[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements for PennyMac Mortgage Investment Trust as of June 30, 2025, and for the three and six-month periods then ended [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated financial statements for PennyMac Mortgage Investment Trust as of June 30, 2025, and for the three and six-month periods then ended, including Balance Sheets, Statements of Operations, Statements of Changes in Shareholders' Equity, Statements of Cash Flows, and accompanying Notes [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $16.80 billion as of June 30, 2025, from $14.41 billion at December 31, 2024, primarily driven by a significant increase in Loans held for investment, while total liabilities also rose to $14.94 billion from $12.47 billion, and total shareholders' equity decreased slightly to $1.87 billion from $1.94 billion over the same period Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$16,801,119** | **$14,408,706** | | Cash | $362,900 | $337,694 | | Loans acquired for sale at fair value | $2,616,251 | $2,116,318 | | Loans held for investment at fair value | $4,566,532 | $2,193,575 | | Mortgage servicing rights at fair value | $3,739,106 | $3,867,394 | | **Total Liabilities** | **$14,935,474** | **$12,470,206** | | Assets sold under agreements to repurchase | $6,826,855 | $6,500,938 | | Unsecured senior notes | $875,225 | $605,860 | | Asset-backed financings of VIEs at fair value | $4,176,128 | $2,040,375 | | **Total Shareholders' Equity** | **$1,865,645** | **$1,938,500** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) For the quarter ended June 30, 2025, the company reported net income of $7.5 million, a decrease from $25.4 million in the same period of 2024, resulting in a net loss attributable to common shareholders of $2.9 million, or ($0.04) per share, primarily due to a significant negative change in the fair value of mortgage servicing rights and higher expenses Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Investment Income | $70,201 | $71,198 | $114,666 | $145,403 | | Total Expenses | $53,195 | $42,589 | $103,959 | $84,413 | | Net Income | $7,534 | $25,434 | $17,214 | $73,042 | | Net (Loss) Income Attributable to Common Shareholders | $(2,921) | $14,980 | $(3,696) | $52,133 | | Basic (Loss) Earnings Per Share | $(0.04) | $0.17 | $(0.05) | $0.60 | | Diluted (Loss) Earnings Per Share | $(0.04) | $0.17 | $(0.05) | $0.60 | [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Total shareholders' equity decreased from $1.94 billion at the end of 2024 to $1.87 billion at June 30, 2025, primarily due to dividends paid on common ($69.8 million) and preferred shares ($20.9 million), which exceeded the net income of $17.2 million for the six-month period - For the six months ended June 30, 2025, total shareholders' equity decreased by **$72.9 million**, from **$1,938.5 million** to **$1,865.6 million**[31](index=31&type=chunk) - Dividends declared for common shares were **$0.40 per share** for the quarter and **$0.80 per share** for the six months ended June 30, 2025, totaling **$35.0 million** and **$69.8 million**, respectively[29](index=29&type=chunk)[31](index=31&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, the company experienced a net cash outflow from operating activities of $2.61 billion, primarily due to the purchase and sale of loans, while a significant net cash inflow of $2.32 billion from financing activities resulted in a net increase in cash of $25.2 million for the period Summary of Cash Flows (in thousands) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,609,863) | $(98,571) | | Net cash provided by investing activities | $313,144 | $763,481 | | Net cash provided by (used in) financing activities | $2,321,925 | $(815,261) | | **Net increase (decrease) in cash** | **$25,206** | **$(150,351)** | | Cash at beginning of period | $337,694 | $281,085 | | **Cash at end of period** | **$362,900** | **$130,734** | [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details the company's accounting policies and financial statement items, including organization and business segments, related party transactions, variable interest entities, fair value measurements, debt facilities, and segment reporting - The company operates in three reportable segments: credit sensitive strategies (CRT, subordinate MBS), interest rate sensitive strategies (MSRs, Agency MBS), and correspondent production (loan acquisition and resale)[40](index=40&type=chunk)[46](index=46&type=chunk) - The company has extensive related-party transactions with subsidiaries of PennyMac Financial Services, Inc. (PFSI) for services including loan servicing (PLS), MSR recapture (PLS), correspondent fulfillment (PLS), and investment management (PCM)[57](index=57&type=chunk) - A significant portion of assets and liabilities are measured at fair value, with many classified as Level 3, requiring management judgment, including Mortgage Servicing Rights (MSRs), Credit