Financial Data and Key Metrics Changes - The economic return for the quarter was negative 4.8%, consisting of a $0.34 dividend per common share and a $0.76 decline in book value per common share [7] - The debt to equity ratio decreased from 7.1x at the end of March to 6.5x at the end of June, indicating a more defensive posture due to elevated near-term uncertainty [7] - As of July 18, 2025, the estimated book value per common share is between $7.99 and $8.31, reflecting a slight recovery in performance [8][25] Business Line Data and Key Metrics Changes - The Agency RMBS portfolio decreased by 15% quarter over quarter as the company managed risk amid trade policy uncertainty [18] - The allocation to Agency CMBS increased from 15% at the end of Q1 to just over 17% as of June 30, 2025, due to the decline in the Agency RMBS portfolio [20] Market Data and Key Metrics Changes - Interest rates declined across the front end of the Treasury yield curve during Q2, while long-term rates increased, reflecting expectations for accommodative policy from the FOMC [6][11] - The two-year Treasury yield declined by 16 basis points, while the thirty-year yield increased by 20 basis points, leading to the steepest two-thirty spread in nearly 3.5 years [11][12] Company Strategy and Development Direction - The company maintains a cautious near-term outlook but is optimistic about the long-term demand for Agency mortgages due to attractive valuations and stabilization in interest rate volatility [8][25] - The focus remains on specified pools with predictable prepayment behavior, particularly in lower loan balance collateral [18] Management's Comments on Operating Environment and Future Outlook - Management noted that financial conditions were volatile in Q2 but ended modestly accommodative, with expectations for two rate cuts by year-end and additional cuts in 2026 [5][25] - The company believes that further easing of monetary policy will lead to a steeper yield curve and a decline in interest rate volatility, supporting long-term demand for agency mortgages [25] Other Important Information - The company’s liquidity position is strong, providing a cushion for potential market stress while allowing for capital deployment as the investment environment improves [25] - The financing market for Agency CMBS remains robust, with no concerns about deterioration during a widening event [62] Q&A Session Summary Question: How does the company view the relative risk versus reward for high coupon RMBS? - The company believes that spreads reflect the risk accurately and has reduced exposure to higher coupon RMBS due to their sensitivity to interest rate volatility [29][30] Question: What is the company's comfort level on leverage? - The company is comfortable with its current leverage, which is lower than in Q1, and does not feel the need to increase leverage to meet return goals [33][34] Question: What is the outlook for swap spreads and the mix of hedges? - The company anticipates that swap spreads will widen, which would be beneficial, and is currently at maximum allocation to interest rate swaps [37][38] Question: What are the views on core earnings and dividends? - The company expects ROEs to remain attractive, supporting the current dividend without significant changes in the near term [41][45] Question: How does the company feel about CMBS spreads when the Fed cuts rates? - The company is comfortable with the financing market for Agency CMBS and expects spreads to tighten as the Fed cuts rates [60][62]

Financial Data and Key Metrics Changes - The company reported distributable earnings of $57.3 million or $0.28 per share, and $0.31 per share excluding one-time realized losses from the sale of two REO assets [19][12] - The return on equity (ROE) for the first quarter was approximately 10% [19] - The company anticipates distributable earnings guidance of $0.30 to $0.35 per quarter for 2025 [19][12] Business Line Data and Key Metrics Changes - The balance sheet lending platform originated $370 million in new bridge loans during the first quarter, with a target of $1.5 billion to $2 billion for 2025 [13][14] - The agency business had a slow first quarter, producing $6 million in originations and $731 million in loan sales, maintaining strong margins of 1.75% [25] - The investment portfolio grew to $11.5 billion at March 31, with an all-in yield of 7.85% [26] Market Data and Key Metrics Changes - The company experienced a significant backup in long-term rates, creating headwinds for originations [7][8] - The delinquency rate decreased by 20% to $654 million as of March 31, compared to $819 million at December 31 [22] - The average cost of debt decreased to approximately 6.82% at March 31 from 6.88% at December 31 [28] Company Strategy and Development Direction - The company is focused on resolving REO assets and delinquencies, viewing 2025 