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Cherry Hill Mortgage Investment Corp (CHMI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 GAAP EPS of $0.05 and EAD per share of $0.09; book value per share increased to $3.36, with management noting October 31 book value up ~1.2% vs September 30 before any Q4 dividend accrual .
  • EPS missed Wall Street consensus ($0.09 vs $0.11), while reported “revenue” (S&P classification) materially beat ($10.87MM vs $2.70MM); classification differences vs the press release “Total Income” complicate comparability; we anchor on S&P consensus for estimate comparisons and flag the mismatch in “Estimates Context” [Q3 2025 estimates from S&P Global; see table and disclaimer].
  • Portfolio NIM and risk positioning improved: RMBS net interest spread rose to 2.87% (from 2.61% in Q2) as CHMI shifted toward lower/mid coupons amid Fed cuts and tighter mortgage spreads; leverage remained 5.3x, liquidity solid with $55.4MM cash .
  • Dividend realigned to $0.10 (from $0.15 in Q2) to reflect sustained earnings power; management emphasized tactical readiness for lower rates and prudent growth, plus momentum in the Real Genius digital mortgage partnership as rates ease .

What Went Well and What Went Wrong

What Went Well

  • Book value per share increased to $3.36 (+$0.02 QoQ), and NAV rose 0.5% QoQ ($1.1MM), signaling stabilization as macro volatility ebbed; “we are prepared to respond tactically to a lower interest rate environment” .
  • RMBS net interest spread improved to 2.87% with repositioning toward lower/mid coupons in a tightening spread environment; “we adjusted our portfolio positioning to benefit from ongoing spread tightening and declining interest rates” .
  • Liquidity and hedging discipline maintained: unrestricted cash $55.4MM; swaps/TBAs/futures balanced (gross notional ~$435MM) and component notionals of swaps $828.7MM, TBAs -$415.8MM, futures $22.5MM to mitigate duration/IR risk .

What Went Wrong

  • Realized losses on derivatives of $10.5MM pressured GAAP results; other loss of $3.2MM included unrealized loss on investments in Servicing Related Assets .
  • Operating expenses rose sequentially (G&A + comp/benefits totaled $3.774MM vs $3.355MM in Q2) due to personnel changes and professional fees; management expects these costs to decline going forward .
  • Servicing costs increased sequentially as Q2 benefited from a deboarding fee reimbursement; Q3 reflected a more normal run-rate, limiting net servicing income QoQ .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
GAAP Diluted EPS ($)$(0.29) $(0.03) $0.05
EAD per Diluted Share ($)$0.17 $0.10 $0.09
Net Income Applicable to Common ($USD Thousands)$(9,313) $(935) $1,955
Total Income ($USD Thousands)$(3,050) $6,037 $8,573
Net Interest Income ($USD Thousands)$2,166 $2,641 $3,300
Net Servicing Income ($USD Thousands)$8,428 $8,981 $8,467
Comprehensive Income Attributable to Common ($USD Thousands)$(2,593) $(616) $4,480
Book Value per Share ($)$3.58 $3.34 $3.36
RMBS Net Interest Spread (%)3.55% 2.61% 2.87%
Leverage (Debt-to-Equity, x)5.2x 5.3x 5.3x
Unrestricted Cash ($USD Millions)$47.3 $58.0 $55.4

Segment breakdown (portfolio and mix)

Segment KPIQ1 2025Q2 2025Q3 2025
MSR UPB ($USD Billions)$17.0 $16.6 $16.2
MSR Carrying Value ($USD Millions)$227.3 $224.6 $218.7
RMBS Book/Carrying Value ($USD Billions)$1.1/$1.1 $1.1/$1.2 $1.2/$1.2
MSR % of Equity Capital44% —41%
RMBS % of Equity Capital39% —39%
MSR % of Investable Assets (ex cash)24% —22%
RMBS % of Investable Assets (ex cash)76% —78%
RMBS WAC (%)4.88% 4.97% 4.98%
RMBS WAM (years)28 28 27

