PennyMac Mortgage Investment Trust Reports Fourth Quarter and Full-Year 2024 Results

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income attributable to common shareholders of $36.1 million, or $0.41 per common share on a diluted basis for the fourth quarter of 2024, on net investment income of $107.9 million. PMT previously announced a cash dividend for the fourth quarter of 2024 of $0.40 per common share of beneficial interest, which was declared on December 13, 2024, and paid on January 24, 2025, to common shareholders of record as of December 27, 2024. Fourth Quarter 2024 Highlights Financial results: Net income attributable to common shareholders of $36.1 million; annualized return on average common equity of 10%1 Results driven by strong levels of income excluding market driven value changes Book value per common share increased to $15.87 at December 31, 2024, from $15.85 at September 30, 2024 Other investment highlights: Investment activity driven by correspondent production volumes Correspondent loan production volumes for PMT’s account totaled $3.5 billion in unpaid principal balance (UPB), down 41 percent from the prior quarter as a result of the sale of a large percentage of conventional loans to PennyMac Financial Services, Inc. (NYSE: PFSI), and up 41 percent from the fourth quarter of 2023 as a result of higher overall volumes Resulted in the creation of $60 million in new mortgage servicing rights (MSRs) Closed two Agency-eligible investor loan securitizations with combined UPB of $822 million Generated $52 million of net new investments in non-Agency subordinate bonds 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 highlights: Renewed management and services agreement with PFSI for five years Notable activity after quarter end Closed an additional Agency eligible investor loan securitization with UPB of $341 million Generated $21 million of net new investments in non-Agency subordinate bonds Full-Year 2024 Highlights Financial results: Net income of $161.0 million, versus $199.7 million in 2023 Net income attributable to common shareholders of $119.2 million, versus $157.8 million in 2023; diluted earnings per share of $1.37 versus $1.63 in 2023 Dividends of $1.60 per common share Book value per share decreased slightly from $16.13 to $15.87 Net investment income of $334.2 million, down from $429.0 million in 2023 Return on average common equity of 8%2 Issued $1.3 billion in term debt to address or refinance upcoming maturities 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 strong results in the fourth quarter with a 10 percent annualized return on equity primarily driven by strong levels of income excluding market driven value changes and excellent performance across all three investment strategies,” said Chairman and CEO David Spector. “Importantly, the fourth quarter marked a return to organic creation of credit investments as we leveraged the strength of our correspondent production and securitization expertise to complete two securitizations of Agency-eligible investor loans and retained $52 million of net new credit subordinate bond investments. With a growing pipeline of loans available for private label securitization and strong investor demand, we expect similar levels of activity well into 2025, with the potential for increased activity and securitizations of other loan products as the origination market grows.” Mr. Spector concluded, “While I am pleased with PMT’s performance in 2024, I am even more excited by the opportunity ahead. Given our expectations for PMT to be a consistent issuer and investor in private label securitizations alongside its seasoned portfolio of MSRs and CRT with strong underlying fundamentals, I am confident the company will continue to deliver attractive risk-adjusted returns in 2025 and beyond.” The following table presents the contributions of PMT’s operating segments, consisting of Credit Sensitive Strategies, Interest Rate Sensitive Strategies, and Correspondent Production, as well as non-segment activities in our corporate operations: Credit sensitive strategies Interest rate sensitive strategies Correspondent production Reportable segment total Corporate Total Quarter ended December 31, 2024 (in thousands) Net investment income: Net loan servicing fees $ — $ 207,421 $ — $ 207,421 $ — $ 207,421 Net gains on loans acquired for sale — — 26,387 26,387 — 26,387 Net gains (losses) on investments and financings Mortgage-backed securities (292 ) (130,856 ) — (131,148 ) — (131,148 ) Loans at fair value (4,016 ) 4,957 — 941 — 941 CRT investments 24,552 — — 24,552 — 24,552 20,244 (125,899 ) — (105,655 ) — (105,655 ) Net interest income: Interest income 21,114 106,117 32,478 159,709 3,426 163,135 