Core Viewpoint - Cherry Hill Mortgage Investment Corporation (CHMI) presents a high annualized dividend yield of 15.4% at a stock price of $2.66, but its history of dividend cuts raises concerns about sustainability [2][5][8]. Financial Performance - The quarterly dividend has been reduced from $0.64 in 2017-2018 to the current $0.10, with a significant 33% cut in September 2025 [2][8]. - Q3 2025 GAAP EPS was $0.05, which did not cover the $0.10 dividend, indicating a precarious earnings situation [9]. - In Q4 2025, diluted EPS improved to $0.14, covering the $0.10 dividend, but earnings available for distribution were only $0.11 per share, leaving a narrow margin [9]. Revenue and Portfolio Dynamics - Cherry Hill experienced a 37.2% year-over-year revenue decline, with its mortgage servicing rights (MSR) portfolio shrinking from $17.0 billion to $15.9 billion [3][12]. - The net interest spread for residential mortgage-backed securities (RMBS) compressed from 3.55% to 2.52%, contributing to the challenges in maintaining dividends [3][12]. Market Conditions and Future Outlook - Rising prepayment speeds could reach 15% if mortgage rates decline, complicating the dividend sustainability in a challenging rate environment for 2026 [3][14]. - The macroeconomic backdrop is complex, with the 10-year Treasury yield at 4.27%, and management noted tighter spreads and a softer tone in mortgage markets entering 2026 [13][14]. - The board confirmed the $0.10-per-share dividend for Q1 2026, but the ability to sustain this yield amid a challenging rate environment remains uncertain [14].

Core Viewpoint - Cherry Hill Mortgage Investment Corporation (CHMI) is currently offering a high annualized dividend yield of 15.04% at a stock price of $2.66, but this yield is a result of a history of dividend cuts and financial instability [2][3][8] Financial Performance - The dividend has been reduced from $0.49 per share in 2017-2018 to the current $0.10 per quarter, with a significant cut of 33% occurring in September 2025 [3][8] - In Q3 2025, GAAP EPS was $0.05, which did not cover the $0.10 dividend, indicating financial strain [4][8] - Q4 2025 showed a slight improvement with diluted EPS of $0.14 covering the $0.10 payout, but earnings available for distribution were only $0.11 per share, leaving a narrow margin [4][8] Revenue and Market Conditions - Cherry Hill faced a 37.2% year-over-year revenue decline, with its mortgage servicing rights (MSR) portfolio shrinking from $17.0 billion to $15.9 billion [8] - The net interest spread for residential mortgage-backed securities (RMBS) decreased from 3.55% to 2.52%, indicating pressure on profitability [8] - Rising prepayment speeds could reach 15% if mortgage rates decline, further complicating the sustainability of dividends in a challenging 2026 rate environment [8]

Core Viewpoint - Cherry Hill Mortgage Investment Corporation has declared dividends for the first quarter of 2026, indicating a commitment to returning value to shareholders through both common and preferred stock dividends [1]. Dividend Announcements - The Board of Directors declared a dividend of $0.10 per share on the common stock, payable on April 30, 2026, to holders of record as of March 31, 2026 [1]. - A dividend of $0.5125 per share was declared on the 8.20% Series A Cumulative Redeemable Preferred Stock, and a dividend of $0.5978 per share on the 8.250% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, both payable on April 15, 2026, to holders of record as of March 31, 2026 [1]. Company Overview - Cherry Hill Mortgage Investment Corporation is a real estate finance company that focuses on acquiring, investing in, and managing residential mortgage assets in the United States [1].

