PennyMac Reports Q1 Financial Results, Recovers From Previous Losses

Mortgage News May 22, 2023

PennyMac Mortgage Investment Trust (PMT) has recovered from its recent setbacks, achieving a first-quarter profit of $50.2 million in 2023.

In the first quarter of the year, PennyMac Mortgage Investment Trust (PMT) posted a net income of $50.2 million, equivalent to $0.50 per common share. This marks a significant turnaround from the net loss of $5.8 million experienced in the preceding quarter. CEO David Spector credited the company’s success to its effective “credit-sensitive strategies” and financing arrangements.

In the company’s earnings report, it was stated by PMT’s CEO, David Spector, that the credit-sensitive strategies employed by PMT yielded positive outcomes due to the tightening of credit spreads early in the quarter. However, the gains were partly offset by net fair value declines on mortgage servicing rights (MSRs) and interest rate hedges, which resulted in a tax benefit. Spector emphasized that PMT’s long-term success is attributed, in part, to the implementation of sophisticated financing structures for its long-term assets.

PMT’s correspondent segment, responsible for acquiring newly originated loans from correspondent sellers and typically selling or securitizing them, reported a pretax income of $1.8 million. This represents a decline from the previous quarter’s figure of $7.1 million.

The company obtained $20.2 billion worth of loans via its correspondent production operations, which is a decrease of 3% compared to the previous quarter and 10% compared to the first quarter of 2022. In terms of conventional correspondent production, the company’s volumes amounted to $6.6 billion in loan balance, marking a 2% decline from the previous quarter and a significant drop of 32% from the corresponding period last year.

Spector stated that the company remains optimistic about the prospect of deploying capital into new investments and repurchasing their shares at prices below book value. He highlighted the advantageous opportunities available and expressed confidence in the company’s seasoned investment portfolio, supported by robust underlying fundamentals and a strong balance sheet. Spector further expressed his positive outlook for PMT, expecting continued strong financial performance throughout 2023.

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