CIM

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 8:30 a.m. ET Head of Investor Relations - Tyra Walton President and Chief Executive Officer - Phillip Kardis Chief Financial Officer - Subramaniam Viswanathan Chief Investment Officer - Jack Macdowell President and CEO of HomeXpress Mortgage - Kyle Walker Operator: Thank you. Greetings, and welcome to the Chimera Investment Corporation Second Quarter Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Tyra Walton, Head of Investor Relations. Thank you. You may begin. Tyra Walton: Thank you, Operator, and thank you, everyone, for joining us this morning. I'm Tyra Walton, Head of Investor Relations. This morning, Chimera released its results for the second quarter of 2026. The earnings release and presentation for the quarter are both available on our website at chimerareit.com. Before we begin, I'd like to review the safe harbor statement. Today's remarks may contain forward-looking statements, which are predictions, projections, or other statements about future events. These events are based on current expectations and assumptions that are subject to risks and uncertainties, which are outlined in the Risk Factors section in our most recent annual and quarterly SEC filings. Actual events and results may differ materially from these forward-looking statements. We encourage you to read the forward-looking statement disclaimers in our earnings release and our quarterly and annual filings. During the call, we may also discuss non-GAAP financial measures. Please refer to our SEC filings and earnings supplements or reconciliations to the most comparable GAAP measures. Additionally, the contents of this conference call may contain time-sensitive information that is accurate only as of the date of this earnings call. We do not undertake and specifically disclaim any obligation to update or revise this information. I will now turn the conference over to our President and Chief Executive Officer, Phil Kardis. Phillip Kardis: Thanks, Tyra. Good morning and welcome to Chimera Investment Corporation's second quarter 2026 earnings call. Joining me on the call are Subramaniam Viswanathan, our Chief Financial Officer; Jack Macdowell, our Chief Investment Officer; and Kyle Walker, the President and CEO of HomeXpress Mortgage. After my remarks, Subra will review the financial results, Jack will review the investment portfolio, and then Kyle will review HomeXpress's results. It's nearly 3,000 years old, but with a fresh translation by Emily Watson (sic) [ Emily Wilson ] and a blockbuster movie by Christopher Nolan, the new generation is discovering the Odyssey, and it has much to say that is relevant to us. During Odysseus' 10-year journey home, we learned that most threats are unpredictable and that risk management matters more than heroics. He doesn't know he'll face challenges like the Cyclops and the Sirens, just as we didn't know at the beginning of the year that we would see open conflict in the Gulf or that the rate cuts everyone had penciled in would give way to talks of hikes before year-end. We also learned that Odysseus reaches home by planning for the downside. For example, by plugging his crew's ears and lashing himself to the mast to resist the Sirens rather than to rely on willpower. Likewise, as I noted in the first quarter, we don't try to predict where the market will be. We focus on being prepared for wherever it goes. And we do that by building resiliency through diversified income streams and liquidity. But most importantly, what the Odyssey teaches us is that we must have a fixed destination, but not a fixed route. Odysseus' objective never changes, return home. His route, however, is not direct. He must be flexible, creative, know when to wait and when to preserve resources and when to take calculated risk to make it home. We've been clear about our destination to build a company that is not dependent on any single market environment and that benefits shareholders through tax-advantaged dividend and enterprise growth. And while we have model portfolio, targeted growth plans, like Odysseus, we're not locked into a particular path. We remain flexible and open to change as market conditions change. The second quarter remained much like the first. Volatility and uncertainty persisted. We went about our business as we did in the first quarter. With respect to the investment portfolio, we continue to reduce our lower-yielding assets and sponsored 2 resecuritizations, redeploying the proceeds into more liquid and higher-yielding assets. Turning to HomeXpress, in the second quarter, loan production grew by 30% compared to the second quarter of 2025 and 24% compared to the prior quarter. Earnings, however, grew only modestly quarter-over-quarter. This result, increased production with essentially flat earnings, was driven primarily by margin compression from increased competition. We'll look to increase HomeXpress's earnings by further scaling production while maintaining our strong credit discipline and by reducing our cost to originate. But increasing our allocation to Agency RMBS and third-party sales of HomeXpress loans are not the only ways to grow Chimera's earnings, especially given the current securitization market economics and compressed sale margins. Therefore, we are pivoting to acquire and securitize mortgage loans from both HomeXpress and third parties. Currently, we're targeting two securitizations of HomeXpress loans and one of third-party loans by year-end. And depending on the relative value between loan sales and securitizations, we may increase the size or frequency of those securitizations. So how are we doing? Last quarter, we noted as we looked out over 2026, we believed we'd be able to generate $1.80 of EAD. We also noted that we expected some volatility in the EAD period-to-period given our operations and the market. We further pointed out that our fourth quarter and first quarter EAD contained several one-time items and that we believed our underlying run rate was closer to $0.47, plus or minus. EAD for the second quarter was $0.46, right on our projected underlying run rate and once again exceeding our dividend. We have a dollar of EAD through the first half of the year and still believe EAD for the year will be at least $1.80. In short, we continue to perform as we expected, even though the market environment is significantly different than anticipated at the beginning of the year. What's our outlook for the remainder of the year and how are we positioned? Just like we noted in the first quarter, we expect continued uncertainty, geopolitical and market-driven. But despite the uncertainty, we remain optimistic about the future. We will continue to grow and diversify the portfolio, expand originations, build fee-based income and opportunistically pursue acquisitions, staying flexible on the route and clear on our destination. With that, I'll turn it over to Subra to walk you through the financials. Subramaniam Viswanathan: Thanks, Phil. GAAP net loss for the second quarter was approximately $4 million. Net loss of $13 million from our investment portfolio segment was offset by net income of $9 million from residential origination. We generated approximately $39 million of earnings available for distribution or $0.46 per share. Our EAD was not materially impacted by onetime charges this quarter. As a reminder, our EAD per share of $0.54 in the first quarter included $0.07 of one-time benefits. These non-recurring favorable items resulted from the securitization unwind undertaken as part of our portfolio optimization efforts as well as MSR-related investments. Excluding the impact of those items, EAD in the first quarter would have been $0.47. The quarterly dividend of $0.45 was covered by second quarter earnings. Book value per share declined 3.2% to $17.75. Economic return on GAAP book value was negative 0.8% based on the quarterly change in book value and second quarter dividend of $0.45 per common share. Annualized EAD return on average common equity was 10.35%. Segment performance for the first quarter (sic) [ second quarter ] was as follows. For the investment portfolio, economic net interest income was $66.3 million, while annualized economic net interest income return on average equity was 12.35%. The yield on average interest-earning assets was 5.9%, our average cost of funds was 4.3% and the resulting net interest spread was 1.6%. For the residential Origination Segment, HomeXpress funded $1.1 billion in loans. EBITDA, defined as earnings before taxes, depreciation and amortization, was $11.8 million and annualized EBITDA ROE was 17.3%. With respect to leverage and liquidity, our total leverage was 5.6:1, while recourse leverage was 3.3:1. GAAP leverage increased due to resecuritization activity and increasing allocation to Agency RMBS. Growing agency allocation also drove the increase in recourse leverage. We ended the quarter with $656 million in total cash and unencumbered assets compared to $675 million the last quarter. Total consolidated secured financing outstanding was $7.7 billion. It was comprised of $727 million related to our residential origination warehouse loans and the remaining approximately $7 billion was for our investment portfolio. Within the investment portfolio, $5.1 billion of secured financing supported the agency positions against which we maintain $4.9 billion in swaps, interest rate caps and other hedges with varying maturities. $1.9 billion was secured by residential credit assets, of which $1.2 billion, or 61%, carried non- or limited mark-to-market features. And $1.1 billion, or 55% of this, were floating rate facilities. Finally, on expenses, compensation, G&A, and servicing expenses were lower in the quarter. The decrease were offset by higher transaction expenses related to our securitization activity during the second quarter. In summary, though the first quarter results included certain non-recurring benefits, our second quarter results provide a normalized EAD. Taken together, the first half demonstrates continued dividend support. And as we move into the second half, we remain focused on supporting dividend coverage over the full year and driving total shareholder returns over the long term. With that, I'll turn the call over to Jack. Jack Macdowell: Thanks, Subra, and good morning, everyone. The second quarter was defined by a sharp repricing of the expected path of monetary policy as persistent inflation and resilient economic activity shifted markets from anticipating rate cuts for a higher-for-longer outlook. Volatility increased materially in mid-May, pushing treasury yields higher and temporarily widening Agency MBS and residential credit spreads. Market conditions subsequently improved and spreads across both Agency MBS and structured residential credit, including new issue non-QM and RPL securities ended the quarter tighter, supported by strong investor demand. By quarter-end, Treasury yields were considerably higher, particularly at the front end, producing a pronounced bear flattening of the curve. While tighter spreads offset part of the increase in benchmark rates, all-in mortgage bond yields still finished the quarter at elevated levels. With respect to our investment portfolio activities, we closed out $966 million short TBA positions and further streamlined our Agency portfolio by selling some of the noncore legacy CMBS interest-only and HECM positions in addition to trimming our CMO exposure. In total, these sales represented $575 million of notional and generated $19 million in capital for redeployment. Within the Agency portfolio, we purchased and settled $967 million of pass-throughs with a focus on coupons in the 5.5% to 6.5% range, leaving our specified pool portfolio with more than 75% allocated to 5% coupons and above and increasing our TBA adjusted average coupon by 14 basis points to 5.28%. As Phil mentioned, we completed 2 resecuritizations backed by $487 million of loans. Of that collateral, $282 million consisted of loans retained from our first quarter loan sale activity, while $205 million came from a securitization we called