Risk Transfer (CRT) arrangements, and Interest Rate Lock Commitments (IRLCs)[106](index=106&type=chunk)[131](index=131&type=chunk) - The company utilizes various VIEs for its Credit Risk Transfer (CRT) arrangements and for financing transactions involving Mortgage Servicing Rights (MSRs) and other mortgage-backed securities, consolidating those where it is the primary beneficiary[90](index=90&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=80&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, business trends, and financial condition, noting a significant decrease in Q2 2025 net income due to fair value losses on MSRs, offset by gains in correspondent production and credit sensitive segments, while highlighting its strategy of creating mortgage-related assets and managing risks - The company's objective is to provide attractive risk-adjusted returns through dividends and capital appreciation by investing in mortgage-related assets, a significant portion of which are created through its correspondent production activities[269](index=269&type=chunk) - Management attributes the **$17.9 million decrease** in net income for Q2 2025 compared to Q2 2024 to increased fair value losses on MSRs, which were partially offset by gains on MBS and CRT investments[295](index=295&type=chunk) - Business trends indicate that elevated interest rates have constrained the mortgage origination market, but recent interest rate volatility has increased refinancing opportunities, which may drive higher production and prepayment speeds[289](index=289&type=chunk)[290](index=290&type=chunk) - Beginning in July 2025, the correspondent production operating model will change, with **PLS** becoming the initial purchaser of loans and **PMT** retaining the right to purchase up to **100%** of the non-government production from **PLS**[283](index=283&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=88&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to various market risks, primarily real estate risk, credit risk, interest rate risk, and prepayment risk, providing sensitivity analyses for key assets like MBS and MSRs to hypothetical changes in interest rates and other valuation inputs MBS Fair Value Sensitivity to Interest Rate Changes (as of June 30, 2025) | Interest Rate Shift (bps) | Change in Fair Value (in thousands) | | :--- | :--- | | -75 | $143,569 | | -50 | $102,056 | | +50 | $(117,232) | | +75 | $(178,717) | MSR Fair Value Sensitivity to Key Inputs (as of June 30, 2025) | Change in Fair Value Attributable to Shift in: | -10% | +10% | | :--- | :--- | :--- | | Pricing Spread | $97,044 | $(92,450) | | Prepayment Speed | $114,525 | $(107,260) | | Annual Per-Loan Cost of Servicing | $32,710 | $(32,710) | CRT Arrangements Fair Value Sensitivity to Pricing Spread (as of June 30, 2025) | Pricing Spread Shift (bps) | Change in Fair Value (in thousands) | | :--- | :--- | | -50 | $18,069 | | -25 | $8,970 | | +25 | $(8,847) | | +50 | $(17,569) | [Item 4. Controls and Procedures](index=89&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[398](index=398&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[399](index=399&type=chunk) [PART II. OTHER INFORMATION](index=90&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=90&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a putative class action lawsuit (Verthelyi Action) alleging unlawful replacement of the LIBOR dividend rate for its Series A and B Preferred Shares with a fixed rate, which the company believes is without merit - A class action lawsuit, Verthelyi v. PennyMac Mortgage Investment Trust, was filed on June 14, 2024, alleging the company improperly replaced the LIBOR dividend rate for its Series A and B Preferred Shares with a fixed rate[221](index=221&type=chunk) - The company's Motion to Dismiss was denied, but it was granted an interlocutory appeal to the Ninth Circuit, and the matter remains pending, with the company believing the claims are without merit[222](index=222&type=chunk)[223](index=223&type=chunk) [Item 1A. Risk Factors](index=90&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024, were reported[403](index=403&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities or repurchase common shares during the quarter ended June 30, 2025, with approximately $73.4 million remaining available for future repurchases under its program - No unregistered sales of equity securities occurred during the quarter ended June 30, 2025[404](index=404&type=chunk) Common Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | Amount Available for Future Repurchase | | :--- | :--- | :--- | :--- | | April 2025 | 0 | $0.00 | $73,353,000 | | May 2025 | 0 | $0.00 | $73,353,000 | | June 2025 | 0 | $0.00 | $73,353,000 | [Item 5. Other Information](index=90&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2025, none of the company's trustees or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No trustees or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter[405](index=405&type=chunk) [Item 6. Exhibits](index=91&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to management and mortgage banking services agreements, certifications by the CEO and CFO, and interactive data files (XBRL) - Key exhibits filed include amendments to the Management Agreement and the Mortgage Banking Services Agreement, both dated **June 23, 2025**[406](index=406&type=chunk) - Certifications from the CEO (David A. Spector) and CFO (Daniel S. Perotti) pursuant to Sections **302** and **906** of the Sarbanes-Oxley Act of **2002** are included as exhibits[406](index=406&type=chunk)

