Cherry Hill Mortgage Investment Corporation (CHMI) Q2 2024 earnings summary

Executive summary

• Q2 2024 was marked by market volatility, a shift in Fed policy expectations, and a GAAP net loss of $1.9 million, or $0.06 per share, with EAD of $2.3 million, or $0.08 per share.

• Book value per common share declined 7.6% to $4.15, net of a $0.15 dividend, driven by special committee expenses, higher preferred dividends, and unrealized losses on RMBS and MSRs.

• Management internalization was announced and approved, expected to reduce expenses and better align interests with shareholders.

• Portfolio performance was impacted by wider spreads and market volatility, but hedging strategies and MSR sales helped mitigate losses.

• Capital allocation shifted toward Agency RMBS and continued preferred share repurchases to stabilize equity.

Financial highlights

• GAAP net loss applicable to common stockholders was $1.9 million, or $0.06 per diluted share; EAD was $2.3 million, or $0.08 per share.

• Book value per common share was $4.15 at June 30, 2024, down from $4.49 at March 31.

• Total assets were $1.42 billion, with $1.07 billion in RMBS and $234 million in servicing-related assets.

• Dividend of $0.15 per share was declared and paid, with an annualized yield near 15%.

• Net interest income was $0.2 million; net servicing income was $8.9 million for Q2 2024.

Outlook and guidance

• Management expects to complete internalization, targeting cost reductions and improved alignment with shareholders.

• Anticipates Fed rate cuts starting in September, with potential for increased prepayments and lower funding costs.

• Focus remains on proactive portfolio management, hedging, and capital preservation amid ongoing volatility.