Q4 2025 Cherry Hill Mortgage Investment Corp Earnings Call

February 25, 2026

Operator: Thank you for standing by. Welcome to Cherry Hill Mortgage Investment Corporation's Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to Emma Little, Investor Relations. Please go ahead.

Speaker #1: After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Emma Little, Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: We'd like to thank you for joining us today for Cherry Hill Mortgage Investment Corporation's fourth quarter 2025 conference call. In advance of this call, we issued a press release that was distributed earlier this afternoon.

Emma Little: We'd like to thank you for joining us today for Cherry Hill Mortgage Investment Corporation's Q4 2025 conference call. In advance of this call, we issued a press release that was distributed earlier this afternoon. That press release and a Q4 2025 investor presentation have been posted to the investor relations section of our website. 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 earnings available for distribution, or EAD, 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.

Speaker #2: That press release and a fourth quarter 2025 investor presentation have been posted to the Investor Relations section of our website. 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.

Speaker #2: 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 earnings available for distribution or EAD and comprehensive income.

Speaker #2: 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.

Emma Little: 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 Apeksha Patel, the Chief Financial Officer. Now, I will turn the call over to Jay.

Speaker #2: Today's conference call is hosted by Jay Lown, President and CEO, Julian Evans, the Chief Investment Officer, and Apeksha Patel, the Chief Financial Officer. Now I will turn the call over to Jay.

Speaker #3: Thanks, Emma. And welcome to our fourth quarter 2025 earnings call. Themes that resonated in the third quarter continued into the fourth quarter. A further reduction in tariff rhetoric and above-trend domestic growth allowed realized and implied volatility levels to drop.

Jay Lown: Thanks, Emma, and welcome to our Q4 2025 Earnings Call. Themes that resonated in the Q3 continued into the Q4. A further reduction in tariff rhetoric and above-trend domestic growth allowed realized and implied volatility levels to drop. The limited government shutdown and a slightly weaker employment picture were offset by additional FOMC eases, which lowered the Fed funds rate by a total of 50 basis points during the quarter. All these factors contributed to the improvement of the equity and credit markets. Mortgage spreads embraced the lower volatility, coupled with a steeper yield curve tightening throughout the quarter. Specific to Cherry Hill, portfolio performance was driven by tighter mortgage spreads and a steeper yield curve. All portfolio components aided in the performance. Mortgages, swaps, futures, and MSRs performed well, with lower and middle coupon mortgages outperforming the wings of the coupon stack.

Speaker #3: The limited government shutdown and a slightly weaker employment picture were offset by additional FOMC eases, which lowered the Fed funds rate by a total of 50 basis points during the quarter.

Speaker #3: All these factors contributed to the improvement of the equity and credit markets. Mortgage spreads embraced the lower volatility, coupled with a steeper yield curve, tightening throughout the quarter.

Speaker #3: Specific to Cherry Hill, portfolio performance was driven by tighter mortgage spreads and a steeper yield curve. All portfolio components aided in the performance. Mortgages, swaps, futures, and MSRs performed well, with lower and middle coupon mortgages outperforming the wings of the coupon stack.

Speaker #3: The RMBS portfolio positioning remained consistent with the third quarter, and that positioning benefited performance. In addition, our MSR portfolio, which remains 250 basis points out of the money given current mortgage rates, performed well given the steeper yield curve.

Jay Lown: The RMBS portfolio positioning remained consistent with Q3, and that positioning benefited performance. In addition, our MSR portfolio, which remains 250 basis points out of the money, given current mortgage rates, performed well given the steeper yield curve. All in, we were pleased with our performance for Q4. For Q4, we generated GAAP net income applicable to common stockholders of $0.14 per diluted share. Book value per common share finished Q4 at $3.44, compared to $3.36 on 30 September. On an NAV basis, which includes preferred stock, NAV was up approximately $3.1 million, or 1.3% relative to 30 September. Financial leverage at the end of Q4 remained relatively consistent at 5.4x as we continued to stay prudently levered.

Speaker #3: All in, we were pleased with our performance for the quarter. For the fourth quarter, we generated GAAP net income applicable to common stockholders of 14 cents per diluted share.

Speaker #3: Book value per common share finished the quarter at $3.44, compared to $3.36 on September 30th. On an NAV basis, which includes preferred stock, NAV was up approximately 3.1 million or 1.3% relative to September 30th.