Company Performance - PennyMac Mortgage reported a quarterly loss of $0.04 per share, significantly missing the Zacks Consensus Estimate of $0.35, and down from earnings of $0.17 per share a year ago, representing an earnings surprise of -111.43% [1] - The company posted revenues of $70.2 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 24.22%, and down from $71.2 million in the same quarter last year [2] - Over the last four quarters, PennyMac Mortgage has surpassed consensus EPS estimates only once [2] Market Comparison - PennyMac Mortgage shares have declined approximately 0.9% since the beginning of the year, while the S&P 500 has gained 7.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.35 on revenues of $92.43 million, and for the current fiscal year, it is $1.06 on revenues of $321.53 million [7] Industry Outlook - The REIT and Equity Trust industry, to which PennyMac Mortgage belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact PennyMac Mortgage's stock performance [5][6]

Financial Data and Key Metrics Changes - For Q2 2025, the company reported a net loss to common shareholders of $3 million, translating to a loss per share of $0.04, primarily due to fair value declines and a non-recurring tax adjustment of $14 million [2][11] - The book value per share as of June 30 was $15, a slight decrease from March 31 [2] - The company declared a common dividend of $0.40 per share for the second quarter [2] Business Line Data and Key Metrics Changes - The Credit Sensitive Strategies contributed $22 million to pretax income, while interest rate sensitive strategies reported a pretax loss of $5 million [11] - Gains from organically created Credit Risk Transfer (CRT) investments were $17 million, with $9 million from realized gains and $8 million from market-driven value changes [11] - The company completed three securitizations totaling $1.1 billion in UPB, retaining $71 million in new investments [4] Market Data and Key Metrics Changes - Total correspondent loan acquisition volume was $30 billion in Q2, up 30% from the previous quarter [12] - PMT retained 17% of total conventional correspondent production in Q2, down from 21% in Q1 [13] - The weighted average coupon of mortgages underlying MSRs was 3.9%, indicating borrowers have little incentive to refinance [6] Company Strategy and Development Direction - The company aims to execute one securitization of agency eligible non-owner occupied loans per month and one jumbo loan securitization per quarter, focusing on leveraging organic investment creation abilities [5] - PMT's structure allows efficient capital deployment into long-term mortgage assets without the operational burdens of origination and servicing [3] - The company is positioned to continue growing its private label securitization market presence, having been a top three issuer of prime non-agency MBS [4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a volatile market by leveraging competitive advantages, including a diversified investment portfolio and strong risk management practices [10] - The company expects to maintain a stable dividend level of $0.40, supported by projected taxable income and investment strategies [40] - Management noted that realized losses are expected to remain limited due to the overall credit strength of consumers and substantial home equity accumulation [8] Other Important Information - The fair value of PMT's MSR asset at the end of the quarter was $3.8 billion, slightly down from March 31 [12] - Delinquency rates for the MSR portfolio remain low, attributed to strong consumer credit and home price appreciation [8] - The company issued $105 million in unsecured senior notes due in February 2030 [15] Q&A Session Summary Question: Discussion on non-agency securitization opportunity and returns - Management noted that non-agency subordinate MBS experienced credit spread tightening despite rate volatility, with expected returns in the mid to low teens [18][19] Question: Retained interest on jumbo loans - The company retained a senior mezzanine tranche on the jumbo securitization, indicating a likely trend of retaining a greater portion of interest in future securitizations based on capital deployment [21][22] Question: Sustainability of the $0.40 dividend level - Management remains comfortable with the $0.40 dividend level, citing stability in taxable income and expected returns from investments [40]

