Cherry Hill Mortgage Investment Corporation Announces Fourth Quarter and Full Year 2019 Results
Fourth Quarter 2019 Highlights
-
GAAP net income applicable to common stockholders of
$5.2 million , or$0.31 per share -
Core earnings attributable to common stockholders of
$8.1 million , or$0.48 per share -
Book value of
$17.35 per share atDecember 31, 2019 , a 2.0% increase fromSeptember 30, 2019 , net of the Company’s fourth quarter dividend -
Declared regular common dividend of
$0.40 per share; annualized common dividend yield at market close was 10.6% atFebruary 26, 2020 -
Aggregate portfolio leverage stood at 6.1x at
December 31, 2019 -
During the fourth quarter, the Company repurchased 235,950 shares of its common stock for approximately
$3.5 million under the Company’s$10.0 million share repurchase program
“I’m pleased with our fourth quarter results. We capped off the year with solid core earnings while protecting book value,” said
Operating Results
Cherry Hill reported GAAP net income applicable to common stockholders for the fourth quarter of 2019 of
Core earnings attributable to common stockholders for the fourth quarter of 2019 were
Three Months Ended |
|||||||
2019 |
|
2018 |
|||||
|
|
(unaudited) |
|
(unaudited) |
|
||
Income |
|||||||
Interest income |
|
$ |
19,770 |
|
$ |
16,958 |
|
Interest expense |
13,499 |
10,385 |
|||||
Net interest income |
|
|
6,271 |
|
|
6,573 |
|
Servicing fee income |
19,318 |
16,574 |
|||||
Servicing costs |
|
|
5,096 |
|
|
3,528 |
|
Net servicing income |
|
14,222 |
|
13,046 |
|||
Other income (loss) |
|
|
|
|
|
|
|
Realized gain (loss) on RMBS, net |
627 |
(2,932) |
|||||
Realized loss on derivatives, net |
|
|
(17,148) |
|
|
(3,162) |
|
Realized loss on acquired assets, net |
(28) |
- |
|||||
Unrealized gain (loss) on derivatives, net |
|
|
3,357 |
|
|
(30,937) |
|
Unrealized gain (loss) on investments in MSRs |
1,959 |
(21,924) |
|||||
Total Income (Loss) |
|
|
9,260 |
|
|
(39,336) |
|
Expenses |
|||||||
General and administrative expense |
|
|
1,352 |
|
|
962 |
|
Management fee to affiliate |
1,999 |
1,649 |
|||||
Total Expenses |
|
|
3,351 |
|
|
2,611 |
|
Income (Loss) Before Income Taxes |
|
5,909 |
|
(41,947) |
|||
Benefit from corporate business taxes |
|
|
(1,842) |
|
|
(3,137) |
|
Net Income (Loss) |
|
7,751 |
|
(38,810) |
|||
Net (income) loss allocated to noncontrolling interests in |
|
|
(127) |
|
|
505 |
|
Dividends on preferred stock |
2,460 |
1,395 |
|||||
Net Income (Loss) Applicable to Common Stockholders |
|
$ |
5,164 |
|
$ |
(39,700) |
|
Net Income (Loss) Per Share of Common Stock |
|||||||
Basic |
|
$ |
0.31 |
|
$ |
(2.42) |
|
Diluted |
$ |
0.31 |
$ |
(2.42) |
|||
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
|
|
|
|
Basic |
16,797,523 |
16,382,914 |
|||||
Diluted |
|
|
16,810,312 |
|
|
16,391,170 |
|
_______________
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 fourth quarter 2019 was approximately
Three Months Ended |
|||||||
2019 |
|
2018 |
|||||
|
|
(unaudited) |
|
(unaudited) |
|
||
Net Income (Loss) |
$ |
7,751 |
$ |
(38,810) |
|||
Other comprehensive income: |
|
|
|
|
|
|
|
Net unrealized gain on RMBS |
|
7,373 |
13,862 |
||||
Reclassification of net realized gain (loss) on RMBS included in earnings |
|
|
(627) |
|
|
2,932 |
|
Other comprehensive income |
|
|
6,746 |
|
16,794 |
||
Comprehensive income (loss) |
|
$ |
14,497 |
|
$ |
(22,016) |
|
Comprehensive income (loss) attributable to noncontrolling interests in |
234 |
(286) |
|||||
Dividends on preferred stock |
|
|
2,460 |
|
|
1,395 |
|
Comprehensive income (loss) attributable to common stockholders |
$ |
11,803 |
$ |
(23,125) |
_______________
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 servicing fee income of
The RMBS portfolio had both a book and carrying value of approximately
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
As of
Dividends
On
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
The following table provides a reconciliation of net income (loss) to core earnings for the three months ended
Three Months Ended |
|||||||
2019 |
|
2018 |
|||||
|
|
(unaudited) |
|
(unaudited) |
|
||
Net Income (Loss) |
$ |
7,751 |
$ |
(38,810) |
|||
Realized loss (gain) on RMBS, net |
|
|
(627) |
|
|
2,932 |
|
Realized loss on derivatives, net |
|
17,148 |
3,162 |
||||
Realized loss on acquired assets, net |
|
|
28 |
|
|
- |
|
Unrealized loss (gain) on derivatives, net |
(3,357) |
30,937 |
|||||
Unrealized loss (gain) on investments in MSRs, net of estimated MSR amortization |
(10,068) |
(1) |
|
17,437 |
|
||
Tax expense on unrealized gain on MSRs |
(168) |
(3,260) |
|||||
Total core earnings: |
|
$ |
10,707 |
|
$ |
12,398 |
|
Core earnings attributable to noncontrolling interests in |
(172) |
(159) |
|||||
Dividends on preferred stock |
|
|
2,460 |
|
|
1,395 |
|
Core Earnings Attributable to Common Stockholders |
$ |
8,075 |
$ |
10,845 |
|||
Core Earnings Attributable to Common Stockholders, per Diluted Share |
|
$ |
0.48 |
|
$ |
0.66 |
|
GAAP Net Income (Loss) Per Share of Common Stock, per Diluted Share |
$ |
0.31 |
$ |
(2.42) |
_________
Dollar amounts in thousands, except per share amounts. Certain prior period amounts have been reclassified to conform to current period presentation.
1
|
Beginning with the third quarter of 2019, the Company refined the MSR amortization method of determining the amount of realized and unrealized gain (loss) on investments in MSRs, used by the Company to calculate core earnings. 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. The refined method better reflects current and expected market conditions and includes an adjustment for any gain or loss on the capital used to purchase the MSR. MSR amortization for periods that ended prior to |
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 1-877-407-9716 (from within the
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, 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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Investor Relations
(877) 870-7005
InvestorRelations@chmireit.com
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