Cherry Hill Mortgage Investment Corporation Reports Q4 and Full-Year 2024 Financial Results
Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) has announced its financial results for the fourth quarter and full year of 2024. The company continues to demonstrate resilience in the face of market fluctuations and has successfully internalized its management, which is expected to enhance shareholder alignment and reduce operational costs.
Fourth Quarter 2024 Highlights
Cherry Hill reported GAAP net income applicable to common stockholders of $9.1 million, translating to $0.29 per share. The company also reported earnings available for distribution (EAD) attributable to common stockholders at $3.3 million, or $0.10 per diluted share. As of December 31, 2024, the common book value per share stood at $3.82. The company’s financials were slightly impacted by special committee-related expenses amounting to $0.02 per share, which stemmed from the internalization of management.
Following the conclusion of the special committee’s work in November 2024, Cherry Hill declared a regular common dividend of $0.15 per share. The annualized dividend yield stood at 17.5%, based on the closing sale price of the company’s common stock as reported by the NYSE on March 5, 2025. The company’s aggregate portfolio leverage reached 5.3x at year-end, and unrestricted cash reserves totaled $46.3 million.
Operational Performance
President and CEO Jay Lown expressed satisfaction with the company’s progress in 2024, emphasizing the successful internalization of management as a critical step in enhancing efficiency. Looking forward, the company remains committed to growing its business and optimizing returns for shareholders in 2025 and beyond.
GAAP net income for the fourth quarter was primarily driven by various factors, including $0.7 million in net interest income, $8.5 million in net servicing income, and a net realized loss of $1.1 million on RMBS. Additionally, the company recorded a net realized gain of $13.6 million on derivatives and a net unrealized loss of $31.7 million on RMBS measured at fair value through earnings. Offsetting these losses, Cherry Hill recorded a net unrealized gain of $21.8 million on derivatives and a net unrealized gain of $6.9 million on investments in Servicing Related Assets. General and administrative expenses, compensation and benefits, and management fees, including special committee-related expenses of $0.5 million, amounted to $4.5 million.
Earnings available for distribution attributable to common stockholders for Q4 2024 were reported at $3.3 million, or $0.10 per share. For a detailed reconciliation of GAAP net income to non-GAAP earnings available for distribution, refer to the financial tables accompanying the full earnings release.
Portfolio Performance
During the quarter, Cherry Hill realized net servicing fee income of $8.5 million and net interest income of $0.7 million. Other income, primarily derived from realized and unrealized gains on derivatives and an unrealized gain on investments in Servicing Related Assets, was recorded at $9.6 million. These gains were partially offset by realized and unrealized losses on the RMBS portfolio.
As of December 31, 2024, the MSR portfolio had an unpaid principal balance of $17.3 billion and a carrying value of $233.7 million. The net interest spread for the RMBS portfolio stood at 2.90%, with an aggregate portfolio debt-to-equity ratio of 5.3x. The RMBS portfolio’s book and carrying value totaled approximately $1.1 billion at year-end, with a weighted average coupon of 4.80% and a weighted average maturity of 28 years.
To mitigate duration and interest rate risks associated with its RMBS and MSRs, Cherry Hill utilized interest rate swaps, TBAs, and Treasury futures. As of December 31, 2024, the company held interest rate swaps with a notional amount of $1.2 billion, TBAs with a notional amount of ($435.6) million, and Treasury futures totaling $73.1 million.
Cherry Hill’s GAAP book value per diluted share was reported at $3.82, net of the fourth-quarter dividend.
Dividend Announcements
On December 12, 2024, Cherry Hill’s Board of Directors declared a quarterly dividend of $0.15 per common share for Q4 2024. This dividend was paid in cash on January 31, 2025, to shareholders of record as of December 31, 2024. Additionally, the company declared a dividend of $0.5125 per share on its 8.20% Series A Cumulative Redeemable Preferred Stock and a dividend of $0.6739 per share on its 8.250% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock. These dividends were paid in cash on January 15, 2025, to preferred stockholders of record as of December 31, 2024.
Earnings Available for Distribution (EAD)
Earnings available for distribution (EAD) is a non-GAAP financial measure used to assess Cherry Hill’s performance. EAD is defined as GAAP net income, excluding realized and unrealized gains and losses on RMBS and derivatives, as well as gains and losses on investments in MSRs, net of amortization. It also includes interest rate swap periodic income (expense) and drop income on TBA dollar roll transactions. EAD is adjusted to exclude outstanding LTIP-OP Units and dividends paid on preferred stock.
The company provides EAD as a means for investors to evaluate operational performance relative to other residential mortgage-focused entities. However, due to variations in methodologies for calculating EAD, comparisons between companies should be approached with caution. EAD is not a substitute for GAAP net income and does not serve as a measure of liquidity. While indicative of earnings potential, EAD differs from REIT taxable income, which is calculated per IRS guidelines.
Cherry Hill Mortgage Investment Corporation remains focused on strengthening its portfolio and delivering sustainable shareholder value. With a successfully internalized management structure and strategic risk management initiatives in place, the company aims to navigate economic fluctuations and generate compelling returns in the coming year. The board and executive team are optimistic about future opportunities, including portfolio growth and enhanced earnings potential.
By maintaining a disciplined approach to asset management and risk mitigation, Cherry Hill is well-positioned to capitalize on favorable market conditions while continuing to provide attractive dividend yields to shareholders. As the company enters 2025, it remains committed to financial stability, operational efficiency, and maximizing long-term investor value.