Speaker #3: Financial leverage at the end of the quarter remained relatively consistent at 5.4 times. As we continue to stay prudently levered, we ended the quarter with 55 million of unrestricted cash on the balance sheet, maintaining a solid liquidity profile.

Jay Lown: We ended the quarter with $55 million of unrestricted cash on the balance sheet, maintaining a solid liquidity profile. Along with our solid portfolio performance, our strategic partnership and investment with RealGenius, LLC, a Florida-based digital mortgage technology company, continues to grow steadily and in line with our expectations. As a reminder, RealGenius has developed a proprietary direct-to-consumer platform, offering an efficient, fully online mortgage experience, including instant pre-qualification, automated document process, and real-time loan tracking, all of which is supported by their custom-built point-of-sale system. With 30-year mortgage rates still hovering around 6% and the potential for additional Fed rate cuts later this year, we remain optimistic that the reduction in mortgage rates may facilitate an acceleration in RealGenius's growth as more home buyers and homeowners look to purchase homes or refinance.

Speaker #3: Along with our solid portfolio performance, our strategic partnership and investment with Real Genius LLC, a Florida-based digital mortgage technology company, continues to grow steadily and in line with our expectations.

Speaker #3: As a reminder, Real Genius has developed a proprietary direct-to-consumer platform, offering an efficient, fully online mortgage experience. Including instant pre-qualification, automated document process, and real-time loan tracking.

Speaker #3: All of which is supported by their custom-built point-of-sale system. With 30-year mortgage rates still hovering around 6% and the potential for additional Fed rate cuts later this year, we remain optimistic that the reduction in mortgage rates may facilitate an acceleration in Real Genius's growth as more homebuyers and homeowners look to purchase homes or refinance.

Speaker #3: As we progress through 2026, we will continue to seek out investment opportunities we believe would be accretive to our business. We will also remain focused on thoughtfully growing the company while consistently maintaining our strong liquidity and prudent leverage positioning.

Jay Lown: As we progress through 2026, we will continue to seek out investment opportunities we believe would be accretive to our business. We will also remain focused on thoughtfully growing the company, while consistently maintaining our strong liquidity and prudent leverage positioning. With that, I'll turn the call over to Julian, who will cover more details regarding our investment portfolio and its performance over the Q4.

Speaker #3: With that, I'll turn the call over to Julian who will cover more details regarding our investment portfolio and its performance over the fourth quarter.

Speaker #4: Thank you, Jay. Fourth quarter's performance was driven by a more more stabilized interest rate environment and a steeper yield curve, which enabled most spread and equity markets to post gains.

Julian Evans: Thank you, Jay. Q4's performance was driven by a more stabilized interest rate environment and a steeper yield curve, which enabled most spread and equity markets to post gains. Tighter mortgage spreads and a portfolio position for a steeper yield curve aided our performance, as Jay mentioned. The portfolio started the quarter slightly long duration, positioned for lower rates and a steepening yield curve, which we maintained throughout the quarter. Performance was bolstered by SOFR swap spreads, which widened in the quarter, aiding mortgage spread tightening. The shift from higher to lower coupon mortgages, initiated in September, proved advantageous as expectations for additional Fed easing increased, supporting tighter spreads and higher prices for lower coupon, longer duration collateral. In the quarter, we proactively adjusted our portfolio positioning as necessary to continue benefiting from the spread in rate environment.

Speaker #4: Tighter mortgage spreads and a portfolio position for a steeper yield curve aided our performance, as Jay mentioned. The portfolio started the quarter slightly long duration, positioned for lower rates and a steepening yield curve.

Speaker #4: Which we maintained throughout the quarter. Performance was bolstered by SOFR swap spreads which widened in the quarter, aiding mortgage spread tightening. The shift from higher to lower coupon mortgages initiated in September proved advantageous as expectations for additional Fed easing increased.

Speaker #4: Supporting tighter spreads and higher prices for lower coupon longer duration collateral. In the quarter, we proactively adjusted our portfolio positioning as necessary to continue benefiting from the spread and rate environment.

Speaker #4: As the quarter progressed, the entire coupon stack had a hand in performance as interest and SOFR swap rates fluctuated. To start, lower and middle coupon mortgages outperformed in concert with lower rates.