Financial Performance - PennyMac Mortgage Investment Trust (PMT) reported a net loss attributable to common shareholders of $3 million, resulting in a diluted EPS of $(004)[5] - The company declared a dividend per common share of $040[5] - Return on average common equity was (1)%[5] - Book value per share was $1500[5] Investment Strategies & Results - Credit sensitive strategies generated a pretax loss of $5 million, but pretax income excluding market driven value changes was $24 million[5] - Interest rate sensitive strategies generated a pretax income of $14 million, but pretax income excluding market driven value changes was $31 billion[5] - Correspondent production generated a pretax income of $22 million[5] - New investments in MSR totaled $44 million, with a fair value of MSR investments at $37 billion[5] - Net new investments in senior bonds from PMT securitizations were $66 million[5] - Net new investments in credit sub-bonds from PMT securitizations were $87 million, with a fair value of organically-created CRT investments at $10 billion[5]

[Financial & Operational Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) PennyMac Mortgage Investment Trust (PMT) reported a net loss of $2.9 million, or $(0.04) per common share, for the second quarter of 2025, impacted by a non-recurring tax expense and fair value declines despite solid core income Q2 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Net Loss Attributable to Common Shareholders | $2.9 million | | Loss Per Common Share | $(0.04) | | Annualized Return on Avg. Common Equity | (1)% | | Book Value Per Common Share (at June 30, 2025) | $15.00 | | Quarterly Dividend Per Common Share | $0.40 | - Financial results were negatively impacted by a non-recurring tax expense of **$14.0 million** due to state legislative changes affecting deferred tax balances[4](index=4&type=chunk) - Correspondent loan production for PMT's account grew **11%** quarter-over-quarter to **$3.1 billion UPB**, resulting in the creation of **$44 million** in new mortgage servicing rights (MSRs)[4](index=4&type=chunk) - The company executed four private label securitizations (three Agency-eligible investor, one Jumbo) with a combined UPB of **$1.4 billion**[5](index=5&type=chunk)[6](index=6&type=chunk) - PMT strengthened its balance sheet by issuing **$105 million** of senior unsecured notes set to mature in 2030[5](index=5&type=chunk) Notable Activity After Quarter End (July 2025) | Activity | UPB / Value (USD) | | :--- | :--- | | Agency-eligible investor loan securitization | $386 million | | Net new investments in non-Agency subordinate bonds | $26 million | | Net new investments in non-Agency senior bonds | $17 million | [Management Commentary](index=2&type=section&id=Management%20Commentary) Management reported solid core income offset by fair value declines and a one-time tax adjustment, emphasizing strategic growth in credit-sensitive investments and the synergistic relationship with PFSI - Management emphasized that positive core performance was offset by net fair value declines from interest rate volatility and a non-recurring tax expense[6](index=6&type=chunk) - The company is increasing its emphasis on diversifying and organically growing credit-sensitive investments, demonstrated by four recent private label securitizations totaling **$1.4 billion UPB**[6](index=6&type=chunk) - The synergistic relationship with manager and servicer PFSI is considered a key strategic advantage, providing access to technology, operational processes, and a high-quality loan pipeline[6](index=6&type=chunk) [Segment Performance Analysis](index=3&type=section&id=Segment%20Performance%20Analysis) PMT's total pretax income was **$17.0 million**, with Credit Sensitive Strategies as the strongest segment and Interest Rate Sensitive Strategies and Corporate segments reporting losses Pretax Income (Loss) by Segment (Q2 2025) | Segment | Pretax Income (Loss) (in thousands) | | :--- | :--- | | Credit Sensitive Strategies | $21,834 | | Interest Rate Sensitive Strategies | $(4,888) | | Correspondent Production | $13,721 | | Corporate | $(13,661) | | **Total** | **$17,006** | [Credit Sensitive Strategies Segment](index=3&type=section&id=Credit%20Sensitive%20Strategies%20Segment) The Credit Sensitive Strategies segment's pretax income surged to **$21.8 million**, driven by **$19.8 million** in net gains on investments and positive valuation changes on GSE CRT investments Segment Performance vs. Prior Quarter | Metric (in millions) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Pretax Income | $21.8 | $1.1 | | Net Investment Income | $21.9 | $1.2 | - Net gains on investments were **$19.8 million**, compared to net losses of **$43 thousand** in the prior quarter, including **$20.3 million** in gains from GSE CRT investments[10](index=10&type=chunk) - Valuation-related gains on organically-created CRT investments were **$7.8 million**, reflecting