Company: CIMO
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001628280-25-006426
Chunk: 109

Company: CHIMERA INVESTMENT CORP
Filing Date: 2025-02-19
Form: 10-K
Item: Item 1A
Chunk 109
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 of interest rate movements, we maintained a hedging program to manage the interest rate risk for the time differential between loan purchase commitment and the closing of loans into securitization. In addition, we used 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. As part of our ongoing securitization execution hedging strategy, we entered into $200 million of short 2-year treasury futures contracts during the fourth quarter to buy protection that hedges the coupon rate of the senior notes of the securitization execution that settled during the first quarter of 2025.

Operating expenses 

Compensation, general, administrative, and servicing expenses were lower marginally year-over-year when excluding expenses related to the Palisades Acquisition. Our transaction expenses were significantly lower during the year due to reduced securitization activity in 2024. However, these expenses increased in the fourth quarter by $2.4 million primarily from expenses related to the Palisades Acquisition. The increase in Compensation and benefits costs for the year  ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily driven by a $10 million, related-party, non-cash imputed compensation charge on the Palisade Acquisition.

Reverse Stock Split

On May 10, 2024, our Board of Directors approved a 1-for-3 reverse stock split of our common stock. The reverse stock split was effective after the close of trading on May 21, 2024, and shares of our common stock began trading on a reverse split-adjusted basis on the New York Stock Exchange beginning at the opening of trading on May 22, 2024.  We implemented the reverse stock split with the objective of reducing our number of shares of common stock outstanding to more closely align with the number of common shares outstanding for companies of a similar market capitalization.  As a result of the reverse stock split, every three shares of our common stock was converted into one share of common stock, reducing the number of issued and outstanding shares of our common stock from approximately 241 million to approximately 80 million and reducing the number of authorized shares from 500 million to approximately 167 million.

Strategy Outlook

We continue to approach portfolio management in a disciplined manner and are expecting to operate in an uncertain environment defined in part by higher interest rates and increased rate volatility. In