | $56,664 | | Other Comprehensive Loss | $(5,335) | $(11,345) | | Comprehensive Income Available to Common Shareholders | $8,689 | $22,568 | Non-GAAP Financial Measures The company reported Earnings Available for Distribution (EAD) of $0.39 per share and Economic Net Interest Income of $69.1 million for Q2 2025, providing alternative performance insights Earnings Available for Distribution (EAD) EAD for Q2 2025 was $32.1 million, or $0.39 per adjusted diluted common share, reflecting adjustments to GAAP net income for non-cash items and transaction expenses - EAD is a non-GAAP measure defined as GAAP net income excluding items such as unrealized gains/losses, realized gains/losses on sales, transaction expenses, and amortization of intangibles[18] Reconciliation of GAAP Net Income to EAD (Q2 2025, in thousands) | Description | Amount (in thousands) | | :--- | :--- | | GAAP Net income available to common stockholders | $14,024 | | Adjustments: | | | Net unrealized (gains) losses on financial instruments | $(6,971) | | Realized (gains) losses on derivatives | $17,954 | | Transaction expenses | $390 | | Increase in provision for credit losses | $4,409 | | Other Adjustments | $2,305 | | Earnings available for distribution | $32,111 | EAD per Share vs. GAAP EPS (Q2 2025) | Metric | Per Share | | :--- | :--- | | GAAP net income per diluted common share | $0.17 | | Earnings available for distribution per adjusted diluted common share | $0.39 | Economic Net Interest Income Economic Net Interest Income, adjusted for derivative costs, was $69.1 million in Q2 2025, exceeding GAAP Net Interest Income of $66.0 million for the same period - Economic Net Interest Income is a non-GAAP measure that equals GAAP net interest income adjusted for the net periodic interest cost of derivatives and excludes interest earned on cash[34] Reconciliation of GAAP NII to Economic NII (Q2 2025, in thousands) | Account | Amount (in thousands) | | :--- | :--- | | GAAP Net Interest Income | $66,010 | | Periodic Interest on derivatives, net | $5,067 | | Other (Interest income on cash) | $(2,002) | | Economic Net Interest Income | $69,075 | Portfolio Analysis The portfolio shifted towards Agency RMBS, now 18.3% of fair value, with GAAP leverage increasing to 4.5:1 and a net interest rate spread of 1.5% for the quarter MBS Portfolio Summary The MBS portfolio at Q2 2025 included $1.01 billion in Non-Agency RMBS and $2.68 billion in Agency RMBS, with significant growth in Agency pass-through securities MBS Portfolio Details (June 30, 2025) | Security Type | Principal/Notional (in thousands) | Weighted Average Fair Value | | :--- | :--- | :--- | | Non-Agency RMBS | | | | Senior | $968,383 | $59.30 | | Subordinated | $613,051 | $57.79 | | Agency RMBS | | | | Pass-through | $2,334,802 | $96.65 | | CMO | $362,333 | $99.69 | Secured Financing Agreements Secured financing agreements totaled $4.57 billion as of June 30, 2025, with a weighted average borrowing rate of 5.60%, a notable increase from $2.84 billion at year-end 2024 Secured Financing Maturities (June 30, 2025) | Remaining Maturity | Principal (in thousands) | Weighted Average Borrowing Rate | | :--- | :--- | :--- | | 1 to 29 days | $2,334,912 | 4.68% | | 30 to 59 days | $376,179 | 6.21% | | 1 to 2 years | $601,662 | 8.28% | | Total | $4,571,393 | 5.60% | Portfolio Characteristics & Leverage Portfolio composition shifted with Agency RMBS increasing to 18.3% and Loans held for investment decreasing to 74.3%, while GAAP leverage rose to 4.5:1 at June 30, 2025 Leverage Ratios | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | GAAP Leverage at period-end | 4.5:1 | 4.0:1 | | GAAP Leverage at period-end (recourse) | 1.8:1 | 1.2:1 | Portfolio Composition by Fair Value | Asset Class | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-Agency RMBS | 7.1% | 8.3% | | Agency RMBS | 18.3% | 3.7% | | Agency CMBS | 0.3% | 0.4% | | Loans held for investment | 74.3% | 87.6% | Portfolio Performance Metrics For Q2 2025, the average yield on interest-earning assets was 6.0%, with a net interest rate spread of 1.5%, and an annualized EAD return on average common equity of 7.54% Q2 2025 Average Yields and Costs | Metric | Value | | :--- | :--- | | Average Yield on Interest-Earning Assets | 6.0% | | Economic Average Cost of Funds | 4.5% | | Net Interest Rate Spread | 1.5% | | Net Interest Margin | 2.1% | Q2 2025 Annualized Returns on Equity | Metric | Value | | :--- | :--- | | Return on Average Equity (GAAP Net Income) | 5.38% | | Economic Net Interest Income / Average Equity | 10.49% | | Earnings available for distribution / Average Common Equity | 7.54% | Other Information This section provides details for the upcoming Q2 2025 earnings conference call and includes a standard disclaimer regarding forward-looking statements and associated risks Conference Call Information Chimera Investment Corporation will host a conference call and live audio webcast to discuss Q2 2025 results on Wednesday, August 6, 2025, at 8:30 a.m. EDT - The earnings conference call is scheduled for Wednesday, August 6, 2025, at 8:30 a.m. EDT[6] Disclaimer and Forward-Looking Statements The press release contains forward-looking statements subject to significant risks and uncertainties, advising readers to consult SEC filings for detailed risk factors - The report includes forward-looking statements subject to risks and uncertainties, and actual results may differ materially; readers should refer to SEC filings like Form 10-K for a full list of risk factors[44][45]