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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| PennyMac Mortgage Investment Trust | NYSE:PMT | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 12.95 | 32 | 09:23:11 |
From Dec 2023 to Dec 2024
PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income attributable to common shareholders of $42.5 million, or $0.44 per common share on a diluted basis for the fourth quarter of 2023, on net investment income of $84.8 million. PMT previously announced a cash dividend for the fourth quarter of 2023 of $0.40 per common share of beneficial interest, which was declared on December 6, 2023, and paid on January 26, 2024, to common shareholders of record as of December 29, 2023.
Fourth Quarter 2023 Highlights
Financial results:
1 Return on average common equity is calculated based on net income attributable to common shareholders as a percentage of monthly average common equity during the quarter
Other investment highlights:
Notable activity after quarter end
Full-Year 2023 Highlights
Financial results:
2 Return on average common equity is calculated based on net income attributable to common shareholders as a percentage of monthly average common equity during the year
“PMT produced very strong results in 2023, with an 11 percent return on equity and income contributions from all three of its investment strategies, demonstrating strength in a year of tremendous volatility,” said Chairman and CEO David Spector. “Book value per share net of the dividends was up 2 percent from the prior year end, driven by both PMT’s strong financial performance as well as our unwavering commitment to managing interest rate risk. The fourth quarter was also very strong, with a 12 percent annualized return on equity driven by sizeable contributions from both the credit sensitive strategies and PMT’s correspondent production business.”
Mr. Spector continued, “I am proud of PMT’s financial performance in 2023, and believe the long-term return potential of PMT’s core MSR and CRT investments remains strong, supported by the borrowers underlying these assets with strong credit characteristics and a significant amount of home equity. At the same time, we will remain disciplined in our approach to managing capital and interest rate risk, positioning PMT to continue delivering attractive risk-adjusted returns to its shareholders.”
The following table presents the contributions of PMT’s segments, consisting of Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production, and Corporate:
Quarter ended December 31, 2023 Credit sensitivestrategies Interest rate sensitivestrategies Correspondentproduction Corporate Total (in thousands) Net investment income: Net loan servicing fees$
-
$
(77,830
)
$
-
$
-
$
(77,830
)
Net gains on loans acquired for sale
-
-
15,380
-
15,380
Net gains (losses) on investments and financings Mortgage-backed securities
7,798
111,419
-
-
119,217
Loans at fair value Held by VIEs
5,398
(5,990
)
-
-
(592
)
Distressed
48
-
-
-
48
CRT investments
45,665
-
-
-
45,665
58,909
105,429
-
-
164,338
Net interest expense: Interest income
26,220
120,853
16,442
1,763
165,278
Interest expense
24,174
142,911
17,795
643
185,523
2,046
(22,058
)
(1,353
)
1,120
(20,245
)
Other
66
-
3,065
-
3,131
61,021
5,541
17,092
1,120
84,774
Expenses: Loan fulfillment and servicing fees payable to PennyMac Financial Services, Inc.
24
20,300
4,931
-
25,255
Management fees payable to PennyMac Financial Services, Inc.
-
-
-
7,252
7,252
Other
116
2,014
903
8,914
11,947
$
140
$
22,314
$
5,834
$
16,166
$
44,454
Pretax income (loss)
$
60,881
$
(16,773
)
$
11,258
$
(15,046
)
$
40,320
Credit Sensitive Strategies Segment
The Credit Sensitive Strategies segment primarily includes results from PMT’s organically-created GSE CRT investments, opportunistic investments in other GSE CRT, investments in non-agency subordinate bonds from private-label securitizations of PMT’s production and legacy investments. Pretax income for the segment was $60.9 million on net investment income of $61.0 million, compared to pretax income of $41.0 million on net investment income of $41.5 million in the prior quarter.
Net gains on investments in the segment were $58.9 million, compared to $38.8 million in the prior quarter. These net gains include $45.7 million of gains on PMT’s organically-created GSE CRT investments, $7.8 million in gains on other acquired subordinate CRT mortgage-backed securities (MBS) and $5.4 million of gains on investments from non-agency subordinate bonds from PMT’s production.