during the quarter. Reallocating the loans sourced from the called securitization across the 2 new transactions enabled us to increase the advance rate and lower the original issue cost of funds related to the bonds. These deals improved overall financing efficiency and also released approximately $13 million of capital for reinvestment. Palisades Advisory Services was named Asset Manager on both deals. We continue to shift our capital allocation mix during the quarter, increasing Agency MBS by 5 percentage points to 26% of our invested capital. Conversely, we reduced our allocation to legacy residential credit by 4 percentage points to 61%, while capital invested in MSRs and HomeXpress were roughly flat. We maintained a strong liquidity position with $656 million in cash and unencumbered assets. We also continue to manage our residential credit repo financing conservatively with 61%, or $1.2 billion comprised of limited or non-mark-to-market facilities whose average months to maturity at quarter-end was 8 months. During the quarter, we adjusted our hedging strategy by replacing a portion of our payer swaps with in-the-money interest rate caps within our Agency portfolio and added similar caps to hedge the liabilities in our residential credit sleeve. The caps provide similar protection to swaps in a higher rate environment while also improving the convexity of our portfolio in a sustained rally. Credit performance continued to track our expectations across product sectors in the second quarter. Delinquencies in the legacy reperforming book ended the quarter at 8.8%, down from 9.1% in Q1. We saw similar improvements in our investor DSCR loan portfolio, where delinquencies declined from 6.1% to 4.7%, driven in large part by early-stage delinquent loans becoming current. We continue to wind down the legacy RTL portfolio, which had 16 loans resolved during the quarter, including 13 payoffs and 3 workouts. The jumbo loan delinquencies remain stable, while prepays across the portfolio had a moderately to upward sloping trend typical for the spring season. We made significant progress repositioning the investment portfolio. We still have work to do, but after multiple refinancings and divestitures over the last 18 months, culminating in the sale of $1.2 billion of loans in the first quarter, we've generated and redeployed nearly $700 million of capital from these portfolio management activities. Through 2025 and into the second quarter of 2026, we redeployed the majority of that capital into liquid Agency MBS. As noted, we view agencies as an important component to our portfolio construction strategy, providing both a relative value allocation and a liquidity bucket we can draw on to fund other accretive opportunities. That work has laid the foundation for us to build on our expertise in residential whole loan credit. Between our HomeXpress origination platform, Palisades' technology and data infrastructure, our loan acquisition partnerships, and a track record spanning whole loan due diligence, credit underwriting, servicer oversight, asset management and securitization, we have a fully integrated residential credit platform, which we intend to grow. We believe the timing is favorable. Non-QM continues to show secular growth, evident in strong year-over-year increases in origination volume, despite elevated rates and subdued housing activity. The rise in self-employment and nontraditional income profiles is expanding the pool of borrowers that fall outside conventional government programs, while non-QM has become a key financing source for investors with rental properties. We expect this form of financing to account for a growing share of the overall origination market, and we expect it to be a key source of financing. We intend to be a consistent value-add partner to our lender and seller network. We're already executing on this. We've identified and retained $301 million of loans to seed our first HomeXpress securitization that remains on track for the third quarter. Since quarter-end, we have retained additional loans for a second HomeXpress securitization and committed to purchase loans from third-party sellers for a separate non-QM transaction we intend to bring to market in the second half of the year. The first half was about continuing to reposition the portfolio. Despite a volatile backdrop, we exited lower-yielding legacy positions and redeployed capital into opportunities more closely aligned with our long-term strategic objectives and offering better prospective returns, all while maintaining our strong liquidity positions. Those actions leave us with a stronger portfolio and the flexibility to lean into our core focus areas, led by residential credit as opportunities emerge through the balance of the year. With that, I will turn it over to Kyle to discuss residential origination. Kyle Walker: Thank you, Jack, and good morning, everyone. HomeXpress delivered another strong quarter with record loan origination volume of $1.1 billion and $11.8 million in EBITDA. Our loan growth is up 30% from the prior year's second quarter and 24% over the first quarter of 2026. Growth in the second quarter was driven by broad-based demand across our core products, as well as increased production through our nondelegated correspondent channel, which now comprises 13% of our production. As Jack noted, while there was market volatility in the second quarter, HomeXpress loan production is less dependent on interest rate levels. In fact, in June, our loan volume increased to reach a monthly record for HomeXpress of $420 million, which is an impressive accomplishment considering the competitiveness of our market. Looking ahead at the third quarter, while monthly production may fluctuate due to market and other macro environment volatility, we expect the underlying loan demand remains healthy, and we are focused on executing with discipline. As to profitability, HomeXpress EBITDA climbed to $11.8 million in the second quarter, driven primarily by the higher loan volume and cost effectiveness. At the same time, net origination margin in the second quarter expanded to 124 basis points, up 10 basis points from the first quarter of 2026. The net origination margin for the second quarter of 2026 is slightly lower than the level of the second quarter of 2025 due to the increased market competition and tighter pricing. As such, we are focused on controlling the controllables by maintaining credit discipline, optimizing and enhancing our loan products and keeping a sharp focus on process efficiency as the HomeXpress platform grows. In addition, while our loans already perform exceptionally well in the secondary market and are highly valued by investors, we continually seek new investor relationships to further enhance competition, broaden demand and maximize loan pricing execution. First, on credit, our underwriting standards have not changed. So even with a robust production volume growth, key metrics on our new loan originations, including weighted average FICO and LTV ratios for the quarter, remained in line with historic levels. That combination of higher volume with the same underwriting standards is what we're focused on preserving as we grow the business. Second, we are not trying to win every loan. Instead, we're protecting economics where returns do not justify the risk and choosing to compete in products and channels where the borrowers' credit profile, the broker relationship, and our execution capabilities can support attractive returns. And third, we remain focused on driving higher efficiency as the platform scales. We recently equipped our brokers with the ability to order appraisals directly through our portal. We also now use smart fees to automatically populate the data they require to compare loan disclosures. These technology tools serve to shorten loan processing times and help us support higher volumes more efficiently while improving accuracy. As I mentioned last quarter, we are expanding the share of consumer loans in our production mix. These loans, while typically having higher balances, enable us to generate more funded volume without a proportional increase in loan count and related fixed operating costs. Our average loan size grew to more than $455,000 during the quarter compared with $410,000 in the first quarter. We are actively engaged with our warehouse lenders to continue to improve the financing economics of our business, and we expect our efforts will enable us to increase our float spread. Importantly, we have ample funding to support our expected growth. Our warehouse capacity, which we expanded to $1.5 billion last quarter, has now been increased to $1.65 billion in July, and we are evaluating additional capacity. Our warehouse facilities are distributed across seven facilities with large financial institutions. We're also growing our broker network. We now have more than 6,350 brokers serviced by 145 account executives and related sales staff. Our strong national network remains our driving force, providing us with broad access across our various consumer non-QM and investor lending products. Stepping back, the first half of 2026 reflected our ability to execute. It also demonstrates the strength and value of our platform. HomeXpress is firmly on track to exceed the $4 billion loan origination volume target for the year, barring market events. It is also contributing meaningful EBITDA while providing Chimera with direct access to quality residential mortgage collateral. As we look towards the second half of 2026 and beyond, our focus is clear. Continue scaling the business in a disciplined and efficient manner with high credit quality, which is the foundation for driving earnings growth over time. With that, I'll turn the call over to Phil. Phillip Kardis: Thanks, Kyle. We'll now open the call for questions. Operator: Thank you. [Operator Instructions] And our first question will come from Bose George with KBW. Bose George: Actually, first just on book value, can you just talk about the drivers of the change in book value during the second quarter? And where does mark-to-market book value stand quarter to date? Jack Macdowell: Yes, sure. This is Jack. Just on the, you know, second quarter book value move, one thing to keep in mind, the vast majority even still today of our GAAP portfolio is comprised of securitized loans. So we have about $8 billion of loans on balance sheet against, what, $5.5 billion of securitized loans. So those are in fixed rate non-mark-to-market term securitization. So we're not hedging the book value there, and that's the vast majority of the move in our book value. We had a pretty substantive sell-off in rates during the quarter, and that drove the value of the loans down, and also the sec debt of the loans move more than the sec debt during this quarter. The one thing to also point out there, too, is as we continue to sort of reposition, diversify the portfolio, we now have a quarter of the portfolio in agencies. We've got about 10%, 11% of the capital allocated to HomeXpress, and both of those things contributed positively to book value. But it's just a function of our consolidated GAAP securitization that's driving that book value change. And just to reiterate, I think we've talked about this in the past. The one reason that we're not looking to hedge that is as the gyrations in interest rates change on both the liability side there. It really doesn't have any impact on our earnings power dividend paying ability. So on the residential credit side of the book, what we're hedging is our floating rate liabilities with respect to our repo to ensure that our earnings power remains intact. But we take that the book value volatility on that part of the book is going to fluctuate with interest rates. Bose George: Okay, yes, that makes sense. So, yes, just the mark-to-market book value part? Jack Macdowell: Yes, so quarter-to-date, there's been a bit of a sell-off in rates. So we're down about 1.5% quarter to date. Bose George: Okay. Great. And then just actually a follow-up on the book value just on the securitized portion. Since that doesn't impact