Cherry Hill Mortgage Investment ((CHMI)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Cherry Hill Mortgage Investment Corporation presented a mixed sentiment. While there were notable achievements such as the successful internalization of management and strong liquidity management, the company faced challenges including a decline in book value and the impact of higher rates on their RMBS portfolio. These factors contributed to a complex financial landscape for the company.
Completion of Internalization of Management
The company announced the successful internalization of its management, a strategic move aimed at aligning management and shareholders more closely while eliminating conflicts of interest. This transition is projected to reduce operating expenses by $1.1 to $1.6 million in 2025, translating to savings of three to five cents per common share.
Strong Liquidity and Prudent Leverage
Cherry Hill ended the quarter with $46 million in unrestricted cash, maintaining a robust liquidity profile. The company’s financial leverage remained consistent at 5.3 times, reflecting prudent financial management amidst challenging market conditions.
Increased MSR Portfolio Value
The company reported gains in its MSR portfolio, with a UPB of $17.3 billion and a market value of approximately $234 million. This increase provided a positive offset against some of the challenges faced in other areas of the business.
Book Value Decline
Despite some positive developments, Cherry Hill’s book value per common share declined from $4.02 to $3.82, marking a decrease of approximately 2.3%. This decline highlights the ongoing challenges in the current economic environment.
Impact of Higher Rates and Increased Volatility
The RMBS portfolio was adversely affected by higher rates and increased volatility, leading to spread widening. However, the company managed to partially mitigate these effects through gains in the MSR portfolio.
Lower Earnings Available for Distribution
Earnings available for distribution were reported at $3.3 million or $0.10 per share, impacted by expenses related to the special committee’s efforts. This represents a slight decrease in profitability for the company.
Forward-Looking Guidance
Looking ahead, Cherry Hill Mortgage Investment Corporation plans to focus on agency RMBS and select MSRs, maintaining strong liquidity and prudent leverage. The management aims to adapt their strategy to the evolving macroeconomic environment, with expectations of reduced operating expenses due to the internalization of management.
In summary, the earnings call for Cherry Hill Mortgage Investment Corporation reflected a complex financial picture. While the company has made strategic moves to improve efficiency and maintain liquidity, challenges such as a decline in book value and the impact of higher rates persist. The company’s forward-looking strategy aims to navigate these challenges while capitalizing on opportunities in the RMBS and MSR markets.