Julian Evans: As the quarter progressed, the entire coupon stack had a hand in performance as interest and SOFR swap rates fluctuated. To start, lower and middle coupon mortgages outperformed in concert with lower rates. However, in December, following the Fed's third rate ease of the year, rates actually moved higher, which favored middle and higher coupon mortgages. Quarter end, our MSR portfolio had a UPB of $15.9 billion and a market value of approximately $215 million. The MSR and related net assets represented approximately 40% of our equity capital and approximately 21% of our investable assets, excluding cash at quarter end. Meanwhile, our RMBS portfolio accounted for approximately 40% of our equity capital. As a percentage of investable assets, the RMBS portfolio represented approximately 79%, excluding cash at quarter end.

Speaker #4: However, in December following the Fed's third rate ease of the year, rates actually moved higher which favored middle and higher coupon mortgages. Quarter end, our MSR portfolio had a UPB of 15.9 billion.

Speaker #4: At a market value of approximately $215 million. The MSR and related net assets represented approximately 40% of our equity capital, and approximately 21% of our investable assets excluding cash at quarter end.

Speaker #4: Meanwhile, our RMBS portfolio accounted for approximately 40% of our equity capital. As a percentage of investable assets, the RMBS portfolio represented approximately 79% excluding cash at quarter end.

Speaker #4: Our MSR portfolio's net CPR averaged approximately 5.1% for the fourth quarter. Down modestly from the previous quarter. The portfolio's recapture rate remained de minimis.

Julian Evans: Our MSR portfolio's net CPR averaged approximately 5.1% for Q4, down modestly from Q3. The portfolio's recapture rate remained de minimis, as the incentive to refinance continues to be minimal for this portfolio, given the portfolio's loan rate. We continue to expect a low recapture rate and a relatively low net CPR in the near term, given our MSR's portfolio's characteristics. As expected, the RMBS portfolio's prepayment speeds rose to 8.5% CPR for the three-month period ended December, compared to 6.1% for Q3, given that our portfolio is comprised of a large portion of higher coupon specified pools. As previously mentioned, the majority of our higher coupon positioning is TBA.

Speaker #4: As the incentive to refinance continues to be minimal for this portfolio, given the portfolio's loan rate. We continue to expect a low recapture rate and a relatively low net CPR in the near term given our MSR's portfolio's characteristics.

Speaker #4: As expected, the RMBS portfolio's prepayment speeds rose to 8.5% CPR for the three-month period ended December, compared to 6.1% for the prior quarter, given that our portfolio is comprised of a large portion of higher coupon-specified pools.

Speaker #4: As previously mentioned, the majority of our higher coupon positioning is TVA. The larger spec pool positioning starts in the 5.5 coupon where the underlying collateral typically has a 6.50 loan rate.

Julian Evans: The larger spec pool positioning starts in the 5.5 coupon, where the underlying collateral typically has a 650 loan rate, and which was impacted by the recent move to lower mortgage rates. As a reminder, while the mortgage universe is only approximately 19% refinanceable at the current mortgage rate levels, as the Fed continues to ease monetary policy, we are monitoring a mortgage rate of 5.5%. At a 5.5% mortgage rate, the refinanceable universe increases to approximately 30%. As of 31st December, the RMBS portfolio, inclusive of TBAs, stood at approximately $805 million, compared to $782 million at the previous quarter end. A modest shift as we reposition the mortgage portfolio towards the middle of the coupon stack.

Speaker #4: And which was impacted by the recent move to lower mortgage rates. As a reminder, while the mortgage universe is only approximately 19% refinanceable at the current mortgage rate levels, as the Fed continues to ease monetary policy we are monitoring a mortgage rate of 5.5%.

Speaker #4: At a 5.5% mortgage rate, the refinanceable universe increases to approximately 30%. As of December 31st, the RMBS portfolio inclusive of TVAs, stood at approximately 805 million.

Speaker #4: Compared to 782 million at the previous quarter end, a modest shift as we reposition the mortgage portfolio towards the middle of the coupon stack.

Speaker #4: For the fourth quarter, our RMBS portfolio's net interest spread was 2.52%, which was lower than the previous quarter due to a reduction in dollar roll income as well as a reduction in interest earned on payer swaps.

Julian Evans: For Q4, our RMBS portfolio's net interest spread was 2.52%, which was lower than the previous quarter due to a reduction in dollar roll income, as well as a reduction in interest earned on payer swaps. We would expect a bounce back in Q1 as dollar roll income improves. Overall, our hedge strategy remains intact, and we will continue to use a combination of swaps, TBA securities, and Treasury futures to hedge the portfolio. During the quarter, the hedge portfolio marginally changed as we initiated a small position in Eris SOFR Futures. We would expect their usage to grow as we transition a portion of the portfolio to Eris SOFR Futures. As we progress through 2026, we will continue to proactively manage our portfolio and adjust our overall capital structure to add value for shareholders through improved performance and earnings.

