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Chimera Investment (NYSE: CIM) said its dividend was covered in the first quarter of 2026 as the company continued repositioning its portfolio toward more liquid assets and expanded its HomeXpress Mortgage origination platform.
President and Chief Executive Officer Phillip Kardis said the quarter unfolded amid a volatile market, with Treasury yields moving higher, the yield curve flattening, and mortgage rates reversing higher after briefly reaching a 3.5-year low. He also cited mortgage basis widening and geopolitical tensions as factors contributing to uncertainty.
“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 (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.
Viswanathan said the company’s quarterly dividend of $0.45 per share was covered by earnings at approximately 1.2 times. Kardis noted that over the past 10 quarters, EAD exceeded the dividend in nine quarters, missing once by $0.01. He also said the dividend has increased 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.
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.
During the quarter, Chimera continued shifting its investment portfolio. Kardis said the allocation to loans decreased from 62% to 55%, while the 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%. Chimera estimated that redeploying the capital could increase annual earnings power by $15 million.
Macdowell said the securitization calls affected reported book value because Chimera redeemed securities at par that had been carried on the balance sheet at a discount. He said the discount was approximately $43 million, which reduced book value, and that the strategic transactions accounted for nearly two-thirds of the quarter’s book value decline.
Chimera also added $1.9 billion of Agency MBS during the quarter, bringing its specified pool portfolio to $4.9 billion. The company 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, including gain on sale and operating costs, was 114 basis points.
Walker said late-quarter market volatility did not meaningfully affect origination volume due to 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. He said demand is driven by borrowers with specific financing needs, including consumer home purchases, cash-out refinancings, and investment property purchases.
Walker said HomeXpress increased 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.
The platform increased total warehouse funding capacity to $1.5 billion during the quarter. Walker said HomeXpress 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 about 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 opportunities to extract underperforming capital and redeploy it into higher-earning assets, though he said he would not expect another near-term transaction of the same size as the first-quarter loan sale.
Asked 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 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. Its 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 a focus on high-quality collateral and disciplined risk management.
The company’s core business activities include identifying and acquiring portfolios of residential mortgage loans and securities from financial institutions and in the secondary market.
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