as a transitional year [18][12] - The strategy includes leveraging efficiencies in the securitization market and maintaining strong banking relationships to drive future earnings [5][7] - The company aims to reposition underperforming assets to increase occupancy and net operating income (NOI) over the next 12 to 24 months [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is characterized by volatility and uncertainty, particularly regarding interest rates [8][9] - There is optimism about potential rate reductions, which could positively impact agency volumes and earnings [9][12] - The management believes that the company is well-positioned to grow earnings and dividends again in 2026 if current challenges are addressed [12][18] Other Important Information - The company has successfully modified $38 million of loans and brought $39 million of loans back to performing status [10] - The company expects REO assets to increase to between $400 million and $500 million, with plans to aggressively manage and reposition these assets [52][54] - The book value at the end of the quarter was reported at $11.98 [77] Q&A Session Summary Question: What is the outlook for the Bridge portfolio growth in 2025? - Management expects net growth in the Bridge portfolio, targeting $1.5 billion to $2 billion in new business, with runoff projected between $1.5 billion to $3 billion depending on interest rates [32][33] Question: What were the primary weaknesses in the 2022 and 2023 vintages? - Management indicated that the multifamily sector experienced a long period of growth without corrections, leading to poor performance due to rising rates, economic vacancy issues, and increased competition from inexperienced entrants [39][41] Question: What is the current liquidity situation and expectations for NPLs and REO? - The company has $325 million in cash and liquidity, with expectations for REO to rise to between $400 million and $500 million, while NPLs are projected to decrease as assets are repositioned [48][54] Question: How much of the reported income was non-cash? - The company reported $15.3 million of PIK (payment-in-kind) interest during the quarter, which is a moving number based on loan modifications and performance [66] Question: What is the company's stance on stock buybacks? - Management emphasized the importance of liquidity and will evaluate stock buybacks based on market conditions and opportunities for capital growth [78]

Financial Data and Key Metrics Changes - The company reported distributable earnings of $57.3 million or $0.28 per share, and $0.31 per share excluding one-time realized losses from the sale of two REO assets [19] - The return on equity (ROE) for the first quarter was approximately 10% [19] - The company anticipates a quarterly distributable earnings guidance of $0.30 to $0.35 for 2025 [19] Business Line Data and Key Metrics Changes - The balance sheet lending platform originated $370 million in new bridge loans during the first quarter, with a full-year guidance of $1.5 billion to $2 billion [12][13] - The agency business had a slow first quarter, producing $6 million in originations and $731 million in loan sales, maintaining strong margins of 1.75% [25] - The investment portfolio grew to $11.5 billion at March 31, with an all-in yield of 7.85% [26] Market Data and Key Metrics Changes - The company experienced a reduction in delinquencies, down 20% to $654 million at March 31 compared to $819 million at December 31 [22] - The average yield on core investments decreased to 8.15% from 8.52% due to a reduction in the average SOFR rate [26] - The overall net interest spread in core assets decreased to 1.26% from 1.44% [28] Company Strategy and Development Direction - The company is focused on resolving REO assets and delinquencies, viewing 2025 as a transitional year to set up for growth in 2026 [18] - The company plans to leverage efficiencies in the securitization market to drive higher returns on capital [6][18] - The strategy includes repositioning underperforming assets to improve occupancy and net operating income (NOI) [11] Management's Comments on Operating Environment and Future Outlook - Management noted significant uncertainty and volatility in the interest rate environment, impacting the ability to predict future performance [8] - The company expects continued challenges in the short term due to the drag on earnings from REO assets and delinquencies [12] - If interest rates decrease, it could positively impact the company's ability to convert non-interest earning assets into income-producing investments [11] Other Important Information - The company has successfully modified $38 million of loans and brought $39 million of loans back to full performance [10] - The company took back $197 million of REO assets in the first quarter, with expectations to increase REO assets to between $400 