Financial Performance - Interest income for the year ended December 31, 2025 was $61.1 million, an increase of $5.3 million compared to $55.8 million in 2024, driven by new securities purchases and higher yielding securities [269]. - Interest expense decreased to $49.8 million in 2025 from $55.8 million in 2024, a reduction of $6.0 million due to lower financing rates and decreased notes payable [270]. - Servicing fee income fell to $43.3 million in 2025 from $48.5 million in 2024, a decrease of $5.2 million attributed to changes in portfolio size [271]. - Net interest income for 2025 was $11.3 million, a significant increase from just $29,000 in 2024 [263]. - Total income for the year ended December 31, 2025 was $23.3 million, down from $34.6 million in 2024 [263]. - Net income for 2025 was $6.9 million, compared to $12.2 million in 2024, reflecting a decrease of 43% [263]. - The company reported a net loss applicable to common stockholders of $3.0 million in 2025, compared to a net income of $2.1 million in 2024 [263]. Assets and Liabilities - Total assets as of December 31, 2025 were $1.54 billion, an increase from $1.49 billion in 2024 [268]. - Total liabilities increased to $1.30 billion in 2025 from $1.26 billion in 2024 [268]. - The company’s investments in RMBS totaled $1.21 billion as of December 31, 2025, compared to $1.12 billion in 2024 [268]. Expenses - Servicing costs decreased to $9.3 million for the year ended December 31, 2025, down from $12.4 million in 2024, a reduction of approximately 25% [272]. - General and administrative expenses decreased to $7.7 million in 2025 from $10.7 million in 2024, a reduction of approximately 30% attributed to lower professional fees [279]. - Compensation and benefits expense increased to $6.5 million in 2025 from $1.6 million in 2024, a rise of 306.3% due to the company operating as an internally managed entity [280]. Gains and Losses - Realized loss on RMBS decreased to $6.0 million in 2025 from $6.6 million in 2024, reflecting a decline of about 9.1% due to fewer RMBS securities sold [273]. - Realized gain on investments in MSRs dropped to $0 in 2025 from $0.5 million in 2024, a decrease of 100% as no MSRs were sold [274]. - Realized gain on derivatives fell to $7.0 million in 2025, down 67.2% from $21.3 million in 2024, primarily due to decreased interest income and increased losses on interest rate swaps [275]. - Unrealized gain on RMBS measured at fair value through earnings increased significantly to $35.6 million in 2025 from a loss of $19.4 million in 2024, a net change of $55.0 million [276]. - Unrealized loss on derivatives rose to $39.8 million in 2025 from a gain of $9.8 million in 2024, an increase of $49.6 million due to interest rate changes [277]. Financing and Liquidity - The company had outstanding repurchase agreement borrowings of approximately $1,137.2 million as of December 31, 2025, reflecting an increase due to the purchase of new RMBS securities [309][311]. - The liquidity strategy includes maintaining sufficient cash reserves to meet margin calls and operational expenses, with a focus on investing in targeted assets as the economy normalizes [306][307]. - The company expects to meet its long-term liquidity requirements through cash on hand and potential additional borrowings [307]. - The average monthly amount of borrowings under repurchase agreements for the quarter ended December 31, 2025, was $1,135,331 million [311]. - The weighted average term to maturity of borrowings under repurchase agreements was 16 days as of December 31, 2025 [315]. - As of December 31, 2025, approximately $90.8 million was outstanding under the Fannie Mae MSR Revolving Facility, down from $95.6 million as of December 31, 2024 [318]. Cash Flow - Operating activities generated cash of approximately $19.1 million for the year ended December 31, 2025, compared to a cash usage of approximately $4.7 million for the year ended December 31, 2024 [319]. - Investing activities used cash of approximately $66.7 million in 2025, a decrease from $141.3 million in 2024, primarily due to RMBS purchases [319]. Shareholder Information - The company’s GAAP loss per diluted share for the year ended December 31, 2025, was $0.09, while the GAAP income per diluted share for 2024 was $0.07 [322]. - The company intends to distribute at least 90% of its REIT taxable income annually, subject to board authorization and operational requirements [320]. - The company may need to sell assets or borrow funds to meet cash distribution requirements if cash available for distribution is less than REIT taxable income [321]. Market Conditions - The Federal Reserve reduced its federal funds rate target by 75 basis points to a range of 3.50% to 3.75% since September 2025, impacting interest expenses and income [331].

