Thank you for standing by, and welcome to Cherry Hill Mortgage Investment Corporation's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Emma Little, Investor Relations. Please go ahead.

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

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. 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. 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. 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 $0.14 per diluted share. Book value per common share finished the quarter at $3.44 compared to $3.36 on September 30. On an NAV basis, which includes preferred stock, NAV was up approximately $3.1 million or 1.3% relative to September 30. Financial leverage at the end of the quarter remained relatively consistent at 5.4x, 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. 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. As a reminder, Real Genius has developed a proprietary direct-to-consumer platform, offering an efficient fully online mortgage experience, including instant prequalification, 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 Real Genius' growth as more homebuyers and homeowners look to purchase homes or refinance. 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 fourth quarter.

Thank you, Jay. Fourth quarter'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 sulfur 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 and rate environment. As the quarter progressed, the entire coupon stack had a hand in performance as interest and SOFR swap rate fluctuated. To start, lower and middle coupon mortgages outperformed in concert with lower rates. However, in December, following the Fed's third rates 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. 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 remain de minimis as the incentive to refinance continues to be…

Thank you, Julian. GAAP net income applicable to common stockholders for the fourth quarter was $5.3 million or $0.14 per weighted average diluted share outstanding during the quarter. 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 December 31, 2025, was $3.44 compared to book value of $3.36 as of September 30, 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. At the end of the fourth quarter, 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 fourth quarter 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 December 12, 2025, our Board of Directors declared a dividend of $0.10 per common share for the fourth quarter of 2025, which was paid in cash on January 30, 2026. 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 January 15, 2026. At this time, we will open up the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Timothy D'Agostino of B. Riley Securities.

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. It'd be great to just kind of through your lens, understand kind of the changes you're seeing and what's different.

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. So I would say net-net spreads have in the first instance of that went tighter, especially in the middle of the coupon stack closest to par and over gradually over the next couple of weeks has subsequently given a lot of that back in terms of returns. Yes, spreads ended the month of January, slightly tighter. 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. 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 flight to quality. So mortgages, I would say the bid-ask has widened out a little bit. So softer tone this month than what we've had definitely in the fourth quarter of last year.

Okay. Great. And if I could ask a quick follow-up. Regarding the RMBS book, I know you said CPR picked up quarter-over-quarter. 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 -- or the CPR is now relative to over a normalized period.

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. Majority of it kind of has been in the 5 and 5.5 coupons. So we've given ourselves a little bit of wiggle room. We felt we've gone high in terms of rates, came back down, but we advised ourselves not to maybe buy that fixed coupon that would kind of be in the refinanceable bucket right now. Given the 6.5 loan rate that we see. Our 6 is, 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. We do have, obviously, some prepaid protection on the majority of the collateral that we have there. So that will offset that. And so I think TBA will be a lot worse. Deliverable will probably be closer to the 30s, maybe 35, 40 type of CPR. But overall, I think our portfolio right now, as we mentioned, it's $8.5 million. 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 not really hasn't been noted as the majority of that was purchased at a discount. So the accretion towards par would be beneficial to our overall portfolio.

Our next question comes from the line of Mikhail Goberman of Citizens JMP.

Good afternoon, everybody. I hope everybody is doing well. Appreciate the detailed answer to the first question that was just asked. So I'll shift to something completely different. What is the -- what would you say the main driver is of quarter-to-quarter of the big drop G&A expenses that you guys had about 30%?

Yes. I'll let Apeksha answer that.

So this is something that we had touched on in our last call as well. We had incurred some nonrecurring expenses in the third quarter, primarily due to personnel changes. So expenses have normalized in the fourth quarter.

Great. 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 2 series of preferreds.

So 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, 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 above 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, but we definitely do think about share repurchases relative to the impact to book value.

Appreciate that, Jay. And if I can sneak in 1 more. I think you might know what it is...

I don't know, I think you're out of questions.

Well, we are a little bit deeper into the quarter at this time of the year. So I guess an update on both sides would be great.

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.

Yes. So as of 3/31, we're seeing about a 1% increase in book value as compared to December 31.

Best of luck going forward. Talk to you soon.

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

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. Have a great evening.

Ladies and gentlemen, the conference has now concluded. You may now disconnect your lines. Thank you.