CIM - NYSE

Greetings, and welcome to the Chimera Investment Corporation Fourth Quarter Earnings Call. At this time, participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Miyun Sung. Thank you. You may begin.

Thank you, Operator, and thank you, everyone, for participating in Chimera Investment Corporation's fourth quarter 2025 earnings call. Before we begin, I would like to review the Safe Harbor statement. During this call, we will be making forward-looking statements which are predictions, projections, or other statements about future events. These events are based on current expectations and assumptions that are subject to risks and uncertainties, which are outlined in the Risk Factors 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 disclaimers in our earnings release and 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 for reconciliations 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, Phillip Kardis.

Thanks, Miyun, and good morning, and welcome to the Chimera Investment Corporation fourth quarter 2025 earnings call. Joining me on the call are Subramaniam Viswanathan, our Chief Financial Officer, Jack Macdowell, our Chief Investment Officer, and Kyle Walker, the President and CEO of Home Express Mortgage. After my remarks, Subramaniam will review the financial results, Jack will review our portfolio, and then Kyle will review Home Express's results. Last year, we provided a consistent message. We said we were not playing defense; we were building a hybrid REIT designed to endure. Durable companies are built on clear thinking, long-term orientation, and discipline. Early last year, we laid out a simple actionable plan: diversify our portfolio, strengthen liquidity, and expand our fee-based income. And we were explicit about how 81% loans, 3% agency securities, and 16% non-agency securities. We ended the year at 61% loans, 16% agency securities, and 10% non-agency securities, 11% lending activities, and 1% MSRs. We are not yet where we intend to be, but the direction is unmistakable and the progress significant. We also increased third-party AUM from $22 billion to $26 billion, added advisory services to three of our securitizations, and successfully integrated our loan data into the Palisade's systems, which is already improving the performance of the legacy portfolio. And we closed on Home Express Mortgage, one of the largest non-QM originators, an acquisition that expands both our capabilities and our reach. Though we raised approximately $120 million in unsecured debt, the majority of the funding for this transformation came directly from our own portfolio, exactly as planned. Through asset sales and collapsing select securitizations, we generated approximately $485 million for an aggregate total of more than $600 million to redeploy into higher value activities. While our orientation is always long-term, we are beginning to see near-term results. Our earnings power has begun to increase, enabling us to raise our dividend by 22% quarter over quarter to $0.45 in the first quarter, and our board expects to maintain that dividend level for the remainder of the year. That combination of earnings momentum coupled with disciplined capital allocation is how sustainable value is built. As we transform Chimera into a long-term hybrid REIT, we have been clear that we are not changing who we are, but expanding how we apply our capabilities. We remain at our core focused on a set of competencies we know well. Our hedgehog nature. But as every durable enterprise learns, evolution requires clarity of purpose. Simon Sinek phrases it, it starts with why. And we know our why. We are here to give investors broad exposure to the entire real estate ecosystem through a diversified set of assets, operations, and income streams. That exposure shows up not only as dividends but as enterprise growth. Our how is straightforward: manufacture and acquire a diversified portfolio of residential assets that generates net interest income, gains on sales, and fees from operations. Our what is equally clear: consistent reliable dividends across market environments while growing enterprise value over time. Many REITs, including us, are viewed as a quasi-bond; book value is treated as principal and dividends as coupons. That is not who we are becoming. We are building an operating company with capacities to compound value while delivering a tax-advantaged dividend. As such, neither book value alone nor dividends alone tell the whole story. What matters is long-term intrinsic value per share supported by a consistent dividend. As we look towards 2026, our priorities remain unchanged. We are focused on the long game, on building a diversified residential platform capable of generating long-term value for both our customers and our investors across a wide range of economic environments. We will continue to diversify the portfolio, expand liquidity, and grow our fee-based income, both organically and through thoughtful acquisitions. As we have said before, we are not merely building a bigger company; we are building a better one, engineered for resiliency and longevity. Now I will turn it over to Subramaniam to walk you through the financials.

