CHMI-PA — Cherry Hill Mortgage Investment Corporation

Cherry Hill Mortgage Investment Corporation (CHMI-PA) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• GAAP Net Income: $5.3 million, or $0.14 per diluted share.
• Comprehensive Income: $6.5 million, or $0.18 per diluted share.
• Earnings Available for Distribution (EAD): $3.9 million, or $0.11 per share.
• Book Value per Common Share: Increased to $3.44 from $3.36 in Q3 2025.
• Net Interest Spread: 2.52% for the RMBS portfolio, down from the previous quarter.
• Financial Leverage: Consistent at 5.4x.
• Cash Position: Ended the quarter with $55 million in unrestricted cash.

2. Strategic Updates and Business Highlights

• Portfolio Performance: Benefited from tighter mortgage spreads and a steeper yield curve. The MSR portfolio performed well, with a market value of approximately $215 million.
• Investment in Real Genius LLC: Continued growth in this digital mortgage technology partnership, which is expected to accelerate as mortgage rates potentially decrease.
• Hedging Strategy: Employed a combination of interest rate swaps, TBAs, and treasury futures to mitigate interest rate risks.

3. Forward Guidance and Outlook

• Market Conditions: Anticipation of further Fed rate cuts could lead to lower mortgage rates, potentially enhancing growth for Real Genius.
• Investment Strategy: Plans to seek accretive investment opportunities while maintaining strong liquidity and prudent leverage.
• Book Value Projection: Expected a 1% increase in book value as of March 31, 2026.

4. Bad News, Challenges, or Points of Concern

• Declining Metrics: The net interest spread decreased due to reduced dollar roll income and interest earned on payer swaps.
• Prepayment Speeds: RMBS portfolio's prepayment speeds rose to 8.5%, indicating a shift in refinancing dynamics that could impact future performance.
• Market Volatility: Fluctuations in the market, with tightening spreads in January followed by widening in February, suggest potential instability.

5. Notable Q&A Insights

• Market Conditions: Management noted a shift in market sentiment, with a flight to quality affecting mortgage spreads and bid-ask dynamics.
• CPR Expectations: Management indicated that the CPR for specified pools could normalize to 9-12% but could increase significantly if mortgage rates drop further.
• G&A Expenses: A significant drop in G&A expenses (30% quarter-over-quarter) was attributed to the normalization of nonrecurring expenses from the previous quarter.
• Share Buybacks: Management is considering strategies for preferred share buybacks but is currently focused on growth rather than immediate common share repurchases.

This summary encapsulates the key points from Cherry Hill Mortgage Investment Corporation's Q4 2025 earnings call, providing a balanced view of their financial performance, strategic initiatives, and market outlook.