Cherry Hill Mortgage Investment Corporation Announces Fourth Quarter 2016 Results
Fourth Quarter 2016 Highlights and Subsequent Events
-
GAAP net income applicable to common stockholders was
$26.2 million , or$3.48 per diluted share, for the fourth quarter 2016 -
Core earnings were
$0.51 per share, or$3.9 million , for the fourth quarter 2016 -
Book value grew 2.0% from
September 30, 2016 to$20.49 per share atDecember 31, 2016 -
Declared regular dividend of
$0.49 per share and special dividend of$0.15 per share; annualized dividend yield at market close was 10.8% atMarch 13, 2017 -
Aggregate portfolio leverage stood at 3.96x at
December 31, 2016 -
Subsequent to the end of the fourth quarter, the Company received
purchase approval from
Ginnie Mae (GNMA) to acquire full MSRs on loans backing GNMA securities in exchange for the sale of the Company’s Pool 2 Excess MSR assets
“The fourth quarter capped off an outstanding year for Cherry Hill,”
stated
Operating Results
Cherry Hill reported GAAP net income applicable to common stockholders
for the fourth quarter of 2016 of
Core earnings for the fourth quarter of 2016 were
| Three Months Ended December 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Income | ||||||||||
| Interest income | $ | 11,242 | $ | 7,984 | ||||||
| Interest expense | 2,389 | 1,759 | ||||||||
| Net interest income | 8,853 | 6,225 | ||||||||
| Servicing fee income | 2,145 | 1,100 | ||||||||
| Servicing costs | 1,018 | 301 | ||||||||
| Net servicing income (loss) | 1,127 | 799 | ||||||||
| Other income (loss) | ||||||||||
| Realized gain (loss) on RMBS, net | 74 | 393 | ||||||||
| Realized gain (loss) on investments in Excess MSRs, net | 1,520 | - | ||||||||
| Realized gain (loss) on derivatives, net | (4,056 | ) | (1,672 | ) | ||||||
| Realized gain (loss) on acquired assets, net | - | 275 | ||||||||
| Unrealized gain (loss) on derivatives, net | 15,307 | 4,634 | ||||||||
| Unrealized gain (loss) on investments in Excess MSRs | 2,588 | 1,219 | ||||||||
| Unrealized gain (loss) on investments in MSRs | 3,870 | (560 | ) | |||||||
| Total Income | 29,283 | 11,313 | ||||||||
| Expenses | ||||||||||
| General and administrative expense | 790 | 1,083 | ||||||||
| Management fee to affiliate | 764 | 713 | ||||||||
| Total Expenses | 1,554 | 1,796 | ||||||||
| Income (Loss) Before Income Taxes | 27,729 | 9,517 | ||||||||
| Provision for corporate business taxes | 1,127 | (134 | ) | |||||||
| Net Income (Loss) | 26,602 | 9,651 | ||||||||
| Net (income) loss allocated to noncontrolling interests | (432 | ) | (106 | ) | ||||||
| Net Income (Loss) Applicable to Common Stockholders | $ | 26,170 | $ | 9,545 | ||||||
| Net income (Loss) Per Share of Common Stock | ||||||||||
| Basic | $ | 3.48 | $ | 1.27 | ||||||
| Diluted | $ | 3.48 | $ | 1.27 | ||||||
| Weighted Average Number of Shares of Common Stock Outstanding | ||||||||||
| Basic | 7,519,038 | 7,509,543 | ||||||||
| Diluted | 7,525,348 | 7,519,038 | ||||||||
|
_______________ |
||||||||||
Unaudited. 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 fourth
quarter 2016 was approximately
|
Three Months Ended
December 31, |
||||||||
| 2016 | 2015 | |||||||
| Net income (loss) | $ | 26,602 | $ | 9,651 | ||||
| Other comprehensive income (loss): | ||||||||
| Net unrealized gain (loss) on RMBS | (18,289) | (5,858) | ||||||
| Reclassification of net realized (gain) loss on RMBS in earnings | (74) | (393) | ||||||
| Other comprehensive income (loss) | (18,363) | (6,251) | ||||||
| Comprehensive income (loss) | $ | 8,239 | $ | 3,400 | ||||
| Comprehensive income (loss) attributable to noncontrolling interests | 142 | 39 | ||||||
| Comprehensive income (loss) attributable to common stockholders | $ | 8,097 | $ | 3,361 | ||||
|
_____________ |
||||||||
Unaudited. Dollar amounts in thousands. Certain prior period amounts have been reclassified to conform to current period presentation.
