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Cherry Hill Mortgage Investment Corp (CHMI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 results showed stabilized operating performance: EAD of $3.2M ($0.10 per diluted share) versus GAAP net loss of $0.03 per share; book value per share declined sequentially to $3.34, leverage was 5.3x, and unrestricted cash increased to $58.0M .
  • Street “Primary EPS” consensus was $0.113* versus reported EAD of $0.10 (slight miss); GAAP EPS was $(0.03), which the company does not use for dividend coverage; “Revenue” came in at $8.0M versus $2.2M consensus (beat)*. Bold: EPS slight miss; Revenue beat.
  • Strategic actions: $8.9M raised via at-the-market equity program and a new partnership/financing with Real Genius (digital mortgage technology) that broadens MSR/servicing-related capabilities .
  • Portfolio metrics mixed: RMBS net interest spread compressed sequentially to 2.61% (from 3.55% in Q1); MSR carrying value ended at $224.6M, UPB at $16.6B; hedging remained robust with $800M swaps and TBA short notional of ~$414M .
  • Dividend maintained at $0.15; focus into 2H: prudently growing assets and delivering risk-adjusted returns; interim CFO appointed in late May supports continuity in financial execution .

What Went Well and What Went Wrong

What Went Well

  • Raised $8.9M through ATM equity, enhancing liquidity and growth capacity .
  • Strategic partnership with Real Genius to advance digital mortgage servicing and potential MSR-related capabilities: “we remain focused on prudently growing Cherry Hill as we seek to deliver attractive risk-adjusted returns” — Jay Lown, CEO .
  • EAD of $0.10 per diluted share covered the $0.15 dividend partially and improved sequential narrative vs Q1 GAAP volatility; unrestricted cash rose to $58.0M .

What Went Wrong

  • RMBS net interest spread fell to 2.61% (from 3.55% in Q1), pressuring core earnings power .
  • Material unrealized losses on derivatives ($19.1M) and unrealized losses on servicing-related assets ($2.7M) weighed on GAAP results despite realized derivative gains ($14.8M) .
  • Book value per share declined to $3.34 vs $3.58 in Q1 and $4.15 YoY, reflecting mark-to-market and derivative valuation impacts .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
GAAP EPS ($)$(0.06) $0.29 $(0.29) $(0.03)
EAD EPS ($)$0.08 $0.10 $0.17 $0.10
Book Value/Share ($)$4.15 $3.82 $3.58 $3.34
Net Servicing Income ($MM)$8.894 $8.483 $8.428 $8.981
Net Interest Income ($MM)$0.167 $0.660 $2.166 $2.641
Total Income (Loss) ($MM)$6.579 $18.725 $(3.050) $6.037
Net Loss Applicable to Common ($MM)$(1.864) $9.069 $(9.313) $(0.935)

Segment/KPI and Portfolio Metrics

MetricQ2 2024Q4 2024Q1 2025Q2 2025
RMBS Net Interest Spread (%)3.23% 2.90% 3.55% 2.61%
Debt-to-Equity (x)4.9x 5.3x 5.2x 5.3x
Unrestricted Cash ($MM)$52.4 $46.3 $47.3 $58.0
MSR UPB ($B)$18.0 $17.3 $17.0 $16.6
MSR Carrying Value ($MM)$234.3 $233.7 $227.3 $224.6
RMBS Portfolio Carrying Value ($B)~$1.1 ~$1.1 ~$1.1 ~$1.2
RMBS WAC (%)4.76% 4.80% 4.88% 4.97%
Interest Rate Swaps Notional ($MM)~$1,100 ~$1,200 $804.3 $799.7
TBA Notional ($MM)$(427.0) $(435.6) $(406.7) $(413.5)
Treasury Futures Notional ($MM)$232.4 $73.1 $91.7 $60.2

Street Estimates vs Reported (S&P Global)

