Financial Performance - Cherry Hill reported a GAAP net loss applicable to common stockholders of $9.3 million, or $0.29 per share for Q1 2025[4]. - Earnings available for distribution (EAD) attributable to common stockholders were $5.4 million, or $0.17 per diluted share[5]. - The company realized net servicing fee income of $8.4 million and net interest income of $2.2 million for the quarter[10]. Dividends - The company declared a regular common dividend of $0.15 per share, resulting in an annualized common dividend yield of 20.1%[6]. Asset Valuation - The common book value per share was $3.58 as of March 31, 2025[6]. - The unpaid principal balance for the MSR portfolio was $17.0 billion, with a carrying value of $227.3 million[10]. - The RMBS portfolio had a book value of approximately $1.1 billion, with a weighted average coupon of 4.88% and a weighted average maturity of 28 years[11]. - The net unrealized gain on the RMBS portfolio classified as available-for-sale was approximately $6.9 million[8]. Leverage and Financial Instruments - The aggregate portfolio leverage stood at 5.2x at the end of Q1 2025[6]. - As of March 31, 2025, the company held interest rate swaps with a notional amount of $804.3 million[12].

Financial Performance - Net income (loss) for the three months ended March 31, 2025, was $(6,992) thousand, a decrease from net income of $12,056 thousand for the same period in 2024[51]. - Comprehensive income (loss) attributable to common stockholders was $(2,593) thousand for the three months ended March 31, 2025, compared to $3,199 thousand for the same period in 2024[54]. - The company reported a net loss of $6,992,000 compared to a net income of $12,056,000 for the same period in 2024, representing a significant decline[172]. - Basic and diluted EPS for Q1 2025 was $(0.29), down from $0.32 in Q1 2024, indicating a negative performance shift[172]. - The comprehensive income for the three months ended March 31, 2025, was a loss of $142,000, compared to a comprehensive income of $5,460,000 for the same period in 2024, marking a significant decline[108]. Revenue and Income Sources - Net interest income improved to $2,166 thousand for the three months ended March 31, 2025, compared to a net interest expense of $907 thousand for the same period in 2024[51]. - Interest income increased to $14,801 thousand for the three months ended March 31, 2025, up from $12,741 thousand in the same period of 2024, reflecting a growth of approximately 16.1%[51]. - The net servicing income for the three months ended March 31, 2025, was $8,428,000, a decrease from $10,257,000 in the same period of 2024, reflecting a decline of about 17.8%[108]. Assets and Liabilities - Total assets decreased from $1,491,175 thousand as of December 31, 2024, to $1,449,508 thousand as of March 31, 2025, representing a decline of approximately 2.8%[48]. - Total liabilities decreased from $1,257,553 thousand as of December 31, 2024, to $1,219,876 thousand as of March 31, 2025, a reduction of about 3.0%[48]. - The net assets increased slightly to $229,632,000 as of March 31, 2025, from $233,622,000 as of December 31, 2024, a decrease of approximately 1.7%[110]. - The company had outstanding borrowings under repurchase agreements of approximately $1,049.9 million as of March 31, 2025, with a weighted average rate of 4.46%[225][227]. Cash Flow and Investments - Net cash provided by operating activities was $682 thousand, a significant improvement from a net cash used of $19.051 million in the prior year[60]. - Cash flows from investing activities showed a net cash provided of $19.463 million, compared to a net cash used of $55.550 million in the same period last year[60]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $21.463 million, compared to a decrease of $16.572 million in the prior year[60]. - Cash and cash equivalents increased slightly from $46,313 thousand as of December 31, 2024, to $47,291 thousand as of March 31, 2025[48]. Dividends and Shareholder Returns - The company declared common dividends of $0.15 per share for the period, totaling $(4,919) thousand[57]. - Dividends declared but not paid amounted to $7.137 million, compared to $6.500 million in the prior year[60]. - The Company issued and sold 1,005,846 shares of common stock under the Common Stock ATM Program during the three-month period ended March 31, 2025, generating approximately $3.6 million in gross proceeds[145]. Derivatives and Risk Management - The Company’s derivatives, including TBAs, are recognized as either assets or liabilities on the balance sheets and measured at fair value[88]. - The company has netting arrangements in place with derivative counterparties, allowing for potential offsets on the consolidated balance sheets[191]. - The fair value of interest rate swaps was $14,704,000 as of March 31, 2025, compared to $13,375,000 at the end of 2024, showing a slight increase[180]. Taxation and Deferred Tax Assets - The effective tax rate for Q1 2025 was -2.5%, compared to 5.5% in Q1 2024, reflecting a significant change in tax expense[243]. - Deferred tax assets totaled $10,747 thousand as of March 31, 2025, slightly down from $10,921 thousand as of December 31, 2024[244]. - The Company believes it is more likely than not that it will fully realize its deferred tax assets based on future taxable income projections[244]. Management and Operational Changes - The company has transitioned to an internally managed structure as of November 14, 2024, enhancing its operational efficiency[66]. - Management fees paid to CHMM were $0 for Q1 2025, down from $1,598,000 in Q1 2024, reflecting the termination of the management agreement[177].

