Cherry Hill Mortgage Investment ((CHMI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Cherry Hill Mortgage Investment’s recent earnings call revealed a mixed sentiment, reflecting both strategic progress and financial challenges. The company announced a promising partnership with Real Genius LLC and maintained stable earnings available for distribution. However, these positive strides were tempered by a GAAP net loss, a decrease in book value, and a lower net interest spread, indicating a complex financial landscape.
Strategic Partnership with Real Genius LLC
Cherry Hill Mortgage has embarked on a strategic partnership with Real Genius LLC, a digital mortgage technology company based in Florida. This collaboration is expected to enhance Real Genius’s growth trajectory and bolster Cherry Hill’s strategic expansion, offering a proprietary direct-to-consumer platform that aligns with Cherry Hill’s growth objectives.
Solid Liquidity Profile
The company concluded the quarter with $58 million in unrestricted cash, underscoring a robust liquidity profile. This financial cushion positions Cherry Hill to navigate potential market fluctuations and invest in strategic opportunities.
Earnings Available for Distribution (EAD)
Cherry Hill reported earnings available for distribution to common stockholders of $3.2 million, or $0.10 per share. This stable income base highlights the company’s resilience amidst broader economic challenges, providing a foundation for future financial stability.
Dividend Declaration
The Board of Cherry Hill declared a dividend of $0.15 per common share for the second quarter of 2025, alongside dividends for preferred shares. This decision reflects the company’s confidence in its cash flow and income stability, offering reassurance to investors.
GAAP Net Loss
Despite strategic advancements, Cherry Hill reported a GAAP net loss of $0.03 per diluted share for the second quarter. This financial setback underscores the challenges the company faces in balancing growth with profitability.
Decrease in Book Value
The book value per common share decreased to $3.34 from $3.58 as of March 31, 2025. This decline in net asset value highlights the financial pressures impacting Cherry Hill during the quarter.
Negative Comprehensive Income
Cherry Hill experienced a comprehensive loss of $0.6 million or $0.02 per weighted average diluted share. This loss includes the mark-to-market of available-for-sale RMBS, reflecting the volatility in the mortgage-backed securities market.
Lower RMBS Net Interest Spread
The RMBS net interest spread fell to 2.61%, a decrease from the previous quarter. This decline was primarily due to the maturation of a large swap position and reduced dollar roll income, impacting Cherry Hill’s overall financial performance.
Forward-Looking Guidance
Looking ahead, Cherry Hill Mortgage plans to maintain strong liquidity and prudent leverage while monitoring economic conditions to potentially adopt a more risk-on investment strategy. The company emphasized its commitment to careful market analysis and portfolio management to optimize returns and sustain dividend policies.
In summary, Cherry Hill Mortgage’s earnings call painted a picture of strategic growth tempered by financial challenges. While the partnership with Real Genius LLC and stable earnings distribution are positive indicators, the GAAP net loss and decreased book value highlight the hurdles the company must overcome. Investors will be keenly watching how Cherry Hill navigates these complexities in the coming quarters.