Interest expense 20,679 135,733 29,531 185,943 1,177 187,120 435 (29,616 ) 2,947 (26,234 ) 2,249 (23,985 ) Other (282 ) — 4,041 3,759 — 3,759 20,397 51,906 33,375 105,678 2,249 107,927 Expenses: Earned by PennyMac Financial Services, Inc.: Loan servicing fees 19 20,467 — 20,486 — 20,486 Management fees — — — — 7,149 7,149 Loan fulfillment fees — — 6,356 6,356 — 6,356 Professional Services — — 3,508 3,508 2,533 6,041 Loan Collection and Liquidation 281 2,256 — 2,537 — 2,537 Compensation — — — — 997 997 Safekeeping — 1,252 84 1,336 — 1,336 Mortgage Loan Origination Fees — — 914 914 — 914 Other Expenses — 2,464 — 2,464 4,523 6,987 300 26,439 10,862 37,601 15,202 52,803 Pretax income (loss) $ 20,097 $ 25,467 $ 22,513 $ 68,077 $ (12,953 ) $ 55,124 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 $20.1 million on net investment income of $20.4 million, compared to pretax income of $26.4 million on net investment income of $26.5 million in the prior quarter. Net gains on investments in the segment were $20.2 million, compared to $27.1 million in the prior quarter. These net gains include $24.6 million of gains on PMT’s organically-created GSE CRT investments, $0.3 million in losses on other acquired subordinate CRT mortgage-backed securities (MBS), and $4.0 million of losses on investments from non-agency subordinate bonds from PMT’s production. Net gains on PMT’s organically-created CRT investments for the quarter were $24.6 million, compared to $20.8 million in the prior quarter. These net gains include $10.2 million in valuation-related gains, which reflected the impact of credit spread tightening in the fourth quarter. The prior quarter included $6.6 million of such gains. Net gains on PMT’s organically-created CRT investments also included $14.8 million in realized gains and carry, compared to $15.0 million in the prior quarter. Realized losses during the quarter were $0.5 million. Net interest income for the segment totaled $0.4 million, compared to $0.5 million of net interest expense in the prior quarter. Interest income totaled $21.1 million, down slightly from $21.4 million in the prior quarter. Interest expense totaled $20.7 million, down from $21.9 million in 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 income for the segment was $25.5 million on net investment income of $51.9 million, compared to pretax income of $0.5 million on net investment income of $26.1 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 increasing interest rates, MSRs are expected to increase in fair value, whereas Agency pass-through and non-Agency senior MBS are expected to decrease 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. Income from net loan servicing fees was $207.4 million, compared to losses of $85.1 million in the prior quarter. Net loan servicing fees included contractually specified servicing fees of $159.6 million and $4.9 million in other fees, reduced by $90.6 million in realization of MSR cash flows, which was down from $100.6 million in the prior quarter due to higher interest rates during the quarter. Net loan servicing fees also included $183.9 million in fair value gains on MSRs due to higher interest rates, $51.2 million in hedging losses, and $0.9 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. Net losses on investments for the segment were $125.9 million, which primarily consisted of losses on MBS due to higher interest rates. The following schedule details net loan servicing fees: Quarter ended December 31, 2024 September 30, 2024 December 31, 2023 (in thousands) From non-affiliates: Contractually specified $ 159,553 $ 162,605 $ 162,916 Other fees 4,884 4,012 2,487 Effect of MSRs: Change in fair value Realization of cashflows (90,612 ) (100,612 ) (87,729 ) Market changes 183,879 (84,306 ) (144,603 ) 93,267 (184,918 ) (232,332 ) Hedging results (51,209 ) (67,220 ) (11,191 ) 42,058 (252,138 ) (243,523 ) Net servicing fees from non-affiliates 206,495 (85,521 ) (78,120 ) From PFSI—MSR recapture income 926 441 290 Net loan servicing fees $ 207,421 $ (85,080 ) $ (77,830 ) Net interest expense for the segment was $29.6 million versus $8.4 million in the prior quarter. Interest income totaled $106.1 million, down from $128.5 million in the prior quarter primarily due to lower interest income on MBS and earnings on custodial balances. Interest expense totaled $135.7 million, down slightly from $136.9 million in the prior quarter. Segment expenses were $26.4 million, up slightly from $25.6 million in 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 $22.5 million in the fourth quarter, up from $13.2 million in the prior quarter. Through its correspondent production activities in the fourth quarter, PMT acquired a total of $28.1 