Cherry Hill Mortgage Investment Corporation Announces First Quarter 2022 Results
Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) reported solid financial results for Q1 2022, achieving a GAAP net income of $25.6 million, equating to $1.40 per share. Earnings available for distribution were $6.2 million, or $0.34 per share. The company declared a dividend of $0.27 per share, yielding 16.0% annually. As of March 31, 2022, Cherry Hill had unrestricted cash of $52.4 million and a common book value of $7.27 per share, with portfolio leverage at 3.6x. Despite net unrealized losses of $44.5 million on RMBS, the company remains positioned for higher rates amid market volatility.
- GAAP net income of $25.6 million, or $1.40 per share.
- Earnings available for distribution of $6.2 million, or $0.34 per share.
- Declared dividend of $0.27 per share, with a 16.0% annual yield.
- Unrestricted cash of $52.4 million as of March 31, 2022.
- Common book value per share at $7.27.
- Net unrealized losses of $44.5 million on the RMBS portfolio.
- Comprehensive loss attributable to common stockholders of $17.9 million.
First Quarter 2022 Highlights
-
GAAP net income applicable to common stockholders of
$25.6 million $1.40 -
Earnings available for distribution (“EAD”) attributable to common stockholders of
$6.2 million $0.34 -
Common book value per share of
$7.27 March 31, 2022 -
Declared regular common dividend of
$0.27 16.0% atMay 6, 2022 -
Aggregate portfolio leverage stood at 3.6x at
March 31, 2022 -
As of
March 31, 2022 , the Company had unrestricted cash of$52.4 million
“We generated another quarter of solid earnings available for distribution as prepayment speeds continued to slow, and despite continued spread widening,” said
Operating Results
Cherry Hill reported GAAP net income applicable to common stockholders for the first quarter of 2022 of
Earnings available for distribution attributable to common stockholders for the first quarter of 2022 were
Three Months Ended |
|||||||||
|
|
|
|||||||
|
|
(unaudited) |
|
(unaudited) |
|
||||
Income |
|||||||||
Interest income |
|
$ |
5,519 |
|
|
$ |
4,529 |
|
|
Interest expense |
1,640 |
|
1,534 |
|
|||||
Net interest income |
|
|
3,879 |
|
|
|
2,995 |
|
|
Servicing fee income |
13,116 |
|
13,030 |
|
|||||
Servicing costs |
|
|
3,193 |
|
|
|
3,390 |
|
|
Net servicing income |
|
9,923 |
|
|
9,640 |
|
|||
Other income (loss) |
|
|
|
|
|
|
|
||
Realized loss on RMBS, available-for-sale, net |
(13,222 |
) |
(1,479 |
) |
|||||
Realized loss on derivatives, net |
|
|
(10,638 |
) |
|
|
(4,688 |
) |
|
Realized gain on acquired assets, net |
12 |
|
- |
|
|||||
Unrealized gain on derivatives, net |
|
|
24,456 |
|
|
|
8,233 |
|
|
Unrealized gain (loss) on investments in Servicing Related Assets |
21,731 |
|
(5,111 |
) |
|||||
Total Income |
|
|
36,141 |
|
|
|
9,590 |
|
|
Expenses |
|||||||||
General and administrative expense |
|
|
1,744 |
|
|
|
1,547 |
|
|
Management fee to affiliate |
1,793 |
|
1,975 |
|
|||||
Total Expenses |
|
|
3,537 |
|
|
|
3,522 |
|
|
Income Before Income Taxes |
|
32,604 |
|
|
6,068 |
|
|||
Provision for (Benefit from) corporate business taxes |
|
|
3,875 |
|
|
|
(637 |
) |
|
Net Income |
|
28,729 |
|
|
6,705 |
|
|||
Net income allocated to noncontrolling interests in |
|
|
(633 |
) |
|
|
(130 |
) |
|
Dividends on preferred stock |
2,463 |
|
2,463 |
|
|||||
Net Income Applicable to Common Stockholders |
|
$ |
25,633 |
|
|
$ |
4,112 |
|
|
Net Income Per Share of Common Stock |
|||||||||
Basic |
|
$ |
1.40 |
|
|
$ |
0.23 |
|
|
Diluted |
$ |
1.40 |
|
$ |
0.23 |
|
|||
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
||
Basic |
18,252,523 |
|
17,963,555 |
|
|||||
Diluted |
|
|
18,272,737 |
|
|
|
17,983,769 |
|
|
_______________
Dollar amounts in thousands, except per share amounts.
Net unrealized loss on the Company’s RMBS portfolio for the first quarter 2022 was approximately
Three Months Ended |
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|
|
|
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|
|
(unaudited) |
|
(unaudited) |
|
||||
Net Income |
$ |
28,729 |
|
$ |
6,705 |
|
|||
Other comprehensive loss: |
|
|
|
|
|
|
|
||
Unrealized loss on RMBS, available-for-sale, net |
|
(44,535 |
) |
(8,276 |
) |
||||
Net other comprehensive loss |
|
|
(44,535 |
) |
|
|
(8,276 |
) |
|
Comprehensive loss |
|
$ |
(15,806 |
) |
$ |
(1,571 |
) |
||
Comprehensive loss attributable to noncontrolling interests in |
|
|
(348 |
) |
|
|
(26 |
) |
|
Dividends on preferred stock |
2,463 |
|
2,463 |
|
|||||
Comprehensive loss attributable to common stockholders |
|
$ |
(17,921 |
) |
|
$ |
(4,008 |
) |
|
______________
Dollar amounts in thousands.