Core Viewpoint - Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) is identified as a real estate investment trust (mREIT) that focuses on investing in residential mortgages, offering high-yield dividends through its common shares and preferred shares [1] Company Overview - The company provides a high-yield dividend through its common shares and has two preferred shares, one of which yields over 11% [1] Investment Focus - The investment strategy is centered on income investing, utilizing common shares, preferred shares, or bonds [1]

Financial Data and Key Metrics Changes - For Q4 2024, the company generated GAAP net income applicable to common stockholders of $9.1 million or $0.29 per diluted share, while earnings available for distribution (EAD) were $3.3 million or $0.10 per share, impacted by approximately two cents per share of expenses related to the special committee's efforts [12][25][26] - Book value per common share decreased to $3.82 from $4.02 as of September 30, 2024, with NAV down approximately $5.5 million or 2.3% relative to the previous quarter [13][26] - Financial leverage remained consistent at 5.3 times, with $46 million of unrestricted cash on the balance sheet, indicating a solid liquidity profile [14] Business Line Data and Key Metrics Changes - The MSR portfolio had a UPB of $17.3 billion and a market value of approximately $234 million, representing about 46% of equity capital and 24% of invested assets excluding cash [19] - The RMBS portfolio accounted for approximately 38% of equity capital, with prepayment speeds for both MSR and RMBS portfolios remaining steady compared to the prior quarter [20][22] - The RMBS portfolio's weighted average three-month CPR was approximately 5.7%, up from 5.4% in the third quarter, with the portfolio's net interest spread at 2.9% lower than the prior quarter [22][23] Market Data and Key Metrics Changes - Long-term yields rose to seven-month highs, with the ten-year yield ending at 4.57%, nearly eighty basis points higher quarter over quarter, driven by concerns over persistent inflation [7][8] - The relationship between short and longer-dated rates has been highly reactive to political agendas and domestic economic data, impacting the company's RMBS portfolio [8] Company Strategy and Development Direction - The company completed the internalization of management, which is expected to reduce operating expenses in 2025 by $1.1 million to $1.6 million, enhancing alignment between management and shareholders [9][11] - The investment strategy will continue to focus on agency RMBS and select MSRs that present strong risk-adjusted return profiles while maintaining strong liquidity and prudent leverage [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic and geopolitical environment, anticipating fewer rate cuts in 2025 than previously expected, and indicated that the investment strategy will remain data-dependent [8][14] - The company expects continued volatility in the near term, with rates likely to remain higher until inflation shows signs of moderating or economic growth falters [18] Other Important Information - Operating expenses for the quarter were $4.5 million, including special committee-related expenses, and dividends declared included $0.15 per common share for Q4 2024 [28] Q&A Session Summary Question: Clarification on special committee expenses and internalization benefits - Management confirmed that special committee expenses were included in the SG&A line item and that benefits from internalization would be reflected in SG&A and compensation moving forward [31][33] Question: Expectations for repo costs and portfolio growth - Management noted that elevated repo costs were partly year-end expenses but have since decreased, and they expect to grow the portfolio through capital raising [35][36][42] Question: Capital allocation between MSR and RMBS - Management indicated that the increase in servicing equity was due to a rise in MSR values rather than new purchases, and they will continue to favor RMBS for better returns in the current environment [48][51] Question: Impact of Fed rate cuts on investment strategy - Management acknowledged that expectations for rate cuts could influence their investment decisions, particularly regarding the MSR portfolio, which has higher financing costs [55][57] Question: Current refinanceability and spec pools - Management estimated that about 5-10% of the market is refinanceable, with a need for mortgage rates to drop further to stimulate significant refinancing activity [71][73]