billion in UPB of loans, up 9 percent from the prior quarter and 19 percent from the fourth quarter of 2023. Of total correspondent acquisitions, government-insured or guaranteed acquisitions totaled $11.0 billion, down 7 percent from the prior quarter, while conventional conforming and jumbo acquisitions totaled $17.1 billion, up 22 percent from the prior quarter. $3.5 billion of conventional conforming and jumbo volume was for PMT’s account, down 41 percent from the prior quarter due to PMT retaining a smaller percentage of conventional conforming correspondent loan production. PMT is expected to retain all jumbo production and 15 to 25 percent of total conventional conforming correspondent production in the first quarter of 2025, compared to 19 percent in the fourth quarter of 2024, as PMT continues to pursue investment opportunities in the private label securitization market. Interest rate lock commitments on conventional conforming and jumbo loans for PMT’s account totaled $3.2 billion, down 58 percent from the prior quarter. Segment revenues were $33.4 million and included net gains on loans acquired for sale of $26.4 million, other income of $4.0 million, which primarily consists of volume-based origination fees, and net interest income of $2.9 million. Net gains on loans acquired for sale increased $6.3 million from the prior quarter, primarily due to increased demand for private label securitization and whole loan execution for investor loans during the quarter. Interest income was $32.5 million, up from $23.9 million in the prior quarter, and interest expense was $29.5 million, up from $24.3 million in the prior quarter, both due to higher inventory of loans held for sale at fair value. Segment expenses were $10.9 million, down from $13.1 million in the prior quarter. The weighted average fulfillment fee rate in the fourth quarter was 18 basis points, down from 19 basis points in the prior quarter. Under a renewed mortgage banking services agreement with PFSI, effective July 1, 2025, correspondent production volumes will initially be acquired by PFSI. PMT will retain the right to purchase up to 100 percent of non-government correspondent loan production. Corporate Corporate includes interest income from cash and short-term investments, management fees, and corporate expenses. Corporate revenues were $2.3 million, up from $1.9 million in the prior quarter. Management fees were $7.1 million, and other expenses were $4.5 million. Taxes PMT recorded a provision for tax expense of $8.6 million, driven by income from correspondent production and gains on MSRs held in PMT’s taxable REIT 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, January 30, 2025. 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 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; 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 real estate values, housing prices and housing sales; changes in macroeconomic, consumer and real estate market conditions; the degree and nature of the Company’s competition; 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 development of artificial intelligence; 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 severe weather events, man-made or other natural conditions, including 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; risks associated with the discontinuation of LIBOR; 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; 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; 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, 2024 September 30, 2024 December 31, 2023 (in thousands except share amounts) ASSETS Cash $ 337,694 $ 344,358 $ 281,085 Short-term investments at fair value 103,198 102,787 128,338 Mortgage-backed securities at fair value 4,063,706 4,182,382 4,836,292 Loans acquired for sale at fair value 2,116,318 1,665,796 669,018 Loans at fair value 2,193,575 1,429,525 1,433,820 Derivative assets 56,840 81,844 177,984 Deposits securing credit risk transfer arrangements 1,110,708 1,135,447 1,209,498 Mortgage servicing rights at fair value 3,867,394 3,809,047 3,919,107 Servicing advances 105,037 71,124 206,151 Due from PennyMac Financial Services, Inc. 16,015 8,538 56 Other 438,221 224,806 252,538 Total assets $ 14,408,706 $ 13,055,654 $ 13,113,887 LIABILITIES Assets sold under agreements to repurchase $ 6,500,938 $ 5,748,461 $ 5,624,558 Mortgage loan participation and sale agreements 11,593 28,790 — Notes payable secured by credit risk transfer andmortgage servicing assets 2,929,790 2,830,108 2,910,605 Unsecured senior notes 605,860 814,915 600,458 Asset-backed financing of variable interest entitiesat fair value 2,040,375 1,334,797 1,336,731 Interest-only security payable at fair value 34,222 35,098 32,667 