credit spread tightening, contrasting with **$14.5 million** of losses in the prior quarter[11](index=11&type=chunk) [Interest Rate Sensitive Strategies Segment](index=4&type=section&id=Interest%20Rate%20Sensitive%20Strategies%20Segment) This segment recorded a pretax loss of **$4.9 million**, with positive net loan servicing fees offset by **$60.6 million** in hedging losses due to interest rate volatility Segment Performance vs. Prior Quarter | Metric (in millions) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Pretax Loss | $(4.9) | $(5.5) | | Net Investment Income | $20.7 | $19.7 | Net Loan Servicing Fees Breakdown (in thousands) | Component | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Servicing & Other Fees | $158,238 | $160,033 | | MSR Fair Value Change (Market) | $22,713 | $(55,831) | | Hedging Results | $(60,637) | $(39,944) | | **Total Net Loan Servicing Fees** | **$23,947** | **$(27,210)** | - Net interest expense for the segment increased to **$17.1 million** from **$15.4 million** in the prior quarter, mainly due to a higher amount of retained investments from securitizations[18](index=18&type=chunk) [Correspondent Production Segment](index=5&type=section&id=Correspondent%20Production%20Segment) The Correspondent Production segment's pretax income increased to **$13.7 million**, driven by a **30%** sequential increase in total loan acquisitions to **$29.8 billion UPB** Segment Performance vs. Prior Quarter | Metric (in millions) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Pretax Income | $13.7 | $10.1 | | Total Loan Acquisitions (UPB) | $29.8B | $22.9B | | Net Gains on Loans Acquired for Sale | $17.8 | $12.3 | - Total correspondent acquisitions of **$29.8 billion UPB** were up **30%** from the prior quarter and **32%** from the second quarter of 2024[21](index=21&type=chunk) - The weighted average fulfillment fee paid to PFSI remained unchanged from the prior quarter at **19 basis points**[24](index=24&type=chunk) [Corporate Segment](index=6&type=section&id=Corporate) The Corporate segment generated **$0.7 million** in revenues and incurred **$14.4 million** in expenses, resulting in a pretax loss, primarily from management fees and other corporate costs Corporate Segment Results (in millions) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Revenues | $0.7 | $2.3 | | Expenses | $14.4 | $14.4 | - Corporate expenses consisted of **$6.9 million** in management fees and **$7.5 million** in remaining expenses, essentially unchanged from the prior quarter[25](index=25&type=chunk) [Tax Analysis](index=7&type=section&id=Taxes) PMT recorded a **$9.5 million** tax provision, heavily impacted by a **$14.0 million** non-recurring tax expense from repricing deferred tax balances due to state legislative changes - A non-recurring tax expense of **$14.0 million** was recorded, primarily from the repricing of deferred tax balances due to state apportionment changes driven by recent legislation[26](index=26&type=chunk)[4](index=4&type=chunk) - Excluding the non-recurring impact, PMT would have reported an income tax benefit of **$4.6 million**[26](index=26&type=chunk) [Financial Statements](index=10&type=section&id=Financial%20Statements) PMT's financial statements show total assets increased to **$16.8 billion**, liabilities rose to **$14.9 billion**, and total shareholders' equity slightly decreased to **$1.87 billion** [Consolidated Balance Sheets](index=10&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20%28UNAUDITED%29) As of June 30, 2025, PMT's total assets increased to **$16.8 billion**, total liabilities rose to **$14.9 billion**, and total shareholders' equity slightly decreased to **$1.87 billion** Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $16,801,119 | $14,876,226 | | Total Liabilities | $14,935,474 | $12,973,508 | | Total Shareholders' Equity | $1,865,645 | $1,902,718 | [Consolidated Statements of Operations](index=11&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20%28UNAUDITED%29) For Q2 2025, PMT reported net investment income of **$70.2 million** and a net loss attributable to common shareholders of **$2.9 million**, or **$(0.04)** per share Key Income Statement Items (in thousands, except per share data) | Account | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Investment Income | $70,201 | $44,465 | $71,198 | | Total Expenses | $53,195 | $50,764 | $42,589 | | Net (Loss) Income Attributable to Common Shareholders | $(2,921) | $(775) | $14,980 | | (Loss) Earnings Per Common Share (Basic) | $(0.04) | $(0.01) | $0.17 | [About the Company & Forward-Looking Statements](index=7&type=section&id=About%20the%20Company%20%26%20Forward-Looking%20Statements) PMT is a mortgage REIT externally managed by a PFSI subsidiary, with the report containing forward-looking statements subject to various market and regulatory risks - PMT is a mortgage REIT that invests in residential mortgage loans and is externally managed by PNMAC Capital Management, LLC, a subsidiary of PennyMac Financial Services, Inc. (PFSI)[29](index=29&type=chunk) - The press release contains forward-looking statements concerning the company's financial results, operations, and strategies, which are subject to significant risks and uncertainties as detailed in SEC filings[31](index=31&type=chunk)[32](index=32&type=chunk)

