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Chimera Investment said its first-quarter dividend was covered, with earnings available for distribution of $0.54 per share versus a $0.45 dividend, or about 1.2x coverage. Despite a GAAP net loss of about $65 million, management emphasized steady dividend growth over the past 10 quarters.
The company continued to reposition its portfolio toward more liquid assets, including reducing loans from 62% to 55% of the mix and increasing Agency RMBS from 15% to 21%. The moves, including the redemption of eight securitizations, released capital but also weighed on book value in the quarter.
HomeXpress Mortgage posted strong growth, funding $884 million of loans, up 39% year over year, while generating $11.4 million of EBITDA. Chimera also plans to launch a new CIM HomeX securitization program soon as it looks to expand originations and fee-based income.
Chimera Investment (NYSE:CIM) executives said the company covered its dividend in the first quarter of 2026 while continuing to reposition its portfolio toward more liquid assets and expanding its HomeXpress Mortgage origination platform.
President and Chief Executive Officer Phillip Kardis said the quarter unfolded against a volatile market backdrop, with Treasury yields moving higher, the yield curve flattening, mortgage rates reversing higher after briefly reaching a 3.5-year low, mortgage basis widening and geopolitical tensions adding to market uncertainty.
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“We are operating in a market where uncertainty is not episodic, it’s structural,” Kardis said. “We don’t try to predict where the market will be. We focus on being prepared for wherever it goes.”
Chief Financial Officer Subra Viswanathan said Chimera reported a GAAP net loss of approximately $65 million for the quarter. Earnings available for distribution, or EAD, were approximately $46 million, or $0.54 per share, compared with $34 million, or $0.41 per share, in the first quarter of 2025.
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The company’s quarterly dividend of $0.45 per share was covered by earnings at approximately 1.2 times, according to Viswanathan. Kardis noted that over the past 10 quarters, Chimera’s EAD has exceeded its dividend in nine quarters, missing once by $0.01, while the company has increased its dividend from $0.33 to $0.45 per share.
GAAP book value per share declined 6.9% to $18.34. Viswanathan said that excluding the impact of the redemption of eight securitization deals and related loan sales, book value was down 2.5%. Economic return on GAAP book value was negative 4.6%, based on the quarterly change in book value and the first-quarter dividend.
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Viswanathan said Chimera ended the quarter with $675 million in total cash and unencumbered assets, up from $528 million at year-end. Total leverage was 5.2 times, while recourse leverage was 2.9 times.
Chimera continued to shift its investment portfolio during the quarter. Kardis said the company’s allocation to loans decreased from 62% to 55%, while its allocation to Agency residential mortgage-backed securities increased from 15% to 21%.
The main driver was the redemption of eight securitizations backed by $1.5 billion of seasoned re-performing loans. Chimera sold $1.2 billion of those loans, generating $195 million in net proceeds, and retained $287 million for current income and future securitization.
Chief Investment Officer Jack Macdowell said the transactions released capital at a break-even return on equity of just under 8%, and Chimera estimates that redeploying the capital has the potential to increase annual earnings power by $15 million.
Macdowell also explained that the securitization calls affected reported book value because Chimera redeemed securities at par that had been carried on the balance sheet at a discount. That discount, approximately $43 million, reduced book value. He said the strategic transactions accounted for nearly two-thirds of the quarter’s book value decline.
“For context, the majority of our book value decline this quarter was a direct result of strategic actions that are designed to improve the quality of our portfolio and enhance our go-forward earnings potential,” Macdowell said.
Macdowell said Chimera added $1.9 billion of Agency MBS during the quarter, bringing its specified pool portfolio to $4.9 billion. The company also used TBA positions to manage risk, including short positions established during March volatility and later adjusted after loan sales raised liquidity.
HomeXpress Mortgage, Chimera’s residential origination platform, funded $884 million of loans in the first quarter, a 39% increase from the first quarter of 2025. Kyle Walker, president and CEO of HomeXpress Mortgage, said all of the volume consisted of first-lien residential mortgages.
HomeXpress generated EBITDA of $11.4 million, with an annualized EBITDA return on equity of 16.8%. Walker said the platform’s net origination margin, which includes gain on sale and operating costs, was 114 basis points.
Walker said first-quarter origination volume was not meaningfully affected by late-quarter market volatility because of the natural lag between loan submission and closing, and because non-QM and business-purpose loan demand is less dependent on rate-driven refinancing activity.
“Demand continues to be driven less by rate-sensitive refinancing activity and more by borrowers with specific financing needs, including consumer home purchases, cash-out refinancings, and investment property purchases,” Walker said.
Walker said HomeXpress has focused on increasing the percentage of consumer non-QM loans, which typically carry higher average balances. Average loan size rose from $424,000 in March to $451,000 in April, compared with $410,000 for the full first quarter.
HomeXpress increased total warehouse funding capacity to $1.5 billion during the quarter. Walker said the company maintains seven warehouse facilities with large financial institutions and serves more than 6,000 approved broker sources through 142 account executives and related sales staff.
Kardis said Chimera ended the quarter with $476 million of cash, approximately $200 million of unencumbered assets and nearly $500 million of equity allocated to Agency RMBS. He said the company expects to continue growing and diversifying the portfolio, expanding originations, building fee-based income and pursuing acquisitions.
Chimera has also begun purchasing newly originated loans from HomeXpress. Kardis said the company plans to launch the new CIM HomeX securitization program later in the current quarter or early in the next one. Macdowell said the retained HomeXpress loans are representative of normal production, with investor loans comprising about 55% of the population, a 70% average loan-to-value ratio, a 735 average credit score and a 7% average coupon.
In response to an analyst question from UBS’s Marissa Lobo about remaining optionality in Chimera’s securitization stack, Macdowell said the company has “a pretty large portfolio of callable deals” and continues to evaluate the economics of calling and resecuritizing them. He said there are still opportunities to extract underperforming capital and redeploy it into higher-earning assets, though he would not expect another near-term transaction of the same size as the first-quarter loan sale.
Asked by Citizens JMP analyst Trevor Cranston about HomeXpress trends in the second quarter, Macdowell said volume should be consistent with the company’s forecast, that volume has been increasing month over month and that margins appear to be holding.
On credit conditions, Macdowell said delinquencies in more seasoned 2023 non-QM pools are rising in the normal course as labor market conditions soften, but he said losses remain very low because of borrower equity in the loans.
“We entered this year with a clear plan: diversify the portfolio, strengthen liquidity, and grow durable sources of income,” Macdowell said. “The actions we took this quarter advanced each of those objectives.”
Chimera Investment Corporation (NYSE: CIM) is a publicly traded real estate investment trust that specializes in investing in residential mortgage assets. The company's portfolio primarily consists of agency and non-agency residential mortgage-backed securities, whole loan residential mortgages and other mortgage-related assets. As a REIT, Chimera Investment aims to generate attractive risk-adjusted returns through its focus on high-quality collateral and disciplined risk management.
The firm's core business activities include identifying and acquiring portfolios of residential mortgage loans and securities from financial institutions and in the secondary market.
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The article "Chimera Investment Q1 Earnings Call Highlights" was originally published by MarketBeat.
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