your earnings out of that, I mean, essentially, does that your ROE on your remaining capital in that, does that just go up when those marks happen? Jack Macdowell: Yes. So I mean our GAAP book value will change certainly. So yes, I guess, from a GAAP ROE standpoint, as the loan value declines, then yes, we -- our earnings power remains intact and so our ROE would increase. Bose George: Okay, great. That makes sense. And then just on HomeXpress, just based on your guidance, it sounds like the higher rate outlook is not having a much -- at least a meaningfully negative impact. So can you just talk about what rates are doing to HomeXpress in the back half of the year? And also, is the -- just talk about the margins in the nondelegated correspondent versus the traditional wholesale. Kyle Walker: So we're seeing continued increase in volume on a margin on a month-to-month basis. We think the third quarter is going to be an increase over the second quarter. There has been some margin compression. We're very focused on maintaining our underwriting standards, pricing deliberately and looking for operational efficiencies to try to drive down our cost. As far as the non-delegated correspondent, it is slightly less margin business than our wholesale business, I would say maybe 10 to 15 basis points less in margin. But it appears to be much more efficient in how we can process the loan. So I think our cost to originate on that business is slightly less. Operator: Our next question will come from Trevor Cranston with JMP Securities. Trevor Cranston: Can you talk a little bit about your outlook for the Agency basis after the spread tightening that we saw during the second quarter and sort of how you compare incremental returns on investing in agency MBS versus new credit opportunities today? Jack Macdowell: Yes, that's a good question. And I would say on the Agency front, I mean, we've built up over $600 million of capital allocated to agencies. Spreads have been moving around, but we're still generating something in the low to mid-teens area with respect to the capital allocations allocated there. The one -- and there's still good demand coming in first half of the year, we obviously had the first quarter of demand coming from the GSE. So there's technical support with respect to spreads in the agency space. And we look at agencies as both a relative value bucket where we can generate returns, but also a source of liquidity that we can draw on for other opportunities. And right now, the bar to draw on that capital is relatively high just given where yields are in the Agency space. With that being said, we do feel like we are at a bit of an inflection point with respect to the work that we've been putting in over the 1.5 years in repositioning the portfolio. I think what you heard from Phil's remarks as well as in my remarks is that the opportunity set for us as we see it on a go-forward basis is really to start leaning into one of our core competencies, which is what the vast majority of our infrastructure is built around, which is residential credit. So again, and that includes retaining more loans from HomeXpress, buying loans from third parties, securitizing those loans, and really creating optionality with respect to whether or not we want to retain the credit portion of the capital stack for our investment portfolio, where we would be targeting something in the mid-teens area or we want to distribute the entire structure and turn over that capital and generate gain on sale or capital markets revenue. Operator: Moving next to Marissa Lobo with UBS. Marissa Lobo: For the inaugural HomeXpress securitization, will Chimera retain the residual equity piece? And if so, how should we expect that to be reflected in EAD going forward? Jack Macdowell: Yes, so like I was saying, whenever we're looking to do a securitization, whether it's HomeXpress or third-party loans, what our intent is to structure those deals and then up to the time of distribution, evaluate a variety of factors. One, our capital needs, our portfolio construction objectives, relative value in the market. And based on those factors, we make a determination as to whether or not we would retain the credit portion of the capital stack, which would essentially be investing for long-term earnings over the next several years or distribute the entire structure and booking the gain on sale, which would go through EAD and earnings and then turning over that capital and rinse and repeating it. So right now, I mean, we're still working through those dynamics. We're looking to get that first deal done probably in the latter part of the third quarter. And as we approach the date of that deal, we'll start honing in on the decision to what we're going to retain. Marissa Lobo: And could you just update us on third-party advisory, you know? How much AUM are you managing? And how should we think about that revenue stream contributing to EAD going forward? Jack Macdowell: Yes, so I guess the way I would think about Palisades Advisory Services is they serve, you know, multiple functions. One, they serve third-party clients with respect to helping them with all their residential whole loan servicer oversight and data needs, and that generates revenue from third parties on a fee basis. And they're also very instrumental in overseeing the Chimera portfolio and our focus on buying loans from third parties, securitizing them. So it's really a function of external versus internal resource allocation. I will say, just on the third-party business, there is competition in that space. And we've also seen somewhat of a reduction in transaction activity from -- in transaction activity from some of our clients. So we're seeing a little bit of dilution with respect to third-party fee revenue, but we're actively redeploying those resources to help focus on some of our whole loan needs at the REIT level. Subramaniam Viswanathan: And also with the HomeXpress securitization and the third-party conduit securitization, we'll expect to see some fees come in. Operator: And our next question will come from Doug Harter with BTIG. Douglas Harter: Can you talk about where you are in terms of redeploying the capital from the call deals in the first quarter and where we are in terms of seeing that earnings? Jack Macdowell: Thank you. Yes. Hey, Doug. So when we raised that $195 million from the calls and the sale in late first quarter, we actually had about a $900 million and close to a $1 billion TBA short just from a risk management perspective, that we held into April. So we actually closed out of that. So there was some degradation with respect to the negative carry of the short position in April. But after that, we were primarily fully deployed, and so we're realizing the benefits of that $195 million redeployment for today and for the better part of the second quarter. The one thing just to highlight and point out, this kind of goes back to our consolidated securitizations. Of the -- we've got $8 billion of loans, $5.5 billion of securitized debt. The way that those deals are structured is that when principal comes in, it delevers the structures. And then over time, that's going to dilute our earnings power up until we call the deal, pull the capital out and then redeploy it once again. So, part of the earnings accretion, if you will, from the first quarter activities, we're definitely seeing that, but it's being offset by some of the deleveraging in other parts of the portfolio. But still, there's a net benefit to it, but we're seeing that today and in the back half of Q2. Douglas Harter: All right. I guess where I'm just struggling is one of the logics of kind of the book value decline that you took from calling those deals was to see earnings accretion from that. And ex, the onetime items, the earnings seem relatively flat. So just -- and I understand your point there about replacing some of the degradation, but just was wondering if -- kind of where we were in seeing that accretion, but I appreciate the answer. Operator: And this now concludes our question and answer session. I would like to turn the floor back over to Phil Kardis for closing comments. Phillip Kardis: Thank you. To our shareholders, thank you for your continued support. Over the past couple of years, we've made a lot of progress towards our destination, and we look forward to updating you again next quarter. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day. 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is pivoting the business model to acquire and securitize mortgage loans from both HomeXpress and third parties, responding to compressed sale margins in the current market. The company successfully achieved a normalized Earnings Available for Distribution (EAD) of $0.46 per share, aligning with the projected run rate after excluding prior one-time benefits. HomeXpress achieved record loan production growth of 30% year-over-year, though earnings remained flat due to margin compression from increased market competition. Portfolio optimization continued through the reduction of lower-yielding assets and the execution of two resecuritizations, which released $13 million in capital for redeployment. Strategic capital allocation shifted toward Agency MBS, which now represents 26% of invested capital, providing a balance of yield and liquidity for future credit opportunities. Management emphasized a 'fixed destination but flexible route' strategy, prioritizing diversified income streams and liquidity to navigate unpredictable interest rate and geopolitical environments. Management reaffirmed its full-year 2026 EAD guidance of at least $1.80, despite anticipating continued period-to-period volatility. The company plans to execute three securitizations by year-end: two consisting of HomeXpress loans and one featuring third-party non-QM loans. HomeXpress is on track to exceed its $4 billion annual loan origination target, supported by an expanded warehouse capacity of $1.65 billion. Future securitization strategy involves a flexible 'rinse and repeat' model, where management will decide between retaining credit residuals for long-term yield or selling for immediate gain-on-sale revenue. Strategic focus for the remainder of the year remains on scaling production, reducing origination costs, and opportunistically pursuing residential credit acquisitions. Book value per share declined 3.2% to $17.75, primarily driven by interest rate volatility affecting the valuation of loans held in consolidated GAAP securitizations. Recourse leverage increased to 3.3:1, largely due to the growing allocation to Agency RMBS and related financing activities. Management noted a shift in hedging strategy, replacing some payer swaps with in-the-money interest rate caps to improve portfolio convexity during potential market rallies. Third-party fee revenue from Palisades Advisory Services experienced some dilution due to reduced transaction activity from external clients and increased internal resource allocation. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The decline was attributed to a sharp sell-off in rates affecting the $8 billion of loans on the balance sheet, which are not hedged for book value because they are in fixed-rate term securitizations. Management confirmed that quarter-to-date book value is down approximately 1.5% due to continued rate pressure. Management clarified that book value fluctuations do not impact earnings power or dividend-paying ability as floating-rate liabilities remain hedged. Non-delegated correspondent business has 10 to 15 basis points lower margins than wholesale but offers higher processing efficiency and lower origination costs. Despite margin compression, management expects third-quarter production volume to exceed the second quarter's record levels. Agency MBS currently generates returns in the low to mid-teens and serves as a liquidity bucket for more accretive opportunities. Management views the current environment as an inflection point to lean back into core residential credit competencies, targeting mid-teens returns on retained credit portions of the capital stack.

