Company sees "solid results" from credit-sensitive strategies
PennyMac Mortgage Investment Trust (PMT) has bounced back from its recent losses, generating a profit of $50.2 million in the first quarter of 2023.
The REIT reported a net income of $50.2 million ($0.50 per common share) in Q1, recovering from a net loss of $5.8 million in the previous quarter. PennyMac CEO David Spector attributed the strong performance to the company's "credit-sensitive strategies" and financing structures.
"Solid results in PMT's credit-sensitive strategies due to credit spread tightening early in the quarter were partially offset by net fair value declines on MSRs and interest rate hedges, which drove a tax benefit," Spector said in the company's earnings report. "A key contributor to PMT's strong performance over the long term has been the sophisticated financing structures we have in place for its long-term assets."
PMT's correspondent segment, which acquires newly originated loans from correspondent sellers and typically sells or securitizes the loans, saw a pretax income of $1.8 million. That's down from $7.1 million in the previous quarter.
The firm acquired $20.2 billion in UPB of loans through its correspondent production activities, down 3% from Q4 and 10% from Q1 2022. Its conventional correspondent production volumes totaled $6.6 billion in UPB, down 2% from the previous quarter and 32% from a year ago.
"We continue to see attractive opportunities to deploy capital into new investments as well as the repurchase of our shares well below book value," Spector said. "Given PMT's seasoned investment portfolio with solid underlying fundamentals and its strong balance sheet, I remain optimistic for continued strong financial performance in 2023."
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