Net gains on PMT’s organically-created CRT investments for the quarter were $45.7 million, compared to $30.2 million in the prior quarter. These net gains include $29.0 million in valuation-related gains, which reflected the impact of credit spread tightening in the fourth quarter. The prior quarter included $14.6 million of such gains. Net gains on PMT’s organically-created CRT investments also included $18.0 million in realized gains and carry, compared to $16.1 million in the prior quarter. Realized losses during the quarter were $1.3 million.
Net interest income for the segment totaled $2.0 million, compared to $3.0 million in the prior quarter. Interest income totaled $26.2 million, unchanged from the prior quarter. Interest expense totaled $24.2 million, up slightly from the prior quarter.
Interest Rate Sensitive Strategies Segment
The Interest Rate Sensitive Strategies segment includes results from investments in MSRs, Agency MBS, non-Agency senior MBS and interest rate hedges. Pretax loss for the segment was $16.8 million on net investment income of $5.5 million, compared to pretax income of $81.6 million on net investment income of $104.5 million in the prior quarter. The segment includes investments that typically have offsetting fair value exposures to changes in interest rates. For example, in a period with decreasing interest rates, MSRs are expected to decrease in fair value, whereas Agency pass-through and non-Agency senior MBS are expected to increase in fair value.
The results in the Interest Rate Sensitive Strategies segment consist of net gains and losses on investments, net interest income and net loan servicing fees, as well as associated expenses.
Net gains on investments for the segment were $105.4 million, which primarily consisted of gains on MBS due to decreasing interest rates.
Losses from net loan servicing fees were $77.8 million, compared to net gains of $281.3 million in the prior quarter. Net loan servicing fees included contractually specified servicing fees of $162.9 million and $2.5 million in other fees, reduced by $87.7 million in realization of MSR cash flows, down from $102.2 million in the prior quarter, due to higher yield levels during the quarter. Net loan servicing fees also included $144.6 million in fair value losses of MSRs due to lower market interest rates, $11.2 million in hedging losses, and $0.3 million of MSR recapture income. PMT’s hedging activities are intended to manage its net exposure across all interest rate sensitive strategies, which include MSRs, MBS and related tax impacts.
The following schedule details net loan servicing fees:
Quarter ended December 31, 2023 September 30, 2023 December 31, 2022 (in thousands) From non-affiliates: Contractually specified$
162,916
$
166,809
$
164,189
Other fees
2,487
3,752
5,502
Effect of MSRs: Change in fair value Realization of cashflows
(87,729
)
(102,213
)
(98,974
)
Due to changes in valuation inputs used in valuation model
(144,603
)
263,139
43,935
(232,332
)
160,926
(55,039
)
Hedging results
(11,191
)
(50,689
)
(117,228
)
(243,523
)
110,237
(172,267
)
(78,120
)
280,798
(2,576
)
From PFSI—MSR recapture income
290
500
512
Net loan servicing fees
$
(77,830
)
$
281,298
$
(2,064
)
Net interest expense for the segment was $22.1 million versus $28.5 million in the prior quarter. Interest income totaled $120.9 million, up from $114.4 million in the prior quarter primarily due to increased income from Agency MBS and other investments. Interest expense totaled $142.9 million, unchanged from the prior quarter.
Segment expenses were $22.3 million, down slightly from the prior quarter.
Correspondent Production Segment
PMT acquires newly originated loans from correspondent sellers and typically sells or securitizes the loans, resulting in current-period income and additions to its investments in MSRs related to a portion of its production. PMT’s Correspondent Production segment generated pretax income of $11.3 million in the fourth quarter, up from $8.8 million in the prior quarter.
Through its correspondent production activities, PMT acquired a total of $23.6 billion in UPB of loans, up 10 percent from the prior quarter and 14 percent from the fourth quarter of 2022. Of total correspondent acquisitions, government-insured or guaranteed acquisitions totaled $11.0 billion, up 24 percent from the prior quarter, and conventional conforming acquisitions totaled $12.6 billion, down 1 percent from the prior quarter. $2.5 billion of conventional volume was for PMT’s account, down 10 percent from the prior quarter due to seasonal impacts. The remaining $10.1 billion of conventional volume was for PFSI’s account. Interest rate lock commitments on conventional loans for PMT’s account totaled $2.7 billion, down 22 percent from the prior quarter.