Interested in Chimera Investment Corporation? Here are five stocks we like better. Chimera reported $39 million of Q2 earnings available for distribution, or $0.46 per share, covering its $0.45 dividend. Management maintained its target of at least $1.80 in full-year EAD. Book value per share fell 3.2% to $17.75 as rising interest rates pressured the securitized loan portfolio, while total leverage ended the quarter at 5.6-to-1. Chimera continued shifting toward agency MBS and residential credit, while its HomeXpress Mortgage unit delivered record quarterly originations of $1.1 billion and remains on track to exceed its $4 billion 2026 target. Chimera Investment (NYSE:CIM) reported second-quarter 2026 earnings available for distribution, or EAD, of $39 million, or $0.46 per share, as the company continued to reposition its investment portfolio toward agency mortgage-backed securities and residential credit opportunities. The quarterly EAD covered Chimera’s $0.45 per-share common dividend. GAAP net loss was approximately $4 million, reflecting a $13 million loss in the investment portfolio segment that was partly offset by $9 million of net income from residential origination. → 3 Drone Stocks That Should Soar After the Summer Slump Chief Executive Officer Phil Kardis said the company remained on track to produce at least $1.80 of EAD for the full year. Chimera generated $1.00 of EAD during the first half, including $0.54 per share in the first quarter and $0.46 in the second quarter. The first-quarter result included $0.07 per share of one-time benefits, while the second-quarter result was not materially affected by one-time items, according to Chief Financial Officer Subra Viswanathan. Book value per share declined 3.2% during the quarter to $17.75, producing an economic return on GAAP book value of negative 0.8%, including the quarterly dividend. Annualized EAD return on average common equity was 10.35%. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth During the question-and-answer session, Chief Investment Officer Jack Macdowell said the book-value decline was primarily driven by the company’s securitized loan portfolio during a period of higher interest rates. Chimera has roughly $8 billion of loans on its balance sheet against $5.5 billion of securitized debt, he said. The securitized debt is fixed-rate, term financing without mark-to-market provisions. Macdowell said Chimera does not hedge the book-value exposure associated with those securitizations because rate-driven movements in asset and liability values do not materially affect the company’s earnings power or dividend-paying ability. He added that book value was down approximately 1.5% quarter to date at the time of the call amid another rise in rates. → Jersey Mike's Serves Fresh Gains After IPO Stumble Chimera ended the quarter with $656 million in total cash and unencumbered assets, compared with $675 million in the prior quarter. Total leverage was 5.6-to-1, while recourse leverage was 3.3-to-1. The company had $7.7 billion in consolidated secured financing outstanding. Chimera continued to reduce lower-yielding and legacy positions while adding agency MBS. During the quarter, the company closed $966 million of short TBA positions and sold non-core legacy CMBS interest-only and HECM holdings, along with portions of its CMO exposure. The sales represented $575 million of notional value and generated $19 million of capital for reinvestment. The company purchased and settled $967 million of agency pass-through securities, concentrating on coupons ranging from 5.5% to 6.5%. Agency MBS represented 26% of invested capital at quarter-end, up five percentage points from the prior quarter, while legacy residential credit fell four percentage points to 61% of invested capital. Chimera also completed two re-securitizations backed by $487 million of loans. The transactions released approximately $13 million of capital and improved financing efficiency, Macdowell said. Credit performance tracked management’s expectations. Delinquencies in the legacy re-performing loan portfolio declined to 8.8% from 9.1% in the first quarter, while delinquencies in the investor debt-service-coverage-ratio loan portfolio fell to 4.7% from 6.1%. Jumbo loan delinquencies remained stable. Looking ahead, management said it plans to expand its residential whole-loan credit activities by retaining loans originated through HomeXpress Mortgage, purchasing loans from third parties and securitizing those assets. Chimera has identified and retained $301 million of loans for its first HomeXpress securitization, which remains planned for the third quarter. It also retained additional loans for a second HomeXpress securitization and committed to purchase third-party loans for another non-QM transaction expected in the second half. Macdowell said Chimera will decide nearer to each securitization whether to retain the credit portion of the capital structure for longer-term earnings or distribute the full structure and recognize a gain on sale. HomeXpress Mortgage funded a record $1.1 billion of loans in the second quarter, up 30% from a year earlier and 24% from the first quarter. The residential origination business generated $11.8 million of EBITDA, according to Chimera. HomeXpress President and CEO Kyle Walker said June production reached a monthly record of $420 million. Growth was supported by broad demand across core products and increased activity in the non-delegated correspondent channel, which accounted for 13% of production. Net origination margin rose 10 basis points sequentially to 124 basis points, although it remained slightly below the level recorded in the second quarter of 2025 because of greater competition and tighter pricing. Walker said the company is focused on maintaining underwriting discipline, improving operational efficiency and controlling origination costs as production grows. Average loan size rose to more than $455,000 from $410,000 in the first quarter, aided by a growing share of consumer loans. HomeXpress increased warehouse capacity to $1.65 billion in July from $1.5 billion and said it was evaluating further capacity additions. The company serves more than 6,350 brokers through 145 account executives and related sales staff. Walker said HomeXpress remains on track to exceed its $4 billion loan-origination target for 2026, barring market events. Kardis said Chimera expects ongoing political, geopolitical and market uncertainty but plans to continue diversifying the portfolio, increasing originations, building fee-based income and pursuing acquisitions opportunistically. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Chimera Investment Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

BOARD DECLARES THIRD QUARTER 2026 DIVIDEND OF $0.50 PER SHARE OF 8.00% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK BOARD DECLARES THIRD QUARTER 2026 DIVIDEND OF $0.6111 PER SHARE OF 8.00% SERIES B FIXED-TO-FLOATING RATE CUMULATIVE REDEEMABLE PREFERRED STOCK BOARD DECLARES THIRD QUARTER 2026 DIVIDEND OF $0.5578 PER SHARE OF 7.75% SERIES C FIXED-TO-FLOATING RATE CUMULATIVE REDEEMABLE PREFERRED STOCK BOARD DECLARES THIRD QUARTER 2026 DIVIDEND OF $0.5984 PER SHARE OF 8.00% SERIES D FIXED-TO-FLOATING RATE CUMULATIVE REDEEMABLE PREFERRED STOCK NEW YORK, August 05, 2026--(BUSINESS WIRE)--The Board of Directors of Chimera Investment Corporation ("Chimera") announced the declaration of its third quarter cash dividend of $0.50 per share of 8.00% Series A Cumulative Redeemable Preferred Stock. The dividend is payable September 30, 2026 to preferred shareholders of record on September 1, 2026. The ex-dividend date is September 1, 2026. The Board of Directors of Chimera also announced the declaration of its third quarter cash dividend of $0.6111 per share of 8.00% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, which reflects a rate of 9.77804% equal to three-month CME Term SOFR (plus a spread adjustment of 0.26161%) on the dividend determination date plus a spread of 5.791%. The dividend is payable September 30, 2026 to preferred shareholders of record on September 1, 2026. The ex-dividend date is September 1, 2026. The Board of Directors of Chimera also announced the declaration of its third quarter cash dividend of $0.5578 per share of 7.75% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, which reflects a rate of 8.73004%, equal to three-month CME Term SOFR (plus a spread adjustment of 0.26161%) on the dividend determination date plus a spread of 4.743%. The dividend is payable September 30, 2026 to preferred shareholders of record on September 1, 2026. The ex-dividend date is September 1, 2026. The Board of Directors of Chimera also announced the declaration of its third quarter cash dividend of $0.5984 per share of 8.00% Series D Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, which reflects a rate of 9.36604%, equal to three-month CME Term SOFR (plus a spread adjustment of 0.26161%) on the dividend determination date plus a spread of 5.379%. The dividend is payable September 30, 2026 to preferred shareholders of record on September 1, 2026. The ex-dividend date is September 1, 2026. About Chimera Investment Corporation Chimera Investment Corporation (NYSE: CIM) is a diversified, internally managed REIT, that serves the U.S. residential real estate market. Through its Investment Portfolio and Residential Origination segments, the company acquires, manages, finances and originates residential mortgage and real estate-related assets, with the objective of delivering attractive risk-adjusted returns to shareholders. Forward-Looking Statements In this press release references to "we," "us," "our," "Chimera," 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 Dodd-Frank Act and related laws and regulations relating to credit risk retention for securitizations; 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, including the ongoing conflicts involving the U.S. in the Middle East; our ability to successfully integrate and realize the anticipated benefits of any acquisitions, including the acquisition of HomeXpress; our ability to originate or acquire quality and profitable loans at an appropriate and consistent cost; our ability to sell the loans that we originate or acquire; our ability to refinance or obtain additional liquidity for borrowing; our ability to manage, maintain and expand our relationships with our clients, the independent mortgage brokers and bankers; 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; 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; the development, proliferation and use of artificial intelligence; our ability to find and retain qualified executive officers and key personnel; our ability to comply with extensive government regulation, including, but not limited to, federal and state consumer lending regulations; the impact of and changes in governmental regulations, tax law and rates, accounting guidance, refinancing and borrowing guidelines 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 press release and, in certain circumstances, may not have been audited by Chimera’s independent auditors. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805483773/en/ Contacts Investor [email protected] www.chimerareit.com

NEW YORK, August 05, 2026--(BUSINESS WIRE)--Chimera Investment Corporation (NYSE: CIM) today announced its financial results for the second quarter ended June 30, 2026. Executive Summary: Business Highlights: Maintained dividend coverage and strong liquidity position. Spread movements and changes in interest rates impacted book value. Generated Earnings Available for Distribution from both Investment Portfolio and Residential Origination segments. Investment Portfolio Segment Completed two re-securitizations of residential mortgage loans with an aggregate principal balance of $487 million. Purchased an additional $122 million of newly originated loans from HomeXpress, bringing loans retained at quarter end to $301 million. Advanced plans for the inaugural securitization using HomeXpress collateral, which serves to integrate both segments. Residential Origination Segment Originated volume of $1.1 billion, up 30% vs prior year period1, demonstrating platform scale and capacity. Generated $9 million of net income and $12 million of EBTDA, representing an annualized EBTDA ROE of 17.3%2. Product mix shifted, with consumer Non-QM representing 47%, Investor Loans 48%, and QM at 5%. "Chimera delivered resilient second quarter results amidst continued macroeconomic and geopolitical uncertainty, scaling our loan origination business, and redeploying capital toward higher-return opportunities," said Phillip J. Kardis II, President and CEO. "Earnings available for distribution were $0.46 per share for the second quarter and $1.00 for the first half of the year, supporting the $0.45 quarterly dividend. As we enter the second half, we remain focused on disciplined execution and sustaining dividend coverage over the course of the year." Second Quarter 2026 Earnings Call Chimera Investment Corporation will host a conference call and live audio webcast to discuss the results at 8:30 AM ET on Wednesday, August 5, 2026. Call-in Number: U.S. Toll Free: (866) 604-1613 International: (201) 689-7810 Webcast: https://www.chimerareit.com/news-events/ir-calendar