million and $500 million [52] - The company has managed to deleverage its business by 30%, reducing the leverage ratio to 2.8:1 [29] Q&A Session Summary Question: Outlook for the Bridge Loan Portfolio - Management expects net growth in the bridge loan portfolio in 2025, targeting $1.5 billion to $2 billion in new business [32][34] Question: Reasons for Poor Performance in Previous Vintages - Management attributed poor performance to a combination of market corrections, economic factors, and inexperienced management in the multifamily sector [40][42] Question: Liquidity and NPLs Expectations - The company currently has $325 million in cash and liquidity, with expectations for NPLs to decrease as they work through the REO assets [48][54] Question: Non-Cash Income and Interest - The company reported $15.3 million of non-cash interest during the quarter, which is a moving number based on loan modifications [65][66] Question: Interest Rate Environment - Management discussed the impact of interest rates on business performance, noting that lower rates could enhance earnings potential [72][74]

Financial Data and Key Metrics Changes - For Q1, the company earned $0.18 per share compared to $0.07 in Q4, with a book value of $7.94 per share down from $8.09 at the end of Q4 [5][6] - Total return for the quarter was 2.6% unannualized, an increase from 0.6% in Q4 [5] - The average portfolio size was just under $6 billion, up from $5.3 billion in Q4, with a leverage ratio of 7.8 compared to 7.3 at the end of Q4 [6] Business Line Data and Key Metrics Changes - The average portfolio size increased, indicating a more substantial investment in mortgage-backed securities [6] - Prepayment speeds decreased to 7.8% in Q1 from 10.5% in Q4, reflecting changes in market conditions [6][52] Market Data and Key Metrics Changes - The market experienced significant volatility due to tariffs and their expected impact on the economy and inflation, leading to pricing in multiple Fed cuts by year-end [11][60] - Swap spreads moved meaningfully negative late in the quarter, impacting mortgage performance [14][15] Company Strategy and Development Direction - The company raised capital during the quarter, deploying it into higher coupon, shorter duration assets, and hedging with longer duration instruments [24][32] - The strategy focuses on maintaining a balance between risk and return, particularly in a volatile market environment [61] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding future economic conditions, highlighting potential inflationary pressures and slower growth due to tariffs [56][60] - The company is positioned to benefit from a steeper yield curve, which is anticipated to occur as a result of the current economic landscape [61] Other Important Information - The company declared and paid dividends of $0.36 per share for the quarter, maintaining a consistent payout [5] - Liquidity at the end of Q1 was 52.2%, slightly down from 52.9% at the end of Q4 [7] Q&A Session Summary Question: What is the duration gap at the end of the quarter and to date? - Management indicated that the duration gap is narrow, with a DV01 basis of $13, remaining consistent [64][65] Question: What is the current book value? - The estimated book value was $7.28, reflecting an 8.3% decline quarter to date [70][71] Question: Where do you see gross ROE sitting today? - Management suggested that ROE is very high, potentially around 20%, due to volatile market conditions [79] Question: How are you looking at dividend issuance and buybacks? - Management noted that buybacks were reactivated due to stock price declines, and future capital raising may be considered for liquidity purposes [81][82] Question: How does the Rocket Mortgage and Nationstar merger affect prepay speeds? - Management indicated that the merger could lead to faster prepayment speeds, impacting the convexity of the mortgage universe [104]

Financial Data and Key Metrics Changes - In Q1 2025, net income was approximately $106 million or $0.18 per diluted share, down from $116 million and $0.20 per diluted share in the previous quarter [6] - Adjusted earnings showed sequential growth due to revenue stability, lower operating expenses, and a smaller loan loss provision [7] - The average cost of deposits declined by 29 basis points, contributing to net interest margin improvement [19][24] Business Line Data and Key Metrics Changes - Commercial and industrial (C&I) loans achieved a 9% annualized growth, while regulatory commercial real estate (CRE) loans declined by $350 million [21] - Adjusted non-interest expenses were $267 million, 3% lower than the previous quarter, driven by lower technology and consulting expenses [26] - Non-accrual loans decreased modestly, and the allowance coverage ratio increased to 1.22%, the highest level in five years [28][30] Market Data and Key Metrics Changes - Core