Book value

Chimera Investment shares plunge after NII failure in Q3, pressure on book value (NYSE: CIM)


Chimera Investment (New York Stock Exchange: CIM) Inventory sank 8.9% Thursday morning after the mortgage REIT’s third-quarter net interest income fell short of Wall Street expectations and higher rates widened spreads, putting pressure on book value.

Q3 earnings available for distribution of $0.27 per share, meeting the consensus estimate, rose from $0.31 in Q2 and $0.42 in Q3 2021.

Third-quarter economic net interest income of $104.2 million, lagging consensus of $110.6 million, fell $116.8 million in the prior quarter and $149.4 million. dollars in the quarter of the previous year.

The GAAP book value was $7.44 per common share as of September 30, 2022, compared to $8.82 as of June 30. CEO and Chief Investment Officer Mohit Marria said on the third quarter conference call that he “suspects” book value has declined 2% to 3% since the end of the quarter as rates rose “d ‘about 30 basis points along the curve. The spreads are slightly wider’.

Earnings available for distribution/average common stock was 13.30%, compared to 13.29% in the prior quarter and 14.54% in the prior year quarter.

“In the third quarter, high market volatility resulted in higher rates and wider spreads, which put additional pressure on our book value,” Marria said. “However, these market conditions have brought new opportunities on both sides of the balance sheet.”

During the quarter, Chimera (CIM) committed to purchase $750 million in mortgages, completed a $370 million securitization and entered into $885 million of new interest rate swaps as a hedge. liabilities against further interest rate hikes.

Since the end of the quarter, the company has entered into additional hedges of $1.1 billion; closed on a new non-mark-to-market financial facility; expects to complete the purchase of $476 million of residential loans in a long-term, non-mark-to-market structure that is expected to generate double-digit returns; and completed a $145 million securitization.

Its cash balance has grown to ~$350 million as of October 31, 2022.

Earlier, Chimera Investment (CIM) non-GAAP EPS of -$0.88 misses $0.56, net interest income of $104.84M misses $5.72M