Cherry Hill Mortgage Investment Corporation (CHMI) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights several negative factors: a 6.1% decline in book value, a negative economic return, and geopolitical risks impacting liquidity and refinancing opportunities. While there is some optimism in hedging strategies and portfolio resilience, the overall sentiment is negative due to significant financial challenges and market volatility. The Q&A section did not provide strong reassurances, and management's lack of clarity on volatility resolution adds to uncertainty. Despite some positive elements like improved net interest margin, the negative aspects dominate, leading to a negative sentiment rating.
Key Financial Performance
GAAP Net Loss $2 million or $0.05 per diluted share for the first quarter of 2026. This was attributed to geopolitical events, including the war with Iran, which caused market volatility and impacted performance.
Book Value Per Common Share $3.23 as of March 31, 2026, compared to $3.44 as of December 31, 2025, representing a 6.1% decline. The decrease was due to geopolitical uncertainty and market volatility.
Economic Return Negative 3.2% for the first quarter of 2026. This was influenced by geopolitical risks and market conditions.
Net Asset Value (NAV) Down $7.9 million or 3.3% relative to December 31, 2025. The decline was driven by market volatility and geopolitical tensions.
Unrestricted Cash $47 million at the end of the first quarter of 2026, maintaining a solid liquidity profile.
MSR Portfolio Market Value Approximately $213 million as of March 31, 2026. The portfolio's resilience helped mitigate some of the negative impacts of market volatility.
RMBS Portfolio Approximately $807 million as of March 31, 2026, in line with the previous quarter. The portfolio's net interest spread improved to 2.9% from the previous quarter due to reduced interest expenses and improved dollar roll income.
RMBS Financing Rate Declined to 3.78% from 3.99% at the end of the first quarter of 2026, contributing to an improved net interest margin.
Earnings Available for Distribution (EAD) $5.3 million or $0.14 per share for the first quarter of 2026. This reflects the company's ability to generate distributable earnings despite challenging market conditions.
Operating Expenses $3.3 million for the first quarter of 2026.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Strategic Partnership with Real Genius: Cherry Hill's partnership with Real Genius, a Florida-based digital mortgage technology company, is progressing as expected.
Geopolitical Impact on Market: The Iran war caused oil and gas prices to spike, leading to increased inflation expectations and mortgage spread volatility. This has created a turbulent market environment.
Interest Rate Management: Cherry Hill managed interest rate exposure effectively in March, mitigating the impact on book value.
Portfolio Performance: The MSR portfolio had a UPB of $15.6 billion and a market value of $213 million, representing 41% of equity capital. The RMBS portfolio accounted for 42% of equity capital, with a net interest spread of 2.9%.
Liquidity Profile: The company ended the quarter with $47 million in unrestricted cash, maintaining solid liquidity.
Focus on Investment Opportunities: Cherry Hill is seeking additional investment opportunities to enhance business growth despite market volatility.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Geopolitical Risks: The war with Iran has caused significant market volatility, leading to widened mortgage spreads, a flattened yield curve, and increased inflation expectations. This geopolitical uncertainty has negatively impacted the company's book value and economic return.
Interest Rate Volatility: Fluctuations in interest rates, driven by geopolitical events and central bank rate expectations, have created challenges in managing the portfolio and maintaining profitability.
Market Volatility: Elevated market volatility has negatively impacted portfolio performance, particularly in February and March, reversing earlier gains and tightening SOFR spreads.
Decline in Book Value: The company's book value per common share decreased by 6.1% during the quarter, reflecting the adverse effects of market conditions and volatility.
Economic Return: The company experienced a negative economic return of 3.2% for the quarter, highlighting the financial challenges posed by the current environment.
Liquidity Risks: While the company maintains a solid liquidity profile with $47 million in unrestricted cash, ongoing market volatility and geopolitical risks could strain liquidity in the future.
Prepayment and Refinancing Risks: The war and rising mortgage rates have reduced refinancing opportunities, impacting the RMBS portfolio's performance and prepayment speeds.
Hedging Effectiveness: The company relies on various hedging instruments to mitigate interest rate risks, but the effectiveness of these strategies could be challenged by ongoing market volatility.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Market Volatility and Geopolitical Impact: The company expects market volatility to persist in the near term due to geopolitical tensions in the Middle East, specifically the Iran war. Stability in the region is anticipated to positively impact market conditions.
Investment Opportunities: The company plans to continue seeking additional investment opportunities that are expected to be accretive to the business.
Mortgage Market Trends: Mortgage supply is expected to reduce, improving mortgage technicals. Consistent demand from GSEs is anticipated to support mortgage spreads, although geopolitical risks may offset these improvements.
Refinanceable Mortgage Universe: At current mortgage rate levels (6.4%), approximately 14% of the mortgage universe is refinanceable. If mortgage rates decrease to 5.5%, the refinanceable universe could expand to 30%.
Portfolio Management: The company will proactively manage its portfolio and adjust its capital structure to add shareholder value, while closely monitoring macroeconomic and geopolitical conditions.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividend for common shares: $0.10 per common share for the first quarter of 2026, paid in cash on April 30, 2026.
