Cherry Hill Mortgage Investment Corporation (NYSE: CHMI ) is a real estate investment trust that invests in residential mortgages, or an mREIT. The company's common shares offer a high-yield dividend, and the company has two high yielding preferred shares, one yielding over 11% (About My Writing: I am currently focused on income investing through either common shares, preferred shares, or bonds. I will occasionally break away and write about the economy at large or a special situation involving a company I' ...

Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) Q4 2024 Earnings Conference Call March 6, 2025 5:00 PM ET Company Participants Garrett Edson - MD, ICR, IR Jay Lown - President and CEO Julian Evans - Chief Investment Officer Mike Hutchby - CFO Conference Call Participants Randy Binner - B. Riley Securities Mikhail Goberman - Citizens JMP Jason Stewart - Janney Montgomery Scott Operator Hello, everyone, and welcome to Cherry Hill Mortgage Investment Corporation Fourth Quarter 2024 Earnings Call. At th ...

Group 1 - Cherry Hill Mortgage Investment Corporation held its Fourth Quarter 2024 Earnings Conference Call on March 6, 2025 [1] - The call featured key participants including the President and CEO, Chief Investment Officer, and CFO [1][2] - A press release and investor presentation were made available on the company's website prior to the call [3] Group 2 - Management's remarks included forward-looking statements that are subject to risks and uncertainties [4] - Forward-looking statements encompass estimates related to interest income, financial guidance, and future expected cash flows [4][5]

Legal Disclaimer Investor Presentation Fourth Quarter 2024 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 ...

Cherry Hill Mortgage (CHMI) came out with quarterly earnings of $0.10 per share, in line with the Zacks Consensus Estimate. This compares to earnings of $0.17 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this residential real estate finance company would post earnings of $0.14 per share when it actually produced earnings of $0.08, delivering a surprise of -42.86%.Over the last four quarters, the company has not been able to surpass consensus EP ...

Company Overview - The company operates as a fully integrated, internally managed residential real estate finance company focused on acquiring, investing in, and managing residential mortgage assets in the U.S.[56] - The company’s overall strategy is adaptable to changing market environments, subject to compliance with REIT qualification requirements[66] - The company aims to maintain its REIT status by distributing at least 90% of its annual REIT taxable income, which is essential to avoid U.S. federal income tax[80] Financial Performance - Interest income for the year ended December 31, 2024, was $55,798,000, an increase from $49,985,000 in 2023, representing a growth of approximately 3.6%[280] - Net interest income improved to $29,000 in 2024 from a loss of $1,657,000 in 2023, indicating a significant turnaround[280] - Total income for 2024 was $34,575,000, compared to a loss of $21,202,000 in 2023, marking a substantial recovery[280] - Net income applicable to common stockholders was $2,079,000 in 2024, a recovery from a loss of $44,647,000 in 2023[280] - The company recognized a realized loss on RMBS of $6,595,000 in 2024, a significant improvement from a loss of $36,315,000 in 2023[280] - Unrealized loss on RMBS measured at fair value through earnings was $19,445,000 in 2024, compared to a gain of $9,755,000 in 2023, indicating volatility in asset valuations[280] - The provision for corporate business taxes increased to $4,102,000 in 2024 from $523,000 in 2023, reflecting higher tax obligations[280] - The company’s total expenses increased to $18,263,000 in 2024 from $13,730,000 in 2023, representing a rise of approximately 33.3%[280] Investment Strategy - The company’s strategy includes allocating a substantial portion of equity capital to the acquisition of Servicing Related Assets and RMBS, with a focus on leveraging investments[60] - The company may raise additional funds through equity or debt offerings as determined by its board of directors[73] - The company operates in a highly competitive market, competing with various financial institutions and mortgage REITs for investment opportunities[74] - The company’s strategy may be influenced by SEC guidance regarding investment company definitions, which could restrict its investment capabilities[88] Risks and Compliance - The company is subject to various risks including market volatility, interest rate fluctuations, and economic conditions that could adversely affect its ability to generate sufficient revenue for distributions[92] - The company relies on third-party servicers for servicing functions, exposing it to compliance risks with applicable laws[55] - The company is subject to numerous federal, state, and local laws and regulations regarding mortgage servicing rights (MSRs), which could lead to fines or penalties if compliance is not maintained[99] - The company’s organizational structure and reliance on leverage expose it to various operational and regulatory risks[54] - The company faces risks related to climate change, which could affect asset values and borrowers' ability to pay mortgages[151] - The increasing focus on ESG matters may lead to higher compliance costs and reduced access to capital, potentially impacting financial performance[152] Human Capital and Management - The company emphasizes human capital management by providing competitive wages, benefits, and professional development opportunities to attract and retain talent[76] - The transition to a self-managed company is expected to result in substantial cost savings and enhanced returns, but there are risks associated with realizing these benefits[157] - The company’s transition to self-management may incur additional costs related to hiring and retaining employees, which could impact financial results[159] Asset Management and Valuation - The company relies on analytical models for asset management, which may lead to incorrect valuations if the models are flawed or based on inaccurate data[116] - The value of Servicing Related Assets is highly sensitive to interest rate changes, with values typically increasing when rates rise and decreasing when they fall[106] - Changes in prepayment rates can adversely affect the performance of the company's assets, impacting cash flows and valuations[109] - The valuation of certain assets remains uncertain and may differ significantly from third-party valuations, particularly during market disruptions like the COVID-19 pandemic[120] Stockholder Considerations - The company must distribute at least 90% of its REIT taxable income to avoid corporate income tax, which could affect cash available for distribution to stockholders[188] - If the company fails to qualify as a REIT, it would be subject to federal income tax, significantly reducing cash available for stockholder distributions[186] - Future sales of common stock or convertible securities could lead to dilution of existing shares and negatively impact market value[178][179] - The company has not established a minimum distribution payment level, and future distributions may vary based on earnings and financial conditions[180] - Distributions may include a return of capital, which would reduce the tax basis of stockholders' investments[182] Operational Challenges - The company relies on third-party mortgage servicers for servicing mortgage loans, and any failure by these servicers could materially impact its financial performance[94] - The company is highly dependent on information technology, and any cybersecurity incidents could disrupt operations and negatively impact financial results[122] - Illiquidity of mortgage-related assets may hinder the ability to sell assets when needed, potentially leading to significant losses during financial stress[126] - Leverage is used to finance investments, which can magnify both gains and losses, impacting cash available for distribution to stockholders[127] - The company faces risks related to margin calls, which may require posting additional cash collateral and could jeopardize its REIT qualification[135] Market Conditions - Rising interest rates could decrease the volume of target assets, adversely affecting the ability to acquire assets that meet investment objectives and make distributions to stockholders[121] - Interest rate mismatches between assets and borrowings could adversely affect income during periods of changing interest rates[113] - An increase in delinquency rates on mortgage loans could significantly lower the net revenue from Servicing Related Assets, impacting cash flow projections[108]