customer deposits increased by $600 million, allowing for the repayment of $700 million in higher-cost brokered balances [17] - Non-interest deposit balances reached the highest level since September 2023, indicating strong deposit growth [18] - The company anticipates loan growth and net interest income to be at the lower end of the expected range for 2025 [12] Company Strategy and Development Direction - The company remains focused on organic customer acquisition in both commercial and consumer areas, aiming for long-term revenue opportunities [14] - The strategic evolution into new business lines and geographies is expected to create previously unavailable opportunities [15] - The company is optimistic about navigating economic uncertainties while executing strategic imperatives [15] Management's Comments on Operating Environment and Future Outlook - Management noted that tariff uncertainty has lowered economic growth estimates, while inflation expectations are rising [7] - Despite increased competition leading to spread compression, the company believes there are sufficient opportunities to grow profitability [11] - Management expects a roughly 50% decline in charges and provisions compared to 2024, indicating confidence in credit quality [13] Other Important Information - The tangible book value has doubled over the last seven years, with growth outpacing peers [13] - The company is well-positioned from a capital perspective, with stable regulatory capital ratios [31] Q&A Session Summary Question: Update on commercial loan originations - New originations were slightly lower than the 7% level, averaging about 6.80% due to lower benchmark rates and spread compression [36] Question: Long-term target for CRE concentration - Management is comfortable with current CRE concentration levels and anticipates stabilization as originations pick up [40] Question: Updated expense guidance - The company has been conservative with expense guidance to allow flexibility for revenue-generating opportunities [45] Question: Deposit growth expectations - Strong core customer deposit growth is anticipated to continue, with a focus on paying off brokered deposits [49] Question: Insights on CRE portfolio insulation - The CRE portfolio is considered insulated from tariff disruptions, with commercial clients being more sensitive to interest rates [56] Question: Spread compression expectations - The guide expects some spread compression due to increased competition, particularly from banks [60] Question: Loan growth expectations for Q2 - The second quarter is expected to be a loan growth quarter, with an uptick in the pipeline for both CRE and C&I loans [70] Question: Update on criticized assets - There was a slight increase in criticized assets, but overall performance metrics remain strong [108] Question: Appetite for additional CRE loan sales - The company is comfortable with the current portfolio and does not anticipate additional loan sales at this time [98]

Financial Data and Key Metrics Changes - For Q1 2025, net income was approximately $106 million or $0.18 per diluted share, down from $116 million and $0.20 per diluted share in the previous quarter [5] - Adjusted earnings showed sequential growth due to revenue stability, lower operating expenses, and a smaller loan loss provision [5][6] - The average cost of deposits declined by 29 basis points, contributing to net interest margin improvement [12][14] Business Line Data and Key Metrics Changes - Commercial and industrial (C and I) loan growth was 9% annualized, with expectations for continued growth in this area [13][14] - The commercial real estate (CRE) concentration ratio decreased to 353% from 362% in the previous quarter, with expectations for stabilization in the CRE portfolio [13][19] - Adjusted non-interest expenses were $267 million, 3% lower than the previous quarter, driven by lower technology and consulting expenses [17] Market Data and Key Metrics Changes - Core customer deposits increased by $600 million, allowing for the repayment of $700 million in higher-cost brokered balances [11] - Non-interest deposit balances reached their highest level since September 2023, indicating strong deposit growth [11] - The company anticipates loan growth and net interest income to be at the lower end of their expected range for 2025 [7][15] Company Strategy and Development Direction - The company remains focused on organic customer acquisition in both commercial and consumer areas, aiming for long-term revenue opportunities [9] - The strategic imperative includes optimizing operations and expanding into new business lines and geographies [9][10] - The company is well-positioned to navigate economic uncertainties and execute on its strategic goals [10] Management's Comments on Operating Environment and Future Outlook - Management noted that tariff uncertainty has lowered