Company: CIMO
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001409493-25-000028
Chunk: 10

Company: CHIMERA INVESTMENT CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Item 2
Chunk 10
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 June 2030 and $365 million 3.69% par rate equivalent pay-fixed two-year Eris swap futures maturing in June 2027.  

Loan Acquisitions. Considering the velocity and magnitude of interest rate movements, we maintain a hedging program to manage the interest rate risk for the time differential between loan purchase commitment and the closing of loans into securitization. We use a combination of various U.S. Treasury futures contracts to hedge our exposure to future financing costs. Our hedging techniques attempt to mitigate the interest rate risk but do not capture the impact of credit spread risk. We did not have any loan commitments or related futures hedges as of the end of the quarter.

Investment and third-party asset management and advisory fees   

Palisades generated third-party investment, asset management and advisory fees in the amount of $9 million during the quarter and $26 million for the nine months ended September 30, 2025. We continue to see interest from investors in residential asset management and advisory services that offer a solution for investors that want exposure to residential loans but may lack the infrastructure to manage the complexities of the strategy. We were formally engaged to provide transaction advisory services during the quarter related to a mandate executed in June 2025.

Operating expenses    

Compensation, general and administrative, and servicing expenses were higher during the third quarter as compared to the previous quarter. Compensation expenses were higher this quarter by $2 million due to severance payments recorded in the quarter. General and administrative expenses and servicing fees were slightly higher this quarter compared to last. Our transaction expenses were higher by $10 million this quarter due to increased expenses related to the HomeXpress Acquisition.

Earnings and Book Value   

Over the past several months, we have deliberately positioned the portfolio to maintain flexibility and to meet liquidity needs as they arise, including for the HomeXpress Acquisition that closed on October 1, 2025. In parallel, we continued to evaluate and execute selective asset dispositions related to investments that are fully valued, are not meeting our risk-adjusted return objectives, and/or are no longer consistent with our long-term portfolio objectives. These asset sales were comprised primarily of retained securities from sponsored securitizations and Non-Agency RMBS with proceeds being redeployed into higher-returning investments to enhance our earnings power, dividend paying ability, and return on equity.

During the quarter, as we prepared to raise liquidity for the pending acquisition of HomeXpress, we executed asset sales at various points that temporarily increased our cash holdings. These