In This Article:
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Cherry Hill Mortgage Investment Corp (NYSE:CHMI) maintained a solid liquidity profile with $47 million of unrestricted cash on the balance sheet.
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Operating expenses declined quarter over quarter due to the elimination of the management fee, reflecting cost efficiency.
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The RMBS portfolio's net interest spread improved to 3.55%, driven by better dollar roll income and repo expenses.
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The company completed its first full quarter as an integrated internally managed mortgagee, indicating a successful transition.
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Cherry Hill Mortgage Investment Corp (NYSE:CHMI) plans to deploy capital into agency RBS and select MSRs, which present strong risk-adjusted return profiles.
Negative Points
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Cherry Hill Mortgage Investment Corp (NYSE:CHMI) reported a GAAP net loss applicable to common stockholders of $0.29 per diluted share for the first quarter.
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Book value per common share decreased to $3.58 from $3.82 at the end of December.
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The company's NAV was down approximately 3.2% relative to December 31st.
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Earnings available for distribution (EAD) are expected to be lower moving forward due to the maturity of a large hedge.
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The macroeconomic environment and tariff uncertainties continue to pose challenges, leading to elevated rates and market volatility.
Q & A Highlights
Q: What would it take for Cherry Hill Mortgage Investment Corp to allocate more to the RMBS portfolio? A: Jay Lam, President and CEO, explained that all reinvestment and amortization income has been reinvested in MBS. They haven't purchased an MSR in quite some time, and the only way to materially change the portfolio composition would be to sell a portion of the MSR in favor of MBS. For several quarters, they have primarily reinvested income into MBS.
Q: Is there any movement in GSE reform being priced into the market, and how might it affect capital allocation? A: Julian Evans, Chief Investment Officer, noted that it's too early to tell if GSE reform is priced into the market. The market assumes the government guarantee is safe, but no detailed plans have been released. They are cautious and await a complete resolution on GSE reform.
Q: Could you provide a book value update for the quarter to date? A: Michael Hudgeby, Chief Financial Officer, stated that as of the end of April, the NAV was down about 3.7%, translating to about a 7% decrease in book value per share before any dividends for the quarter.