Cherry Hill Mortgage Investment (CHMI) - 2024 Q2 - Quarterly Results

Cherry Hill Mortgage Investment Corporation Q2 2024 Earnings Release Second Quarter 2024 and Other Recent Highlights The company reported a Q2 2024 GAAP net loss and advanced its plan to internalize management - In July 2024, the Board of Directors approved the internalization of the company's management, a move aimed at reducing expenses and improving alignment with stockholders[2] - The company has repurchased $9.4 million of its 8.250% Series B Preferred Stock as of August 7, 2024, with $40.6 million remaining under the repurchase program[2] Q2 2024 Key Financial Metrics | Metric | Value | | :--- | :--- | | GAAP Net Loss per Share | $0.06 | | Earnings Available for Distribution (EAD) per Diluted Share | $0.08 | | Common Book Value per Share (as of June 30, 2024) | $4.15 | | Regular Common Dividend per Share | $0.15 | | Aggregate Portfolio Leverage | 4.9x | | Unrestricted Cash (as of June 30, 2024) | $52.4 million | Management Commentary Management highlighted proactive portfolio management through a significant MSR sale and expressed optimism about the upcoming management internalization - The company sold approximately $1.2 billion UPB of low-balance MSRs in Q2 to enhance portfolio efficiency and reduce servicing costs[3] - Management anticipates that the planned internalization will reduce corporate expenses and further align the company's interests with those of its stockholders[3] Financial Performance The company reported a Q2 2024 GAAP net loss of $1.9 million, driven by unrealized losses on investments and increased special committee-related expenses Consolidated Statements of Income (Loss) The company's GAAP net loss was $1.9 million in Q2 2024, a reversal from a $9.7 million net income in Q1 2024 due to market-driven valuation changes Condensed Consolidated Statements of Income (Loss) (in thousands, except per share amounts) | Description | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Servicing Income | $8,894 | $10,257 | | Realized Gain on Derivatives, net | $9,430 | $6,252 | | Unrealized Loss on RMBS, net | ($4,440) | ($8,321) | | Unrealized (Loss) Gain on Derivatives, net | ($3,042) | $12,324 | | Total Expenses | $5,131 | $3,589 | | Net (Loss) Income Applicable to Common Stockholders | ($1,864) | $9,666 | | Diluted (Loss) Income Per Share | ($0.06) | $0.32 | Consolidated Statements of Comprehensive Income (Loss) A comprehensive loss of $5.5 million was recorded, primarily from a $3.7 million unrealized loss on its available-for-sale RMBS portfolio Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Description | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $784 | $12,056 | | Unrealized loss on RMBS, available-for-sale, net | ($3,734) | ($6,596) | | Comprehensive (Loss) Income | ($2,950) | $5,460 | | Comprehensive (Loss) Income Attributable to Common Stockholders | ($5,522) | $3,199 | Portfolio and Risk Management The company maintained an aggregate portfolio leverage of 4.9x and managed interest rate risk using a mix of swaps, TBAs, and Treasury futures - The company's GAAP book value per diluted share was $4.15 as of June 30, 2024[9] Portfolio Composition as of June 30, 2024 | Portfolio | Metric | Value | | :--- | :--- | :--- | | MSR | Unpaid Principal Balance (UPB) | $18.0 billion | | MSR | Carrying Value | $234.3 million | | RMBS | Book/Carrying Value | $1.1 billion | | RMBS | Net Interest Spread | 3.23% | Hedging Instruments (Notional Amounts) as of June 30, 2024 | Instrument | Notional Amount | | :--- | :--- | | Interest Rate Swaps | $1.1 billion | | TBAs (Short Position) | ($427.0) million | | Treasury Futures | $232.4 million | Shareholder Returns The company declared a quarterly common dividend of $0.15 per share, alongside preferred stock dividends for both Series A and Series B Q2 2024 Declared Dividends | Stock Series | Dividend Per Share | Record Date | Payment Date | | :--- | :--- | :--- | :--- | | Common Stock | $0.15 | June 28, 2024 | July 31, 2024 | | 8.20% Series A Preferred | $0.5125 | June 28, 2024 | July 15, 2024 | | 8.250% Series B Preferred | $0.6995 | June 28, 2024 | July 15, 2024 | Non-GAAP Financial Measures: Earnings Available for Distribution (EAD) EAD, a non-GAAP metric, was $0.08 per diluted share for Q2 2024, adjusting GAAP net income for certain non-cash and unrealized items - EAD is a non-GAAP measure used to provide insight into ongoing operational performance by excluding various realized and unrealized gains/losses on RMBS, derivatives, and MSRs[11][12] Reconciliation of Net Income to EAD (in thousands, except per share amounts) | Description | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $784 | $12,056 | | Adjustments (Net) | $4,170 | ($5,632) | | Total EAD | $4,954 | $6,424 | | EAD Attributable to Common Stockholders | $2,299 | $3,992 | | EAD Per Diluted Share | $0.08 | $0.13 | Company Information and Events The company provides additional financial details in its Form 10-Q and hosted a conference call on August 8, 2024, to discuss results - Additional information is available in the company's Form 10-Q for the quarter ended June 30, 2024, and in an investor presentation posted to the Investor Relations section of its website[14] - Management hosted a conference call and webcast to discuss the quarterly results on August 8, 2024, at 5:00 pm Eastern Time[15] Forward-Looking Statements The report includes forward-looking statements concerning company strategy and the benefits of management internalization, subject to known risks - Forward-looking statements include those related to the completion and benefits of the management internalization, potential cost savings, and the ability to generate attractive risk-adjusted returns[17]