Chimera Investment Corporation (NYSE:CIM) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 09:00 am ET


Chimera Investment Corporation (NYSE:CIM) Q4 2018 Earnings Conference Call Transcript


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Ladies and gentlemen, thank you for standing by. Welcome to Chimera Investment Corporation Fourth Quarter and Full Year 2018 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

It is now my pleasure to turn the floor over to Emily Mohr of Investor Relations. Please go ahead.

Emily Mohr

Thank you, Nicole, and thank you, everyone, for participating in Chimera's fourth quarter and full year earnings conference call. Before we begin, I'd like to review the safe harbor statements. During this call, we will be making forward-looking statements, which are predictions, projections or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, which are outlined in the risk factor section in our most recent annual and quarterly SEC filings. Actual events and results may differ materially from these forward-looking statements. We encourage you to read the forward-looking statement disclaimer in our earnings release, in addition to our quarterly and annual filings.

During the call today, we may also discuss non-GAAP financial measures. Please refer to our SEC filings and earnings supplement for reconciliation to the most comparable GAAP measures. Additionally, the content of this conference call may contain time-sensitive information that is accurate only as of the date of this earnings call. We do not undertake and specifically disclaim any obligation to update or revise this information.

I will now turn the conference over to our President and Chief Executive Officer, Matthew Lambiase.

Matthew J. Lambiase

Thank you, Emily. Welcome to the fourth quarter 2018 Chimera Investment earnings call. Joining me on the call this morning are Mohit Marria, our CIO; Rob Colligan, our CFO; Choudhary Yarlagadda, our COO; and Victor Falvo, Chimera's Head of Capital Markets.

I'll make some brief comments, then Mohit will review the activity for our portfolio and Rob will go over the financial results. Afterward, we'll open up the call for questions.

The fourth quarter was one of the most volatile periods in recent memory due to fears relating to Brexit, Italy's monetary problems, China/US trade tariffs and a looming government -- US government shutdown as well as some economic data which seem to imply the US economy's growth is starting to slow. The market's final kick in the shins occurred on December 19th when the Federal Reserve increased the federal funds rate for the fourth time in 2018 by 25 basis points. These factors help send investors into a risk-off mode, driving the S&P 500 down 9.2% in December. It was the first worst December for US equities since the Great Depression.

Like equities, the fixed income markets also experienced great volatility in the fourth quarter. 10-year US Treasury notes hit a seven-year high of 3.24% in November, then rallied significantly to close the quarter at a 2.68% yield. The surprising reversal in treasury yields in the relatively short period left most fixed income -- most of the