Segment revenues were $17.1 million and included net gains on loans acquired for sale of $15.4 million, other income of $3.1 million, which primarily consists of volume-based origination fees, and net interest expense of $1.4 million. Net gains on loans acquired for sale increased $1.8 million from the prior quarter, primarily due to higher margins. Interest income was $16.4 million, up from $14.7 million in the prior quarter, and interest expense was $17.8 million, up from $16.4 million in the prior quarter, both due to higher inventory of loans held for sale at fair value.
Segment expenses were $5.8 million, down from the prior quarter. The weighted average fulfillment fee rate in the fourth quarter was 20 basis points, unchanged from the prior quarter.
Corporate Segment
The Corporate segment includes interest income from cash and short-term investments, management fees, and corporate expenses.
Segment revenues were $1.1 million, down from $2.3 million in the prior quarter. Management fees were $7.3 million, and other segment expenses were $8.9 million.
Taxes
PMT recorded a tax benefit of $12.6 million, driven primarily by fair value declines on MSRs and hedges held in PMT’s taxable subsidiary.
Management’s slide presentation and accompanying materials will be available in the Investor Relations section of the Company’s website at pmt.pennymac.com after the market closes on Thursday, February 1, 2024. Management will also host a conference call and live audio webcast at 6:00 p.m. Eastern Time to review the Company’s financial results. The webcast can be accessed at pmt.pennymac.com, and a replay will be available shortly after its conclusion.
Individuals who are unable to access the website but would like to receive a copy of the materials should contact the Company’s Investor Relations department at 818.224.7028.
About PennyMac Mortgage Investment Trust
PennyMac Mortgage Investment Trust is a mortgage real estate investment trust (REIT) that invests primarily in residential mortgage loans and mortgage-related assets. PMT is externally managed by PNMAC Capital Management, LLC, a wholly-owned subsidiary of PennyMac Financial Services, Inc. (NYSE: PFSI). Additional information about PennyMac Mortgage Investment Trust is available at pmt.pennymac.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: changes in interest rates; the Company’s ability to comply with various federal, state and local laws and regulations that govern its business; changes in the Company’s investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject it to additional risks; volatility in the Company’s industry, the debt or equity markets, the general economy or the real estate finance and real estate markets; events or circumstances which undermine confidence in the financial and housing markets or otherwise have a broad impact on financial and housing markets; changes in general business, economic, market, employment and domestic and international political conditions, or in consumer confidence and spending habits from those expected; the degree and nature of the Company’s competition; changes in real estate values, housing prices and housing sales; the availability of, and level of competition for, attractive risk-adjusted investment opportunities in mortgage loans and mortgage-related assets that satisfy the Company’s investment objectives; the inherent difficulty in winning bids to acquire mortgage loans, and the Company’s success in doing so; the concentration of credit risks to which the Company is exposed; the Company’s dependence on its manager and servicer, potential conflicts of interest with such entities and their affiliates, and the performance of such entities; changes in personnel and lack of availability of qualified personnel at its manager, servicer or their affiliates; our ability to mitigate cybersecurity risks, cybersecurity incidents and technology disruptions; the availability, terms and deployment of short-term and long-term capital; the adequacy of the Company’s cash reserves and working capital; the Company’s ability to maintain the desired relationship between its financing and the interest rates and maturities of its assets; the timing and amount of cash flows, if any, from the Company’s investments; our substantial amount of indebtedness; the performance, financial condition and liquidity of borrowers; our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man-made or natural disasters, climate change and pandemics; the ability of the Company’s servicer, which also provides the Company with fulfillment services, to approve and monitor correspondent sellers and underwrite loans to investor standards; incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of the Company’s customers and counterparties; the Company’s indemnification and repurchase obligations in connection with mortgage loans it purchases and later sells or securitizes; the quality and enforceability of the collateral documentation evidencing