MetricQ2 2025 ConsensusQ2 2025 Reported
Primary EPS Consensus Mean ($)0.113*GAAP EPS $(0.03) ; EAD EPS $0.10
Revenue Consensus Mean ($)2,185,330*7,989,000*
Primary EPS - # of Estimates3*—
Revenue - # of Estimates3*—
Target Price Consensus Mean ($)2.875*2.875*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common Dividend ($/share)Q2 2025$0.15 $0.15 Maintained
Series A Preferred Dividend ($/share)Q2 2025$0.5125 $0.5125 Maintained
Series B Preferred Dividend ($/share)Q2 2025$0.6413 $0.6413 Maintained
Revenue/Margins/OpEx/Tax RateQ2 2025Not providedNot providedN/A
Capital ActionsQ2 2025N/AATM equity proceeds ~$8.9M New action

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Internalization / OpExInternalization completed; OpEx reduction expected Continuity in finance (interim CFO); focus on prudent growth Stable execution; leadership transition
Interest Rates & HedgingSignificant derivative gains/losses; strong hedge usage Continued heavy hedging; unrealized derivative loss impacts GAAP Ongoing rate/volatility sensitivity
Portfolio Optimization (MSRs/RMBS)UPB $17.3B; spread 2.90% MSR UPB $16.6B; spread compresses to 2.61% Spread compression; MSR mix evolving
Liquidity & CapitalCash ~$46.3M; leverage 5.3x Cash $58.0M; ATM raise $8.9M; leverage 5.3x Liquidity strengthened; leverage stable
Technology/DigitalN/APartnership with Real Genius (digital mortgage tech) New initiative; potential servicing efficiency
Dividend Policy$0.15 maintained $0.15 maintained Stable payout focus

Note: The Q2 2025 earnings call transcript could not be retrieved due to a system issue; refer to external transcript sources for detailed prepared remarks and Q&A themes .

Management Commentary

  • “We are pleased with the progress made in the second quarter, successfully raising additional equity and entering into a strategic partnership with Real Genius, an innovative digital mortgage company… we remain focused on prudently growing Cherry Hill as we seek to deliver attractive risk-adjusted returns to our shareholders.” — Jay Lown, President & CEO .
  • Interim CFO appointment: “With the appointment of Apeksha as our interim CFO, we are able to leverage her financial acumen… ensuring a seamless transition.” — Jay Lown .
  • Operating drivers: net interest income $2.6M; net servicing income $9.0M; realized derivative gains $14.8M offset by unrealized derivative losses $19.1M and unrealized losses on servicing-related assets $2.7M .

Q&A Highlights

  • Due to a retrieval limitation, full Q&A specifics from the call transcript are not included. For detailed Q&A themes (hedging strategy, spread outlook, MSR dynamics, dividend coverage/EAD), see the published transcript sources .

Estimates Context

  • EPS: Street “Primary EPS” was $0.113* versus reported $0.10 EAD; GAAP EPS was $(0.03). Bold: Slight miss vs Street on the EAD-like metric tracked; clarify that mortgage REIT consensus often anchors on EAD/AFFO rather than GAAP EPS .
  • Revenue: $8.0M actual vs $2.2M consensus*; Bold: Beat.
  • Target price consensus stood at $2.875*; recommendation text unavailable*. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EAD of $0.10 held near recent run-rate despite spread compression; dividend maintained at $0.15, implying partial coverage and continued reliance on portfolio and hedging contributions .
  • Book value per share continues to drift lower ($3.34), driven by derivative and servicing-related fair value marks; monitor BV trajectory as a core valuation anchor .
  • RMBS net interest spread fell to 2.61%; watch for stabilization/improvement as rates and MBS basis evolve; hedging remains substantial ($800M swaps; sizable TBA exposure) .
  • Liquidity improved (cash $58.0M) and capital flexibility increased via $8.9M ATM proceeds; potential to deploy into higher-return assets or support MSR initiatives .
  • Strategic optionality via Real Genius partnership may enhance servicing tech/efficiency and future Excess MSR creation, but near-term P&L impact likely modest as integration progresses .
  • Sequentially better comprehensive position versus Q1 volatility; yet YoY book value and spread metrics underscore macro sensitivity to rates and volatility .
  • Trading lens: Expect focus on EAD sustainability vs dividend, spread recovery, BV stability, and any follow-up detail on MSR strategy/tech partnership from management outreach .

Citations: Q2 2025 8-K and press release ; Dividend announcements and dates ; Q1 2025 press release ; Q4 2024 press release ; Q2 2024 8-K ; Interim CFO appointment . External transcript links noted above.