Group 1 - The article discusses the author's journey into investing, starting in high school in 2011, focusing on REITs, preferred stocks, and high-yield bonds, indicating a long-standing interest in markets and the economy [1] - The author has recently adopted a strategy that combines long stock positions with covered calls and cash secured puts, emphasizing a fundamental long-term investment approach [1] - The author primarily covers REITs and financials on Seeking Alpha, with occasional articles on ETFs and other stocks influenced by macro trade ideas [1]

Group 1 - The article discusses an exchange-traded fixed-income security IPO, specifically focusing on the PennyMac Mortgage Investment Trust [1] - It invites active investors to join a free trial and engage in discussions with sophisticated traders and investors [1] Group 2 - The article emphasizes that past performance is not indicative of future results and does not provide specific investment recommendations [2] - It clarifies that the analysts contributing to the article may not be licensed or certified by any regulatory body [2]

Summary of PennyMac Mortgage Investment Trust (PMT) 2025 Conference Call Company Overview - **Company**: PennyMac Mortgage Investment Trust (PMT) - **Date**: June 03, 2025 - **Key Partner**: PennyMac Financial Services, Inc. (PFSI) Core Strategies 1. **Credit Sensitive Strategies** - Focus on mortgage investments primarily exposed to credit risk, particularly subordinate pieces of securitizations [2][3] - Current focus on generating new securitizations of high credit quality loans, comprising about 15% of PMT's total equity [3][4] 2. **Interest Rate Sensitive Strategies** - Investments sensitive to interest rate changes, with a sophisticated hedge program to mitigate risks [4][5] - Mortgage servicing rights (MSRs) make up approximately 45% of PMT's total equity, benefiting from lower prepayment sensitivity due to their origination in 2020-2021 [20][21] 3. **Correspondent Aggregation** - Aggregation of loans from smaller originators, with a focus on both agency-eligible and non-agency loans [6][8] - PMT collaborates with PFSI to adjust correspondent activity based on capital availability and objectives [7] Financial Metrics - **Total Equity**: Approximately $1.9 billion, with $1.3 billion in common equity [9] - **Total Assets**: About $15 billion, with $3 billion in non-recourse debt [10] - **Monthly Securitization Size**: Ranges from $300 million to $400 million, retaining $25 million to $30 million of first loss pieces [12][13] Market Position and Competitive Landscape - PMT is capturing significant market share in the investor and second home collateral space, with one main competitor in non-agency deals [18] - The prime jumbo space is more competitive, with higher origination activity and more players involved [19] Risk Management - PMT employs a dual-pronged risk management strategy focusing on interest rate hedging and stable funding sources [25][28] - The company maintains a mid-single-digit leverage ratio and utilizes non-mark-to-market debt to avoid forced asset sales during market downturns [29][30] Dividend Policy - PMT has maintained a stable dividend of $0.40 per share, reflecting confidence in future earnings potential from both interest rate sensitive and credit sensitive strategies [31] Additional Insights - The company is not currently focused on significantly growing its MSR portfolio, preferring stability and predictability in cash flows [22] - The overall return expectations for interest rate sensitive strategies are currently lower due to an inverted yield curve, but there is potential for improvement if the curve steepens [23][24]

Group 1 - Albert Anthony is a Croatian-American media personality and analyst for financial media platforms Investing.com and Seeking Alpha, focusing on dividend stocks and general market commentary [1] - Since 2023, Albert Anthony has gained over 1,000 followers and has covered more than 200 companies across multiple sectors [1] - He has experience as an analyst in the IT sector and was part of the IT team at a top 10 financial firm in the US [1] Group 2 - Albert Anthony holds a B.A. from Drew University and has completed coursework through the Corporate Finance Institute and Coursera [1] - In 2025, he plans to launch a new book on Amazon discussing his methodology as an analyst and how he rates stocks [1] - The Albert Anthony brand is owned by Albert Anthony & Co., a sole proprietorship registered in Austin, Texas [1]