the Company’s ownership and rights in the assets in which it invests; increased rates of delinquency, defaults and forbearances and/or decreased recovery rates on the Company’s investments; the performance of mortgage loans underlying mortgage-backed securities in which the Company retains credit risk; the Company’s ability to foreclose on its investments in a timely manner or at all; increased prepayments of the mortgages and other loans underlying the Company’s mortgage-backed securities or relating to the Company’s mortgage servicing rights and other investments; the degree to which the Company’s hedging strategies may or may not protect it from interest rate volatility; the effect of the accuracy of or changes in the estimates the Company makes about uncertainties, contingencies and asset and liability valuations when measuring and reporting upon the Company’s financial condition and results of operations; the Company’s ability to maintain appropriate internal control over financial reporting; the Company’s ability to detect misconduct and fraud; developments in the secondary markets for the Company’s mortgage loan products; legislative and regulatory changes that impact the mortgage loan industry or housing market; regulatory or other changes that impact government agencies or government-sponsored entities, or such changes that increase the cost of doing business with such agencies or entities; the Consumer Financial Protection Bureau and its issued and future rules and the enforcement thereof; changes in government support of homeownership; changes in government or government-sponsored home affordability programs; limitations imposed on the Company’s business and its ability to satisfy complex rules for it to qualify as a REIT for U.S. federal income tax purposes and qualify for an exclusion from the Investment Company Act of 1940 and the ability of certain of the Company’s subsidiaries to qualify as REITs or as taxable REIT subsidiaries for U.S. federal income tax purposes; changes in governmental regulations, accounting treatment, tax rates and similar matters; the Company’s ability to make distributions to its shareholders in the future; the Company’s failure to deal appropriately with issues that may give rise to reputational risk; and the Company’s organizational structure and certain requirements in its charter documents. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, 2023 September 30, 2023 December 31, 2022 (in thousands except share amounts) ASSETS Cash$
281,085
$
236,396
$
111,866
Short-term investments at fair value
128,338
150,059
252,271
Mortgage-backed securities at fair value
4,836,292
4,665,970
4,462,601
Loans acquired for sale at fair value
669,018
1,025,730
1,821,933
Loans at fair value
1,433,820
1,372,118
1,513,399
Derivative assets
177,984
29,750
84,940
Deposits securing credit risk transfer arrangements
1,209,498
1,237,294
1,325,294
Mortgage servicing rights at fair value
3,919,107
4,108,661
4,012,737
Servicing advances
206,151
93,614
197,972
Due from PennyMac Financial Services, Inc.
56
2,252
3,560
Other
252,538
301,492
134,991
Total assets
$
13,113,887
$
13,223,336
$
13,921,564
LIABILITIES Assets sold under agreements to repurchase
$
5,624,558
$
6,020,716
$
6,616,528
Mortgage loan participation and sale agreements
-
23,991
-
Notes payable secured by credit risk transfer and mortgage servicing assets
2,910,605
2,825,591
2,804,028
Unsecured senior notes
600,458
599,754
546,254
Asset-backed financing of variable interest entities at fair value
1,336,731
1,279,059
1,414,955
Interest-only security payable at fair value
32,667
28,288
21,925
Derivative and credit risk transfer strip liabilities at fair value
51,381
140,494
167,226
Accounts payable and accrued liabilities
354,989
92,633
160,212
Due to PennyMac Financial Services, Inc.
29,262
27,613
36,372
Income taxes payable
190,003
202,967
151,778
Liability for losses under representations and warranties
26,143
33,152
39,471
Total liabilities
11,156,797
11,274,258
11,958,749
SHAREHOLDERS' EQUITY Preferred shares of beneficial interest
541,482
541,482
541,482
Common shares of beneficial interest—authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding 86,624,044, 86,760,408 and 88,888,889 common shares, respectively
866
868
889
Additional paid-in capital
1,923,437
1,923,130
1,947,266
Accumulated deficit
(508,695
)
(516,402
)
(526,822
)
Total shareholders' equity
1,957,090
1,949,078
1,962,815
Total liabilities and shareholders' equity
$
13,113,887
$
13,223,336
$
13,921,564
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Quarterly Periods Ended December 31, 2023 September 30, 2023 December 31, 2022 (in thousands, except per share amounts) Investment Income Net loan servicing fees: From nonaffiliates Servicing fees$
165,403
$
170,561
$
169,691
Change in fair value of mortgage servicing rights
(232,332
)
160,926
(55,039
)
Hedging results
(11,191
)
(50,689
)
(117,228
)
(78,120
)
280,798
(2,576
)
From PennyMac Financial Services, Inc.