Portfolio Highlights for the Quarter Ended
The Company realized interest 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, Cherry Hill used interest rate swaps,
swaptions, TBAs, Treasury futures and options on Treasury futures. At
As of
Dividend
On
Core Earnings
Core earnings is a non-GAAP financial measure and is defined by the
Company as GAAP net income (loss) applicable to common stockholders,
excluding realized gain (loss) on RMBS, realized and unrealized (gain)
loss on investments in Excess MSRs and MSRs, realized and unrealized
gain (loss) on derivatives, realized (gain) loss on acquired assets, and
changes in fair value of MSRs primarily due to realization of expected
cashflows (runoff). Core earnings are adjusted to exclude outstanding
LTIP-OP units in our
The following table provides a reconciliation of net income to core
earnings for the three months ended
|
Three Months Ended
December 31, |
||||||||
| 2016(¹) | 2015(²) | |||||||
| Net income (loss) | $ | 26,602 | $ | 9,651 | ||||
| Realized (gain) loss on RMBS, net | (74) | (393) | ||||||
| Realized (gain) loss on investments in Excess MSRs, net | (1,520) | - | ||||||
| Realized (gain) loss on derivatives, net | 4,056 | 1,672 | ||||||
| Realized (gain) loss on acquired assets, net | - | (275) | ||||||
| Unrealized (gain) loss on derivatives, net | (15,307) | (4,634) | ||||||
| Unrealized (gain) loss on investments in Excess MSRs | (2,588) | (1,219) | ||||||
| Unrealized (gain) loss on investments in MSRs | (3,870) | 560 | ||||||
| Tax (benefit) expense on unrealized (gain) loss on MSRs | 1,486 | 276 | ||||||
| Estimated “catch up” premium amortization (benefit) cost | (4,130) | (1,313) | ||||||
| Changes due to realization of expected cash flows | (1,219) | (189) | ||||||
| Reversal of gain (loss) on acquired assets, net | 244 | - | ||||||
| Yield maintenance income | 250 | - | ||||||
| Total core earnings: | $ | 3,930 | $ | 4,136 | ||||
| Core earnings attributable to noncontrolling interests | (73) | (55) | ||||||
| Core Earnings Attributable to Common Stockholders | $ | 3,857 | $ | 4,081 | ||||
| Core Earnings Attributable to Common Stockholders, per Share | $ | 0.51 | $ | 0.54 | ||||
| GAAP Net income (Loss) Per Share of Common Stock | $ | 3.48 | $ | 1.27 | ||||
|
__________________ |
||||||||
Unaudited. Dollar amounts in thousands, except per share amounts.
Certain prior period amounts have been reclassified to conform to
current period presentation.
(¹) In 4Q 2016 the Company
refined its method of calculating amortization of its MSRs to reflect
expected cashflows (runoff) from the portfolio. Using this revised
method of calculating MSR amortization, core earnings per share for
1Q16, 2Q16 and 3Q16 would have been
(²)
Reflects revised method of calculating MSR amortization.
Additional Information
Additional information regarding Cherry Hill’s financial condition and
results of operations can be found in its Annual Report on Form 10-K for
the year ended
Webcast and Conference Call
The Company’s management will host a conference call today at
The conference call may be accessed by dialing 1-877-407-9039 (from within the U.S.) or 1-201-689-8470 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Cherry Hill Fourth Quarter 2016 Earnings Call.”
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,
its ability to complete the pending Aurora transaction, its ability to
execute on the anticipated strategy of purchasing full MSRs, 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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Source:
Cherry Hill Mortgage Investment Corporation
Investor Relations
877-870-7005
InvestorRelations@CHMIreit.com