Cherry Hill Mortgage Investment Corporation (NYSE: CHMI)
(“Cherry Hill” or the “Company”) today reported results for the
third quarter 2020.
Third Quarter 2020 Highlights
- GAAP net loss applicable to common stockholders of $3.2
million, or $0.19 per share
- Core earnings attributable to common stockholders of $8.2
million, or $0.48 per share
- Common book value per share of $11.74 at September 30,
2020
- Declared regular common dividend of $0.27 per share, annualized
common dividend yield at market close was 11.0% at November 6,
2020
- Aggregate portfolio leverage stood at 4.6x at September 30,
2020
- As of September 30, the Company had unrestricted cash of
approximately $95 million
“We generated core earnings that exceeded our dividend again
this quarter while maintaining a strong balance sheet going into
year end,” said Jay Lown, President and Chief Executive Officer of
Cherry Hill Mortgage Investment Corporation. “We believe we are
well positioned to navigate the current environment and to deliver
compelling returns to shareholders.”
Operating Results
Cherry Hill reported GAAP net loss applicable to common
stockholders for the third quarter of 2020 of $3.2 million, or
$0.19 per basic and diluted weighted average common share
outstanding. The reported GAAP net loss was determined based
primarily on the following: $10.0 million of net interest income,
$9.1 million of net servicing income, a net realized gain of $6.7
million on RMBS, a net realized loss of $7.8 million on
derivatives, a net realized loss on acquired assets of $0.1
million, a net unrealized gain of $3.7 million on derivatives, a
net unrealized loss of $21.0 million on Servicing Related Assets,
and general and administrative expenses and management fees paid to
Cherry Hill’s external manager in the aggregate amount of $3.5
million.
Core earnings attributable to common stockholders for the third
quarter of 2020 were $8.2 million, or $0.48 per basic and diluted
weighted average common share outstanding. For a reconciliation of
GAAP net loss to non-GAAP core earnings, please refer to the
reconciliation table accompanying this release.
Three Months Ended September
30,
2020
2019
(unaudited)
(unaudited)
Income
Interest income
$
10,001
$
19,383
Interest expense
(18)
12,635
Net interest income
10,019
6,748
Servicing fee income
14,365
18,687
Servicing costs
5,266
4,102
Net servicing income
9,099
14,585
Other income (loss)
Realized gain on RMBS, available-for-sale,
net
6,722
275
Realized gain (loss) on derivatives,
net
(7,841)
12,627
Realized gain (loss) on acquired assets,
net
(95)
54
Unrealized gain (loss) on derivatives,
net
3,702
(2,133)
Unrealized loss on investments in
Servicing Related Assets
(20,972)
(37,514)
Total Income (Loss)
634
(5,358)
Expenses
General and administrative expense
1,503
1,194
Management fee to affiliate
1,989
2,042
Total Expenses
3,492
3,236
Loss Before Income Taxes
(2,858)
(8,594)
Benefit from corporate business taxes
(2,116)
(4,285)
Net Loss
(742)
(4,309)
Net loss allocated to noncontrolling
interests in Operating Partnership
10
65
Dividends on preferred stock
2,459
2,459
Net Loss Applicable to Common
Stockholders
$
(3,191)
$
(6,703)
Net Loss Per Share of Common
Stock
Basic
$
(0.19)
$
(0.40)
Diluted
$
(0.19)
$
(0.40)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic
17,054,634
16,883,816
Diluted
17,076,858
16,896,605
_______________ Dollar amounts in thousands, except per share
amounts. Certain prior period amounts have been reclassified to
conform to current period presentation.
Net unrealized loss on the Company’s RMBS portfolio for the
third quarter 2020 was approximately $2.1 million.
Three Months Ended September
30,
2020
2019
(unaudited)
(unaudited)
Net Loss
$
(742)
$
(4,309)
Other comprehensive income (loss):
Net unrealized gain on RMBS
4,612
15,826
Reclassification of net realized loss on
RMBS included in earnings
(6,722)
(275)
Other comprehensive income (loss)
(2,110)
15,551
Comprehensive income (loss)
$
(2,852)
$
11,242
Comprehensive income (loss) attributable
to noncontrolling interests in Operating Partnership
(49)
181
Dividends on preferred stock
2,459
2,459
Comprehensive income (loss) attributable
to common stockholders
$
(5,262)
$
8,602
_______________ Dollar amounts in thousands. Certain prior
period amounts have been reclassified to conform to current period
presentation.
Portfolio Highlights for the Quarter Ended September 30,
2020
The Company realized servicing fee income of $14.4 million,
interest income of $10.0 million and other loss of $18.5 million,
primarily related to unrealized losses on investments in Servicing
Related Assets, as well as realized losses in derivatives, and
partially offset by realized gains on RMBS and unrealized gains on
derivatives. The unpaid principal balance for the MSR portfolio
stood at $22.1 billion as of September 30, 2020 and the carrying
value of the MSR portfolio ended the quarter at $162.6 million. Net
interest spread for the RMBS portfolio stood at 2.23% and the
debt-to-equity ratio on the aggregate portfolio ended the quarter
at 4.6x.
The RMBS portfolio had a book value of approximately $1.4
billion and a carrying value of approximately $1.5 billion at
quarter-end September 30, 2020. The portfolio had a weighted
average coupon of 3.30% and weighted average maturity of 28
years.
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 and Treasury futures. At
quarter end September 30, 2020, the Company held interest rate
swaps with a notional amount of $1.5 billion, swaptions with a
notional amount of $75.0 million, TBAs with a notional amount of
$162.6 million and Treasury futures with a notional amount of
$207.5 million.