Thank you, Phillip. With the acquisition of Home Express, a material portion of our business is now operations in addition to our investment portfolio. As a result, we have reevaluated our financial reporting. Beginning with the fourth quarter, we now have two reportable segments: our investment portfolio and our residential origination platform. The investment portfolio segment consists of our investments and third-party advisory business, for which Jack will provide more detail. Our residential origination segment consists of the standalone mortgage origination business, for which both Jack and Kyle will provide more details. And now I will review Chimera's financial highlights for the fourth quarter and full year of 2025. GAAP net income for the fourth quarter was $7 million or $0.08 per share. And GAAP net income for the full year was $144 million or $1.72 per share. GAAP book value at the end of the fourth quarter was $19.70 per share. For the fourth quarter, our economic return on GAAP book value was negative 0.9% based on the quarterly change in book value and the $0.37 fourth quarter dividend per common share. And for the full year, our economic return was positive 7.4%, which includes $1.48 of dividends declared in 2025. As Phillip noted, this morning, the company announced first quarter 2026 dividends of $0.45 per share, an increase of 22% from prior quarterly dividends, and our board expects to continue the dividend for the remaining March 2026. Our earnings available for distribution for the fourth quarter was $45 million or $0.53 per share. And our EAD for the full year was $141 million or $1.68 per share. Turning now to our reportable segments. For the investment portfolio segment, during the fourth quarter, our economic net interest income was $65 million. The yield on average interest-earning assets was 5.9%. Our average cost of funds was 4.5%, and our net interest spread was 1.4%. For the residential origination segment, during the fourth quarter, Home Express funded $1 billion in production with a gain on sale premium of 358 basis points on loans sold and settled. Home Express EBITDA, defined as earnings before taxes, depreciation, and amortization, was $11 million for the quarter, and Home Express annualized EBITDA ROE was 16.2%. With respect to leverage, our total leverage for the fourth quarter was 5.1 to one, while Rico's leverage ended the quarter at 2.4 to one. Rico's leverage increased this quarter as we continue to increase our capital allocation to Agency RMBS securities and the addition of warehouse lines from the residential origination segment. For liquidity and strategic developments, the company ended the year with $528 million in total cash and unencumbered assets, compared to $752 million at the end of the third quarter. Cash decreased as we completed the acquisition of Home Express for cash consideration of $244 million and total consideration of $272 million. On the investment portfolio side for the fourth quarter, we added $6 million of Agency RMBS during the quarter net of sales. We continue to rebalance our portfolio as we redeemed $70 million of securities from SIM 2022 I one securitization and sold the underlying loans with a principal balance of $166 million, releasing approximately $28 million of equity. We also sold $33 million of non-agency RMBS subordinate securities. At year-end, we had $6 billion of total consolidated secured financing outstanding. $802 million related to our residential origination warehouse loans and $5.2 billion for our investment portfolio. Of this $5.2 billion relating to our investment portfolio, $3.3 billion was secured financing for agency RMBS positions. We maintained $2.9 billion of hedges against this exposure, a combination of swaps and swaptions across varying maturities. $1.9 billion of secured financing was for residential credit exposure. Of that, $1.3 billion or 66% included either non or limited mark-to-market features. $1 billion or 51% of this floating rate facilities. We also maintain $2.15 billion with a combination of swaps, options, and interest rate caps across varying maturities to hedge our interest rate risk related to residential credit exposure. For 2025, our economic net interest income return on average equity assigned to the investment portfolio was 10.8%. Our GAAP return on average equity was 4.4%. Our EAD return on average equity was 11%. And our EAD return on average tangible equity was 11.9%. And lastly, compensation, general and administrative expenses increased by $22 million year over year, which was primarily driven by the inclusion of staffing costs and G&A expenses related to Palisade's acquisition in December 2024 and Home Express acquisition in 2025. Compensation expense of our investment portfolio was lower during the fourth quarter due to the absence of severance costs that were recorded in the third quarter and a lower incentive compensation accrual in Q4. Together, these items contributed approximately $0.05 to EAD for the fourth quarter. We consider both these items to be non-recurring and do not expect these compensation-related benefits to continue to EAD in future periods. Servicing expense decreased by $2 million year over year due to lower loan balances and loan counts related to our portfolio reallocation strategy. Our transaction expenses were higher by $10 million this year, reflecting the cost associated with Home Express acquisition. To close, as Phillip noted, and our financials are beginning to show, building a diversified residential platform that is generating income from assets, gain on sale, and fees from operations. I will now turn the call over to Jack to review the portfolio and investment activity.

