CHMI — Cherry Hill Mortgage Investment Corporation

Cherry Hill Mortgage Investment Corporation (CHMI) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• GAAP Net Loss: $2 million or $0.05 per diluted share.
• Comprehensive Loss: $4.4 million or $0.12 per diluted share.
• Earnings Available for Distribution (EAD): $5.3 million or $0.14 per share.
• Book Value per Share: Decreased to $3.23 from $3.44 at the end of Q4 2025, a decline of 6.1%.
• Economic Return: Negative 3.2% for the quarter.
• NAV Decline: Down $7.9 million or 3.3% relative to December 31, 2025.
• Financial Leverage: Maintained at 5.5x.
• Liquidity: Ended the quarter with $47 million in unrestricted cash.

2. Strategic Updates and Business Highlights:

• The company focused on managing interest rate exposure amid geopolitical volatility, particularly due to the war in Iran, which impacted mortgage spreads and market stability.
• Continued investment in a strategic partnership with Real Genius, a digital mortgage technology company, is progressing well.
• The MSR portfolio had a UPB of $15.6 billion with a market value of approximately $213 million, representing 41% of equity capital.
• The RMBS portfolio accounted for 42% of equity capital, with a net interest spread of 2.9%, improved from the previous quarter.

3. Forward Guidance and Outlook:

• The company anticipates continued market volatility until geopolitical tensions stabilize, particularly in the Middle East.
• Management expects that if stability persists, mortgage spreads could tighten, potentially improving returns.
• Return expectations for RMBS are projected between mid-teens to high teens on a levered basis, while MSR returns are expected between 10% to 12%.

4. Bad News, Challenges, or Points of Concern:

• The geopolitical situation has created significant market volatility, impacting performance and leading to a decline in book value.
• The company reported a negative economic return and comprehensive loss, indicating challenges in the current market environment.
• The tightening of SOFR spreads and fluctuations in mortgage rates have added pressure to portfolio performance.
• The potential for further geopolitical escalation remains a concern, which could exacerbate market volatility.

5. Notable Q&A Insights:

• Management emphasized a cautious approach to new investments, indicating that any new opportunities would require careful evaluation of risk and return profiles.
• Questions regarding the expected range of mortgage spreads highlighted the uncertainty in the market, with management suggesting a potential range of 130 to 180 basis points depending on market conditions.
• An update on book value indicated a nearly 2% increase from March 31, 2026, as of April 30, 2026, reflecting some recovery in market conditions post-quarter end.

Overall, CHMI's Q1 2026 performance reflects a challenging environment influenced by geopolitical events, but management remains focused on proactive portfolio management and strategic opportunities amidst ongoing volatility.