Content provided in partnership with

Business Services Industry

Chimera Investment Corporation Reports 1st Quarter Core EPS of $0.27; Successfully Managing Through Challenging Market Conditions

Business Wire, May 5, 2008

NEW YORK -- Chimera Investment Corporation (NYSE: CIM) today reported Core Earnings for the quarter ending March 31, 2008 of $10.1 million or $0.27 per average share as compared to Core Earnings of $1.3 million or $0.03 per average share for the period commencing November 21, 2007 and ending December 31, 2007. "Core Earnings" is a non-GAAP measure that approximates distributable income, and is defined as GAAP net income (loss) excluding non-cash equity compensation expense, unrealized gains and losses, realized gains and losses on sales and terminations of interest rate swaps and other items that do not affect realized net income, regardless of whether such items are included in other comprehensive income or loss, or in net income. The Company reported a GAAP loss for the quarter ending March 31, 2008 of $54.9 million or $1.46 per average share as compared to a GAAP loss of $2.9 million or $0.08 per average share for the period commencing November 21, 2007 and ending December 31, 2007.

Most Popular Articles in Business: Research and Markets : Tesco Plc - SWOT Framework Analysis; Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors; eBay made easy: ready to start an eBay business? These 5 simple steps will ...; Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...; Wal-Mart's newest distribution center opened last month near the southwest ...; More »

At March 31, 2008 the Company recorded unrealized losses on interest rate swaps of $31.5 million as compared to unrealized losses of $4.2 million at December 31, 2007. During the quarter ending March 31, 2008, the Company sold investments of $394.2 million resulting in realized losses of $32.8 million. The Company had no sales of investments during the period commencing November 21, 2007 and ending December 31, 2007.

The Company declared common dividends for the quarter ending March 31, 2008 of $0.26 per share as compared to $0.025 per share for the period commencing November 21, 2007 and ending December 31, 2007. The annualized dividend yield on the Company's common stock for the quarter, based on the March 31, 2008 closing price of $12.30, was 8.46%. On a Core Earnings basis, the Company provided an annualized return on average equity of 8.44% for the quarter ending March 31, 2008 as compared to 2.10% for the period commencing November 21, 2007 and ending December 31, 2007. On a GAAP basis, the Company provided an annualized return on average equity of (45.86%) for the quarter ending March 31, 2008 and provided an annualized return on average equity of (4.87%) for the period commencing November 21, 2007 and ending December 31, 2007.

Subsequent to quarter-end, the Company completed a $619.7 million securitization, a long-term financing transaction whereby it securitized its then-current inventory of unsecuritized loans. In this transaction, the Company sold approximately $536.9 million of AAA-rated fixed and floating rate bonds to third party investors, and retained approximately $46.3 million of AAA-rated mezzanine bonds and $36.5 million in subordinated bonds.

Matthew J. Lambiase, Chief Executive Officer and President of Chimera, commented on the quarter's results. "The challenges and opportunities for Chimera are reflected in the results for the first quarter. Specifically, market conditions were volatile, as heavy dealer inventories, fears of distressed selling and general illiquidity, combined with tighter financing conditions, resulted in a significant asset value downdraft. No one was immune from these conditions, although Chimera was fortunate to have only just begun its acquisition process. Nevertheless, we sold certain assets in order to reduce exposure and recorded mark-to-market losses on other assets in the portfolio. While we were compelled to make difficult decisions to manage through these exceptionally challenging markets, we believe that we have positioned the Company to take advantage of the opportunities afforded by these conditions. Moreover, markets have calmed somewhat since quarter-end, as policymakers have taken a more aggressive approach to deal with the situation and financial institutions have accelerated their recapitalization process. These changes should have a positive impact on the types of assets owned by Chimera."

For the quarter ending March 31, 2008, the annualized yield on average earning assets was 6.63% and the annualized cost of funds on the average repurchase balance was 4.23% for an interest rate spread of 2.40%. This is a 46 basis point increase over the 1.94% annualized interest rate spread for the period commencing November 21, 2007 and ending December 31, 2007. At March 31, 2008, the weighted average yield on assets was 6.32% and the weighted average cost of funds was 4.67%. For the period commencing November 21, 2007 and ending December 31, 2007, the annualized yield on average earning assets was 7.02% and the cost of funds on the average repurchase balance was 5.08%. At December 31, 2007, the weighted average yield on assets was 6.62% and the weighted average cost of funds was 5.02%. Leverage at March 31, 2008 was 3.4:1, in comparison to 0.5:1 at December 31, 2007.

Adjustable rate mortgage-backed securities comprised 74.0% of the Company's portfolio at March 31, 2008. The balance of the portfolio was comprised of 4.1% fixed rate mortgage-backed securities, 10.7% adjustable rate residential mortgage loans and 11.2% fixed rate residential mortgage loans. At March 31, 2008, the Company had entered into interest rate swaps with a notional amount of $1.6 billion. The purpose of the swaps is to mitigate the risk of rising interest rates that affect the Company's cost of funds.

Business Services Industry

Chimera Investment Corporation Reports 1st Quarter Core EPS of $0.27; Successfully Managing Through Challenging Market Conditions

Business Wire, May 5, 2008

Find Research Guides for:

Find Featured Titles for: Health

Most Popular Articles in Business

Most Popular Publications in Business