Thanks, Subramaniam, and good morning, everyone. 2025 was a pivotal year for the business and our capital allocation strategy. As Phillip mentioned in his remarks, we began the year with a clear objective to reposition the investment portfolio to be more balanced and liquid while strengthening our earnings power. That plan included increasing our allocation to liquid agency MBS, adding MSRs to help offset interest rate and prepayment risk in other parts of the portfolio, and applying our asset-level credit risk management capabilities to enhance performance across the loan book. Over the course of the year, we generated more than $600 million of capital through portfolio and capital markets activity, including $291 million from refinancing select investments, approximately $195 million from divesting assets that no longer met our return thresholds, and $116 million from our senior unsecured notes offering. These actions supported our portfolio allocation realignment and, importantly, positioned us to pursue a broader business transformation through the acquisition of Home Express. During 2025, we purchased over $3 billion of agency MBS net of sales and launched our MSR strategy. As a result, our capital allocation shifted from approximately 97% residential credit at the start of the year to 72% at year-end, with the balance now allocated across agency MBS at 16%, MSRs at 1%, and 11% to our Home Express lending platform. This was all carried out alongside a relatively dynamic market backdrop. Following the volatility spike in April, agency and non-spreads tightened throughout the remainder of the year. In the fourth quarter, agency swap OAS continued tightening by approximately 22 basis points, while generic non-QM AAAs were firmer by five basis points. Treasury yields had a tightening bias during the year as the front end was driven primarily by expectations for Federal Reserve easing, and longer-term yields reflected inflation and fiscal considerations. The two-year, ten-year treasury spread ended the year at 69 basis points, approximately 37 wider than where it began, with roughly 15 basis points of that occurring in the fourth quarter alongside the Fed rate cuts. Lower treasury yields helped guide mortgage rates down approximately 70 basis points for the year, with 15 basis points coming in the fourth quarter to end at 6.15%. Our book value is sensitive to yield curve dynamics because both our securitized loans and the related liabilities are recorded at fair value. As the curve steepened in recent quarters, loan values increased. However, those gains were more than offset by increases in the fair value of our securitized debt, resulting in lower reported book value. In the fourth quarter, our Agency MBS portfolio contributed positively to book value as spreads tightened, while our aggregate loan portfolio was roughly flat. However, as Subramaniam noted earlier, overall book value declined 2.7%, attributable in large part to the increase in value of our consolidated securitized debt and activities related to the Home Express acquisition. Our earnings power increased during 2025, reflecting deliberate portfolio repositioning, improvements in capital allocation, and contributions derived from the Home Express acquisition. The Federal Reserve's easing provided some benefit through the asymmetry in our liability hedge structure related to the residential credit portfolio. In the first full quarter with Home Express contributions, the business generated a distributable ROE as measured by EAD over average common equity of 11% annualized. This compares to 7.16 in 2024, representing an increase of nearly 400 basis points. During the fourth quarter, we exited approximately $33 million of legacy non-agency RMBS, releasing roughly $6.7 million of capital at a breakeven ROE of 7%. We also exercised our redemption rights on the SEM 2022 I1 investor loan securitization, sold $166 million of underlying loans, and generated $28 million of net capital after satisfying debt obligations, with a breakeven ROE of 3%. We added approximately $6 million of Agency MBS in the fourth quarter and ended the year with over $3 billion consisting primarily of specified pools selected for call protection characteristics. Performance in our seasoned re-performing loan portfolio remains stable. Prepayments were primarily driven by housing turnover, and we saw a seasonal 50 basis point increase in delinquencies during the fourth quarter. Otherwise, no other notable trends. Looking ahead, we expect 2026 to focus on continuing to unlock capital and redeploy into investments that are earnings accretive and align with our portfolio repositioning objectives. This may include exercising additional securitization redemption rights and divesting of assets that no longer meet portfolio objectives or return thresholds. We expect our capital deployment efforts will remain focused on Agency MBS, MSRs, sponsored securitizations backed by Home Express production, and other select credit investments. While positioning ourselves to capitalize on potential platform acquisitions as they emerge. Agency MBS continues to serve as the most liquid component of our portfolio, enabling efficient deployment following capital markets activity, asset sales, or portfolio runoff, while preserving liquidity for future investments and other strategic initiatives. At approximately 7.5 times leverage, the agency portfolio continues to generate run-rate ROEs in the low to mid-double digits. We are seeing strong demand for non-QM loans and related securitized products to start the year. Generic non-QM AAA spreads have tightened approximately 20 to 25 basis points year to date, surpassing 2025 levels. While we intend to retain portions of Home Express' production for our securitization program, we will continue to evaluate relative value between selling the loans in the secondary market and securitizing and retaining portions of the capital structure in our investment portfolio. 2025 represented a meaningful transition year for the portfolio and the broader business. We repositioned capital, diversified sources of earnings, and expanded platform capabilities. As Phillip mentioned in his remarks, while our core discipline remains unchanged, we believe these steps enhance our value proposition and improve the durability of our earnings profile. With that, I will turn it over to Kyle to discuss Residential Origination.