290
500
512
(77,830
)
281,298
(2,064
)
Net gains (losses) on investments and financings
164,338
(109,544
)
54,294
Net gains on loans acquired for sale
15,380
13,558
9,755
Loan origination fees
3,004
3,226
9,668
Interest income
165,278
158,926
132,375
Interest expense
185,523
183,918
154,676
Net interest expense
(20,245
)
(24,992
)
(22,301
)
Other
127
(117
)
15
Net investment income
84,774
163,429
49,367
Expenses Earned by PennyMac Financial Services, Inc.: Loan servicing fees
20,324
20,257
20,245
Management fees
7,252
7,175
7,307
Loan fulfillment fees
4,931
5,531
12,184
Professional services
2,084
2,133
1,898
Compensation
2,327
1,961
1,587
Loan origination
817
710
3,982
Loan collection and liquidation
1,184
1,890
278
Safekeeping
1,059
467
1,799
Other
4,476
4,885
5,569
Total expenses
44,454
45,009
54,849
Income (loss) before (benefit from) provision for income taxes
40,320
118,420
(5,482
)
(Benefit from) provision for income taxes
(12,590
)
56,998
(10,145
)
Net income
52,910
61,422
4,663
Dividends on preferred shares
10,455
10,455
10,456
Net income (loss) attributable to common shareholders
$
42,455
$
50,967
$
(5,793
)
Earnings (losses) per common share Basic$
0.49
$
0.59
$
(0.07
)
Diluted$
0.44
$
0.51
$
(0.07
)
Weighted average shares outstanding Basic
86,659
86,760
89,096
Diluted
110,987
111,088
89,096
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Year ended December 31,2023
2022
2021
(in thousands, except per share amounts) Net investment income Net loan servicing fees: From nonaffiliates Servicing fees$
676,446
$
651,251
$
595,346
Change in fair value of mortgage servicing rights
(296,847
)
449,435
(337,186
)
Hedging results
(92,775
)
(204,879
)
(345,041
)
286,824
895,807
(86,881
)
From PennyMac Financial Services, Inc.
1,784
13,744
50,859
288,608
909,551
(36,022
)
Net gains (losses) on investments financings
178,099
(658,787
)
304,079
Net gains on loans acquired for sale
39,857
25,692
87,273
Loan origination fees
18,231
52,085
170,672
Interest income
639,907
383,794
195,239
Interest expense
735,968
410,420
304,737
Net interest expense
(96,061
)
(26,626
)
(109,498
)
Other
286
1,856
3,793
Net investment income
429,020
303,771
420,297
Expenses Earned by PennyMac Financial Services, Inc.: Loan servicing fees
81,347
81,915
80,658
Management fees
28,762
31,065
37,801
Loan fulfillment fees
27,826
67,991
178,927
Professional services
7,621
9,569
11,148
Compensation
7,106
5,941
4,000
Loan origination
4,602
12,036
28,792
Loan collection and liquidation
4,562
5,396
11,279
Safekeeping
3,766
8,201
9,087
Other
19,033
18,570
13,944
Total expenses
184,625
240,684
375,636
Income before provision for (benefit from) income taxes
244,395
63,087
44,661
Provision for (benefit from) income taxes
44,741
136,374
(12,193
)
Net income (loss)
199,654
(73,287
)
56,854
Dividends on preferred shares
41,819
41,819
30,891
Net income (loss) attributable to common shareholders
$
157,835
$
(115,106
)
$
25,963
Earnings (loss) per common share Basic
$
1.80
$
(1.26
)
$
0.26
Diluted
$
1.63
$
(1.26
)
$
0.26
Weighted average common shares outstanding Basic
87,372
91,434
97,402
Diluted
111,700
91,434
97,402
View source version on businesswire.com: https://www.businesswire.com/news/home/20240201225235/en/
Media Kristyn Clark kristyn.clark@pennymac.com 805.395.9943
Investors Kevin Chamberlain Isaac Garden investorrelations@pennymac.com 818.224.7028
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