Derivative and credit risk transfer strip liabilitiesat fair value 7,351 16,151 51,381 Accounts payable and accrued liabilities 139,124 114,085 354,989 Due to PennyMac Financial Services, Inc. 30,206 32,603 29,262 Income taxes payable 163,861 155,544 190,003 Liability for losses under representations and warranties 6,886 8,315 26,143 Total liabilities 12,470,206 11,118,867 11,156,797 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; issuedand outstanding 86,860,960, 86,860,960 and 86,760,408common shares, respectively 869 869 866 Additional paid-in capital 1,925,067 1,924,596 1,923,437 Accumulated deficit (528,918 ) (530,160 ) (508,695 ) Total shareholders' equity 1,938,500 1,936,787 1,957,090 Total liabilities and shareholders' equity $ 14,408,706 $ 13,055,654 $ 13,113,887 PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the Quarterly Periods Ended December 31, 2024 September 30, 2024 December 31, 2023 Investment Income Net loan servicing fees: From nonaffiliates Servicing fees $ 164,437 $ 166,617 $ 165,403 Change in fair value of mortgage servicing rights 93,267 (184,918 ) (232,332 ) Hedging results (51,209 ) (67,220 ) (11,191 ) 206,495 (85,521 ) (78,120 ) From PennyMac Financial Services, Inc. 926 441 290 207,421 (85,080 ) (77,830 ) Net gains on loans acquired for sale 26,387 20,059 15,380 Loan origination fees 3,986 6,640 3,004 Net (losses) gains on investments and financings (105,655 ) 146,695 164,338 Interest income 163,135 176,734 165,278 Interest expense 187,120 184,171 185,523 Net interest expense (23,985 ) (7,437 ) (20,245 ) Other (227 ) (13 ) 127 Net investment income 107,927 80,864 84,774 Expenses Earned by PennyMac Financial Services, Inc.: Loan servicing fees 20,486 22,240 20,324 Management fees 7,149 7,153 7,252 Loan fulfillment fees 6,356 11,492 4,931 Professional services 6,041 2,614 2,084 Loan collection and liquidation 2,537 2,257 1,184 Safekeeping 1,336 1,174 1,059 Compensation 997 1,326 2,327 Loan origination 914 1,408 817 Other 6,987 4,666 4,476 Total expenses 52,803 54,330 44,454 Income before provision for (benefit from) income taxes 55,124 26,534 40,320 Provision for (benefit from) income taxes 8,589 (14,873 ) (12,590 ) Net income 46,535 41,407 52,910 Dividends on preferred shares 10,455 10,455 10,455 Net income attributable to common shareholders $ 36,080 $ 30,952 $ 42,455 Earnings per common share Basic $ 0.41 $ 0.36 $ 0.49 Diluted $ 0.41 $ 0.36 $ 0.44 Weighted average shares outstanding Basic 86,861 86,861 86,659 Diluted 86,861 86,861 110,987 PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Year ended December 31, 2024 2023 2022 (in thousands, except earnings per common share) Net investment income Net loan servicing fees: From nonaffiliates Contractually specified $ 644,642 $ 659,438 $ 625,210 Other 14,722 17,008 26,041 659,364 676,446 651,251 Change in fair value of mortgage servicing rights (170,409 ) (296,847 ) 449,435 Mortgage servicing rights hedging results (226,608 ) (92,775 ) (204,879 ) 262,347 286,824 895,807 From PennyMac Financial Services, Inc. 2,193 1,784 13,744 264,540 288,608 909,551 Net gains on loans acquired for sale: From nonaffiliates 65,055 32,695 20,724 From PennyMac Financial Services, Inc. 8,069 7,162 4,968 73,124 39,857 25,692 Loan origination fees 15,085 18,231 52,085 Net gains (losses) on investments and financings 61,050 178,099 (658,787 ) Net interest expense: Interest income 635,263 639,907 383,794 Interest expense 714,659 735,968 410,420 Net interest expense (79,396 ) (96,061 ) (26,626 ) Results of real estate acquired in settlement of loans (437 ) (186 ) 496 Other 228 472 1,360 Net investment income 334,194 429,020 303,771 Expenses Earned by PennyMac Financial Services, Inc.: Loan servicing fees 83,252 81,347 81,915 Management fees 28,623 28,762 31,065 Loan fulfillment fees 26,291 27,826 67,991 Professional services 12,779 7,621 9,569 Loan collection and liquidation 6,834 4,562 5,396 Compensation 5,608 7,106 5,941 Safekeeping 4,403 3,766 8,201 Loan origination 3,328 4,602 12,036 Other 20,428 19,033 18,570 Total expenses 191,546 184,625 240,684 Income before (benefit from) provision for incometaxes 142,648 244,395 63,087 (Benefit from) provision for income taxes (18,336 ) 44,741 136,374 Net income (loss) 160,984 199,654 (73,287 ) Dividends on preferred shares 41,819 41,819 41,819 Net income (loss) attributable to commonshareholders $ 119,165 $ 157,835 $ (115,106 ) Earnings (losses) per common share Basic $ 1.37 $ 1.80 $ (1.26 ) Diluted $ 1.37 $ 1.63 $ (1.26 ) Weighted average common shares outstanding Basic 86,815 87,372 91,434 Diluted 86,815 111,700 91,434

PennyMac Mortgage Investment Trust Reports Fourth Quarter and Full-Year 2024 Results

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