[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements for Q1 2025 show a net loss attributable to common shareholders of $0.8 million, a significant decrease from $37.2 million net income in the prior-year quarter [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $14.88 billion, primarily due to a rise in loans at fair value, while total liabilities also rose to $12.97 billion, leading to a slight decrease in shareholders' equity Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$14,876,226** | **$14,408,706** | | Cash | $247,941 | $337,694 | | Loans at fair value | $3,228,991 | $2,193,575 | | Mortgage servicing rights at fair value | $3,770,034 | $3,867,394 | | **Total Liabilities** | **$12,973,508** | **$12,470,206** | | Assets sold under agreements to repurchase | $6,202,539 | $6,500,938 | | Asset-backed financings of VIEs at fair value | $2,967,631 | $2,040,375 | | Unsecured senior notes | $773,122 | $605,860 | | **Total Shareholders' Equity** | **$1,902,718** | **$1,938,500** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2025, the company reported a net income of $9.7 million, down from $47.6 million in Q1 2024, resulting in a net loss of $0.8 million attributable to common shareholders due to a significant drop in net loan servicing fees Consolidated Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Investment Income | $44,465 | $74,205 | | Total Expenses | $50,764 | $41,824 | | (Loss) Income Before Income Taxes | ($6,299) | $32,381 | | Net Income | $9,680 | $47,608 | | Net (Loss) Income Attributable to Common Shareholders | ($775) | $37,153 | | Basic (Loss) Earnings Per Common Share | ($0.01) | $0.43 | | Diluted (Loss) Earnings Per Common Share | ($0.01) | $0.39 | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash used in operating activities significantly increased to $594.3 million, while investing activities provided $40.2 million, and financing activities provided $464.3 million, resulting in an overall cash decrease of $89.8 million Summary of Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($594,267) | ($342,371) | | Net Cash Provided by Investing Activities | $40,228 | $770,796 | | Net Cash Provided by (Used in) Financing Activities | $464,286 | ($582,932) | | **Net Decrease in Cash** | **($89,753)** | **($154,507)** | | Cash at End of Quarter | $247,941 | $126,578 | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's operating segments, extensive related-party transactions, use of Variable Interest Entities, fair value measurement techniques, and compliance with debt covenants for its various short-term and long-term debt facilities - The company operates in three segments: Credit Sensitive Strategies (CRT, subordinate MBS), Interest Rate Sensitive Strategies (MSRs, Agency MBS), and Correspondent Production (loan acquisition and resale)[36](index=36&type=chunk)[42](index=42&type=chunk) - PMT has extensive related-party agreements with subsidiaries of PennyMac Financial Services, Inc. (PFSI) for loan servicing (PLS), management (PCM), and correspondent fulfillment services (PLS), with fee changes effective January 1, 2025[53](index=53&type=chunk)[54](index=54&type=chunk)[70](index=70&type=chunk) - The company utilizes Variable Interest Entities (VIEs) for Credit Risk Transfer (CRT) arrangements with Fannie Mae and for securitizing loans where it retains subordinate interests, consolidating these VIEs as the primary beneficiary[83](index=83&type=chunk)[85](index=85&type=chunk)[93](index=93&type=chunk) - A significant portion of assets and liabilities are measured at fair value, with MSRs, CRT derivatives, and certain MBS classified as Level 3 due to reliance on unobservable inputs like prepayment speeds and discount rates[98](index=98&type=chunk)[100](index=100&type=chunk)[119](index=119&type=chunk) - As of March 31, 2025, the company was in compliance with all financial covenants for its debt facilities, including requirements for minimum tangible net worth, liquidity, and debt-to-equity ratios[174](index=174&type=chunk)[355](index=355&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the $37.9 million decrease in Q1 2025 net income to market conditions, specifically MSR valuation losses and widening credit spreads, despite increased correspondent production volume and asset growth Pretax (Loss) Income by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Credit sensitive strategies | $1,110 | $60,826 | | Interest rate sensitive strategies | ($5,474) | ($27,245) | | Correspondent production | $10,127 | $11,667 | | Corporate operations | ($12,062) | ($12,867) | | **Total Pretax (Loss) Income** | **($6,299)** | **$32,381** | - The decrease in Q1 2025 results was driven by a **$53.5 million decrease** in net gains from the Credit Sensitive segment and a **$72.9 million decrease** in net servicing fees from the Interest Rate Sensitive segment[277](index=277&type=chunk) - Correspondent loan purchases increased to **$24.0 billion** in Q1 2025 from **$18.4 billion** in Q1 2024, though gain on sale margins were reduced[261](index=261&type=chunk)[324](index=324&type=chunk) - Beginning