Thank you, Jack, and good morning, everyone. I would like to begin by noting that the transition into the Chimera organization has gone smoothly throughout our first quarter of ownership. Although the relationship is new, we are already seeing meaningful synergies between the Chimera Palisades platform and Home Express. Home Express currently has 332 employees and is licensed to originate mortgage loans in 46 states. We primarily focus on originating non-QM consumer and business purpose loans through a network of 6,000 mortgage brokers and bankers. These loans are sold in pools to investors who either aggregate and securitize the loans or hold them in their portfolios. Home Express originated $1.04 billion in loans during the fourth quarter, representing an 18% increase over the third quarter and marks a record for our company. For the full year 2025, we originated $3.4 billion in loan volume. As Subramaniam noted, Home Express's EBITDA was $11 million in the fourth quarter. Throughout 2025, we have been focused on expanding our lending capacity by further building our sales and operations teams. We believe this, combined with our continual technology enhancements, will support the continuation of our origination growth into future quarters. We have always been very focused on our cost metrics, and we reached a new record low GAAP cost to originate in the fourth quarter of 201 basis points, which produced a debt margin of 111 basis points. In 2025, we launched a non-delegated correspondent program to serve a growing segment of mortgage bankers seeking to fund non-QM and business purpose loans. Home Express underwrites these loans to our guidelines with the bankers funding the loans in their names. We now have 55 mortgage bankers approved to deliver closed loans to Home Express. While volume in this channel was modest in the fourth quarter at $47 million, we expect it to represent a growing share of our origination volume going forward. We increased our total warehouse funding capacity to $1.35 billion in the fourth quarter, which we expect will be sufficient to fund our anticipated growth in the near term. With the anticipated continued growth of the non-QM and business purpose market, we are optimistic that our business will continue to grow, and we look forward to realizing the benefits that our partnership with Chimera can deliver. Thanks, Kyle. We are glad to have Home Express as part of the Chimera team. And as you said, we are already seeing the benefits of the partnership. Now we will open the call for questions.

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Trevor Cranston with Citizens JMP. Please proceed with your question.

Hey, thanks. Good morning. Looking at the Home Express numbers, obviously, the fourth quarter was pretty strong, both in terms of production volume and gain on sale also saw a nice jump. Can you give us an update on kind of how you guys are seeing volume and gain on sales so far in the first quarter? I know you mentioned that your AAA spreads have tightened quite a bit year to date. Thanks.

We are seeing the typical seasonal reduction in volume after the holidays. But we think that 2026 is going to be a great year. We think the first quarter is going to be a pretty good quarter in comparison to last year. We are seeing the gain on sale premiums to be pretty good in comparison to the fourth quarter, and we are optimistic about the revenue for the first quarter.

Got it. Okay. That is helpful. And then as you go through the year and continue to free up capital in some cases and reposition the portfolio, can you talk about where you see the best relative value today between adding more agencies after the spread tightening that has occurred versus potentially doing securitizations of non-agency assets?

Yeah. Hey, Trevor. This is Jack. You know, one of the things that we continue to be really focused on is the portfolio construction. So there are certain objectives that we have that we have talked about in terms of what we are trying to do with the portfolio, namely, creating more balance. And part of that is having that liquid component with agencies, which I think we have done a really good job in 2025 of building up. The other bookend there would be to have somewhat of a hedge vis-a-vis our MSR allocation, which at 1% continues to be well below what our otherwise target would be. And then in between those two bookends is the credit piece of the portfolio where, you know, we think that having the Home Express production in-house and being able to securitize that and retain certain parts of the capital structure in our investment portfolio can certainly be accretive. As you point out, agency spreads have come in where we are holding leverage right now. We still see that as, you know, relatively attractive or at least meeting our return threshold somewhere in that low to mid-double digits. But I would say where we are from an allocation perspective today, we are pretty comfortable with, you know, plus or minus another 5%, I would say. So, really, for the balance of the year, that will continue to serve as our liquidity bucket. MSRs continue to be a focus of ours. And right now, as Kyle mentioned, we are seeing pretty strong demand in the secondary market for loans. So we are constantly evaluating the cost-benefit analysis of selling loans in the secondary market versus retaining them for our investment portfolio.

Got it. Okay. I appreciate the comments. Thank you.

