Chimera Investment Corporation (CIM)

[MCArmel1]

Chimera Investment misses by $0.05, misses on net interest income

Nov 3 2015, 16:51 ET | About: Chimera Investment Corpo... (CIM) | By: Gaurav Batavia, SA News Editor

Chimera Investment (NYSE:CIM): Q3 EPS of $0.50 misses by $0.05.

Net interest income of $143.97M (-5.0% Y/Y) misses by $23.58M.

Press Release

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CHIMERA INVESTMENT CORPORATION RELEASES 3RD QUARTER 2015 EARNINGS
Tue November 3, 2015 4:45 PM|Business Wire | About: CIM

• CORE EARNINGS OF $98 MILLION OR $0.50 PER SHARE
• PURCHASED 16.6 MILLION OR 8% OF CHIMERAS OUTSTANDING SHARES FOR $231 MILLION OR $13.94 PER SHARE; A 17% DISCOUNT FROM Q2 2015 ENDING GAAP BOOK VALUE PER SHARE
• BECAME A MEMBER OF THE FEDERAL HOME LOAN BANK OF DES MOINES THROUGH WHOLLY-OWNED INSURANCE COMPANY
• GAAP BOOK VALUE OF $16.38 PER SHARE
• GAAP NET LOSS OF $48 MILLION OR $0.24 PER SHARE

NEW YORK--(BUSINESS WIRE)-- "Chimera had a number of positive advances in the third quarter. We made significant progress in our transition to a fully independent, internally managed mortgage REIT, repurchased $231 million of our stock and became a member of the Federal Home Loan Bank System. Chimera has also taken a number of steps to position our portfolio and balance sheet in light of the continuing volatility in the fixed income market. This includes lowering our interest rate risk by reducing our Agency portfolio by $2 billion earlier this year, increasing the notional balances of our interest rate swaps and extending the term of our non-agency financing. Given the current uncertainty around interest rates, we believe defending book value in the near term while creating an investor friendly operating structure will be the right path to maximizing value for our shareholders over the long term."

3rd Quarter 2015 Financial Results and Highlights
• Core earnings(1) of $0.50 per share down, from $0.53 earned in the 2nd quarter of 2015 and $0.56 earned in the 3rd quarter of 2014. Core earnings for the third quarter were based on 198 million average shares outstanding for the quarter compared to 189 million shares currently outstanding.
• Net interest income of $144 million, down from $150 million in the 2nd quarter of 2015 and $151 million in the 3rd quarter of 2014
• GAAP book value of $16.38 per share, down from $16.73 per share for the 2nd quarter of 2015 and down from $17.50 per share in the 3rd quarter of 2014
• Economic book value of $15.28 per share, down from $15.54 per share for the 2nd quarter of 2015 and $15.75 for the 3rd quarter of 2014
• Purchased 8% of Chimeras outstanding shares during the quarter which is expected to be beneficial to Chimeras shareholders in future quarters. • Purchased all shares held by Annaly, 4.4% of outstanding, for $14.05 per share.
• Open market purchases were executed at $13.81 per share for an average of $13.94 per share on all purchases.

• Exercised call right on Springleaf 2012-2 trust and securitized related mortgage loans in a new CIM 2015-3AG trust reducing financing costs from 4.1% to 2.2%. Incurred $2.4m of non-recurring deal expenses during the third quarter in relation to this transaction.

(1) Core earnings is a non-GAAP measure and is defined as GAAP net income (loss) excluding unrealized gains on the aggregate portfolio, impairment losses, realized gains on sales of investments, gain on deconsolidation, extinguishment of debt and certain other non-recurring gains or losses. Core earnings includes interest income and expense as well as realized gains or losses on derivatives used to hedge interest rate risk, including $9m of realized losses on treasury futures during the 3rd quarter of 2015. Core earnings is provided for purposes of comparability to other peer issuers, but has important limitations. Therefore, core earnings should not be viewed in isolation and is not a substitute for net income or net income per basic share computed in accordance with GAAP.

Gross asset yields were 8.3% on the residential mortgage credit portfolio and 2.8% on the Agency MBS portfolio. The net interest spread on the total portfolio was 3.4% and net interest margin was 4.0% reflecting total leverage of 3.8:1 and recourse at risk leverage of 2.5:1 at September 30, 2015.

The Company declared a common stock dividend of $0.48 per share for the quarter ended September 30, 2015. The annualized dividend yield on the Companys common stock for the quarter ended September 30, 2015 was 14%.

Other Information

Chimera Investment Corporation (CIM) invests in residential mortgage loans, residential mortgage-backed securities, real estate-related securities and various other asset classes. The Companys principal business objective is to generate income from the spread between yields on its investments and its cost of borrowing and hedging activities. The Company is a Maryland corporation that has elected to be taxed as a real estate investment trust (REIT).

Please visit www.chimerareit.com and click on Investor Relations for additional information about the Company.

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