Speaker #4: We would expect a bounce back in the first quarter as dollar roll income improves. Overall, our hedge strategy remains intact. And we will continue to use a combination of swaps, TVA securities, and treasury futures to hedge the portfolio.

Speaker #4: During the quarter, the hedge portfolio marginally changed as we initiated a small position in Eris SOFR futures. We would expect their usage to grow as we transition a portion of the portfolio to Eris SOFR futures.

Speaker #4: As we progress through 2026, we will continue to proactively manage our portfolio and adjust our overall capital structure to add value for shareholders through improved performance and earnings.

Speaker #4: I will now turn the call over to Apeksha for our fourth quarter financial discussion.

Julian Evans: I will now turn the call over to Apeksha Patel for our Q4 financial discussion.

Speaker #5: Thank you, Julian. Gap net income applicable to common stockholders for the fourth quarter was 5.3 million or 14 cents per weighted average diluted share outstanding during the quarter.

Apeksha Patel: Thank you, Julian. GAAP net income applicable to common stockholders for Q4 was $5.3 million, or $0.14 per weighted average diluted share outstanding during Q4. While comprehensive income attributable to common stockholders, which includes the mark-to-market of our available for sale RMBS, was $6.5 million, or $0.18 per weighted average diluted share. Our earnings available for distribution, or EAD, attributable to common stockholders were $3.9 million or $0.11 per share. Our book value per common share as of 31 December 2025, was $3.44, compared to book value of $3.36 as of 30 September 2025. We use a variety of derivative instruments to mitigate the effects of increases in interest rates on a portion of our future repurchase borrowings.

Speaker #5: While comprehensive income attributable to common stockholders which includes the mark-to-market of our available-for-sale RMBS was 6.5 million or 18 cents per weighted average diluted share.

Speaker #5: Our earnings available for distribution or EAD attributable to common stockholders were 3.9 million or 11 cents per share. Our book value per common share as of December 31st, 2025 was $3.44 compared to book value of $3.36 as of September 30th, 2025.

Speaker #5: We use a variety of derivative instruments to mitigate the effects of increases in interest rates on a portion of our future repurchase borrowing. At the end of the fourth quarter, we held interest rate swaps, DBAs, Treasury futures, and swap futures, all of which had a combined notional amount of approximately $422 million.

Apeksha Patel: At the end of Q4, we held interest rate swaps, TBAs, treasury futures, and swap futures, all of which had a combined notional amount of approximately $422 million. You can see more details regarding our hedging strategy in our 10-K as well as our Q4 presentation. For GAAP purposes, we have not elected to apply hedge accounting for our interest rate derivatives, and as a result, we record the change in estimated fair value as a component of the net gain or loss on interest rate derivatives. Operating expenses were $3.3 million for the quarter. On 12 December 2025, our board of directors declared a dividend of $0.10 per common share for Q4 2025, which was paid in cash on 30 January 2026.

Speaker #5: You can see more details regarding our hedging strategy in our 10-K as well as our fourth quarter presentation. For gap purposes, we have not elected to apply hedge accounting for our interest rate derivatives.

Speaker #5: And as a result, we record the change in estimated fair value as a component of the net gain or loss on interest rate derivatives.

Speaker #5: Operating expenses were $3.3 million for the quarter. On December 12th, 2025, our board of directors declared a dividend of 10 cents per common share for the fourth quarter of 2025, which was paid in cash on January 30th, 2026.

Speaker #5: We also declared a dividend of 51.25 cents per share on our 8.2% Series A cumulative redeemable preferred stock and a dividend of 62.59 cents on our 8.25% Series B fixed-to-floating rate cumulative redeemable preferred stock.

Apeksha Patel: We also declared a dividend of $0.5125 per share on our 8.2% Series A Cumulative Redeemable Preferred Stock, and a dividend of $0.6259 on our 8.25% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, both of which were paid on 15 January 2026. At this time, we will open up the call for questions. Operator?

Speaker #5: Both of which were paid on January 15th, 2026. At this time, we will open up the call for questions. Operator?