Thank you. Our next question comes from the line of Douglas Michael Harter with UBS. Please proceed with your question.

Thanks and good morning. Was hoping you could put the dividend increase in context, kind of how you thought about the size of that increase and how you think about kind of retaining some capital for book value growth, being able to grow the investment portfolio operating businesses versus kind of maximizing the dividend?

Hi, this is Phillip. Thanks for the question. I think as we look at that issue, what we look at is we look at it over the period of the year. We recognize as we become more of an operating company, we expect EAD to potentially be variable from short period to short period, but so how we look at it is we look at it over the course of the year, we feel like that dividend is one that will have sufficient EAD coverage on. And will provide us sufficient coverage for us to have the proper allocations to help grow, you know, the operating aspects of our business. So that is the kind of the balance we struck and to give the market some feel for where we think we will be throughout the year.

And I guess just on that point, would you expect going forward to kind of give guidance for the full year in the first quarter dividend or is that kind of unique to this year since it is kind of the first?

Yeah. I think, I mean, that is hard to say. As we looked at it for this year, we did think it would be helpful to the market to address the questions that you ask, which were like how much do you expect in a dividend? How much do you expect to retain? And we thought rather it would be helpful to the market to go ahead and try to lay out what our expectations were. Whether we proceed to continue to do that, you know, a year from now, we will just have to wait and see.

Okay. I appreciate that, Phillip. Thank you.

Sure. Thank you. Our next question comes from the line of Bose Thomas George with KBW. Please proceed with your question.

Hey, guys. Good morning. On the residential segment, are you guys originating second liens at the moment? Or is that an incremental opportunity? Then where do you see industry non-QM volume in 2026 versus 2025?

We currently are not originating second mortgages. We originate through a wholesale brokered network, and it is difficult with small loan amounts, like second mortgages, to originate those in a profitable manner. So we have not gotten into the second mortgage market. All the statistics and analytics that we see for non-QM and business purpose loans in 2026 are growing, increasing over 2025. So we are seeing numbers as large as 20% to 25% growth in the market. So we are anticipating that the market is going to grow and that we will get our share of the increased market going forward.

Yes. And hey, the other thing, Bose, I would just say on the second lien side, I mean, when you have a servicing business, as you know, that is a very good mechanism for sourcing second lien borrowers in a way to kind of address some of the prepayment activity associated with your MSRs. So perhaps at some point down the road, that could be more of a strategy for us. But at this point, as Kyle said, it is not something that, you know, we are originating. And then just in terms of the non-QM volume outlook, this was a major thesis for us early last year as we were sort of thinking about the acquisition of Home Express and the viability of doing that. And, you know, I think 2025 sort of supported our case, but going into 2026, I mean, we saw a considerable increase in both origination volume and non-QM in 2025, plus issuance volume. And looking out into 2026, I mean, we are projecting just on the origination volume side, that could be anywhere from $110 billion to $130 billion, which is based on modest growth in overall mortgage originations, including conventional and agencies, plus having a non-QM capture, you know, another 100 basis points or so of wallet share.

Okay, great. That is helpful. Thanks. And then actually just switching over to the change in book value this quarter and the reduction of the value related to your securitized debt. Is that happening mainly because that is more liquid than the loans on the other side? And should we just kind of see that as a timing issue?

Yeah. I mean, it is a good question. So maybe we will just address what value quarter to date. I assume somebody is going to ask that. So we are basically flat to down, call it, 30 basis points quarter to date. And the one thing and maybe it is a good time just to talk about our views of capital at risk and value at risk. There has been a pretty heavy steepening in the yield curve during 2025. I think in the prior quarters, we have talked about the impact on our loans as well as on our securitized debt. And basically, loan values have been but the value of our securitized debt has increased at a faster pace, having the effect of reducing reported book value. Okay? And while that is an important accounting outcome, it does not really change how we view our economic risk or capital at risk. And that is because a core part of our strategy is exercising the call rights that we own on our securitizations where we redeem the bonds at par. And, you know, basically, the mark-to-market fluctuations in our securitized debt, it does not affect the economics of our call option nor does it affect the earnings power of our capital. So just want to give you kind of a, you know, how we think about that. We are focused squarely on managing capital at risk, and the way that we think about that is we evaluate based on the cash flow generating capital that we have, not on the short-term valuation movements of our securitized liabilities.

Okay, great. That is helpful. Thanks.

Thank you. Our next question comes from the line of Eric Hagen with BTIG. Please proceed with your question.

