Cherry Hill Mortgage Investment Corp (NYSE:CHMI) Q1 2019 Earnings Conference Call Transcript

May 09, 2019 • 05:00 pm ET

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Cherry Hill Mortgage Investment Corp (NYSE:CHMI) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings and welcome to the Cherry Hill Mortgage Investment Corporation First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host Michael Hutchby, Controller. Please go ahead sir.

Executive
Michael Hutchby

We would like to thank you for joining us today for Cherry Hill Mortgage Investment Corporation's first quarter 2019 conference call. In addition to this call, we've filed a press release that was distributed earlier this afternoon and posted to the Investor Relations section of our website at www.chmireit.com.

On today's call, Managements' prepared remarks and answers to your questions may contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those discussed today. Examples of forward looking statements include those related to interest income, financial guidance, IRRs, future expected cash flows, as well as prepayment and recapture rates, delinquencies, and non-GAAP financial measures, such as core and comprehensive income.

Forward-looking statements represent Management's current estimates and Cherry Hill assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to these forward-looking statements contained in the Company's filings with the SEC and the definitions contained in the financial presentations available on the Company's website.

Today's conference call is hosted by Jay Lown, President and CEO of Cherry Hill. Also present on the call today are Julian Evans, our Chief Investment Officer; and Marty Levine, our Chief Financial Officer.

And now, I'll turn the call over to Jay.

Executive
Jay Lown

Thanks, Mike, and welcome to today's call. Overall, Cherry Hill turned in a solid performance for the first quarter of 2019. A dovish fed posture highlighted by a surprise shift in their stance on future rate hikes led to another volatile quarter end. Despite the market's reaction post the March Fed meeting, which drove US 10-year Treasury yields to 15-month lows, our earnings remained strong and our book value held. Both prepayment fees within our MSR and RMBS portfolios persisted, and we once again out-earned our quarterly dividend. Specifically, for the first quarter of 2019, we generated core earnings per share of $0.60. Although we expect the velocity of prepayments will rise in the quarters ahead as is the seasonal norm, we believe our MSR and RMBS portfolio is constructive today and positioned well to succeed in this lower rate environment.

Book value per share was down marginally by 0.2% to $17.54 at the end of the first quarter net of our common dividend. Like many, we were surprised by the Fed's reversal on future rate hikes in March, but we remain nimble and proactively repositioned our portfolio throughout the quarter in order to protect it against a larger potential book value reduction. Julian will elaborate in his remarks shortly, but we continue to closely watch the global macroeconomic environment as we evaluate