Chimera Investment Corporation (NYSE:CIM) saw its stock plummet 6.44% in pre-market trading on Wednesday after the company reported fourth-quarter 2024 earnings that fell short of analysts' estimates. The mortgage REIT's adjusted earnings per share of $0.37 missed the consensus forecast of $0.38, raising concerns about its outlook amid a challenging economic environment.

The disappointing Q4 results were further compounded by a $9.8 million increase in the provision for credit losses, indicating potential asset quality issues within the company's investment portfolio. While economic net interest income remained relatively stable at $281.1 million for the full year 2024, it declined to $69.2 million in the fourth quarter, reflecting the impact of higher funding costs and a flattening yield curve.

Chimera Investment's acquisition of Palisades Asset Management during the quarter added $10 million in non-cash imputed compensation expenses, weighing on profitability. However, the company expects the deal to provide long-term benefits through diversification and expanded investment management capabilities.

Despite the earnings miss, the company maintained a strong liquidity position, with a GAAP leverage ratio of 4.0x at year-end. Its investment portfolio remained well-diversified, with exposure to residential mortgage loans, non-agency RMBS, agency RMBS, and agency CMBS. However, the company's focus on residential loans and non-agency RMBS, which accounted for 87.6% and 8.3% of the portfolio's fair value, respectively, may have contributed to the stock's volatility amid uncertainties in the housing market.