CHMI — Cherry Hill Mortgage Investment Corporation

Cherry Hill Mortgage Investment Corporation (CHMI) 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: Maintained 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, with strong performance in lower and middle coupon mortgages.
• MSR Portfolio: Valued at approximately $215 million with a UPB of $15.9 billion, representing about 40% of equity capital.
• Investment in Real Genius LLC: A digital mortgage technology partnership that is expected to grow as mortgage rates decrease, enhancing the online mortgage experience.
• Hedging Strategy: Continued use of interest rate swaps, TBAs, and treasury futures to mitigate interest rate risks.

3. Forward Guidance and Outlook

• Market Conditions: Optimism regarding potential Fed rate cuts and a reduction in mortgage rates, which may accelerate growth for Real Genius.
• Investment Strategy: Plans to seek accretive investment opportunities while maintaining strong liquidity and prudent leverage.
• Book Value: Expected a 1% increase in book value by March 31, 2026.

4. Bad News, Challenges, or Points of Concern

• Prepayment Speeds: Increased to 8.5% in the RMBS portfolio, indicating a potential challenge as the refinanceable universe remains limited.
• Market Volatility: Recent tightening in spreads and a potential flight to quality may impact future performance, with a softer tone in the mortgage market noted in early 2026.
• Operational Expenses: Although down 30% quarter-over-quarter, this was attributed to nonrecurring expenses from the previous quarter, raising questions about sustainability.

5. Notable Q&A Insights

• Market Comparison: Management noted a shift in market conditions from Q4 2025 to early 2026, with tightening spreads in January followed by widening in February.
• CPR Normalization: Expectations for CPR were discussed, with potential speeds reaching up to 20% if mortgage rates drop to 5.5%.
• Share Buybacks: Management is considering strategies for preferred stock buybacks but is currently focused on growth and believes the stock is undervalued.
• Book Value Projections: A modest increase in book value is anticipated in the near term, reflecting a stable outlook despite market fluctuations.

Overall, Cherry Hill Mortgage Investment Corporation reported solid financial results for Q4 2025, with strategic initiatives in place to navigate market challenges and capitalize on potential growth opportunities in 2026.