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.
Book Value Declines as Rates Rise
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%.
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.
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.
Portfolio Shifts Toward Agency MBS and Residential Credit
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 Originations Reach Record Level
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.
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.