Core Insights - Cherry Hill Mortgage Investment Corp. (CHMI) reported improved earnings and book value momentum heading into 2026 [1] Financial Performance - Net interest income remained stable at $3.2 million for Q4, while net servicing income slightly decreased to $8.1 million [2] - Net income increased by 74% from the previous quarter, fully covering the $0.10 common dividend for Q4 [2] Management Outlook - Management expressed a positive outlook for 2026, focusing on disciplined growth and maintaining balance sheet strength [3] - Liquidity is robust with unrestricted cash totaling $54.9 million, and leverage is conservative [3] Economic Environment - The overall economic environment is supportive for CHMI, with recent spreads tightening before slightly widening again [3] - Positive macro factors include solid domestic growth, reduced tariff rhetoric, and contained policy risk [3] Stock Performance - CHMI shares have performed well since December but still have potential for continued appreciation [4] - The stock trades at a 49% discount to its 1-year-high NTM P/E multiple and a 32% discount to the peer average, indicating potential for narrowing this gap in 2026 [4]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income applicable to common stockholders of $5.3 million, or $0.14 per diluted share, compared to a book value per common share of $3.44, up from $3.36 at the end of Q3 2025 [5][15] - The NAV increased by approximately $3.1 million, or 1.3%, relative to September 30, 2025 [5] - Financial leverage remained consistent at 5.4x, indicating a prudent leverage strategy [6] Business Line Data and Key Metrics Changes - The MSR portfolio had a UPB of $15.9 billion with a market value of approximately $215 million, representing about 40% of equity capital [10] - The RMBS portfolio accounted for approximately 40% of equity capital and 79% of investable assets, excluding cash [10] - The RMBS portfolio's net interest spread was 2.52%, lower than the previous quarter due to reduced dollar roll income [13] Market Data and Key Metrics Changes - The company noted a stabilization in the interest rate environment and a steeper yield curve, which positively impacted performance [9] - The RMBS portfolio's prepayment speeds rose to 8.5% CPR for the three-month period ended December, compared to 6.1% for the prior quarter [11] - The market environment showed a flight to quality, with net spreads tightening initially but then widening in February [20] Company Strategy and Development Direction - The company aims to seek out investment opportunities that are accretive to its business while maintaining strong liquidity and prudent leverage [8] - The strategic partnership with Realgenius LLC is expected to facilitate growth as mortgage rates potentially decrease [7] - The company is focused on growing thoughtfully while managing its capital structure to enhance shareholder value [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential for additional Fed rate cuts, which could lead to lower mortgage rates and increased refinancing activity [7] - The company anticipates a low recapture rate and relatively low net CPR in the near term due to the characteristics of its MSR portfolio [11] - Management noted that the market has changed from Q4 2025 to early 2026, with tightening spreads in January followed by a widening in February [20] Other Important Information - Operating expenses for the quarter were reported at $3.3 million, reflecting a normalization after non-recurring expenses in the previous quarter [16] - A dividend of $0.10 per common share was declared for Q4 2025, paid in cash on January 30, 2026 [16] Q&A Session Summary Question: Market conditions at the start of 2026 compared to 2025 - Management noted that net spreads tightened initially but then widened in February, indicating a flight to quality in the market [20] Question: Normalized level for CPR - Management indicated that the CPR could normalize around 15% if mortgage rates decrease, with current speeds around 8.5% [25] Question: Drop in G&A expenses - The decrease in G&A expenses was attributed to the normalization of expenses after non-recurring costs in the previous quarter [34] Question: Share buybacks and preferred stock strategy - Management is considering strategies for preferred stock buybacks and is focused on growing the company rather than immediate share repurchases [36] Question: Update on book value - As of March 31, 2026, the book value is expected to increase by about 1% compared to December 31, 2025 [46]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income applicable to common stockholders of $5.3 million, or $0.14 per diluted share, compared to a book value per common share of $3.44, up from $3.36 as of September 30, 2025 [5][16] - The NAV increased by approximately $3.1 million, or 1.3%, relative to September 30, 2025 [5] - Financial leverage remained consistent at 5.4x, indicating a prudent leverage strategy [5] Business Line Data and Key Metrics Changes - The MSR portfolio had a UPB of $15.9 billion with a market value of approximately $215 million, representing about 40% of equity capital [10] - The RMBS portfolio accounted for approximately 40% of equity capital and 79% of investable assets, excluding cash [10] - The RMBS portfolio's net interest spread was 2.52%, lower than the previous quarter due to reduced dollar roll income [13] Market Data and Key Metrics Changes - The company noted a stabilization in the interest rate environment and a steeper yield curve, which contributed to gains in spread and equity markets [9] - The RMBS portfolio's prepayment speeds rose to 8.5% CPR for the three-month period ended December, compared to 6.1% for the prior quarter [11] - The market experienced tightening in January followed by widening in February, indicating a flight to quality in the mortgage market [21] Company Strategy and Development Direction - The company aims to seek out investment opportunities that are accretive to its business while maintaining strong liquidity and prudent leverage [8] - The strategic partnership with Real Genius LLC is expected to facilitate growth as mortgage rates potentially decrease [6][7] - The company plans to continue managing its portfolio proactively to enhance shareholder value through improved performance and earnings [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential for reduced mortgage rates to accelerate growth for Real Genius as more homebuyers look to refinance [7] - The company is monitoring the mortgage rate environment closely, particularly the impact of Fed rate cuts on refinancing opportunities [12] - Management acknowledged a softer tone in the market compared to the previous quarter, with a focus on quality in investment decisions [21] Other Important Information - Operating expenses for the quarter were reported at $3.3 million, reflecting a normalization from non-recurring expenses in the previous quarter [17] - The company declared a dividend of $0.10 per common share for Q4 2025, paid in cash on January 30, 2026 [17] Q&A Session Summary Question: Market conditions at the start of 2026 compared to 2025 - Management noted that net spreads tightened initially due to GSEs reinvesting in mortgage-backed securities, but the market has since shown signs of widening and a flight to quality [20][21] Question: Normalized level for CPR - Management indicated that the CPR could normalize around 20% if mortgage rates drop to 5.5%, with current speeds around 8.5% [27] Question: Drivers of the drop in G&A expenses - The decrease in G&A expenses was attributed to the normalization of costs following non-recurring expenses related to personnel changes in the previous quarter [35] Question: Share buybacks and preferred stock strategy - Management is considering strategies regarding preferred stock buybacks and is focused on growing the company rather than immediate share repurchases [37] Question: Update on book value - As of March 31, the book value is expected to show about a 1% increase compared to December 31 [47]