Dividend for Series A Preferred Stock: $0.5125 per share on 8.2% Series A Cumulative Redeemable Preferred Stock, paid on April 15, 2026.
Dividend for Series B Preferred Stock: $0.5978 per share on 8.25% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, paid on April 15, 2026.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Could you provide some color on how you would go about funding additional investment opportunities?
A:Any investment would come at the expense of a different asset class. The evaluation would focus on the return profile on a risk-return weighted basis and its impact on shareholder returns, given constrained capital.
Q:What are your general thoughts on the return profile of the portfolio if stabilization persists through the second quarter or if there is a spike in volatility?
A:Mortgages are currently attractive from a spread and yield perspective. Levered returns for RMBS are about 15% to mid-to-high teens, and for MSR, 10% to 12%. Stability or spread tightening would positively impact the portfolio. Scenarios like parallel shifts or bull steepening could add positive returns.
Q:What kind of range do you expect spreads to trade in over the near future, and what behavior from GSEs or other investors gives you confidence in the ceiling for spreads in widening events?
A:Mortgage spreads versus swaps ended Q1 around 165 and are now at 150. They could go back to 130 or visit 180 in a high scenario. Stabilization in volatility depends on external factors like geopolitical resolutions. Elevated volatility is expected until clarity or certainty emerges.
Q:Do you have an update on where book value is today from the end of the quarter?
A:As of April 30, book value per share increased nearly 2% from March 31, excluding any second-quarter dividend accrual. However, spreads softened post mid-April.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the resolution of elevated volatility and its potential impact, citing uncertainty and lack of clarity on external factors like geopolitical events.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Apeksha discussion
East portfolio
GSE policy
GSEs mortgage
Genius Florida
Hill uncertainty
Homeowners advantage
Iran oil
Iran war
Middle East
Mortgages certainty
NIM improvement
NIM reduction
Officer market
REITs peer
RMBS financing
Relations ICR
SOFR spread
Specific Cherry
Subsequent end
TBAs line
addition investment
curve
day
environment end
expectation
level mortgage
month period
mortgage spread
rate environment
rate level
rate mortgage
spread improvement
spread volatility
term stability
universe
war mortgage
CHMI Transcript
Cherry Hill Mortgage Investment Corporation (CHMI) Q1 2026 Earnings Call Transcript
Unknown5-8
The earnings call highlights several negative factors: a 6.1% decline in book value, a negative economic return, and geopolitical risks impacting liquidity and refinancing opportunities. While there is some optimism in hedging strategies and portfolio resilience, the overall sentiment is negative due to significant financial challenges and market volatility. The Q&A section did not provide strong reassurances, and management's lack of clarity on volatility resolution adds to uncertainty. Despite some positive elements like improved net interest margin, the negative aspects dominate, leading to a negative sentiment rating.
Cherry Hill Mortgage Investment Corporation (CHMI) Q4 2025 Earnings Call Transcript
Unknown2-25
The earnings call presents a mixed picture: a slight increase in book value and income, but concerns over liquidity, leverage, and market risks. The dividend declaration is stable, but no increase was announced. The Q&A highlights uncertainties in market conditions and a lack of clear strategic direction on share buybacks. The company's financial health appears stable, but market sensitivity and economic uncertainties temper optimism. Without a clear market cap, the stock's reaction is likely neutral, reflecting cautious investor sentiment amid stable but unexciting financial performance.
Cherry Hill Mortgage Investment Corporation (CHMI) Q3 2025 Earnings Call Transcript
Unknown11-7
The earnings call presents a mixed outlook. Financial performance shows modest improvement, with a slight increase in book value per share and comprehensive income. However, concerns about rising prepayment speeds, economic uncertainties, and vague guidance on future partnerships temper optimism. Dividend adjustments indicate a cautious approach, and unclear management responses in the Q&A add uncertainty. The digital mortgage technology partnership introduces potential execution risks. These factors balance out to a neutral sentiment, suggesting limited stock price movement.
Cherry Hill Mortgage Investment Corporation (CHMI) Q2 2025 Earnings Call Transcript
Unknown8-7
The earnings call reflects several negative aspects: a decline in book value, lower earnings available for distribution, and challenges in hedging strategies. Despite a new partnership with Real Genius, the lack of definitive plans and unclear management responses in the Q&A section contribute to uncertainties. The market volatility, high leverage, and economic uncertainties further worsen the outlook. Dividend declarations provide some support, but the overall sentiment is negative, likely leading to a stock price decline in the short term.
CHMI Slides
Cherry Hill Q1 2026 slides: book value declines amid rate volatility2026-05-07
Cherry Hill Mortgage Q3 2025 slides: Book value grows as dividend strategy adjusts2025-11-06
Cherry Hill Mortgage Q2 2025 slides: book value declines amid portfolio rebalancing2025-08-07
Cherry Hill Mortgage Q1 2025 slides: EAD improves despite net loss and book value decline2025-05-06
CHMI Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
