Cherry Hill Mortgage Investment Corporation Announces Third Quarter 2016 Results
Third Quarter 2016 Highlights
-
GAAP net income applicable to common stockholders was
$5.4 million , or$0.72 per diluted share, for the third quarter 2016 -
Core earnings were
$0.54 per share, or$4.1 million , for the third quarter 2016 -
Book value per share grew 1.5% from
June 30, 2016 to$20.09 atSeptember 30, 2016 -
Declared dividend of
$0.49 per share; annualized dividend yield at market close was 12.0% atNovember 8, 2016 -
Aggregate portfolio leverage stood at 3.20x at
September 30, 2016 -
Entered into new
$25 million MSR financing agreement
“Our third quarter saw a continuation of our recent quarterly
performances – strong core earnings and a stable book value led by a
balanced investment portfolio and a focused investment approach,” stated
Operating Results
Cherry Hill reported GAAP net income applicable to common stockholders
for the third quarter of 2016 of
Core earnings for the third quarter of 2016 were
| Three Months Ended September 30, | ||||||||
| 2016 | 2015 | |||||||
| Income | ||||||||
| Interest income | $ | 7,157 | $ | 5,813 | ||||
| Interest expense | 1,877 | 1,643 | ||||||
| Net interest income | 5,280 | 4,170 | ||||||
| Servicing fee income | 2,365 | 463 | ||||||
| Servicing costs | 641 | 366 | ||||||
| Net servicing income (loss) | 1,724 | 97 | ||||||
| Other income (loss) | ||||||||
| Realized gain (loss) on RMBS, net | 770 | 269 | ||||||
| Realized gain (loss) on derivatives, net | (2,147 | ) | (947 | ) | ||||
| Realized gain (loss) on acquired assets, net | - | - | ||||||
| Unrealized gain (loss) on derivatives, net | 3,199 | (4,986 | ) | |||||
| Unrealized gain (loss) on investments in Excess MSRs | 117 | (2,059 | ) | |||||
| Unrealized gain (loss) on investments in MSRs | (1,847 | ) | (541 | ) | ||||
| Total Income | 7,096 | (3,997 | ) | |||||
| Expenses | ||||||||
| General and administrative expense | 864 | 622 | ||||||
| Management fee to affiliate | 802 | 690 | ||||||
| Total Expenses | 1,666 | 1,312 | ||||||
| Income (Loss) Before Income Taxes | 5,430 | (5,309 | ) | |||||
| Provision for corporate business taxes | (89 | ) | (139 | ) | ||||
| Net Income (Loss) | 5,519 | (5,170 | ) | |||||
| Net (income) loss allocated to noncontrolling interests | (76 | ) | 46 | |||||
| Net Income (Loss) Applicable to Common Stockholders | $ | 5,443 | $ | (5,124 | ) | |||
| Net income (Loss) Per Share of Common Stock | ||||||||
| Basic | $ | 0.72 | $ | (0.68 | ) | |||
| Diluted | $ | 0.72 | $ | (0.68 | ) | |||
| Weighted Average Number of Shares of Common Stock Outstanding | ||||||||
| Basic | 7,511,653 | 7,509,543 | ||||||
| Diluted | 7,528,188 | 7,511,653 | ||||||
| _______________ |
| Unaudited. Dollar amounts in thousands, except per share amounts. Certain prior period amounts have been reclassified to conform to current period presentation. |
Net unrealized gain on the Company’s RMBS portfolio for the third
quarter 2016 was approximately
|
Three Months Ended |
||||||||
|
September 30, |
||||||||
| 2016 | 2015 | |||||||
| Net income (loss) | $ | 5,519 | $ | (5,170 | ) | |||
| Other comprehensive income (loss): | ||||||||
| Net unrealized gain (loss) on RMBS | 1,110 | 3,363 | ||||||
| Reclassification of net realized (gain) loss on RMBS in earnings | (770 | ) | (269 | ) | ||||
| Other comprehensive income (loss) | 340 | 3,094 | ||||||
| Comprehensive income (loss) | $ | 5,859 | $ | (2,076 | ) | |||
| Comprehensive income (loss) attributable to noncontrolling interests | 98 | (18 | ) | |||||
| Comprehensive income (loss) attributable to common stockholders | $ | 5,761 | $ | (2,058 | ) | |||
| _______________ |
| 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 and Treasury futures. At
As of
Dividend
On
Core Earnings
Core earnings is a non-GAAP financial measure and is defined as GAAP net income (loss) applicable to common stockholders, excluding realized gain (loss) on RMBS, realized gain (loss) on derivatives, realized gain (loss) on acquired assets, unrealized gain (loss) on derivatives, unrealized gain (loss) on investments in Excess MSRs and unrealized gain (loss) on investments in MSRs and adjusted to exclude outstanding LTIP units in the Company’s operating partnership. Additionally, core earnings excludes (1) any tax (benefit) expense on unrealized (gain) loss on MSRs, (2) any estimated "catch up" premium amortization (benefit) cost due to the use of current rather than historical estimates of CPR for amortization of Excess MSRs and (3) the amortization of MSRs. Core earnings are provided for purposes of 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, gives investors greater transparency into the Company’s ongoing operational performance. The concept of core earnings does have significant limitations, including the exclusion of realized and unrealized gains (losses), and may not be comparable to similarly-titled measures of other peers, which may use different calculations. 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 to core
earnings for the three months ended
|
Three Months Ended |
||||||||
|
September 30, |
||||||||
| 2016 | 2015 | |||||||
| Net income (loss) | $ | 5,519 | $ | (5,170 | ) | |||
| Realized (gain) loss on RMBS, net | (770 | ) | (269 | ) | ||||
| Realized (gain) loss on derivatives, net | 2,147 | 947 | ||||||
| Realized (gain) loss on acquired assets, net | - | - | ||||||
| Unrealized (gain) loss on derivatives, net | (3,199 | ) | 4,986 | |||||
| Unrealized (gain) loss on investments in Excess MSRs | (117 | ) | 2,059 | |||||
| Unrealized (gain) loss on investments in MSRs | 1,847 | 541 | ||||||
| Tax (benefit) expense on unrealized (gain) loss on MSRs | (91 | ) | (216 | ) | ||||
| Estimated “catch up” premium amortization (benefit) cost | 21 | 695 | ||||||
| Amortization of MSRs | (1,228 | ) | - | |||||
| Total core earnings: | $ | 4,129 | $ | 3,573 | ||||
| Core earnings attributable to noncontrolling interests | (76 | ) | (37 | ) | ||||
| Core Earnings Attributable to Common Stockholders | $ | 4,053 | $ | 3,536 | ||||
| Core Earnings Attributable to Common Stockholders, per Share | $ | 0.54 | $ | 0.47 | ||||
| GAAP Net income (Loss) Per Share of Common Stock | $ | 0.72 | $ | (0.68 | ) | |||
| __________ |
| Unaudited. 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
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 Third 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