As of September 30, 2020, Cherry Hill’s GAAP book value was
$11.74 per diluted share, net of the third quarter dividend.
Dividends
On September 17, 2020, the Board of Directors declared a
quarterly dividend of $0.27 per share of common stock for the third
quarter of 2020. The dividend was paid in cash on October 27, 2020
to common stockholders of record as of the close of business on
September 30, 2020. Additionally, the Board of Directors declared a
dividend of $0.5125 per share on the Company’s 8.20% Series A
Cumulative Redeemable Preferred Stock and $0.515625 per share on
the Company’s 8.250% Series B Fixed-to-Floating Rate Cumulative
Redeemable Preferred Stock for the third quarter of 2020. The
dividends were paid in cash on October 15, 2020 to Series A and B
Preferred stockholders of record as of the close of business on
September 30, 2020.
Core Earnings
Core earnings is a non-GAAP financial measure and is currently
defined by the Company as GAAP net income (loss), excluding
realized gain (loss) on RMBS, realized and unrealized gain (loss)
on investments in MSRs (net of any estimated MSR amortization),
realized and unrealized gain (loss) on derivatives and realized
(gain) loss on acquired assets. Core earnings is adjusted to
exclude outstanding LTIP-OP Units in our Operating Partnership and
dividends paid on preferred stock. MSR amortization refers to the
portion of the change in fair value of the MSRs that is primarily
due to the realization of cashflows or runoff and includes an
adjustment for any gain or loss on the capital used to purchase the
MSR. Additionally, core earnings excludes any tax (benefit) expense
on realized and unrealized gain (loss) on MSRs. Core earnings are
provided for purposes of potential comparability to other issuers
that invest in residential mortgage-related assets. The Company
believes providing investors with core earnings, in addition to
related GAAP financial measures, may provide investors some insight
into the Company’s ongoing operational performance. However, the
concept of core earnings 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 core earnings, it may not be comparable to
similarly-titled measures of other issuers, which define core
earnings differently from the Company and each other. As a result,
core earnings should not be considered a substitute for the
Company’s GAAP net income (loss) or as a measure of the Company’s
liquidity.
The following table provides a reconciliation of net income
(loss) to core earnings for the three months ended September 30,
2020 and 2019:
Three Months Ended
September 30,
2020
2019
(unaudited)
(unaudited)
Net Loss
$
(742)
$
(4,309)
Realized gain on RMBS, net
(6,722)
(275)
Realized loss (gain) on derivatives,
net
7,841
(12,627)
Realized loss (gain) on acquired assets,
net
95
(54)
Unrealized loss (gain) on derivatives,
net
(3,702)
2,133
Unrealized loss on investments in MSRs,
net of estimated MSR amortization
15,091
29,105
Tax expense on realized and unrealized
gain on MSRs
(1,017)
(4,364)
Total core earnings:
$
10,844
$
9,609
Core earnings attributable to
noncontrolling interests in Operating Partnership
(198)
(153)
Dividends on preferred stock
2,459
2,459
Core Earnings Attributable to Common
Stockholders
$
8,187
$
6,997
Core Earnings Attributable to Common
Stockholders, per Diluted Share
$
0.48
$
0.41
GAAP Net Loss Per Share of Common
Stock, per Diluted Share
$
(0.19)
$
(0.40)
_________ Dollar amounts in thousands, except per share amounts.
Certain prior period amounts have been reclassified to conform to
current period presentation.
Additional Information
Additional information regarding Cherry Hill’s financial
condition and results of operations can be found in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 2020 filed
with the Securities and Exchange Commission on November 9, 2020. In
addition, an investor presentation with supplemental information
regarding Cherry Hill, its business and its financial condition as
of September 30, 2020 and its results of operations for the third
quarter 2020 has been posted to the Investor Relations section of
Cherry Hill’s website, www.chmireit.com. Cherry Hill will discuss
the investor presentation on the conference call referenced
below.
Webcast and Conference Call
The Company’s management will host a conference call today at
5:00 P.M. Eastern Time. A copy of this earnings release and the
investor presentation referenced above will be posted to the
Investor Relations section of Cherry Hill’s website,
www.chmireit.com. All interested parties are welcome to participate
on the live call. A simultaneous webcast of the conference call
will be available to the public on a listen-only basis at
www.chmireit.com. Please allow extra time prior to the call to
visit the site and download any necessary software required to
listen to the webcast.
The conference call may be accessed by dialing 1-877-407-9716
(from within the U.S.) or 1-201-493-6779 (from outside of the U.S.)
ten minutes prior to the scheduled start of the call; please
reference “Cherry Hill Third Quarter 2020 Earnings Call.”
A telephonic replay of the conference call will also be
available two hours following the completion of the call through
11:59 P.M. Eastern Time on December 9, 2020 by dialing
1-844-512-2921 (from within the U.S.) or 1-412-317-6671 (from
outside of the U.S.); please enter replay pin number
“13711607.”
About Cherry Hill Mortgage Investment Corporation
Cherry Hill Mortgage Investment Corporation is a real estate
finance company that acquires, invests in and manages residential
mortgage assets in the United States. For additional information,
visit www.chmireit.com.
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 December
31, 2019, and other documents filed by the Company with the
Securities and Exchange Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201109006142/en/
Cherry Hill Mortgage Investment Corporation Investor Relations
(877) 870-7005 InvestorRelations@chmireit.com
Cherry Hill Mortgage Inv... (NYSE:CHMI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Cherry Hill Mortgage Inv... (NYSE:CHMI)
Historical Stock Chart
From Apr 2023 to Apr 2024