Portfolio Highlights for the Quarter Ended
The Company realized net servicing fee income of
The RMBS portfolio had a book value of approximately
In order to mitigate duration risk and interest rate risk associated with the Company’s RMBS and MSRs, Cherry Hill used interest rate swaps, swaptions, TBAs,
As of
Dividends
On
Earnings Available for Distribution
Earnings available for distribution (“EAD”) is a non-GAAP financial measure that the Company defines as GAAP net income (loss), excluding realized gain (loss) on RMBS, realized and unrealized gain (loss) on derivatives, realized gain (loss) on acquired assets, realized and unrealized gain (loss) on investments in MSRs (net of any estimated MSR amortization) and any tax (benefit) expense on realized and unrealized gain (loss) on MSRs. MSR amortization refers to the portion of the change in fair value of the MSR that is primarily due to the realization of cashflows, runoff resulting from prepayments and an adjustment for any gain or loss on the capital used to purchase the MSR. EAD also includes interest rate swap periodic interest income (expense) and drop income on TBA dollar roll transactions, which are included in “Realized loss on derivatives, net” on the consolidated statements of income (loss). EAD is adjusted to exclude outstanding LTIP-OP Units in the Company’s
EAD is provided for purposes of potential comparability to other issuers that invest in residential mortgage-related assets. The Company believes providing investors with EAD, in addition to related GAAP financial measures, may provide investors some insight into the Company’s ongoing operational performance. However, the concept of EAD does have significant limitations, including the exclusion of realized and unrealized gains (losses), and given the apparent lack of a consistent methodology among issuers for defining EAD, it may not be comparable to similarly titled measures of other issuers, which define EAD differently from us and each other. As a result, EAD should not be considered a substitute for the Company’s GAAP net income (loss) or as a measure of the Company’s liquidity. While EAD is one indicia of the Company’s earnings capacity, it is not the only factor considered in setting a dividend and is not the same as REIT taxable income which is calculated in accordance with the rules of the
The following table provides a reconciliation of net income to EAD for the three months ended
Three Months Ended |
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|
|
|
|||||||
|
|
(unaudited) |
|
(unaudited) |
|
||||
Net Income |
$ |
28,729 |
|
$ |
6,705 |
|
|||
Realized loss on RMBS, net |
|
|
13,222 |
|
|
|
1,479 |
|
|
Realized loss on derivatives, net ¹ |
|
14,422 |
|
8,860 |
|
||||
Realized gain on acquired assets, net |
|
|
(12 |
) |
|
|
- |
|
|
Unrealized gain on derivatives, net |
(24,456 |
) |
(8,233 |
) |
|||||
Unrealized gain on investments in MSRs, net of estimated MSR amortization |
|
|
(28,011 |
) |
|
|
(947 |
) |
|
Tax expense on realized and unrealized gain on MSRs |
4,937 |
|
594 |
|
|||||
Total EAD: |
|
$ |
8,831 |
|
|
$ |
8,458 |
|
|
EAD attributable to noncontrolling interests in |
(195 |
) |
(160 |
) |
|||||
Dividends on preferred stock |
|
|
2,463 |
|
|
|
2,463 |
|
|
EAD Attributable to Common Stockholders |
$ |
6,173 |
|
$ |
5,835 |
|
|||
EAD Attributable to Common Stockholders, per Diluted Share |
|
$ |
0.34 |
|
|
$ |
0.32 |
|
|
GAAP Net Income Per Share of Common Stock, per Diluted Share |
$ |
1.40 |
|
$ |
0.23 |
|
|||
_________________
Dollar amounts in thousands, except per share amounts.
1. Excludes drop income on TBA dollar rolls of
Additional Information
Additional information regarding Cherry Hill’s financial condition and results of operations can be found in its Annual Report on Form 10-Q for the quarter ended
Webcast and Conference Call
The Company’s management will host a conference call today at
The conference call may be accessed by dialing 1-877-407-9716 (from within the
A telephonic replay of the conference call will also be available two hours following the completion of the call through
About
Forward-Looking Statements
This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including, among others, statements relating to the Company’s long-term growth opportunities and strategies, expand its market opportunities and create its own Excess MSRs and its ability to generate sustainable and attractive risk-adjusted returns for stockholders. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. For a description of factors that may cause the Company's actual results or performance to differ from its forward-looking statements, please review the information under the heading “Risk Factors” included in the Company's Annual Report on Form 10-K for the year ended
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Investor Relations
(877) 870-7005
InvestorRelations@chmireit.com
Source:
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