8-K: Cherry Hill Mortgage Reports Solid Q3 2025 Results

Cherry Hill Mortgage Investment Corporation announced solid third quarter 2025 results, including increased book value and net asset value per share, alongside a regular common dividend.

Summary

• GAAP net income applicable to common stockholders was $2.0 million, or $0.05 per share, for the third quarter of 2025.
• Earnings available for distribution (EAD) attributable to common stockholders were $3.3 million, or $0.09 per diluted share.
• Common book value per share stood at $3.36 as of September 30, 2025.
• A regular common dividend of $0.10 per share was declared, representing an annualized common dividend yield of 17.0% based on the November 5, 2025 closing price.
• Aggregate portfolio leverage was 5.3x at September 30, 2025.
• The company held unrestricted cash of $55.4 million as of September 30, 2025.
• Net interest income for the quarter was $3.3 million, while net servicing income was $8.5 million.
• The company reported a net realized loss of $10.5 million on derivatives and a net unrealized loss of $5.9 million on investments in Servicing Related Assets.
• These losses were partially offset by a net unrealized gain of $10.7 million on RMBS measured at fair value through earnings and a net unrealized gain of $2.5 million on derivatives.
• General and administrative expenses and compensation and benefits totaled $3.8 million.
• The unpaid principal balance for the MSR portfolio was $16.2 billion, with a carrying value of $218.7 million at quarter-end.
• The RMBS portfolio had a net interest spread of 2.87% and a book and carrying value of approximately $1.2 billion, with a weighted average coupon of 4.98% and a weighted average maturity of 27 years.
• To mitigate duration and interest rate risk, the company utilized interest rate swaps ($828.7 million notional), TBAs (($415.8) million notional), and Treasury futures ($22.5 million notional).

Sentiment

Score: 7

Explanation: The company reported a return to GAAP net income profitability, an increase in book value, and maintained a strong dividend yield, indicating solid operational performance despite some realized losses on derivatives and unrealized losses on servicing related assets. Management expressed confidence in strategic growth and adapting to market conditions.

Positives

• GAAP net income applicable to common stockholders of $2.0 million, or $0.05 per share, represents a significant improvement from a net loss of ($0.935) million, or ($0.03) per share, in the prior quarter.
• Common book value per share increased to $3.36 at September 30, 2025, indicating an improvement in shareholder equity.
• A regular common dividend of $0.10 per share was declared, maintaining an attractive annualized yield of 17.0%.
• Unrestricted cash balance of $55.4 million provides liquidity.
• Net interest income increased to $3.3 million from $2.641 million in the previous quarter.
• Total income increased to $8.573 million from $6.037 million in the prior quarter.
• Reported a net unrealized gain of $10.7 million on RMBS measured at fair value through earnings and a net unrealized gain of $2.5 million on derivatives.

Negatives

• Earnings available for distribution (EAD) attributable to common stockholders per diluted share slightly decreased to $0.09 from $0.10 in the prior quarter.
• The company realized a net loss of $10.5 million on derivatives.
• A net unrealized loss of $5.9 million was recorded on investments in Servicing Related Assets.
• Servicing costs increased to $2.297 million from $1.952 million in the prior quarter, leading to a decrease in net servicing income to $8.467 million from $8.981 million.

Risks

• Actual results or performance may differ from forward-looking statements due to factors detailed under the heading 'Risk Factors' in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and other documents filed with the Securities and Exchange Commission.

Future Outlook

The company is prepared to respond tactically to a lower interest rate environment and remains committed to strategically growing its portfolio while delivering attractive risk-adjusted returns for shareholders.

Management Comments

• "We are pleased to report solid third quarter results, highlighted by an increase in both our book value and net asset value per share."
• "We are prepared to respond tactically to a lower interest rate environment and remain committed to strategically growing our portfolio, while delivering attractive risk-adjusted returns for our shareholders."

Industry Context

The announcement reflects the company's performance within the residential mortgage asset sector, a segment highly sensitive to interest rate fluctuations. Management's statement about preparing for a lower interest rate environment indicates an awareness of potential shifts in broader market conditions that could impact mortgage-backed securities and servicing assets.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to global benchmarks for direct assessment against industry standards.

Stakeholder Impact

• Shareholders are positively impacted by the return to GAAP net income profitability, the increase in common book value per share, and the declaration of a regular common dividend of $0.10 per share, representing a 17.0% annualized yield. Preferred stockholders also received their regular dividends.
• Investors are provided with detailed financial results and management commentary, which can aid in assessing the company's performance and future prospects within the residential mortgage market.

Next Steps

• The company will host a conference call on November 6, 2025, at 5:00 pm Eastern Time to discuss the results and investor presentation.
• The company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, has been filed with the Securities and Exchange Commission.

Key Dates

Recommendation

The company delivered solid Q3 2025 results, showing a return to GAAP profitability and an increase in book value per share, which are positive indicators. The maintained common dividend yield of 17.0% is attractive. However, the EAD per diluted share slightly decreased quarter-over-quarter, and there were significant realized losses on derivatives and unrealized losses on Servicing Related Assets, indicating ongoing volatility in the portfolio. While management expresses confidence in strategic growth and adapting to a lower interest rate environment, the mixed financial performance and inherent risks in the mortgage REIT sector suggest a 'Hold' position for investors to monitor consistency and execution of strategy.

Keywords

Mortgage REIT, Residential Mortgage Assets, RMBS, MSR, Real Estate Finance, Dividends, Financial Results, Q3 2025, Cherry Hill Mortgage, CHMI, Earnings