Cherry Hill Mortgage's 2025 Q1 Earnings Call: Unpacking Contradictions in RMBS Growth, GSE Reform, and Market Dynamics

RMBS portfolio growth, impact of GSE reform, capital allocation and investment strategy, earnings per share expectations, and MSR market dynamics are the key contradictions discussed in Cherry Hill Mortgage Investment's latest 2025Q1 earnings call.



Market and Political Uncertainty Impacting Rates:
- The 10-year Treasury rate ended the quarter at 4.25%, down approximately 30 basis points from the previous quarter.
- Initially driven by political rhetoric and expectations of economic recession, rates spiked due to Liberation Day tariff announcements, reflecting market volatility and uncertainty.

Portfolio Composition and Performance:
- The MSR portfolio ended the quarter with an unpaid principal balance (UPB) of $17 billion and a market value of approximately $227 million.
- The RMBS portfolio accounted for approximately 39% of equity capital, representing 76% of investable assets, with a weighted average three-month CPR of approximately 5.8%.

Financial Performance and Dividend:
- Cherry Hill Mortgage Investment Corporation reported a GAAP net loss applicable to common stockholders of $0.29 per diluted share in Q1.
- The Board declared a dividend of $0.15 per common share and $0.5125 and $0.6372 per share on preferred stocks.

Operating Expenses and Internalization Benefits:
- Operating expenses declined quarter-over-quarter due to the elimination of the management fee, following the transition to an internally managed mortgage REIT.
- The internalization resulted in approximately $0.02 savings in earnings available for distribution (EAD) in Q1.