PennyMac Mortgage Investment Trust (PMT) Q2 2024 earnings summary

Executive summary

• Net income attributable to common shareholders was $15 million for Q2 2024, or $0.17 per diluted share, with a 4% annualized return on common equity and a book value per share of $15.89 at June 30, 2024.

• Dividend per common share was $0.40 for the quarter.

• All three investment strategies contributed to income, though fair value changes in interest rate-sensitive strategies offset some gains due to elevated volatility.

• The company operates in four segments: credit sensitive strategies, interest rate sensitive strategies, correspondent production, and corporate.

• Total assets decreased to $12.1 billion at June 30, 2024, from $13.1 billion at year-end 2023, mainly due to lower mortgage-backed securities holdings.

Financial highlights

• Net income to common shareholders was $15 million, or $0.17 per diluted share, for the quarter.

• Excluding market-driven value changes and related tax impacts, net income was $35 million, up from $28 million last quarter.

• Pretax income for credit sensitive strategies was $15.7 million; interest rate sensitive strategies generated $16.9 million pretax income.

• Correspondent production pretax income was $9.6 million, with $2.2 billion in conventional correspondent production volume.

• Book value per share at quarter end was $15.89.

Outlook and guidance

• PMT expects to retain 30–50% of total conventional correspondent production in Q3 2024, up from 18% in Q2 2024.

• Mortgage origination market is projected at $1.7 trillion in 2024 and $2.1 trillion in 2025, with rates expected to decline and refinance volumes to rise.

• Run rate potential for investment strategies is $0.33 per share quarterly, down from $0.35 last quarter, mainly due to lower expected asset yields.

• Dividend is expected to remain stable at $0.40 per share, despite run rate earnings dipping to $0.33, with potential for EPS to rise above $0.40 next year as short-term rates decline.

• Management plans further capital deployment in correspondent production and MSR investments.