economic growth estimates, but the company feels well-positioned to improve results despite this backdrop [6] - There is optimism regarding continued C and I growth, with a strong foundation laid over the past few years [27] - The company expects net interest margin to increase throughout the year as funding costs decline [15][69] Other Important Information - The tangible book value has doubled over the last seven years, indicating strong long-term value creation for stakeholders [8] - The allowance coverage ratio increased to 1.22%, the highest level in the past five years, reflecting a stable credit environment [19][20] Q&A Session Summary Question: Update on commercial loan originations - New originations were slightly lower than the 7% level, averaging around 6.8% due to lower benchmark rates and spread compression [24] Question: Long-term target for CRE concentration levels - Management is comfortable with current levels and anticipates stabilization as CRE originations pick up [28] Question: Expense guidance and expectations - The company has been conservative with expense guidance to allow for flexibility in revenue-generating opportunities [31] Question: Deposit growth expectations - Strong core customer deposit growth is expected to continue, with a focus on paying off brokered deposits [35] Question: Impact of tariffs on CRE portfolio - The CRE portfolio is insulated from tariff disruptions, with interest rates and labor being the primary factors affecting development [40] Question: Spread compression and competition - Increased competition is noted, particularly from banks, leading to expectations of further spread compression [43][45] Question: Loan growth expectations for Q2 - The second quarter is expected to be a loan growth quarter, with a strong pipeline in both C and I and CRE [48][49] Question: Update on criticized assets - Criticized assets have seen repayments, and the overall portfolio performance remains strong despite some elevated levels [78][80]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a pretax income of $53 million and a net income of $39 million, translating to $1.26 per diluted share, with adjusted net income at $42 million or $1.36 per diluted share [18] - Home sales revenues for Q1 were $884 million, down 4% year-over-year, primarily due to lower deliveries and average sales price [19] - The average sales price in Q1 was $387,000, a 1% decrease year-over-year, attributed to higher incentives [19] - The adjusted homebuilding gross margin was 21.6%, down from 22.9% in Q4 2024, while GAAP gross margin was 19.9%, compared to 20.6% in the previous quarter [20] Business Line Data and Key Metrics Changes - Deliveries in Q1 totaled 2,284 homes, a 3% decline from the previous year, influenced by a strategy to manage starts at a lower level [19] - Net new contracts for Q1 were 2,692 homes, a 6% decline compared to the previous year but a 33% increase over Q1 2023 [8] - The company maintained stable homebuilding gross margins of 20.1%, easing by only 80 basis points sequentially [7] Market Data and Key Metrics Changes - The absorption rate averaged 2.8 in Q1 2025, with a sequential increase in February and March, but April's rate is trending below Q1 levels [8] - The company noted that Texas had the lowest absorption performance at 2.1, impacting overall results [30] Company Strategy and Development Direction - The company aims to balance pace and price while managing construction costs and incentives, targeting a growth in deliveries of approximately 10% annually over the next several years [9] - The company is focused on maintaining an appropriate level of spec inventory and matching starts with sales pace [9] - The land strategy involves low-risk, land-light agreements with landowners, minimizing upfront costs and risk exposure [15][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty, interest rate volatility, and eroding consumer confidence affecting the spring selling season [6] - The company expects to see further sequential increases in deliveries in the latter half of 2025, supported by community count growth [24] - Management remains optimistic about long-term demand, despite current market challenges, and is taking steps to address headwinds [24] Other Important Information - The company was recognized on Newsweek's list of America's most trustworthy companies for the third consecutive year [10] - The company increased its quarterly cash dividend by 12% to $0.29 per share and repurchased 753,000 shares for $56 million at a discount to book value [23] Q&A Session Summary Question: Absorption rate differences between Century Complete and regional businesses - Management noted that Century Complete operates in markets with less direct competition, leading to a more stable absorption profile compared to regional businesses [29] Question: Pricing strategies for moving