Q1 2025 PennyMac Mortgage Investment Trust Earnings Call Transcript
Key Points
- PennyMac Mortgage Investment Trust (PMT) declared a first quarter common dividend of $0.40 per share, demonstrating a commitment to returning value to shareholders.
- The company's diversified investment portfolio and strong risk management practices, including a well-established interest rate hedging program, have enabled it to manage through challenging market conditions effectively.
- PMT's synergistic relationship with PFSI provides competitive advantages, such as access to a large and agile multichannel origination business and the ability to execute private label securitizations.
- The company successfully completed three securitizations of investor loans totaling $1 billion, retaining $94 million in new investments with expected returns on equity in the mid-teens.
- PMT's MSR investments, which account for approximately half of its deployed equity, are expected to continue producing stable cash flows due to low expected prepayments and a higher interest rate environment.
- PMT reported a net loss to common shareholders of $1 million in the first quarter, or negative $0.01 per diluted common share, primarily due to interest rate volatility and credit spread widening.
- The interest rate sensitive strategies contributed a pretax loss of $5 million, with fair value declines on MSR investments amounting to $56 million.
- Total correspondent loan acquisition volume was $23 billion in the first quarter, down 18% from the prior quarter, reflecting a decline in the size of the origination market.
- The company's book value per share decreased by about 2% to 3% since the end of the quarter due to higher hedge costs, interest rate volatility, and spread widening.
- PMT's run rate return potential reflects a quarterly average of $0.35 per share, down from $0.37 per share in the prior quarter, due to compression between longer-dated asset yields and short-term financing rates.
Good afternoon, and welcome to Pennymac Mortgage Investment Trust first quarter 2025 earnings call. Additional earnings materials, including the presentation slides that will be referred to in the call are available on PennyMac Mortgage Investment Trust website at pmt.pennymac.com.
Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on slide 2 of the earnings presentation that could cause the company's actual results to differ materially as well as non-GAAP measures that have been reconciled to their GAAP equivalent in the earnings materials.
Now I'd like to introduce David Spector, Pennymac Mortgage Investment Trust's Chairman and Chief Executive Officer; and Dan Perotti, PennyMac Mortgage Investment Trust's Chief Financial Officer.
Thank you, operator. For the first quarter, PMT produced a net loss to common shareholders of $1 million or diluted earnings per
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