Cherry Hill Mortgage Investment Corp (NYSE:CHMI) Q3 2019 Earnings Conference Call - Final Transcript

Nov 12, 2019 • 05:00 pm ET


Cherry Hill Mortgage Investment Corp (NYSE:CHMI) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings, ladies and gentlemen, and welcome to the Cherry Hill Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

[Operator Instructions]

It is now my pleasure to introduce your host, Rory Rumore. Thank you. You may begin.

Rory Rumore

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

On today's call, management's 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; Julian Evans, the Chief Investment Officer; and Michael Hutchby, the Chief Financial Officer.

Now, I will turn the call over to Jay.

Jay Lown

Thanks, Rory, and welcome to today's call. We remain diligent and proactive with respect to our hedging strategy and managing our portfolio in the third quarter, as we noted we would do on our prior call. As a result, we're pleased to report an increase in book value and core earnings in line with our new quarterly dividend level.

We achieved these results as ongoing macroeconomic in US-China trade related concerns persisted, global economic data remains softer and recessionary fears collectively weighed on the rate environment. The Fed telegraphed and ultimately executed on two 25 basis point rate eases based on those global concerns. And US 10-year yields declined to end the third quarter well below the 2% level at the close of the prior quarter.

As of September 30, our book value increased to $17.01 from $16.80 at the prior quarter end or a 1.3% gain, net of the dividend. As we communicated on our second quarter call, we anticipated that the Board would adjust our common dividend. In September, the Board announced a quarterly common stock dividend of $0.40 per share, which we believe is a better representation of our expected near-term earnings performance given the increase in prepayments and lower yields environment for the reinvestment of capital. The Board also authorized $10 million share repurchase program, given the significant relative valuation discount. We remain confident in our portfolio composition and investment strategy to deliver shareholder value over the long term and