Chimera Investment (CIM) Q4 2024 earnings summary

Executive summary

• 2024 saw significant market volatility, with long-term rates rising, lowest existing home sales since 1995, and mortgage rates peaking at 7.2%.

• Home prices rose 4.3% year-over-year, supporting portfolio values, while credit spreads tightened and non-agency RMBS issuance nearly doubled.

• Book value per share declined to $19.72 in Q4'24 from $22.35 in Q3'24; EAD was $0.37 per share.

• Completed the acquisition of Palisades Group, expanding into third-party asset management and fee-based income.

• Declared a $0.37 per common share dividend for Q4'24, totaling $1.42 per share for 2024.

Financial highlights

• Q4 2024 GAAP net loss was $168.3 million ($2.07/share); full-year GAAP net income was $90.3 million ($1.10/share).

• Q4 economic return on GAAP book value was -10.1%; full-year economic return was +4.4%, including $1.42/share in dividends.

• Earnings available for distribution (EAD) for Q4 was $30.4 million ($0.37/share); full-year EAD was $121 million ($1.48/share).

• Q4 economic net interest income was $69.2 million, with a 6% yield on interest-earning assets and a 1.5% net interest spread.

• Portfolio at year-end: $13.1 billion in assets, $10.6 billion in liabilities, $2.5 billion in equity.

Outlook and guidance

• 2025 strategy includes continued portfolio diversification, liquidity enhancement, and growth in fee-based income.

• Focus on expanding agency RMBS, acquiring MSRs, and leveraging Palisades for third-party asset management.

• Targeting mid-teens ROE on invested assets, with double-digit net ROE as a goal for the overall portfolio, subject to market conditions.

• Plans to continue acquiring and securitizing mortgage loans, with timing of re-securitizations dependent on credit performance, prepayment speeds, interest rates, and market volatility.

• Hedges positioned for an uncertain rate environment, with $1.5 billion of interest rate swaps protecting 69% of floating rate secured recourse financing.