Conference Call Replay: U.S. Toll Free: (877) 660-6853 International: (201) 612-7415 Conference ID: 13760724 A replay of the call will be available for a limited time and can be accessed via the dial-in numbers above or through the webcast archive on the company’s website. Other Information Chimera Investment Corporation (NYSE: CIM) is a diversified, internally managed REIT, that serves the U.S. residential real estate market. Through its Investment Portfolio and Residential Origination segments, the company acquires, manages, finances and originates residential mortgage and real estate-related assets, with the objective of delivering attractive risk-adjusted returns to shareholders. Earnings available for distribution Earnings available for distribution ("EAD") is a non-GAAP measure and is defined as GAAP net income (loss) excluding: (i) Net unrealized gains (losses) on financial instruments at fair value; (ii) Net realized gains (losses) on sales of investments; (iii) Gains (losses) on extinguishment of debt; (iv) Increase in provision for credit losses; (v) Net unrealized gains (losses) on derivatives; (vi) Realized gains (losses) on derivatives; (vii) Transaction expenses; (viii) stock compensation expenses for retirement eligible awards; (ix) Depreciation, amortization, and impairment of intangible assets, net of any tax impact; (x) non-cash imputed compensation expense related to business acquisitions; and (xi) Other investment gains (losses). Non-cash imputed compensation expense reflects the portion of the consideration paid in the Palisades Acquisition that pursuant to the sellers’ contractual arrangements is distributable to the sellers’ 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 a non-cash contribution from a related party to stockholders’ 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 incurred prior to or at the execution of the transaction and do not recur thereafter. Recurring expenses, such as servicing fees, custodial fees, trustee fees, and other similar ongoing fees, are not excluded from EAD. We believe that excluding these costs is useful to investors because it is generally consistent with the treatment applied by our peer group in their non-GAAP measure presentations, 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 issuance costs prior to the fair value election option made by us. We also believe it is important for investors to review EAD as it 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 may hold long and/or short positions in TBA securities through transactions commonly referred to as "dollar roll" transactions. Under U.S. GAAP, these transactions are accounted for as derivatives and are carried at fair value. Changes in the fair value of TBA positions consist of two components: (i) drop income (expense) and (ii) mark-to-market adjustments. For financial statement presentation purposes, drop income (expense) is reported within Periodic interest on derivatives, net, while mark-to-market adjustments are reported within Net unrealized gains (losses) on derivatives. Together with any realized gains and losses, these amounts are included in Net gains (losses) on derivatives in our Consolidated Statements of Operations. Management includes drop income (expense) in EAD because it views drop income (expense) as the economic equivalent of net interest income on the underlying Agency securities, reflecting the difference between the implied interest earned and the implied financing cost over the period from trade date to settlement date. This treatment is consistent with how management evaluates the Company’s investment performance and how we believe our investors analyze our investment performance. We view EAD as one measure of our investment portfolio's ability to generate income for distribution to common stockholders. EAD is one of the metrics, but not the exclusive metric, that our Board of Directors considers when determining 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. EAD is different from REIT taxable income. For example, differences between EAD and REIT taxable income may result from whether the REIT uses mark-to-market accounting for GAAP purposes, accretion of market discount or OID and amortization of premium, and differences in the treatment of securitizations for GAAP and tax purposes, among other items. Further, REIT taxable income generally does not include earnings of our domestic taxable REIT subsidiaries ("TRSs") unless such income is distributed from current or accumulated earnings and profits. The determination of whether we have met the requirement to distribute at least 90% of our annual REIT taxable income is not based on EAD, and EAD should not be considered as an indication of our REIT taxable income, a guarantee of our ability to pay dividends, or a proxy for the amount of dividends we may pay. We believe EAD helps us and investors evaluate our financial performance period over period without the impact of certain non-recurring transactions. EAD should not be viewed in isolation and is not a substitute for, or superior to, net income (loss) or net income (loss) per basic share computed in accordance with GAAP. In addition, our methodology for calculating EAD may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and accordingly, our EAD may not be comparable to the EAD 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. At June 30, 2026, the Company’s reportable segments include (i) Investment Portfolio and (ii) Residential Origination. The Investment Portfolio segment consists of the Company’s investments and third-party advisory services activities. The Residential Origination segment consists of the stand-alone mortgage origination business of HomeXpress that originates Non-QM residential mortgage loans (both consumer loans and Investor Loans), and other Non-Agency and Agency mortgage loan products. The segment information presented below reflects the Company’s current reportable segment structure. Segment Results of Operations The following tables present, for each reportable segment, revenues, the measure of segment profit or loss, and significant segment expenses that are regularly reviewed by the Chief Operating Decision Maker ("CODM"). Segment results are prepared on the same basis as the Company’s consolidated financial statements and are reconciled to consolidated amounts below: Investment Portfolio Segment The following tables provide a summary of the Company’s MBS portfolio, within our Investment Portfolio Segment, at June 30, 2026 and December 31, 2025. At June 30, 2026 and December 31, 2025, the secured financing agreements collateralized by MBS, Loans held for investment, and LHFS had the following remaining maturities and borrowing rates. Investment Portfolio Segment The following table summarizes certain characteristics of our consolidated assets and liabilities at June 30, 2026 and December 31, 2025. Economic Net Interest Income - Investment Portfolio Segment Economic net interest income of our Investment Portfolio segment is a non-GAAP financial measure that equals GAAP net interest income adjusted for net periodic interest on derivatives, interest income from our Residential Origination segment and interest income from investment in MSR financing receivables, and excludes interest earned on cash and interest expense from our Residential Origination segment. 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, interest rate caps 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 on derivatives 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. 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. The table below shows our Net income (loss) and Economic net interest income as a percentage of average stockholder’ equity and Earnings available for distribution as a percentage of average common stockholders’ equity, and Average Tangible Common 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. Tangible Common Equity is a non-GAAP measure and is defined below. Tangible Common Equity is a non-GAAP measure and is defined as Total stockholders' equity available to common stockholders less intangible assets and goodwill related to the business acquisitions. We believe that this measure helps our management and investors understand our capital adequacy and changes from period to period in our common stockholders' equity exclusive of changes of intangible assets. The following table presents a reconciliation of Total Stockholders’ Equity to Tangible Common Equity as of the following periods. Investment Portfolio Segment 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 on our investment portfolio segment. Residential Origination Segment NET INCOME OF $9 MILLION FOR THE QUARTER ENDED JUNE 30, 2026. EBTDA OF $12 MILLION FOR THE QUARTER ENDED JUNE 30, 2026. FUNDED PRODUCTION VOLUME OF $1.1 BILLION FOR THE QUARTER ENDED JUNE 30, 2026. Earnings Before Taxes, Depreciation and Amortization In managing our Residential Origination segment, management additionally uses Earnings Before Taxes, Depreciation and Amortization, or EBTDA, a non-GAAP measure, as a supplemental performance measure to evaluate the underlying operating efficiency and scalability of the business. EBTDA is defined as GAAP Net Income of the Residential Origination Segment, adjusted for federal and state tax provisions; and non-cash items such as intangibles amortization and depreciation. In our current model where we sell all the loans we originate and purchase from correspondents on a servicing-released basis, the economics are driven by origination income and loan sale activity, net and personnel-based costs. EBTDA helps isolate core operating results by excluding the effects of capital structure, non-cash depreciation and amortization, and tax attributes that can vary period to period. This measure allows management to assess margin performance, expense discipline, and incremental profitability as loan volumes fluctuate, and supports internal decision-making related to staffing levels, compensation structures, and growth initiatives. We believe this presentation is useful to investors because it provides investors with important information concerning the operating performance of our Residential Origination Segment exclusive of certain non-cash and other costs. However, EBTDA should not be viewed in isolation and is not a substitute for net income computed in accordance with GAAP. The following table provides a reconciliation from GAAP net income to common stockholders for our residential origination segment to a non-GAAP measure of EBTDA for the period presented. Disclaimer In this press release references to "we," "us," "our," "Chimera," 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 Dodd-Frank Act and related laws and regulations relating to credit risk retention for securitizations; 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, including the ongoing conflicts involving the U.S. in the Middle East; our ability to successfully integrate and realize the anticipated benefits of any acquisitions, including the acquisition of HomeXpress; our ability to originate or acquire quality and profitable loans at an appropriate and consistent cost; our ability to sell the loans that we originate or acquire; our ability to refinance or obtain additional liquidity for borrowing; our ability to manage, maintain and expand our relationships with our clients, the independent mortgage brokers and bankers; 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; 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; the development, proliferation and use of artificial intelligence; our ability to find and retain qualified executive officers and key personnel; our ability to comply with extensive government regulation, including, but not limited to, federal and state consumer lending regulations; the impact of and changes in governmental regulations, tax law and rates, accounting guidance, refinancing and borrowing guidelines 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 press release and, in certain circumstances, may not have been audited by the Company’s independent auditors. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805794146/en/ Contacts Investor [email protected] www.chimerareit.com

