Cherry Hill Mortgage Investment (US:CHMI)2025-08-07 22:00Financial Data and Key Metrics Changes - For Q2 2025, the company reported a GAAP net loss applicable to common stockholders of $900,000 or $0.03 per diluted share, with a comprehensive loss of $600,000 or $0.02 per diluted share [17][19] - The book value per common share decreased to $3.34 from $3.58 as of March 31, 2025, reflecting a decline in NAV of approximately $6.2 million or 2.7% [7][19] - Earnings available for distribution (EAD) attributable to common stockholders were $3.2 million or $0.10 per share, impacted by the maturity of a significant hedge [17][19] Business Line Data and Key Metrics Changes - The mortgage servicing rights (MSR) portfolio had an unpaid principal balance (UPB) of $16.6 billion and a market value of approximately $225 million, representing about 43% of equity capital [12] - The residential mortgage-backed securities (RMBS) portfolio accounted for approximately 36% of equity capital, with a prepayment speed of 6.1 CPR [12][14] - The RMBS net interest spread was reported at 2.61%, lower than the previous quarter due to the impact of a maturing swap position [14] Market Data and Key Metrics Changes - The ten-year treasury yield ended the quarter at 4.23%, slightly higher than the previous quarter, with the Agency MBS sector experiencing negative performance due to mortgage basis underperforming [6] - The economic environment showed resilience with low inflation, and the company is closely monitoring the Fed's potential shift towards a rate cut cycle [6][9] Company Strategy and Development Direction - The company entered a strategic partnership with RealGenius LLC, a digital mortgage technology firm, to enhance its investment strategy and explore unique growth opportunities [7][9] - The management indicated a potential shift towards a more risk-on investment strategy as the economic environment stabilizes, while maintaining strong liquidity and prudent leverage [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery and the potential for rate cuts by the Fed, which could positively impact refinancing incentives and portfolio performance [9][13] - The company plans to proactively manage its portfolio and adjust its capital structure to enhance shareholder value through improved performance and earnings [15] Other Important Information - The company raised approximately $9 million of capital through its common ATM program and ended the quarter with $58 million of unrestricted cash [7] - Operating expenses for the quarter were reported at $3.4 million, and dividends were declared for both common and preferred stockholders [20] Q&A Session Summary Question: What caused the lower servicing costs this quarter? - Management noted that lower servicing costs were due to deboarding fees from a prior quarter related to the Mr. Cooper acquisition, and a decrease in loan count [24] Question: What is the expectation for leverage moving forward? - Management expects leverage to gradually increase as the year progresses, influenced by economic conditions and potential Fed actions [26][28] Question: Can you provide details on the partnership with RealGenius and its projections? - The partnership is expected to be profitable within the first six to seven months, with dividends anticipated within the first year [33] Question: Are there any updates on the current book value? - The book value per share as of July 31 is expected to remain flat compared to June 30, prior to any third-quarter dividend accrual [39]