product - Management indicated that they are using both interest rate buy downs and price reductions to move unsold homes, anticipating a potential margin impact in Q2 [32] Question: Guidance for the back half of the year - Management expects community count growth to support higher closings in the latter half of the year, despite current headwinds [38] Question: SG&A savings from workforce reductions - Management stated that cost savings from various initiatives, including workforce reductions, are incorporated into the full-year SG&A guidance [39] Question: Pricing and incentive strategies - Management explained that pricing decisions are made based on individual subdivisions and market conditions, balancing between price cuts and incentives [85]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss to common shareholders of $1 million, translating to a diluted earnings per share of negative $0.01, primarily due to fair value declines from interest rate volatility and credit spread widening [2][10] - The book value per share as of March 31 was $15.43, a modest decrease from December 31 [2] - The run rate return potential for PMT is currently averaging $0.35 per share, down from $0.37 in the prior quarter [14] Business Line Data and Key Metrics Changes - The Credit Sensitive Strategies contributed $1 million to pretax income, while losses from organically created CRT investments were $5 million [10] - The interest rate sensitive strategies incurred a pretax loss of $5 million, with fair value declines on MSR investments amounting to $56 million [10] - PMT's Correspondent Production segment generated $10 million in income, down from the prior quarter [13] Market Data and Key Metrics Changes - Total correspondent loan acquisition volume was $23 billion in Q1, down 18% from the previous quarter [12] - PMT retained 21% of total conventional correspondent production in Q1, an increase from 19% in the fourth quarter [12] - Current third-party estimates for industry originations in 2025 average $2 trillion, indicating growth in overall volumes [2] Company Strategy and Development Direction - PMT aims to leverage its relationship with PFSI to capitalize on unique investment opportunities, focusing on credit-sensitive strategies while maintaining a consistent securitization cadence [4][7] - The company plans to continue closing approximately one securitization of non-owner occupied loans per month and one jumbo loan securitization per quarter starting in Q2 [7] - PMT's strategy includes a focus on maintaining a stable dividend while navigating the current volatile market environment [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in PMT's ability to navigate the challenging mortgage market, citing strong risk management practices and a diversified investment portfolio [3][9] - The company anticipates continued low delinquency rates due to the overall credit strength of consumers and substantial home equity accumulation [7][8] - Management noted that the current economic environment has led to credit spread widening, but they expect the yield curve to normalize over time, which could improve returns on interest rate-sensitive strategies [36][38] Other Important Information - PMT completed three securitizations of investor loans totaling $1 billion in unpaid principal balance during the first quarter [6] - The fair value of PMT's MSR asset at the end of the quarter was $3.8 billion, slightly down from December 31 [11] Q&A Session Summary Question: Changes in book value and expected ROE since quarter end - Management indicated that book value has decreased by about 2% to 3% due to interest rate volatility and credit spread widening, but remains contained [17][18] Question: Expectation of acquiring a larger percentage of loans from PFSI - Management stated that PMT's acquisition strategy focuses on where capital can be most advantageously deployed, with no expectation of increasing the proportion of loans retained in the second half of the year [22] Question: Outlook on capital allocation and investment strategies - Management expressed satisfaction with current capital allocation, emphasizing the importance of growing credit-sensitive strategies while maintaining correspondent activity [28][30] Question: Visibility on volumes from correspondent loans - Management expects increased correspondent activity starting at the end of April, with the market centered on a $2 trillion origination market [31][32] Question: Outlook for the dividend amidst lower run rate earnings - Management expects the dividend to remain stable despite fluctuations in run rate, emphasizing the importance of dividend stability [36] Question: Return expectations on new loan securitizations - Management noted that return targets on subordinate bonds have increased due to credit spread widening, with expected returns in the mid-teens [41][42]