Company's board has approved plans for better alignment with stockholders' interests
Cherry Hill Mortgage Investment Corporation has announced its financial results for the second quarter of 2024, highlighting significant portfolio adjustments and strategic changes aimed at improving operational efficiency.
In a notable development, Cherry Hill sold approximately $1.2 billion in unpaid principal balance (UPB) of low-balance mortgage servicing rights (MSRs) during the quarter. The transaction is expected to enhance the efficiency of the company’s portfolio and reduce servicing costs. Additionally, the company noted it is progressing with its internalization plan, which is anticipated to cut expenses and better align its interests with those of its stockholders.
Strategic changes for better alignment
The company reported a GAAP net loss applicable to common stockholders of $1.9 million, or $0.06 per share. This loss reflects a range of financial activities, including net interest income of $0.2 million, net servicing income of $8.9 million, and various realized and unrealized losses and gains. Notably, special committee-related expenses contributed $0.06 per share to the reported loss.
Earnings available for distribution (EAD) attributable to common stockholders were $2.3 million, or $0.08 per diluted share. The common book value per share stood at $4.15 as of June 30, 2024. The company declared a regular common dividend of $0.15 per share, translating to an annualized common dividend yield of 16.4% based on the closing sale price reported on August 7, 2024.
In terms of stock repurchases, Cherry Hill has bought back 395,897 shares of its 8.250% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, totalling $9.4 million, with $40.6 million remaining in the repurchase program. As of June 30, 2024, the company had unrestricted cash of $52.4 million and portfolio leverage stood at 4.9x.
“We continue to proactively manage our portfolio, navigating spread and volatility risks,” said Jay Lown, president and CEO of Cherry Hill Mortgage Investment Corporation. “Notably, we sold approximately $1.2 billion of UPB of low-balance MSRs this quarter, which should enhance our portfolio’s efficiency and reduce servicing costs. Looking ahead, we look forward to completing our internalization, which we anticipate will reduce our expenses and further align us with stockholders.”
For the quarter ending June 30, 2024, Cherry Hill’s financial performance included a net servicing fee income of $8.9 million and net interest income of $0.2 million. However, the company also faced losses related to realized and unrealized investments in RMBS and derivatives. The net interest spread for the RMBS portfolio was 3.23%, and the debt-to-equity ratio was 4.9x.
According to a company statement, Cherry Hill’s board of directors has approved the internalization of management, a strategic move intended to enhance operational efficiency and reduce costs. The company will continue to provide updates on this process and its impact on future performance.
Do you have anything in mind about this update? Leave comments below.