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Timothy D'Agostino of B. Riley Securities. Please go ahead, Timothy.

Speaker #6: Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again.

Speaker #6: Please stand by while we compile the Q&A roster. Our first question comes from the line of Timothy D'Agostino. o. Of B. Riley Securities. Please go ahead, Timothy.

Speaker #7: Yeah. Hi. Thanks for taking the question. And thanks for the comments before. My first question is, could you just kind of give us a sense or provide maybe a little bit more color on how the market for you all feels at the start of '26 compared to '25?

Timothy D'Agostino: Yeah. Hi, thank you for taking the question, and thanks for the comments before. You know, my first question is, could you just kind of give us a sense or provide maybe a little bit more color on how the market for you all feels at the start of 2026 compared to 2025? It'd be great to just kind of, through your lens, understand kind of the changes you're seeing and what's different. Thank you.

Speaker #7: It'd be great to just, through your lens, understand the changes you're seeing and what's different. Thank you.

Julian Evans: Hey, Tim, this is Julian. Well, I mean, obviously, the first thing off the table is, you know, we obviously got the tweet that talked about the DSCs being able to reinvest about $200 billion into mortgage-backed securities. I would say net spreads have, in the first, you know, instance of that, went tighter, especially in the middle of the coupon stack closest to par, and gradually over the next couple weeks, has subsequently given a lot of that back in terms of returns. Yes, spreads ended the month of January slightly tighter. I would say as we moved into February, the market has changed. I think relative to where we were in Q4, I think you saw kind of continuously tightening over the entire quarter.

Speaker #8: Hey, Tim. This is Julian. Well, I mean, obviously, the first thing off the table is we obviously got the tweet that talked about the DSCs being able to reinvest about $200 billion into mortgage-backed securities.

Speaker #8: So, I would say net-net spreads have, in the first instance of that, gone tighter. Especially in the middle of the coupon stack, closest to par.

Speaker #8: And over gradually over the next couple of weeks, I subsequently gave a lot of that back in terms of returns. Yes, spreads ended the month of January slightly tighter.

Speaker #8: But I would say as we moved into February, the market has changed. And I think relative to where we were in the fourth quarter, I think you saw kind of continuously tightening over the entire quarter.

Speaker #8: I think what we've seen so far is tightening in the month of January widening in the month of February plus the flattening of the yield curve.

Julian Evans: I think what we've seen so far is tightening in the month of January, widening in the month of February, plus the flattening of the yield curve. There seems to be more of a flight to quality bid in the market at the moment. Some of that obviously having to do with equities, in terms of either a rotation or a scare out of particular equity stocks, and I think that's filtered over into rates and where we see more of a flight to quality. Mortgages, I would say the bid-ask has widened out a little bit. Softer tone this month than what we've had definitely in the Q4 of last year.

Speaker #8: There seems to be more of a flight-to-quality bid in the market at the moment. Some of that obviously having to do with equities in terms of either a rotation or a scare out of particular equity stocks.

Speaker #8: And I think that's filtered over into rates and where we've seen more of a flight-to-quality. So mortgages, I would say the bid-ask is widened out a little bit.

Speaker #8: Some softer tone. This month than what we've had definitely in the fourth year.

Speaker #7: Okay. Great. Thank you so much for that. And if I could just ask a quick follow-up. Regarding the RMBS book, I know you said CPR ticked up quarter over quarter.

Timothy D'Agostino: Okay, great. Thank you so much for that. If I could just ask a quick follow-up. Regarding the RMBS book, I know you said CPR ticked up quarter-over-quarter.

Julian Evans: Yes.

Timothy D'Agostino: Is there a normalized level for CPR that you think you'll get to or that, you know, over the cycle you kind of look to? Just trying to understand, you know, where the CPR is now relative to over a normalized period. Thank you.

Speaker #7: Is there a normalized level for CPR that you think you'll get to or that over the cycle you kind of look to? Just trying to understand where that CPR is now relative to over a normalized period.

Speaker #7: Thank you.

Speaker #8: Well, I think if you look at our specified pools, I kind of tried to note was that a majority of the specified pools are not in the sixth and six and a half coupon for specified pools.

Julian Evans: Well, I think if you look at, like, our specified pools, I kind of tried to note was that a majority of the specified pools are not in the 6 and 6.5 coupon for specified pools.