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Chimera Investment Corp (NYSE:CIM) generated $0.46 of EAD per share in Q2 2026, exceeding its $0.45 quarterly dividend and aligning with its projected underlying run rate. Home Express delivered record quarterly loan origination volume of $1.1 billion, up 30% year-over-year and 24% sequentially, with a monthly record of $420 million in June. The company completed two resecuritizations that improved financing efficiency, released approximately $13 million of capital for reinvestment, and increased the advance rate on its collateral. Credit performance improved across key portfolios, with delinquencies in the legacy reperforming book declining from 9.1% to 8.8% and investor DSCR loan delinquencies falling from 6.1% to 4.7%. Management reaffirmed its full-year 2026 EAD guidance of at least $1.80 per share, supported by a strong first-half performance of $1.00 per share. The company is strategically pivoting to acquire and securitize mortgage loans from both Home Express and third parties, targeting two Home Express securitizations and one third-party transaction by year-end. Chimera Investment Corp (NYSE:CIM) reported a GAAP net loss of approximately $4 million for Q2 2026, driven by a $13 million loss in its investment portfolio segment. Book value per share declined 3.2% to $17.75 during the quarter, primarily due to a sharp repricing of monetary policy expectations and higher Treasury yields. Home Express earnings grew only modestly quarter-over-quarter despite higher production, due to margin compression from increased competition and tighter pricing. The company experienced a reduction in third-party fee revenue at Palisades Advisory Services due to increased competition and lower transaction activity from clients. Market volatility and a higher-for-longer rate outlook have created an uncertain environment, with the company noting that rate cuts initially expected for 2026 have given way to talks of potential hikes. The company's GAAP leverage increased to 5.6-to-1, driven by resecuritization activity and a growing allocation to agency RMBS, which also pushed recourse leverage higher. Warning! GuruFocus has detected 5 Warning Signs with CIM. High Yield Dividend Stocks in Gurus' Portfolio This Powerful Chart Made Peter Lynch 29% A Year For 13 Years How to calculate the intrinsic value of a stock? Is CIM fairly valued? Test your thesis with our free DCF calculator. Q: Can you talk about the drivers of the change in book value during the second quarter, and where does mark-to-market book value stand quarter-to-date?A: Jack McDowell, Chief Investment Officer, explained that the vast majority of the GAAP portfolio is comprised of securitized loans, with about $8 billion of loans on balance sheet against $5.5 billion of securitized debt in fixed-rate, non-mark-to-market terms. The substantive sell-off in rates during the quarter drove the value of the loans down more than the securitized debt, which was the primary driver of the book value decline. He noted that the repositioning toward agencies and Home Express contributed positively, but the consolidated GAAP securitizations drove the change. Quarter-to-date, book value is down about 1.5% due to a continued sell-off in rates. Q: For the inaugural Home Express securitization, will Chimera retain the residual equity piece, and if so, how should we expect that to be reflected in EAD going forward?A: Jack McDowell, Chief Investment Officer, stated that the intent is to structure the deals and then evaluate a variety of factors up to the time of distribution, including capital needs, portfolio construction objectives, and relative value in the market. Based on those factors, they will determine whether to retain the credit portion of the capital stack for long-term earnings or distribute the entire structure and book the gain on sale, which would go through EAD and earnings. The first deal is expected to close in the latter part of the third quarter. Q: Can you talk about your outlook for the agency basis after the spread tightening during the second quarter, and how you compare incremental returns on investing in agency MBS versus new credit opportunities today?A: Jack McDowell, Chief Investment Officer, noted that they have built up over $600 million of capital allocated to agencies, generating returns in the low-to-mid 10s area. He views agencies as both a relative value bucket and a source of liquidity that can be drawn on for other opportunities, but the bar to draw on that capital is relatively high given current yields. He emphasized that the opportunity set going forward is leaning into residential credit, which includes retaining more loans from Home Express, buying loans from third parties, and securitizing them, targeting mid-teens returns on retained credit or generating gain-on-sale revenue. Q: Can you talk about where you are in terms of redeploying capital from the called deals in the first quarter, and where we are in terms of seeing that earnings accretion?A: Jack McDowell, Chief Investment Officer, explained that when they raised $195 million from calls and sales in late Q4 and Q1, they held a nearly $1 billion TBA short from a risk management perspective that was closed out in April, causing some degradation from negative carry. After that, they were primarily fully deployed and are realizing the benefits of the redeployment. However, he highlighted that the way the consolidated securitizations are structured, principal payments delever the structures and dilute earnings power until the deal is called and capital is redeployed. Part of the earnings accretion from Q1 activities is being seen but is offset by deleveraging in other parts of the portfolio. Q: Can you just update us on third-party advisory, how much AUM are you managing, and how should we think about that revenue stream contributing to EAD going forward?A: Jack McDowell, Chief Investment Officer, explained that Palisades Advisory Services serves multiple functions, including serving third-party clients with residential home loan servicing oversight and data needs, generating fee-based revenue. They are also instrumental in overseeing the Chimera portfolio and focusing on buying loans from third parties and securitizing them. He noted there is competition in the third-party space and some reduction in transaction activity from clients, causing dilution in third-party fee revenue, but they are actively redeploying resources to focus on whole loan needs at the REIT level and expect to see some fees from the Home Express securitization and third-party securitization. Q: Based on your guidance, it sounds like the higher rate outlook is not having a meaningfully negative impact on Home Express. Can you talk about what rates are doing to Home Express in the back half of the year, and discuss the margins in the non-delegated correspondent versus the traditional wholesale?A: Kyle Walker, President and CEO of Home Express, stated that they are seeing continued increases in volume on a month-to-month basis and expect the third quarter to be an increase over the second quarter. While there has been some margin compression, they are focused on maintaining underwriting standards, pricing deliberately, and finding operational efficiencies to drive down costs. Regarding the non-delegated correspondent channel, he noted it is slightly less margin business than wholesale, about 10 to 15 basis points less, but it appears to be more efficient in processing loans, so the cost to originate is slightly less. Q: Since the securitized portion of the portfolio doesn't impact your earnings, does your ROE on your remaining capital just go up when those marks happen?A: Jack McDowell, Chief Investment Officer, confirmed that as GAAP book value changes due to loan value declines, their earnings power remains intact, so from a GAAP ROE standpoint, the ROE would increase as the loan value declines. Q: Can you provide more detail on the portfolio repositioning activities and the shift in capital allocation during the quarter?A: Jack McDowell, Chief Investment Officer, detailed that they closed out $966 million of short TBA positions, sold $575 million of noncore legacy CMBS interest-only and CMO positions, generating $19 million in capital, and purchased $967 million of pass-throughs focused on 5.5 to 6.5 coupons. They completed two resecuritizations backed by $487 million of loans, which improved financing efficiency and released approximately $13 million of capital. The capital allocation mix shifted, increasing agency MBS by 5 percentage points to 26% of invested capital, while reducing legacy residential credit by 4 percentage points to 61%. Q: What is the outlook for EAD for the remainder of the year, and how is the company positioned given the market environment?A: Phil Cartis, President and CEO, reiterated that they still believe EAD for the year will be at least $1.80, with second quarter EAD of $0.46 right on their projected underlying run rate and exceeding the dividend. He emphasized that despite continued uncertainty in political, For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Dividend Maintained at $0.45 Per Share, Reflecting an Annualized Rate of $1.80 Per Share NEW YORK, June 11, 2026--(BUSINESS WIRE)--The Board of Directors of Chimera Investment Corporation ("Chimera") has declared its second quarter cash dividend of $0.45 per common share, consistent with the first quarter 2026 dividend and in line with the Board’s previously stated expectation to maintain the $0.45 quarterly dividend throughout 2026. The dividend is payable on July 31, 2026 to common shareholders of record on June 30, 2026. The ex-dividend date is June 30, 2026. About Chimera Investment Corporation Chimera is a diversified real estate company that invests in, originates, and manages primarily residential real estate assets. The assets we may invest in for ourselves and manage for others through our wholly-owned subsidiary Palisades Advisory Services, LLC, include residential mortgage loans, Non-Agency RMBS, Agency RMBS, RTLs, Investor Loans, MSRs and other real estate-related assets such as Agency CMBS, junior liens and HELOCs, equity appreciation rights, and reverse mortgages. Also, through our wholly-owned subsidiary, HomeXpress Mortgage Corp., we primarily originate non-QM residential mortgage loans (both consumer loans and Investor Loans) as well as a smaller amount of QM residential mortgage loans. Chimera was incorporated in Maryland on June 1, 2007 and started trading on the NYSE in November 2007, and is structured as an internally managed real estate investment trust, or REIT, for U.S. federal income tax purposes. Forward-Looking Statements In this press release references to "we," "us," "our," "Chimera," 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, including as related to the expected impact. 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 Dodd-Frank Act and related laws and regulations relating to credit risk retention for securitizations; 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, including the ongoing conflicts involving the U.S. in the Middle East; our ability to successfully integrate and realize the anticipated benefits of any acquisitions, including the acquisition of HomeXpress; our ability to originate or acquire quality and profitable loans at an appropriate and consistent cost; our ability to sell the loans that we originate or acquire; our ability to refinance or obtain additional liquidity for borrowing; our ability to manage, maintain and expand our relationships with our clients, the independent mortgage brokers and bankers; 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; 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; the development, proliferation and use of artificial intelligence; our ability to find and retain qualified executive officers and key personnel; our ability to comply with extensive government regulation, including, but not limited to, federal and state consumer lending regulations; the impact of and changes in governmental regulations, tax law and rates, accounting guidance, refinancing and borrowing guidelines 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 press release and, in certain circumstances, may not have been audited by Chimera’s independent auditors. View source version on businesswire.com: https://www.businesswire.com/news/home/20260611556404/en/ Contacts Investor [email protected] www.chimerareit.com