Investor Presentation Fourth Quarter 2025 Legal Disclaimer FORWARD-LOOKING STATEMENTS. Certain statements in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, references to: potential or expected future cash flows; estimated or expected returns, sometimes referred to as initial IRR, updated IRR, expected IRR, or current-to-maturity IRR; potential discount rates; potential future investments; e ...

Financial Performance - GAAP net income applicable to common stockholders for Q4 2025 was $5.3 million, or $0.14 per share[6] - Earnings available for distribution (EAD) attributable to common stockholders for Q4 2025 were $3.9 million, or $0.11 per diluted share[5] - Comprehensive income attributable to common stockholders for Q4 2025 was $6.45 million[9] Dividends - Declared regular common dividend of $0.10 per share, resulting in an annualized common dividend yield of 15.4%[6] Asset Valuation - Common book value per share was $3.44 as of December 31, 2025[6] - The unpaid principal balance for the MSR portfolio was $15.9 billion, with a carrying value of $214.8 million[10] - The RMBS portfolio had a book value of approximately $1.2 billion, with a weighted average coupon of 4.98%[11] Portfolio Metrics - Aggregate portfolio leverage stood at 5.4x as of December 31, 2025[6] - Net interest spread for the RMBS portfolio was 2.52%[10] Financial Instruments - The Company held interest rate swaps with a notional amount of $828.7 million as of December 31, 2025[12]

Core Viewpoint - Cherry Hill Mortgage Investment Corporation (CHMI) is a mortgage real estate investment trust (mREIT) that provides a high dividend yield through its common shares and also offers two preferred shares [1] Company Overview - CHMI specializes in investing in mortgages, which positions it uniquely within the real estate investment trust sector [1] - The company has a focus on income investing, targeting returns through common shares, preferred shares, or bonds [1] Investment Strategy - The investment strategy includes a commitment to publish articles on income investing, with a frequency of two articles per week [1] - The articles may also cover broader economic topics or specific situations related to companies under research [1] Background of the Analyst - The analyst has a background in history and political science, along with a Master's in Business Administration specializing in Finance and Economics [1] - The analyst has been investing since 2000 and currently serves as the CEO of an independent living retirement community in Illinois [1]