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Reported GAAP Net Income: $9.7 million for Q1 2024, translating to $0.32 per share, significantly exceeding the estimated earnings per share of $0.18.
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Revenue: Total income reported at $16.35 million, surpassing the estimated revenue of $14.60 million.
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Earnings Available for Distribution (EAD): $4.0 million, or $0.13 per share, closely aligning with the estimated quarterly earnings per share.
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Dividends: Declared a quarterly dividend of $0.15 per share for common stock and dividends on preferred stock series A and B for Q1 2024.
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Portfolio Management: Unpaid principal balance of the MSR portfolio stood at $19.6 billion, with a carrying value of $250.4 million as of the end of Q1 2024.
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Book Value: GAAP book value per diluted share reported at $4.49 after accounting for the first quarter dividend.
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Risk Management: Utilized interest rate swaps, TBAs, and Treasury futures to mitigate duration and interest rate risks, with notional amounts in significant figures as of Q1 2024 end.
On May 6, 2024, Cherry Hill Mortgage Investment Corporation (NYSE:CHMI), a prominent real estate investment trust in the United States, disclosed its financial results for the first quarter of 2024 through its 8-K filing. The company reported a robust quarter, with earnings per share (EPS) of $0.32 on a GAAP basis, aligning with analyst estimates of $0.18 EPS. Revenue for the quarter stood at $16.35 million, notably surpassing the forecasted $14.60 million.
Company Overview
Cherry Hill Mortgage Investment Corp operates as a real estate investment trust, focusing on residential mortgage assets. The company aims to generate yields and risk-adjusted total returns primarily through dividends and secondarily through capital appreciation. Its portfolio includes investments in residential mortgage-backed securities (RMBS), Servicing Related Assets, and other sectors, with the majority of revenue derived from the RMBS segment through interest income.
Quarterly Financial Highlights
The first quarter saw Cherry Hill achieving a net income of $9.7 million, with significant contributions from net servicing income and gains on derivatives. However, these were partially offset by unrealized losses on RMBS and investments in Servicing Related Assets. The company’s earnings available for distribution (EAD) were reported at $4.0 million, or $0.13 per share, providing insights into its operational performance beyond standard GAAP metrics.
President and CEO Jay Lown commented on the quarter’s results, emphasizing the strategic management of the investment portfolio amidst challenging market conditions. Lown noted,
Our investment portfolios positioning considerably offset the impact of widening spreads and higher rates during the quarter. We continue to closely monitor the consistently shifting environment to optimally position our portfolio, while we continue to make steady progress in stabilizing our equity profile.”
Strategic Financial Management
Cherry Hill’s approach to mitigating risks associated with its RMBS and MSRs included the use of interest rate swaps, TBAs, and Treasury futures. The company reported a net interest spread of 3.42% for its RMBS portfolio and a debt-to-equity ratio of 4.5x, reflecting its strategic financial management to sustain profitability.
Dividend Announcements
The Board of Directors declared a quarterly dividend of $0.15 per share of common stock and dividends on its Series A and B Preferred Stock, underscoring its commitment to delivering shareholder value. These dividends reflect the company’s stable financial position and confidence in its business model.
Operational and Market Challenges
Despite the positive financial outcomes, Cherry Hill faces ongoing challenges such as market volatility and interest rate fluctuations. The company’s ability to adapt to these conditions will be crucial for sustaining its performance. The management’s focus on adjusting the investment portfolio in response to market conditions demonstrates a proactive approach to navigating these challenges.
Looking Ahead
Cherry Hill’s management remains focused on leveraging its market position and asset management capabilities to drive long-term growth. The company’s strategic initiatives, aimed at enhancing its investment portfolio and operational efficiencies, are expected to support its performance in upcoming quarters.
For further details, Cherry Hill’s comprehensive financial statements and additional information are available in its Q1 2024 Form 10-Q filed with the SEC and can be accessed through its website, along with an investor presentation that provides deeper insights into its financial health and strategic direction.
Conclusion
Cherry Hill’s first quarter results for 2024 reflect a resilient operational model and a strategic approach to asset management, which have collectively enabled it to surpass revenue expectations and meet EPS estimates. As the company continues to navigate the complexities of the real estate investment landscape, its focus on strategic portfolio management and shareholder value remains evident.
Explore the complete 8-K earnings release (here) from Cherry Hill Mortgage Investment Corp for further details.
This article first appeared on GuruFocus.