Hey, thanks. Good morning. Maybe following up on this bullish non-QM outlook. I mean, do you think there is any room for credit enhancement levels to come down in the securitization trust? And to the extent that we ever saw more flexibility for credit enhancement levels, how do you think that would drive your appetite to take leverage on the subordinate pieces that you retain from securitization?

Yeah. Good question. I mean, look, on some deals, we see quite a bit of differentiation among, call it, AAA enhancement levels across various deals. And we see the rating agencies consistently reviewing their models as more data comes in. And you are as aware as anybody that losses have been de minimis in the non-QM sector, but we are seeing the 2022, '23 cohorts where delinquencies are creeping up. So I guess our expectation is not that there is a material decline in credit enhancement levels. And for us, Eric, I mean, we actually look at securitization in two different components. One, horizontal risk retention and vertical risk retention. So the horizontal, obviously, we have, you know, certain types of requirements with respect to how much we must retain if we are holding horizontal. And then on the vertical side, we are holding most of that would be AAAs. So for us, it is really just an economic consideration. The nice thing about securitizing and retaining the horizontal piece is that you are basically, you know, funding your investment with fixed-rate term financing, so you are not taking liquidity risk. And certainly, from that perspective, we are more comfortable taking the leverage. And if it was like mark-to-market repo.

That is really helpful color. I appreciate that. Right here. As you guys know, the administration is focused on reducing mortgage rates by buying agency MBS, but the GSEs, of course, still hold a huge portfolio of mortgage loans, which they usually target for loss mitigation. Do you guys think the GSEs could ever look to sell more of the loan portfolio mainly in an effort to, like, create more room for MBS purchases? And do you think there is a deep enough market for them to potentially pursue that opportunity?

Are you talking about the, like, the NPL sales?

Yes. Much. Yeah. Oh, yeah. Exactly.

Yeah. For sure. For sure. I mean, I would hope that they would. I mean, they have certainly been, you know, sellers in the past. So that could certainly be an avenue that they have used historically, and they could certainly use again to the extent that the economics made sense for them to do so.

Okay. Thank you, guys.

Thank you. Our next question comes from the line of Kenneth Lee with RBC Capital Markets. Please proceed with your question.

Hey, good morning. Thanks for taking my question. Just one on third-party assets under management and the growth around there. How do you think about the potential contribution of fee revenues or fee-related earnings over time? To see a meaningful pickup, would there have to be a pickup in loans under management? Or is there any other avenues that you are looking at there? Thanks.

Yes, I mean, that is certainly a focus of ours to diversify our earnings and grow our fee-earning capabilities. I mean, that group is really bifurcated into two different pieces. One, the majority of which is managing, you know, loans on a third-party basis, and that creates a couple of different fee revenue streams. So we are constantly working to, you know, grow that business both sort of with external loans, and there are also synergies with respect to Home Express production to the extent that we sell loans and we can retain the asset management function on a go-forward basis. So we are certainly looking to exploit some of those synergies as well. And then on the more discretionary, you know, credit fund side, you know, we certainly remain focused on, you know, looking at building separately managed accounts and growing fees through that channel as well.

Gotcha. And then relatedly, are you seeing in terms of client demand or interest for the loans? Is there any kind of color around the mix of either institutional investors? What types? Sounds like from the prepared remarks, you are seeing stronger demand there, but just want to get a little bit more color on that. Thanks.

Yes. If you are talking about the demand in the secondary market for Home Express' loan sales, I mean, it is a consortium of different buyers from insurance companies to dealers to, you know, asset managers who oftentimes are crossover between securities crossing over into the loan space. So, yeah, I mean, just like we have seen spreads tighten on AAA non-QM, 20 to 25 basis points start of the year, we are seeing very strong demand for non-QM loans in the secondary market from a whole host of investors. And maybe just to follow up on that question, the types of investors, I mean, you continue to see insurance companies looking to crossover and get exposure to the whole loans. So that is an area I think that we continue to be focused on to the extent that we can provide somewhat of a one-stop shop for folks who are looking to get exposure to non-QM loans, but perhaps do not have the infrastructure to manage those loans. We have the in-house capability, and we can provide that one-stop shop.

Very helpful there. Thanks again.

Thank you. And we have reached the end of the question and answer session. I would like to turn the floor back to CEO, Phillip Kardis, for closing remarks.

I would like to thank everybody for participating in our 2025 fourth quarter earnings call, and we look forward to speaking with you again for our 2026 first quarter earnings call. Thanks again.