Financial Performance - GAAP net income applicable to common stockholders for Q4 2024 was $9.1 million, or $0.29 per share[6] - Earnings available for distribution (EAD) attributable to common stockholders for Q4 2024 were $3.3 million, or $0.10 per diluted share[5] - Total income for Q4 2024 was $18.7 million, compared to a loss of $7.1 million in the previous quarter[7] Dividends - Declared a regular common dividend of $0.15 per share, resulting in an annualized common dividend yield of 17.5%[6] Portfolio Information - Common book value per share was $3.82 as of December 31, 2024[6] - The unpaid principal balance for the MSR portfolio was $17.3 billion as of December 31, 2024[10] - The RMBS portfolio had a book value of approximately $1.1 billion with a weighted average coupon of 4.80%[11] - The company reported a net unrealized loss on the RMBS portfolio of approximately $10.8 million[8] Leverage and Risk Management - Aggregate portfolio leverage stood at 5.3x at the end of Q4 2024[6] - The company held interest rate swaps with a notional amount of $1.2 billion as of December 31, 2024[12] Strategic Focus - The company emphasizes its long-term growth opportunities and strategies to expand market opportunities[24] - The company aims to create its own Excess MSRs to enhance profitability[24] - The company is focused on generating sustainable and attractive risk-adjusted returns for stockholders[24]

Group 1 - The article focuses on high-yielding mortgage REITs, specifically those with yields of 12% or higher, which are attractive for investors in the mortgage REIT or BDC sector [1] - Colorado Wealth Management is highlighted as a REIT specialist with extensive experience in deep-dive REIT analysis, holding an MBA and having passed all 3 CFA exams [1] - Scott Kennedy is noted as a Certified Public Accountant and partner at a national accounting firm, contributing to the analysis of mortgage REITs [1] Group 2 - The article mentions that the contributors, Colorado Wealth Management Fund and Scott Kennedy, provide insights for The REIT Forum, with overlapping ratings and outlooks [3] - It is stated that the recommendations made in the article are not indefinite and are closely monitored, with Buy and Sell alerts issued exclusively to members [3] - There is an indirect conflict of interest mentioned regarding specific mREIT stocks, indicating a cautious approach to those investments [3]

I rate Cherry Hill Mortgage Investment Corporation ( CHMI ) as Hold, for mortgage REIT investors. Short-term investors may be able to trade the trend as the stock has upward momentum, however it is a highly speculative bet for theDavid A. Johnson is founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company. As an investor entrepreneur, David invests in stocks, bonds, options, ETFs, REITs, real estate, closed end funds and alternative investment funds such as hedge funds a ...

Cherry Hill Mortgage Investment Corporation (NYSE: CHMI ) is a real estate investment trust that invests in residential mortgages, also known as an mREIT. A recent sell-off in shares has sent the dividend yield to over 20%. The company also offersAbout My Writing: I am currently focused on income investing through either common shares, preferred shares, or bonds. I will occasionally break away and write about the economy at large or a special situation involving a company I've been researching in. I target ...