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

1Key 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.

2Strategic 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.

3Forward 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.

4Bad 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.

5Notable 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.