Image source: The Motley Fool. Thursday, May 7, 2026 at 8:30 a.m. ET Chief Executive Officer — Phillip Kardis Chief Financial Officer — Subramaniam Viswanathan Chief Investment Officer — Jack MacDowell President and Chief Executive Officer of HomeXpress Mortgage — Kyle Walker Need a quote from a Motley Fool analyst? Email [email protected] Phillip Kardis: Thank you, Tyra. Good morning, and welcome to Chimera Investment Corporation's First Quarter 2026 Earnings Call. Joining me on the call are Subra Viswanathan, our Chief Financial Officer; Jack MacDowell, our Chief Investment Officer; and Kyle Walker, the President and CEO of HomeXpress Mortgage. After my remarks, Subra will review the financial results. Jack will review the investment portfolio, and then Kyle will review HomeXpress results. We operate in a market where conditions change -- can change quickly. Rates move, spreads widen, liquidity tightens and then [rarely] in a straight line. This year has been a clear reminder of that reality. During the quarter, treasury yields moved higher across the curve, while the 2/10s spread flattened. Prior to the Iran conflict, mortgage rates briefly touched the 3.5-year low, going to reverse higher by 40 basis points as volatility returned. Mortgage basis widened relative to treasuries and swaps, equity volatility spiked at one point doubling before stabilizing. Oil prices moved sharply higher. And at the same time, rate markets alternated between periods of calm and episodes of rapid repricing. Overlaying this, the market expectations for monetary policy shifted meaningfully. At the start of the year, the market anticipated two to three rate cuts in 2026. By quarter end, those expectations had largely dissipated. And in fact, there's now some discussion of the possibility of rate hikes. I highlight these dynamics to underscore a central point. We are operating in a market where uncertainty is not episodic. It's structural. We don't try to predict where the market will be. We focus on being prepared for wherever it goes. Our objective is clear: to build a company that's not dependent on any single market environment. The question then is straightforward. How did we perform in this environment? And how are we positioned going forward? I'll give you a sneak peek. We think we did very well and believe we are well positioned to take advantage of opportunities throughout the rest of the year. So let's start with HomeXpress. HomeXpress had another strong quarter. Despite volatility, origination volume increased 39% compared to the first quarter of 2025, reaching $884 million. Moreover, they were able to generate $11 million of earnings before taxes, depreciation and amortization, representing an annualized return on equity of 16.8%. This is what we aim for, growth with discipline and returns that justify the capital employed. Turning next to our investment portfolio. We continue to reposition the portfolio to unlock value and build more durable earnings. During the quarter, our allocation to loans decreased from 62% to 55% and our allocation to Agency RMBS increased from 15% to 21%. The primary driver for this shift was the redemption of eight securitizations backed by $1.5 billion of seasoned reperforming loans. We sold $1.2 billion of those loans, generating $195 million in net proceeds and retained $287 million for current income and future securitization. With an estimated breakeven ROE of just under 8%, the reinvestment of these proceeds has the potential to generate an additional $15 million in annual earnings. The takeaway, we increased earnings power while improving portfolio flexibility. As we look at our portfolio repositioning over the past 15 months, our estimated investment levered returns, including the addition of HomeXpress, have increased by approximately 20%. Also since the beginning of the year, we have been purchasing newly originated loans from HomeXpress. We plan to launch the new CIM HomeX securitization program later this quarter or early next. Overall, our portfolio had a very strong quarter. But as a REIT, the real test is our dividend. So how are we doing? First quarter earnings available for distribution EAD was $0.54 per share, which covered the $0.45 dividend by 120%. Over the past 10 quarters, our EAD has exceeded our dividend in nine, missing once by a single penny. Over that same period, we increased the dividend from $0.33 to $0.45 per share, a 36% increase while maintaining EAD coverage of more than 1.1x. I want to let that sink in for a minute. We've grown and covered our dividend for the past 2.5 years. That consistency is not accidental. It reflects a focus on generating durable earnings. So what's our outlook for the remainder of the year and how are we positioned? Looking ahead, we expect continued uncertainty, political, geopolitical and market-driven. But despite that uncertainty, we remain optimistic about the future. We have structured the platform to preserve optionality across origination, investment and asset management so that we can adapt as conditions evolve. And more than that, we have the capital and the liquidity to take advantage of that optionality. We ended the quarter with $476 million of cash, approximately $200 million of unencumbered assets and nearly $500 million of equity allocated to Agency RMBS. So as we look over the rest of the year, we believe we have both the liquidity and the flexibility to continue to play offense and act when opportunities arise. Specifically, we will continue to grow and diversify the portfolio, expand originations, build fee-based income and pursue acquisitions. With that, I'll turn it over to Subra to walk you through the financials. Subramaniam Viswanathan: Thanks, Phil. GAAP net loss for the quarter was approximately $65 million. We generated approximately $46 million of earnings available for distribution or $0.54 per share compared with $34 million and $0.41 per share in Q1 of 2025. This improvement reflects higher net interest income from the portfolio and the addition of HomeXpress. Our quarterly dividend of $0.45 per share was covered by earnings at approximately 1.2x. GAAP book value per share declined by 6.9% to $18.34. Excluding the impact of redemption of eight securitization deals and related loan sales, book value was down by 2.5%. Jack will provide additional details on the transaction and its impact on book value and earnings. In addition, the transaction released $195 million in equity, which was immediately redeployed into agency securities, increasing liquidity and supporting earnings accretion. Redeeming the securitized debt reduced net interest expense by $4 million, reflecting the exclusion of accrued carry interest on the payoff. In addition, income from our MSR-related investments benefited from early payout protection payments of $2 million. Together, these items contributed approximately $0.07 to earnings available for distribution per share and are not expected to recur. With that, at the firm level for the quarter, economic return on GAAP book value was negative 4.6% based on the quarterly change in book value and the $0.45 first quarter dividend per common share. Annualized GAAP return on average equity was negative 6.97%, while annualized EAD return on average common equity was 11.53%. Segment performance for the first quarter was as follows: -- for the investment portfolio, economic net interest income was $72.8 million, while annualized economic net interest income return on average equity was 13.03%. The yield on average interest-earning assets was 6%. Our average cost of funds was 4.2% and the resulting net interest spread was 1.8%. For the Residential Origination segment, HomeXpress funded $884 million of loans. EBITDA defined as earnings before taxes, depreciation and amortization was $11.4 million and annualized EBITDA ROE was 16.8%. With respect to leverage and liquidity, our total leverage was 5.2:1, while recourse leverage was 2.9:1. Recourse leverage rose this quarter as we continue to increase our capital allocation to Agency RMBS securities. We ended the quarter with $675 million in total cash and unencumbered assets compared to $528 million at the end of the year. Total consolidated secured financing outstanding was $7 billion. It was comprised of $629 million related to our residential origination warehouse loans and the remaining approximately $6.4 billion was for our investment portfolio. Within the investment portfolio, $4.1 billion of secured financing supported Agency RMBS positions against which we maintained $3.7 billion in swaps and swaps futures across varying maturities and $966 million in TBAs. $1.9 billion was secured by residential credit assets, of which $1.2 billion or 62% carried non or limited mark-to-market features and $1 billion or 54% of this were floating rate facilities. We also utilized $224 million of warehouse capacity during the quarter to finance retained loans post redemption of the eight deals I discussed earlier. Finally, on expenses. Compensation expense increased by $8.5 million quarter-over-quarter, mainly driven by a return to a more normalized run rate and higher stock-based compensation. In the Investment Portfolio segment, the prior quarter reflected a lower accrual while the first quarter returned to a more normalized run rate. We also recognized higher stock-based compensation in the first quarter related to grants awarded to retirement-eligible employees. In the Residential Originations segment, expenses increased by approximately $1.4 million, driven by primarily by a higher headcount. In summary, the first quarter reflects the impact of a deliberate portfolio repositioning with capital released and deployed into higher return opportunities, while the underlying business continues to perform. We believe the steps taken this quarter position us well for improved earnings and returns for the future. With that, I'll turn the call over to Jack. Jack Macdowell: Thank you, Subra, and good morning, everyone. As Phil mentioned, the quarter began on constructive footing, supported by GSE demand for Agency MBS and expectations for Fed easing. That tone shifted in early February as liquidity and credit concerns reemerged, particularly in private credit. Conditions deteriorated further with the escalation of the conflict in the Middle East that continued throughout the balance of March. Since quarter end, mortgage spreads have tightened from their wides and credit has firmed across products, though rates remain higher and markets continue to digest an evolving geopolitical environment. Against this backdrop, our focus has remained consistent. Over the past year, we have been executing a deliberate strategy to optimize our portfolio, in particular, raising capital organically by economically relevering securitization structures, divesting fully valued assets and increasing our allocation to more liquid investments. That strategy positioned us well heading into the March volatility, enabling us to de-risk quickly when conditions deteriorated and deploy promptly upon raising capital. During the quarter, we completed a series of strategic transactions involving the redemption of eight securitizations collateralized by $1.5 billion of legacy re-performing loans. We sold $1.2 billion of the loans and retained approximately $287 million that we plan to resecuritize in the near term. These transactions released approximately $195 million of capital at a breakeven ROE of just under 8%, and we estimate the redeployment of that capital has the potential to increase annual earnings power by $15 million. You can see additional details on Slide 10 of the accompanying presentation. I want to take a moment to walk through how these transactions impacted our reported book value as the mechanics of calling legacy securitizations can create movements that do not fully reflect the economic outcomes. When we call these securitizations at par, we redeemed securities that were carried on our balance sheet at a discount. That discount, approximately $43 million flowed through as a reduction in book value. In total, these strategic transactions accounted for nearly two thirds of our change in book value during the quarter, and absent these actions, book value would have been down approximately 2.5%, reflecting the impact of spread movements and rate volatility during the quarter. As of last Friday, our estimated book value is up about 1%. So 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. We are committed to preserving capital and managing risk, and we assess value at risk based on the earnings-generating capacity of our capital, not short-term market movements in securitized liabilities. We continued our capital reallocation efforts, repositioning the portfolio toward a more balanced mix, enhancing our liquidity profile and the potential for more durable risk-adjusted earnings. Our allocation to residential credit decreased to 65% from 72% at year-end, with loan exposure coming down to 55% from 62%, driven mainly by asset sales during the quarter. In turn, we added $1.9 billion of Agency MBS, bringing that allocation to 21%, up six percentage points quarter-over-quarter with our specified pool portfolio ending at $4.9 billion. In March, amidst the onset of the conflict in the Middle East, we added selectively to our agency portfolio in five and six coupons where spreads have widened most and we were under-allocated, reducing overall portfolio duration at a time when we wanted to maintain a more defensive posture. We also actively managed risk through TBA positions, initially shorting $500 million as the conflict intensified before unwinding those positions after raising liquidity through loan sales. We subsequently reestablished shorts on a portion of our portfolio to maintain flexibility across the stack. We continue to hedge our agency portfolio with interest rate swaps, consistent with our SOFR-based funding and the carry advantage provided by current swap spread levels. On the credit side, our hedge composition shifted during the quarter from pay fixed swaps and swaptions to interest rate caps, providing an asymmetric payoff in the event of a material decline in short-term rates. As Phil mentioned, we began retaining HomeXpress loans in the first quarter and anticipate launching our first securitization in late Q2 or early Q3. These loans are representative of HomeXpress's normal production with investor loans making up approximately 55% of the population, reporting a 70% average loan-to-value ratio, 735 average credit score and 7% average coupon. We see securitization execution outpacing whole loan pricing in the current market. And given our flexibility to hold, securitize or sell, we are well positioned to capture that differential. Turning now to credit. Performance across our loan portfolio remains strong. Delinquencies in the legacy re-performing book ticked up, though this was largely due to the composition of loans we sold versus retained. On the RTL side, the dollar balance of delinquencies remained stable and losses nominal. And in our investor loan cohort, delinquencies driven by a natural seasoning of the 2023 vintage are in line with expectations and reverted back into the mid-5% range