Jay Lown: The majority of it's kind of been the 5 and 5.5 coupon. We've given ourselves a little bit of wiggle room. We felt we'd gone up high in terms of rates, came back down, but we advised ourselves not to maybe buy that 6th coupon. That would kind of be in the refinanceable bucket right now. Given the 6.5 kind of loan rate that we see, you know, our 6s, I would say, I mean, our 5.5s are kind of prepaying in that, I would say 9 to 12-ish type area. Over time, obviously, if rates get down to 5.5, that particular coupon becomes refinanceable, and I think you could see those speeds probably get to 20.

Julian Evans: The majority of it's kind of been the 5 and 5.5 coupon. We've given ourselves a little bit of wiggle room. We felt we'd gone up high in terms of rates, came back down, but we advised ourselves not to maybe buy that 6th coupon. That would kind of be in the refinanceable bucket right now. Given the 6.5 kind of loan rate that we see, you know, our 6s, I would say, I mean, our 5.5s are kind of prepaying in that, I would say 9 to 12-ish type area. Over time, obviously, if rates get down to 5.5, that particular coupon becomes refinanceable, and I think you could see those speeds probably get to 20.

Speaker #8: Majority of it's kind of in the five and five and a half coupons. So we've given ourselves a little bit of wiggle room. We felt we'd gone up high in terms of rates, came back down, but we advised ourselves not to maybe buy that sixth coupon that would kind of be in the refinanceable bucket right now.

Speaker #8: Given the six and a half kind of loan rate that we see, our sixth is, I would say I mean, our five and a halves are kind of prepaying in that, I would say, 9 to 12-ish type area.

Speaker #8: Over time, obviously, if rates get down to five and a half, that particular coupon becomes refinanceable. And I think you could see those speeds probably get to 20.

Speaker #8: We do have, obviously, some prepaid protection on a majority of the collateral that we have there, so that will offset that. And so I think TBA will be a lot worse.

Jay Lown: We do have, obviously, some prepaid protection on a majority of the collateral that we have there, so that will offset that. I think TBA will be a lot worse. Deliverable will probably be closer in the 30s, maybe 35, 40 type of CPR. I think our portfolio, you know, right now, as we mentioned, is, you know, 8.5. Could you see that portfolio, depending on how low mortgage rates, I would say probably, knock on wood, maxes itself probably around 15. The good part about that portfolio that we're also hasn't been noted, is the majority of that was purchased at a discount. You know, the accretion towards par would be beneficial to our overall portfolio.

Julian Evans: We do have, obviously, some prepaid protection on a majority of the collateral that we have there, so that will offset that. I think TBA will be a lot worse. Deliverable will probably be closer in the 30s, maybe 35, 40 type of CPR. I think our portfolio, you know, right now, as we mentioned, is, you know, 8.5. Could you see that portfolio, depending on how low mortgage rates, I would say probably, knock on wood, maxes itself probably around 15. The good part about that portfolio that we're also hasn't been noted, is the majority of that was purchased at a discount. You know, the accretion towards par would be beneficial to our overall portfolio.

Speaker #8: Deliverable will probably be closer in the 30s, maybe 35, 40 type of CPR. But overall, I think our portfolio right now, as we mentioned, is 8 and a half could you see that portfolio depending on how low mortgage rates I would say probably knock on wood maxes itself probably around 15.

Speaker #8: The good part about that portfolio that we're also not really hasn't been noted is the majority of that was So the accretion towards par would be beneficial to our overall portfolio.

Speaker #7: Okay. Great. Thank you so much for taking the questions today.

Mikhail Goberman: Okay, great. Thank you so much for taking the questions today.

Operator: Thank you. Our next question comes from the line of Mikhail Goberman of Citizens JMP. Please go ahead, Mikhail.

Speaker #6: Thank you. Our next question. Comes from the line of Mikhail Goberman of Citizens JMP. Please go ahead, Mikhail.

Mikhail Goberman: Hey, good afternoon, everybody. Hope everybody's doing well. Appreciate the detailed answer to the first question that was just asked. Maybe I'll shift to something completely different. What would you say the main driver is of quarter-over-quarter of the big drop in G&A expenses that you guys had? About 30%.

Speaker #9: Hey. Good afternoon, everybody. I hope everybody's doing well. Appreciate the detailed answer to the first question that was just asked. So maybe I'll shift to something completely different.

Speaker #9: What is the what would you say the main driver is of quarter to quarter of the big drop in G&A expenses that you guys had about 30%?

