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Reported GAAP net income: The first quarter of 2024 is $9.7 million, or $0.32 per share, significantly exceeding the expected earnings of $0.18 per share.
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Revenue: Total revenue was reported at $16.35 million, which exceeded the estimated revenue of $14.6 million.
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Earnings available for distribution (EAD): $4 million, or $0.13 per share, roughly in line with estimated quarterly earnings per share.
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Dividend: Announced quarterly dividend of $0.15 per share for common stock and preferred stock Series A and B dividends for the first quarter of 2024.
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Portfolio management: The MSR Portfolio has an outstanding principal balance of $19.6 billion and a carrying value of $250.4 million at the end of the first quarter of 2024.
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Book value: GAAP book value per diluted share, including first quarter dividends, was reported at $4.49.
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crisis management: The company uses interest rate swaps, TBAs and Treasury futures to mitigate duration and interest rate risk, with significant notional amounts as of end-Q1 2024.
On May 6, 2024, Cherry Hill Mortgage Investment Corporation (NYSE:CHMI), a prominent U.S. real estate investment trust, announced its financial results for the first quarter of 2024 through an 8-K filing. The company reported a strong quarter with GAAP earnings per share (EPS) of $0.32, matching analyst estimates of $0.18 EPS. Revenue for the quarter was $16.35 million, significantly beating estimates of $14.6 million.
Company Profile
Cherry Hill Mortgage Investment Corp operates as a real estate investment trust focused on residential mortgage assets. The company aims to generate yield and risk-adjusted total return, primarily through dividends and secondarily through capital appreciation. The company’s portfolio includes investments in residential mortgage-backed securities (RMBS), service-related assets, and other sectors, with the majority of its revenue coming from interest income from the RMBS segment.
Quarterly Financial Highlights
In the first quarter, Cherry Hill achieved net income of $9.7 million, driven largely by net servicing income and derivatives income. However, these were partially offset by unrealized losses on RMBS and investments in service-related assets. The company reported earnings available for distribution (EAD) of $4 million, or $0.13 per share, which provides insight into operating results beyond standard GAAP metrics.
President and CEO Jay Rohn commented on the quarter’s results and emphasized the strategic management of the investment portfolio amid challenging market conditions. Mr. Lown pointed out:
The positioning of our investment portfolio significantly offset the impact of spread widening and rising interest rates during the quarter. We continue to closely monitor the ever-changing environment to optimally position our portfolio, while continuing to make steady progress in stabilizing our equity profile. ”
strategic financial management
Cherry Hill’s approach to mitigating the risks associated with RMBS and MSRs included the use of interest rate swaps, TBAs, and U.S. Treasury futures. The company reported a net interest spread of 3.42% and a debt-to-equity ratio of 4.5x for its RMBS portfolio, reflecting its strategic financial management to maintain profitability.
Dividend notice
The Board of Directors announced a quarterly dividend of $0.15 per common share and dividends on Series A and B Preferred Stock, highlighting the Company’s 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 strong financial results, Cherry Hill faces ongoing challenges such as market volatility and interest rate fluctuations. A company’s ability to adapt to these conditions is critical to sustaining business performance. Management’s focus on adjusting the investment portfolio in response to market conditions demonstrates a proactive approach to overcoming these challenges.
For the future
Cherry Hill’s management team remains focused on leveraging its market position and asset management capabilities to drive long-term growth. The company’s strategic initiatives aimed at improving its investment portfolio and operational efficiency are expected to support results in the coming quarters.
For more information, Cherry Hill’s comprehensive financial statements and additional information are available in the first quarter 2024 Form 10-Q filed with the SEC, providing deeper insight into the company’s financial health and strategic direction. It can be accessed through the website, along with an investor presentation offering. .
conclusion
Cherry Hill’s first quarter 2024 results reflect a resilient operating model and strategic approach to asset management, which enabled us to beat revenue expectations and meet EPS expectations. As the company continues to navigate the complexities of the real estate investment environment, its focus on strategic portfolio management and shareholder value is clear.
For more information, please see Cherry Hill Mortgage Investment Corp’s full 8-K earnings release here.
This article first appeared on GuruFocus.
