CHMI-PB — Cherry Hill Mortgage Investment Corporation

Cherry Hill Mortgage Investment Corporation (CHMI-PB) 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.
• Unrestricted Cash: $55 million on the balance sheet.

2. Strategic Updates and Business Highlights

• Portfolio Performance: Benefited from tighter mortgage spreads and a steeper yield curve. The MSR portfolio performed well despite being 250 basis points out of the money.
• Investment in Real Genius LLC: The partnership with the digital mortgage technology company is progressing well, with expectations for growth as mortgage rates potentially decrease.
• Hedging Strategy: Continued use of interest rate swaps, TBAs, and treasury futures to mitigate risks associated with interest rate fluctuations.

3. Forward Guidance and Outlook

• Management remains optimistic about the potential for additional Fed rate cuts, which could lower mortgage rates and stimulate growth in their digital mortgage platform.
• Plans to seek out accretive investment opportunities while maintaining strong liquidity and prudent leverage.

4. Bad News, Challenges, or Points of Concern

• Market Conditions: The market experienced a shift with tightening spreads in January followed by widening in February, indicating potential volatility.
• Prepayment Rates: The MSR portfolio's recapture rate remains low, and the expected prepayment speeds for the RMBS portfolio have increased, which could impact future earnings.
• Operating Expenses: While expenses normalized in Q4 after nonrecurring costs in Q3, ongoing management of G&A expenses will be necessary.

5. Notable Q&A Insights

• Market Sentiment: The market is currently experiencing a flight to quality, affecting mortgage spreads and investor sentiment.
• CPR Expectations: The normalized CPR for specified pools is expected to be around 9-12%, with potential increases if mortgage rates decline further.
• Share Buybacks: Management is considering strategies for both common stock and preferred shares but is currently focused on growth rather than immediate buybacks.
• Book Value Outlook: A 1% increase in book value is anticipated for the first quarter of 2026, reflecting positive momentum.

Overall, Cherry Hill Mortgage Investment Corporation reported a solid performance in Q4 2025, with strategic initiatives in place to navigate market challenges and capitalize on potential growth opportunities.