Cherry Hill Mortgage Investment (CHMI) Financials

Cherry Hill Mortgage Investment (NYSE: CHMI) showed a modest improvement in profitability and operating cash flow in Q1 2026, but the broader multi-year picture still looks highly volatile. The company remains a highly leveraged mortgage REIT with earnings that can swing sharply from quarter to quarter based on interest rates, portfolio repositioning, and non-cash marks on investments.

For Q1 2026, CHMI reported net income of $429,000, down sharply from $7.9 million in Q4 2025 and $4.5 million in Q3 2025. However, after preferred dividends and noncontrolling interests, common shareholders still saw a loss of $2.0 million. That tells investors the headline profit is still not translating cleanly into value for common equity holders.

One encouraging sign is that operating cash flow improved to $12.6 million in Q1 2026, up from $8.4 million in Q4 2025 and well above the weak levels seen in earlier periods. Investment activity also generated strong cash, with net investing cash flow of $28.5 million as sales and maturities exceeded purchases. That said, financing activity was still negative, and the business continues to rely on large-scale debt issuance and repayment to manage the balance sheet.

Revenue trends remain mixed. In Q1 2026, total revenue was $4.6 million, down from $11.8 million in Q4 2025 and $8.6 million in Q3 2025. Net interest income improved to $4.5 million from $3.2 million in Q4 2025, helped by lower interest expense. But the company’s non-interest income was only $184,000, and realized/unrealized investment gains were negative overall, showing how dependent results are on market conditions.

On the balance sheet, CHMI ended Q1 2026 with $1.52 billion in assets and $1.29 billion in liabilities, leaving total equity and noncontrolling interests at about $230.6 million. Cash declined from Q4 2025, while debt remained very large, including $1.12 billion in short-term debt. That leverage is typical for a mortgage REIT, but it also means the company is sensitive to funding costs and asset values.

Looking at the last four years, the biggest takeaway is that CHMI has moved from a period of more meaningful profitability in parts of 2023 and early 2024 into a much choppier stretch in 2025, with some quarters showing losses at the common-share level. The recent improvement in Q1 2026 is positive, but it does not yet signal a clear, sustained turnaround.

• Q1 2026 operating cash flow improved to $12.6 million, indicating better cash generation from the core business.
• Net interest income improved to $4.5 million from $3.2 million in Q4 2025, helped by lower interest expense.
• Net income was positive at $429,000 in Q1 2026 after a loss at the common-share level in prior quarters.
• Investing cash flow was strong in Q1 2026 as maturities and sales of investments exceeded purchases.
• Total assets were stable at $1.52 billion, roughly in line with recent quarters.
• Preferred stock remains a large claim on earnings, which continues to pressure returns to common shareholders.
• Balance sheet leverage remains high, which is normal for a mortgage REIT but adds risk in changing rate environments.
• Common shareholders still posted a loss of $2.0 million in Q1 2026, despite positive consolidated net income.
• Total revenue fell sharply to $4.6 million from $11.8 million in Q4 2025 and $8.6 million in Q3 2025.
• Debt remains very large, including $1.12 billion of short-term debt, making the company highly rate-sensitive.

Bottom line: CHMI’s latest quarter shows some operational improvement, but the company still looks like a volatile income-oriented mortgage REIT rather than a stable compounder. Investors should focus on funding costs, common-share profitability, and whether recent cash flow strength can continue over multiple quarters.