CHERRY HILL MORTGAGE INVESTMENT CORPORATION (NYSE:CHMI) REPORTS MIXED Q3 2025 RESULTS AS MARKET WEIGHS DIVIDEND YIELD AGAINST EARNINGS SHORTFALL
Earnings Versus Estimates
Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) delivered a mixed financial performance for the third quarter of 2025, beating revenue expectations but falling short on a key profitability metric. The real estate finance company reported earnings available for distribution (EAD) of $0.09 per diluted share, which came in below the analyst consensus estimate of $0.1122.
The company’s top-line performance showed more strength, with reported revenue of $3.3 million significantly surpassing the $2.24 million that analysts had projected. This represents a substantial beat on the revenue front, indicating robust operational income generation during the quarter.
The market’s immediate reaction to these results appears cautiously optimistic, with the stock showing positive after-hours movement. This suggests investors may be balancing the earnings miss against the strong revenue performance and the company’s maintained dividend policy.
Quarterly Performance Highlights
The third quarter results reveal a company in transition, showing improvement from the previous quarter while navigating a complex interest rate environment. Key financial metrics demonstrate both progress and ongoing challenges:
- GAAP Net Income: $2.0 million, or $0.05 per share, representing a significant turnaround from the net loss of $0.03 per share in the second quarter
- Common Book Value: $3.36 per share at September 30, 2025
- Dividend Declaration: Maintained its regular quarterly dividend of $0.10 per share, translating to an annualized yield of 17.0% based on the November 5 closing price
- Portfolio Leverage: Aggregate leverage stood at 5.3x, reflecting the company’s use of borrowed funds to enhance returns
- Liquidity Position: Unrestricted cash of $55.4 million provides financial flexibility
President and CEO Jay Lown characterized the results as "solid," highlighting the increase in both book value and net asset value per share. He emphasized the company's preparedness to "respond tactically to a lower interest rate environment" while remaining committed to "strategically growing our portfolio."
Portfolio and Hedging Activity
Cherry Hill’s operations are built around two core asset classes: residential mortgage-backed securities (RMBS) and mortgage servicing rights (MSRs). The company provided detailed insights into both segments:
- RMBS Portfolio: Ended the quarter with a book value of approximately $1.2 billion, featuring a weighted average coupon of 4.98% and weighted average maturity of 27 years
- MSR Portfolio: Carried a value of $218.7 million against an unpaid principal balance of $16.2 billion
- Hedging Strategy: Utilized interest rate swaps, TBAs, and Treasury futures to mitigate interest rate risk, with notional amounts of $828.7 million, ($415.8) million, and $22.5 million respectively
The company’s net interest spread for the RMBS portfolio stood at 2.87%, reflecting the difference between the yield earned on assets and the cost of financing those assets.
Forward Outlook and Analyst Expectations
Looking ahead, analysts have established expectations for Cherry Hill’s future performance. For the fourth quarter of 2025, the consensus estimates project earnings per share of $0.129 and revenue of $3.067 million. For the full year 2025, analysts anticipate earnings of $0.517 per share on revenue of $9.965 million.
The company did not provide specific forward guidance in its earnings release, leaving investors to weigh the current results and management commentary against these external estimates. The maintained dividend and improved book value suggest management confidence in the company’s ability to generate consistent cash flow, though the earnings miss relative to expectations indicates potential headwinds.
For detailed earnings estimates and future projections, investors can review additional analysis on the CHMI earnings estimates page.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.
