PennyMac Mortgage Investment Trust(PMT) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights 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] - 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] - The company executed four private label securitizations (three Agency-eligible investor, one Jumbo) with a combined UPB of $1.4 billion[5][6] - PMT strengthened its balance sheet by issuing $105 million of senior unsecured notes set to mature in 2030[5] 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 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] - 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] - 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] Segment Performance Analysis 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 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] - 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] Interest Rate Sensitive Strategies Segment 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] Correspondent Production Segment 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] - The weighted average fulfillment fee paid to PFSI remained unchanged from the prior quarter at 19 basis points[24] Corporate Segment 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] Tax Analysis 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][4] - Excluding the non-recurring impact, PMT would have reported an income tax benefit of $4.6 million[26] Financial Statements 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 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 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 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] - 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][32]