Chimera Investment (NYSE:CIM) executives used the company’s fourth-quarter 2025 earnings call to highlight a year of portfolio repositioning and the addition of a new operating business through the acquisition of HomeXpress Mortgage, as management continued to frame the company’s strategy as a shift toward a “hybrid REIT” model with more diversified sources of income.
Management emphasizes portfolio diversification and platform buildout
President and CEO Phil Kardis said the company spent 2025 executing on a plan to diversify its portfolio, strengthen liquidity, and expand fee-based income. He noted a change in the mix of the GAAP portfolio over the year, moving away from loans and adding more Agency exposure and new lines of business.
Kardis also said Chimera increased third-party assets under management to $26 billion from $22 billion, added advisory services to three securitizations, and integrated loan data into the Palisades systems, which he said was improving legacy portfolio performance. He added that while the company issued about $120 million of unsecured debt, most funding for the repositioning came from internal portfolio actions, including asset sales and collapsing select securitizations that generated about $485 million, for “an aggregate total of more than $600 million to redeploy.”
Dividend raised as earnings available for distribution improves
Chimera announced a first-quarter 2026 dividend of $0.45 per share, a 22% increase from the prior quarterly dividend. Kardis said the board expects to maintain that dividend level for the remainder of 2026.
In the Q&A, Kardis said the company evaluates dividend sizing over the course of a year, acknowledging that with a larger operational component, earnings available for distribution (EAD) could be more variable quarter to quarter. He said management believes the dividend level should have sufficient EAD coverage while still allowing for capital allocation to support growth in operating businesses.
Financial results and segment reporting changes
Chief Financial Officer Subra Viswanathan said Chimera revised its financial reporting following the HomeXpress acquisition and now reports two segments: an investment portfolio segment (investments and third-party advisory business) and a residential origination segment (the mortgage origination business).
Viswanathan reported GAAP net income of $7 million, or $0.08 per share, for the fourth quarter and GAAP net income of $144 million, or $1.72 per share, for full-year 2025. GAAP book value at the end of the fourth quarter was $19.70 per share. Economic return on GAAP book value was -0.9% for the quarter (based on the change in book value and the $0.37 dividend) and +7.4% for the full year, which included $1.48 of dividends declared in 2025.
Earnings available for distribution were $45 million, or $0.53 per share, in the fourth quarter and $141 million, or $1.68 per share, for the full year.
- Investment portfolio segment: economic net interest income of $65 million in the fourth quarter; yield on average interest-earning assets of 5.9%; average cost of funds of 4.5%; net interest spread of 1.4%.
- Residential origination segment (HomeXpress): $1.0 billion funded in the quarter with a gain-on-sale premium of 358 basis points on loans sold and settled; EBITDA of $11 million; annualized EBITDA ROE of 16.2%.
Total leverage was 5.1-to-1 at quarter-end, with recourse leverage at 2.4-to-1. Viswanathan said recourse leverage increased as Chimera allocated more capital to Agency RMBS and added warehouse lines tied to the origination segment.
Liquidity ended the year at $528 million of total cash and unencumbered assets, down from $752 million at the end of the third quarter, with Viswanathan citing the HomeXpress acquisition, including $244 million of cash consideration and $272 million of total consideration.
Portfolio activity, hedging, and book value dynamics
Chief Investment Officer Jack Macdowell described 2025 as a “pivotal year” for capital allocation. He said Chimera generated more than $600 million of capital through a mix of refinancing select investments ($291 million), divesting assets ($195 million), and the senior unsecured notes offering ($116 million). Over the year, the company purchased more than $3 billion of Agency MBS net of sales and launched its MSR strategy.
Macdowell said capital allocation shifted from about 97% residential credit at the start of 2025 to 72% at year-end, with the remainder allocated to 16% Agency MBS, 1% MSRs, and 11% to the HomeXpress lending platform.
He also discussed market conditions, including spread tightening after an April volatility spike. In the fourth quarter, Agency swap OAS tightened about 22 basis points, while generic non-QM AAAs were firmer by 5 basis points. He said mortgage rates declined about 70 basis points during 2025 to end the year at 6.15%.
Regarding book value, Macdowell said Chimera’s book value is sensitive to yield curve dynamics because securitized loans and related liabilities are recorded at fair value. He said that as the curve steepened, loan values increased, but those gains were more than offset by increases in the fair value of securitized debt, contributing to lower reported book value. He added that the Agency MBS portfolio contributed positively to book value in the fourth quarter as spreads tightened, while the aggregate loan portfolio was roughly flat, but book value still declined 2.7% due largely to the increase in value of consolidated securitized debt and HomeXpress acquisition-related activity.
In Q&A, management said mark-to-market changes in securitized debt do not affect the economics of Chimera’s call rights on securitizations, since bonds are redeemed at par when calls are exercised, and said it focuses on “capital at risk” based on cash-flow-generating capital rather than short-term valuation moves in securitized liabilities.
HomeXpress origination metrics and non-QM outlook
Kyle Walker, president and CEO of HomeXpress Mortgage, said integration into Chimera had gone smoothly in the first quarter of ownership and that the company was seeing “meaningful synergies” among Chimera, the Palisades platform, and HomeXpress. Walker said HomeXpress has 332 employees, is licensed in 46 states, and originates non-QM consumer and business-purpose loans through a network of about 6,000 brokers and bankers.
Walker reported HomeXpress originated $1.04 billion in the fourth quarter, up 18% from the third quarter and a company record. Full-year 2025 originations were $3.4 billion. He said HomeXpress achieved a record-low GAAP cost to originate of 201 basis points in the fourth quarter, producing a net margin of 111 basis points.
He also discussed a non-delegated correspondent program launched in 2025, with 55 mortgage bankers approved to deliver closed loans. Fourth-quarter volume in that channel was $47 million, and Walker said he expects it to represent a growing share of future volume. He said total warehouse funding capacity increased to $1.35 billion in the fourth quarter.
On early 2026 trends, Walker said HomeXpress was seeing typical seasonal volume reductions after the holidays, but said first-quarter performance should be “pretty good” compared with the prior year and that gain-on-sale premiums were “pretty good” relative to the fourth quarter.
On market sizing, management said it was seeing expectations for 20% to 25% growth in non-QM and business-purpose loans in 2026 versus 2025, and Macdowell added that the company was projecting non-QM origination volume of roughly $110 billion to $130 billion in 2026, based on modest growth in overall mortgage originations and an increase in non-QM wallet share.
About Chimera Investment (NYSE:CIM)
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.