KPIs and hedging

KPIQ1 2025Q2 2025Q3 2025
MSR Net CPR (%)4.1% —~5.9%
RMBS 3-mo CPR (%)~5.8% —~6.1%
Swaps Notional ($USD Millions)$804.3 $799.7 $828.7
TBA Notional ($USD Millions)$(406.7) $(413.5) $(415.8)
Treasury Futures Notional ($USD Millions)$91.7 $60.2 $22.5
Combined Hedge Notional (Mgmt View) ($USD Millions)~$489 —~$435
EAD Drivers: TBA Dollar Roll Drop Income ($USD Thousands)$944 $650 $589
EAD Drivers: Swap Periodic Interest Income ($USD Millions)$6.5 $4.6 $4.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common Dividend per Share ($)Q3 2025$0.15 (Q2 2025 actual) $0.10 (Q3 2025 declared) Lowered
Operating Expenses (G&A + Comp Run-Rate)Forward-lookingNot quantifiedExpected to decline as personnel/professional fee changes normalize and new in-house GC onboarded Lower expected
Book Value Trend (Q4-to-date)Oct 31, 2025N/A+~1.2% vs Sep 30 (pre any Q4 dividend accrual) Positive trend
Portfolio PositioningQ3 2025Higher-coupon focus in Q1 Shift to lower/mid coupons; proactive hedge strategy remains intact Repositioned
LeverageQ3 2025~5.3x ~5.3x Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Macro/Rate Policy & TariffsQ1: Elevated volatility, tariff uncertainty, rates reactive; positioned neutral to rates Fed cut rates (Sept and early Nov), lower macro volatility; mortgage spreads tightened; positioned to benefit Improving rate backdrop; spreads tighter
Dividend PolicyQ2: $0.15 declared Board realigned dividend to $0.10; viewed as sustainable and aligned with earnings power Lowered then maintained
RMBS Coupon Positioning & PrepaymentsQ1: Higher-coupon focus; CPR ~5.8% Shift to lower/mid coupons; RMBS CPR ~6.1%; monitoring refinanceability at ~5.5% mortgage rate Rotation to duration; CPR likely to rise if rates fall
Hedging StrategyQ1: Greater use of treasury futures as swap spreads tightened; combined notional ~$489MM Swaps/TBAs/futures mix intact; combined notional ~ $435MM; component notionals disclosed Stable hedging mix
Expenses/G&AQ1: Internalization removed mgmt fee; OpEx ~$3.8MM G&A+comp up sequentially due to personnel/pro fees; expected to decline Near-term elevated; declining expected
Technology/Real Genius PartnershipQ2: Strategic partnership announced (May), ATM proceeds ~$8.9MM Positive momentum; rates easing should aid growth in direct-to-consumer origination Building

Management Commentary

  • “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.” — Jay Lown, President & CEO .
  • “Throughout the quarter, we adjusted our portfolio positioning to benefit from ongoing spread tightening and declining interest rates.” — Julian Evans, CIO .
  • “G&A and comp and benefits were both up this quarter… going forward, we do anticipate those costs going down, especially with having a new in-house GC now.” — Apeksha Patel, CFO .
  • “We are seeing positive momentum from [Real Genius]… we are optimistic that the reduction in mortgage rates may facilitate an acceleration in Real Genius’s growth.” — Jay Lown .

Q&A Highlights

  • Real Genius partnership: Management sees positive momentum and is open to additional accretive partnerships if aligned with internal capabilities .
  • Expense trajectory: Sequential rise in G&A/comp tied to personnel/professional fees; run-rate expected to decline with the new in-house GC .
  • Servicing costs: Q2 benefited from a deboarding fee reimbursement; Q3 reflects a more normal ongoing run-rate .
  • Book value update: October 31 BVPS up ~1.2% vs September 30, pre any Q4 dividend accrual .

Estimates Context

Consensus vs actuals (S&P Global; see disclaimer)

MetricQ1 2025Q2 2025Q3 2025
EPS (Consensus, $)0.105*0.113*0.11*
EPS (Actual, $)0.17 0.10 0.09
Revenue (Consensus, $USD Millions)2.4127*2.1853*2.7000*
Revenue (Actual, $USD Millions)-0.5050*7.9890*10.8700*
  • Q3 EPS: 0.09 vs 0.11 consensus — bold miss.
  • Q3 “Revenue”: 10.87MM vs 2.70MM consensus — bold beat; note S&P’s revenue classification differs from press-release “Total Income” ($8.573MM), making press-release comparisons non-like-for-like .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Portfolio earnings power stabilizing: Book value rose and RMBS net interest spread expanded; sustained liquidity and prudent leverage underpin resilience .
  • EPS miss offset by revenue beat under S&P classification; expect continued noise from derivative marks and MSR fair value, but EAD remains the key dividend anchor .
  • Dividend reset to $0.10 appears aligned with current EAD; monitor EAD trajectory as rates fall (swap income, dollar roll/duration changes) .
  • Rate-easing cycle is a double-edged sword: benefits funding costs and some asset pricing, but could raise prepayment speeds; CHMI repositioned toward lower/mid coupons to balance this dynamic .
  • Expense normalization is a near-term tailwind as personnel/professional fees abate post-internalization; watch for operating expense trend in Q4 and FY26 .
  • Technology optionality: Real Genius partnership could add origination throughput as mortgage rates decline, offering upside to fee income and asset flow .
  • Tactical catalysts: Continued BVPS improvement (Q4-to-date +~1.2%), dividend sustainability at $0.10, additional Fed cuts driving spread tightening and funding cost reductions .

Appendix: Additional Quantitative Comparisons vs Prior Periods (selected)

ItemQ1 2025Q2 2025Q3 2025
Derivative Realized Gain/(Loss) ($USD Thousands)$4,634 $14,838 $(10,496)
RMBS Unrealized Gain ($USD Thousands)$14,780 $3,508 $10,730
Derivative Unrealized Gain/(Loss) ($USD Thousands)$(22,741) $(19,147) $2,482
MSR Investments Unrealized Gain/(Loss) ($USD Thousands)$(6,325) $(2,731) $(5,912)

Notes:

  • EAD reconciliation items and hedging cash flows (swap periodic income, TBA drop income) are disclosed and key to quarter-to-quarter EAD variability .
  • Comprehensive income includes AFS RMBS marks, adding $2.561MM in Q3 to total comprehensive income .