as of the April remittance reports. Stepping back, the first quarter demonstrated both the value and the necessity of the transformation we have been executing over the past year. The loan sale activities released capital and materially improved our earnings capacity. Our growing agency portfolio gave us flexibility to redeploy and de-risk dynamically as conditions shifted. And HomeXpress continues to contribute to earnings while building a pipeline for our securitization program. We entered this year with a clear plan, diversify the portfolio, strengthen liquidity and grow durable sources of income. The actions we took this quarter advanced each of those objectives. We covered our dividend. We improved the composition of the portfolio, and we redeployed the capital freed up from the legacy transactions into higher returning opportunities. The strategy is delivering results, and we see continued growth in the earnings power of this platform. With that, I will turn it over to Kyle to discuss residential origination. Kyle Walker: Thank you, Jack, and good morning, everyone. HomeXpress delivered strong results in the first quarter, building on the momentum from the prior quarter. We originated $884 million in total loan volume, representing a 39% increase as compared to the first quarter of last year. Despite market volatility emerging late in the quarter, our origination volume, all of which is first lien residential mortgages was not meaningfully impacted due to two key reasons. First, the loan submission to close process has a natural lag of about 35 days. As a result, much of our first quarter's volume was already in the pipeline before market conditions shifted. Our first quarter results, therefore, largely reflect the origination pipeline activity built earlier in the quarter. Second, consumer non-QM and business purpose loan demand is less dependent on rate-driven refinancing activity, which also supported our pipeline stability through the late quarter disruption. Looking ahead, our pull-through rates and broker engagement have remained relatively consistent entering the second quarter. Submissions did moderate briefly during the disruption, but activity has begun to normalize. 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. As a result, despite elevated and ongoing interest rate volatility, the underlying demand for HomeXpress loan origination remains firm. Our experienced leadership team has successfully navigated many past market disruptions and cycles. That experience enables us to make strategic decisions and pivot effectively with changes in the market. One area we have been focusing on is increasing our percentage of consumer non-QM loans, which generally carry higher average loan balances. Our average loan size increased from $424,000 in March to $451,000 in April. This compares with a $410,000 average for the first -- for the entire first quarter. By increasing the average loan size, we can generate more volume with the same number of loans, further improving our efficiency. HomeXpress delivered strong profitability in the quarter, generating an EBITDA of $11.4 million. Our net origination margin, which reflects both gain on sale as well as operating cost to produce our loans was 114 basis points. In this environment, we remain focused on driving efficiency while maintaining disciplined pricing and sound underwriting standards. On the front end, we've integrated with ARIVE, so brokers can access our products and pricing directly in their workflow and submit loans without jumping between systems. That has helped reduce some of the back and forth and improve submission quality. We're also using AI to reduce manual work in underwriting, automating parts of income verification. Our efforts have helped us handle more volume and bring down cost per loan as we scale. We continue to assess other opportunities to incorporate AI into our systems. Credit quality on new originations remained consistent and key metrics, including weighted average FICO and LTV ratios were maintained in line with our historical loan production levels. To support production, we increased our total warehouse funding capacity to $1.5 billion during the quarter. That, combined with our strong cash position provides ample liquidity to support our expected production levels. Our seven warehouse facilities are maintained with large and leading financial institutions. We also continue to deliver HomeXpress's high-touch service model that distinguishes our platform, maintaining relationships with our more than 6,000 approved broker sources, which are serviced by our 142 account executives and related sales staff. As our first quarter results demonstrate, HomeXpress is contributing meaningfully to Chimera's earnings base. Going forward, we will continue to scale the platform responsibly, maintain credit discipline and originate loans with attractive economics. With that, I'll turn the call back over to Phil. Phillip Kardis: Thank you, Kyle. To sum up, we're not optimizing for quarterly outcomes. We're allocating capital for long-term compounding. Our objective is straightforward, build a residential platform engineered to perform across interest rate cycles, credit cycles and capital market cycles. If we execute, intrinsic value per share will grow and the dividend will follow. That's how we run the business. And that's how we believe it should be evaluated. We'll now open the call to questions. Operator: [Operator Instructions] Our first question comes from the line of Marissa Lobo with UBS. Ameeta Lobo Nelson: On the securitization call strategy, that unlocked capital, but it pressured book value a little bit. How much additional embedded optionality remains in the existing securitization stack? And how should we think about the trade-off between book value volatility and future earnings power? Jack Macdowell: Yes, Marissa, I appreciate the question. Just for context, I mean, as we're looking at these deals and as I think we've talked about on this call and prior calls, the securitization -- securitized debt impact, we're evaluating this very holistically. And we look at the opportunity cost of doing these deals versus the opportunity cost of just continuing to do nothing and letting the capital generate the existing returns. I mean we have a pretty large portfolio of callable deals. And so we view our job is to constantly be evaluating the economics of calling those and resecuritizing them. But like we said in the prepared remarks, I mean, there's a difference between earnings generating capital and then the capital that is somewhat derived from valuation marks on our securitized debt. Ameeta Lobo Nelson: And looking at the allocation, loans still represent the majority of capital, but agency is growing. So what risk-adjusted return threshold determines whether incremental capital goes to agency or credit assets from here? Jack Macdowell: Yes. I mean, so we are thinking about portfolio construction. And so the agency sleeve has been an important component of growth over the last year, one, for the liquidity and the optionality that we've been talking about and making sure that we maintain that. The loans, I mean, the credit element is a core competency of ours. So it's not that we necessarily are looking to decrease that allocation, so to speak, but we are looking to identify areas where we can extract underperforming capital and redeploy that into higher earning assets. And maybe back to your original question, are there continuing to be opportunities in the portfolio to call deals, extract capital, redeploy it accretively? I think the answer to that is certainly yes. This was a very important quarter for us that culminated in the sale of $1.2 billion of loans. So that was obviously a milestone effort on the team's part. But I probably wouldn't expect in the near term something of that size, but I certainly think there's still opportunities to prune the portfolio and continue to drive earnings power. Operator: Our next question comes from the line of Trevor Cranston with Citizens JMP. Trevor Cranston: Question on the agency portfolio. You mentioned establishing a short TBA position in March. It looks like it was about $1 billion at the end of the quarter. Can you say if you guys are continuing to hold that short TBA position or if there's been any other significant changes to the agency book since the end of the quarter? Jack Macdowell: No. I guess what I would say is we are using the TBA shorts for two different purposes. One, the one that we put on early in March was at the onset of the Middle East conflict. So that was purely a de-risking effort on the team's part that we were doing in preparation for the loan sales that were occurring and would raise liquidity later in the quarter. We did take that short off before quarter end. We had reestablished some other shorts, the 966 that you see in the prepared materials. And we have continued to maintain that for all intents and purposes post quarter end. And we use that in part when we see interesting spec pools that -- where we think the payups are attractive or the stores or the call protection is interesting. Whenever we know that we're going to be raising capital at some point in the future, we don't necessarily want to be forced buyers of whatever is in the market at that time. So when we know capital is coming in, we may go ahead and purchase bonds, but we'll offset that risk by shorting TBAs. And that's what you see with that 966 for the most part at quarter end. Trevor Cranston: Okay, Got it. Makes sense. Then on the HomeXpress business, can you maybe give us a little bit of color on sort of early indications on the second quarter, how volumes are holding up with higher mortgage rates? And I guess I'd be curious if you've seen any sort of indication of changes in margin levels as well. Jack Macdowell: Volume in the second quarter should be very consistent with what we forecasted. So our volume has been increasing month-over-month. The margins appear to be holding. We did a couple of trades to an insurance investor throughout the kind of market dislocation, and that helped us keep the margins right. Now it seems like things are back to normal regarding margin activity. Operator: Our next question comes from the line of Bose George with KBW. Francesco Labetti: This is Frankie Labetti on for Bose. To start, just kind of more of a macro question. Given the rate volatility, given some headline risks on unemployment, maybe can you talk about what you're seeing in the market there on credit, how have credit conditions held up? Jack Macdowell: Yes, sure. I mean if you look across our portfolio, and we put like our delinquency history in some charts in the prepared materials. But look, I think what you -- in some of the, call it, 2023 more seasoned vintage pools or, let's say, non-QM, we are starting to see delinquencies rise in what I would say is a normal course. There's certainly labor market conditions are starting to soften. So we would expect to see delinquencies reflect those conditions. With. That being said, this is a much different underwriting than what we've seen like pre-financial crisis. These loans have significant equity in them, which opens up opportunities for much more constructive workout solutions for borrowers. And I think that's reflected in the very, very low levels of losses that we've seen in all these loans across non-QM and non-agencies. So I think you'll continue to see delinquencies rise in the normal course, but also losses continue to remain very muted just given the amount of equity in the loans. Francesco Labetti: Great. And then on the HomeXpress platform, like how does Chimera think about retaining servicing or MSR exposure going forward? Jack Macdowell: Yes. I mean that's a good question. And right now, everything has been sold on a servicing release basis. You know from prior calls and our remarks that building an MSR sleeve is a very important component of our longer-term strategy. So there's certainly discussions about retaining servicing longer term. I think we've still got some work to do on that front, but it's definitely on the drawing board and something that we would hope to do going forward at some point. Operator: Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Kardis for any final comments. Phillip Kardis: Thank you. Thank you, everyone, for joining our first quarter 2026 earnings call, and we look forward to speaking to you next quarter. Have a great day. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Chimera Investment Corporation, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chimera Investment Corporation wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Chimera (CIM) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Chimera Investment Corporation? Here are five stocks we like better. 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. → Uber's Annual Product Showcase Reveals It Is Coming for Airbnb and Booking “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. → Wells Fargo’s Comeback Is Real—But Not Risk-Free 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. → Rocket Lab Posts Record Q1 Revenue, Raises Q2 Guidance 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Chimera Investment Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.