Speaker #8: Yeah, I'll let Apeksha answer that.

Jay Lown: Yeah. I'll let Apaksha answer that.

Apeksha Patel: Hey, Mikhail.

Speaker #10: Hey, Mikhail. So this is something that we had touched on in our last call as well. We had incurred some non-recurring expenses in the third quarter, primarily due to personnel changes.

Mikhail Goberman: Hello.

Apeksha Patel: This is something that we had touched on in our last call as well. We had incurred some non-recurring expenses in Q3, primarily due to personnel changes. Expenses have normalized in Q4.

Speaker #10: So expenses have normalized in the fourth quarter.

Speaker #6: Great. Thank you. And how are you guys thinking about the looking at the equity stack? How are you guys thinking about both share buybacks going forward and also the two series of preferreds?

Mikhail Goberman: Great. Thank you. How are you guys thinking about the, looking at the equity stack, how are you guys thinking about both, share buybacks going forward and also the two series of preferreds? Thanks.

Speaker #6: Thanks.

Speaker #8: So we do have an eye on the preferreds, the series B recently was trading at a discount in post-earnings. I think we'll have some conversations relative to a strategy with respect to whether or not we're going to continue to buy that back on the common front.

Jay Lown: We do have an eye on the preferreds. The Series B recently was trading at a discount and, post-earnings, I think we'll have some conversations relative to a strategy, with respect to whether or not we're going to continue to buy that back. On the common front, you know, look, we are currently focused on growing. We think the stock is cheap relative to where our performance has been, and we're looking forward to stock price recovering to a higher level that's more representative of what we think we're doing. As it relates to, you know, just explicitly giving direction around share buybacks, I'm not really prepared to do that, but we definitely do think about share repurchases relative to, you know, the impact of book value.

Speaker #8: Look, we are currently focused on growing. We think the stock is cheap relative to where our performance has been. And we're looking forward to stock price recovering to a higher level.

Speaker #8: That's more representative of what we think we're doing. And as it relates to just explicitly giving direction around share buybacks, I'm not really prepared to do that.

Speaker #8: But we definitely do think about share repurchases relative to the impact of book value.

Mikhail Goberman: Thanks. Appreciate that, Jay. If I can sneak in one more, I think you might know what it is.

Speaker #6: Thanks. Appreciate that, Jay. And if I can sneak in one more, I think you might know what it is.

Speaker #8: I don't know. I don't know. I think you're out of questions.

Jay Lown: I don't know.

Mikhail Goberman: How you guys-

Jay Lown: I don't know. I think you're out of questions.

Speaker #6: Well, we are a little bit deeper into the quarter this time of the year. So I guess an update on the book value would be great.

Mikhail Goberman: Well, we are a little bit deeper into the quarter this time of the year, so I guess.

Jay Lown: Yeah.

Mikhail Goberman: An update on the book value would be great. Thank you.

Speaker #6: Thank you.

Speaker #8: Wait a minute. Wait a minute. Hang on a second. We'll answer the question. So we'll let Apeksha answer the question. And she'll tell you what she sees for the book value.

Jay Lown: Wait a minute. Hang on a second. We'll answer the question. We'll let Apaksha answer the question, and she'll tell you what she sees for the book value.

Speaker #10: Yeah. So as of May 31st, we're seeing about a 1% increase in book value as compared to December 31st.

Apeksha Patel: Yeah.

Mikhail Goberman: Thank you.

Apeksha Patel: As of 31 February, we're seeing about a 1% increase in book value as compared to 31 December.

Speaker #6: Thanks very much. Best of luck going forward. Talk to you soon.

Mikhail Goberman: Thanks very much. Best of luck going forward. Talk to you soon.

Speaker #8: Talk to you soon, Jude. Thanks a lot.

Jay Lown: Talk to you soon, dude. Thanks a lot.

Operator: Thank you. I would now like to turn the conference back to Jay Lown for closing remarks. Sir?

Speaker #6: Thank you. I would now like to turn the conference back to Jay Lown for closing remarks. Sir?

Jay Lown: Thank you. Thanks, everyone, for joining our Q4 2025 earnings call, and we look forward to updating you in May for our Q1 2026 results. Have a great evening.

Speaker #8: Thank you. Thanks, everyone, for joining our fourth-quarter 2025 earnings call. And we look forward to updating you in May for our first quarter 2026 results.

Speaker #8: Have a great evening.

Operator: At this time providing... You may-

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