July 2025, PLS will become the initial purchaser of correspondent loans, with PMT retaining the right to purchase up to 100% of PLS's non-government production[264](index=264&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Net income declined to $9.7 million in Q1 2025 from $47.6 million in Q1 2024, primarily due to a significant negative swing in net loan servicing fees and increased total expenses Key Performance Measures (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Investment Income | $44,465 | $74,205 | | Expenses | $50,764 | $41,824 | | Net (Loss) Income | $9,680 | $47,608 | | Book Value per Common Share | $15.43 | $15.87 (at 12/31/24) | [Balance Sheet Analysis](index=70&type=section&id=Balance%20Sheet%20Analysis) Total assets increased by $467.5 million to $14.88 billion, driven by a $1.0 billion rise in loans at fair value, while total debt reached $12.67 billion, resulting in a 6.7:1 debt-to-equity ratio - Total assets increased by **$467.5 million**, primarily due to a **$1.0 billion increase** in Loans at fair value, offset by a **$114.1 million decrease** in Loans acquired for sale at fair value[321](index=321&type=chunk) Correspondent Loan Purchases (Fair Value, in thousands) | Loan Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GSE-Eligible Loans | $12,194,110 | $10,080,120 | | Government insured or guaranteed | $11,449,035 | $8,328,018 | | Jumbo loans | $348,740 | $2,589 | | **Total** | **$23,991,885** | **$18,410,727** | [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by investment cash flows and borrowings, with total debt at $12.7 billion and a 6.7:1 debt-to-equity ratio as of March 31, 2025, while remaining compliant with all debt covenants and regulatory capital requirements - The company's debt-to-equity ratio was **6.7:1** on a total basis and **5.1:1** excluding non-recourse debt from consolidated VIEs as of March 31, 2025[345](index=345&type=chunk)[346](index=346&type=chunk) - In February 2025, the company issued **$172.5 million** of 9.00% senior notes due 2030[349](index=349&type=chunk) - The company and its servicer, PLS, were in compliance with liquidity and net worth requirements from FHFA and Ginnie Mae as of March 31, 2025[358](index=358&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces real estate, credit, interest rate, prepayment, and market value risks, with sensitivity analyses showing significant impacts on MSR and MBS fair values from changes in prepayment speeds and interest rates MSR Fair Value Sensitivity to Prepayment Speed (as of March 31, 2025, in thousands) | Change in Prepayment Speed | +5% | +10% | +20% | | :--- | :--- | :--- | :--- | | Change in Fair Value | $(54,038) | $(106,340) | $(206,073) | MBS Fair Value Sensitivity to Interest Rates (as of March 31, 2025, in thousands) | Interest Rate Shift (bps) | -75 | -50 | +50 | +75 | | :--- | :--- | :--- | :--- | :--- | | Change in Fair Value | $128,373 | $93,935 | $(111,893) | $(171,231) | [Controls and Procedures](index=80&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[371](index=371&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[372](index=372&type=chunk) [PART II. OTHER INFORMATION](index=81&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a class action lawsuit alleging improper replacement of the LIBOR dividend rate for preferred shares, which the company believes is without merit and intends to vigorously defend - A class action lawsuit (Verthelyi Action) was filed alleging the company improperly replaced the LIBOR dividend rate for Series A and B Preferred Shares with a fixed rate instead of a SOFR-based rate[209](index=209&type=chunk) - The company believes its actions were consistent with the terms of the shares and the LIBOR Act, considers the lawsuit to be without merit, and plans to defend itself vigorously[210](index=210&type=chunk) [Risk Factors](index=81&type=section&id=Item%201A%20Risk%20Factors) No material changes have occurred regarding the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[376](index=376&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=81&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company did not sell any unregistered equity securities or repurchase common shares, with approximately $73.4 million remaining available under its share repurchase program - No common shares were repurchased during the quarter ended March 31, 2025[377](index=377&type=chunk) Share Repurchase Program Status (as of March 31, 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Total Authorization | $500,000 | | Amount Available for Future Repurchase | $73,353 | [Other Information](index=81&type=section&id=Item%205.%20Other%20Information) During Q1 2025, no trustees or officers adopted, terminated, or modified any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No trustees or officers adopted, terminated, or modified a Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangement during the quarter[378](index=378&type=chunk)