Financial Data and Key Metrics Changes - For Q4 2024, the company generated GAAP net income applicable to common stockholders of $9.1 million or $0.29 per diluted share, while earnings available for distribution (EAD) were $3.3 million or $0.10 per share, impacted by approximately two cents per share of special committee-related expenses [12][25][26] - Book value per common share decreased to $3.82 from $4.02 as of September 30, 2024, with NAV down approximately $5.5 million or 2.3% relative to the previous quarter [13][26] - Financial leverage remained consistent at 5.3 times, with $46 million of unrestricted cash on the balance sheet [14] Business Line Data and Key Metrics Changes - The MSR portfolio had a UPB of $17.3 billion and a market value of approximately $234 million, representing about 46% of equity capital [19] - The RMBS portfolio accounted for approximately 38% of equity capital, with a weighted average three-month CPR of approximately 5.7% compared to 5.4% in the previous quarter [22][23] - The RMBS net interest spread was 2.9% lower than the prior quarter due to improved repo costs being offset by a reduction in swap and dollar roll income [23] Market Data and Key Metrics Changes - Long-term yields rose to seven-month highs, with the ten-year yield ending at 4.57%, nearly eighty basis points higher quarter over quarter [7] - Mortgage spreads widened and volatility increased due to concerns about the US election and future debt levels, despite two rate cuts by the Fed [16] - Prepayment speeds for the MSR portfolio averaged approximately 4.7% for Q4, down modestly from the previous quarter, while RMBS prepayment speeds rose modestly as expected [20][22] Company Strategy and Development Direction - The company completed the internalization of management, which is expected to reduce operating expenses in 2025 by $1.1 million to $1.6 million [9][11] - The investment strategy will continue to focus on agency RMBS and select MSRs that present strong risk-adjusted return profiles while maintaining strong liquidity and prudent leverage [14][15] - The company remains cautious of the macroeconomic environment and geopolitical factors, expecting to maintain its current investment strategy [8] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over persistent inflation and uncertainty about economic growth, indicating that additional rate cuts in 2025 will be fewer than previously expected [8] - The company anticipates continued volatility in the near term, with rates expected to remain higher until inflation shows signs of moderating or economic growth falters [18] - Management highlighted the importance of aligning management and shareholder interests through internalization, improving transparency and decision-making processes [10] Other Important Information - Operating expenses for the quarter were $4.5 million, including special committee-related expenses [28] - The board declared a dividend of $0.15 per common share for Q4 2024, paid in cash on January 31, 2025 [28] Q&A Session Summary Question: Special committee expenses and internalization benefits - The special committee expenses were found in the SG&A line item, and benefits from internalization will be reflected in SG&A and compensation and benefits going forward [31][33] Question: Repo costs and portfolio growth - Elevated repo costs were attributed to year-end expenses, but benefits have been seen in the first quarter, with potential for growth through capital raising [35][36][42] Question: Capital allocation between investment bins - The increase in servicing equity composition was due to an increase in MSR value, with a focus on RMBS for better returns in the current environment [48][51] Question: Expectations for Fed rate cuts - Expectations for fewer rate cuts this year may impact investment strategies, with a focus on the MSR portfolio's returns if rates drop [56][57] Question: Refinance activity and spec pools - Current refinanceability stands at about 5-10%, with a need for mortgage rates to drop to around 5.7%-5.8% for significant refinancing activity [71][73]

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]