PennyMac Mortgage Investment Trust: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 29 July 2026: press release. The quarter’s numbers.

Read the filing

Key takeaways

• Net income to common shares rose: Net income attributable to common shareholders was $20 million, or $0.23 per diluted share, against $14 million and $0.16 in the first quarter. Annualized ROE was 6%. Source
• Private label subordinate bonds grew: Fair value of subordinate bonds from PMT private label securitizations was $853 million, up 16% from the prior quarter and 211% from a year earlier. Source
• Market-driven losses offset core income: Pretax income reflected $20 million of income excluding market-driven value changes, partly offset by $11 million of market-driven losses. Source
• Correspondent purchases eased 8%: PMT bought $2.6 billion of UPB through the PFSI correspondent agreement, down 8% from the prior quarter and 17% from a year earlier. Source
• Leverage rose on securitization debt: Total debt to equity was 12.4x, up from 10.9x in the first quarter. Excluding non-recourse debt, the ratio was 6.2x, up from 5.6x. Source
• Equity moves toward credit: Management said it is shifting equity allocation toward private label credit investments, which it described as more accretive. Source
• MSR sale and Agency stop: PMT agreed to sell $13 billion of UPB in MSRs and elected to stop Agency-eligible correspondent loan acquisitions in June. Source

“We are moving to strengthen the overall earnings power of our portfolio.”

David Spector, Chairman and CEO

What changed from last quarter

• New: In June, PMT agreed to sell $13 billion of UPB in MSRs, one of the first steps to reduce MSR exposure. Source
• New: From June, PMT stopped acquiring Agency-eligible conventional loans through correspondent production, while continuing to buy all non-Agency loans. Source
• New: Equity allocation is shifting toward private label credit investments, which management described as more accretive. Source

Results and earnings

• Net income to common shares rose: Net income attributable to common shareholders was $20 million, or $0.23 per diluted share, against $14 million and $0.16 in the first quarter. Annualized ROE was 6%. Source
• Net investment income fell from first quarter: Net investment income was $73 million, down 11% from $82 million in the first quarter and up 4% from $70 million a year earlier. Source
• Tax benefit lifted net income: Pretax income was $17 million. A $14.1 million tax benefit, driven mainly by taxable REIT subsidiary hedging losses, took net income to $31 million. Source
• Book value per share edged lower: Book value per share was $14.83 at June 30, 2026, against $14.98 at March 31 and $15.00 a year earlier. Source

Credit sensitive strategies segment

• Segment pretax income fell to $11M: Pretax income was $11 million, an 11% annualized return on equity, against 17% in the first quarter and 19% a year earlier. Source
• Organically created CRT book shrank: Organically created CRT investments were $938 million in fair value at June 30, down from $962 million, with underlying UPB of $18.1 billion, both reduced by runoff. Source
• Private label subordinate bonds grew: Fair value of subordinate bonds from PMT private label securitizations was $853 million, up 16% from the prior quarter and 211% from a year earlier. Source
• Valuation swung from gains to declines: CRT contribution to pretax income was $6 million, down from $10 million, mainly on valuation declines of $1 million against $3 million of gains in the first quarter. Source

“We expect this realignment of our balance sheet will bolster PMT’s return profile”

David Spector, Chairman and CEO

Interest rate sensitive strategies segment

• Segment pretax income edged up: Pretax income was $9 million, against $8 million in the first quarter and a $5 million loss a year earlier. Source
• Market-driven losses offset core income: Pretax income reflected $20 million of income excluding market-driven value changes, partly offset by $11 million of market-driven losses. Source
• MBS portfolio grew on purchases: Fair value of the MBS portfolio was $4.1 billion, up from $3.8 billion, mainly from $486 million of new MBS purchases. Source
• Net servicing fees fell by half: Net loan servicing fees were $40 million, against $84 million in the first quarter, as MSR fair value gains were smaller and hedging losses were larger. Source
• Funding costs rose with balances: Interest expense was $257 million, up from $228 million, on higher financing balances including non-recourse asset-backed financing from securitizations. Net interest expense was $20 million. Source

Aggregation and securitization segment

• Segment pretax income declined: Pretax income was $11 million, down from $16 million in the first quarter. Annualized ROE was 21%, against 33%. Source
• Correspondent purchases eased 8%: PMT bought $2.6 billion of UPB through the PFSI correspondent agreement, down 8% from the prior quarter and 17% from a year earlier. Source
• PFSI-sourced private label loans rose: PMT acquired $2.2 billion of PFSI production for private label securitizations, up 44% from the prior quarter and 123% from a year earlier. Source
• Share of conforming correspondent fell: PMT acquired 15% of total conventional conforming correspondent production, down from 18% in the prior quarter. Source

Costs and corporate

• Total expenses rose slightly: Total expenses were $56 million, against $55 million in the first quarter. Other expenses were $7 million and professional services $12 million. Source
• Segment expenses held steady: Interest rate sensitive segment expenses, mostly subservicing fees paid to PFSI, were $23 million, down slightly from the prior quarter. Source
• Corporate expenses were flat: Corporate pretax loss was $15 million, and corporate expenses of $15 million were unchanged from the prior quarter. Source

Margins and pricing

• Loan sale gains fell on lower volume: Net gains on loans acquired for sale were $15 million, down from $23 million, which management attributed to lower volumes. Source
• MSR cash flow realization slipped: Realization of MSR cash flows was $100 million, down slightly, reflecting lower expected prepayments as interest rates rose. Source
• MSR gains narrowed, hedging losses grew: Fair value gains on MSRs were $19 million, against $46 million in the first quarter, while hedging losses were $33 million, against $12 million. Source

Securitization and rate lock activity

• Six securitizations closed: Six securitizations closed with $2.2 billion of UPB, against eight with $2.8 billion in the first quarter: three Agency investor, one jumbo and two owner-occupied. Source
• Retained credit sensitive investments fell: Retained credit sensitive investments from private label securitizations were $120 million, against $189 million in the first quarter. Source
• Conventional rate locks dropped: Conventional conforming rate lock UPB was $1,357 million, down from $2,364 million in the prior quarter and 55% lower than a year earlier. Source
• Post-quarter securitizations added volume: After quarter end, a jumbo and an owner-occupied securitization closed with $692 million of combined UPB, generating $36 million of net new non-Agency subordinate bonds. Source

Capital, liquidity and leverage

• Liquidity fell to $517 million: Total liquidity was $517 million, down from $611 million at March 31 and $778 million a year earlier. Source
• Leverage rose on securitization debt: Total debt to equity was 12.4x, up from 10.9x in the first quarter. Excluding non-recourse debt, the ratio was 6.2x, up from 5.6x. Source
• Dividend held at $0.40 a share: Dividends declared were $0.40 per common share, unchanged from the prior quarter. Source
• Equity cushion narrowed: Total equity to adjusted assets was 13.5%, down from 14.9% in the first quarter, as adjusted assets rose to $13,695 million. Source

Strategy and balance sheet realignment

• Equity moves toward credit: Management said it is shifting equity allocation toward private label credit investments, which it described as more accretive. Source
• MSR sale and Agency stop: PMT agreed to sell $13 billion of UPB in MSRs and elected to stop Agency-eligible correspondent loan acquisitions in June. Source
• Balance sheet realignment expected to help: Management expects the balance sheet realignment to improve the return profile of PMT. Source

Coming up, as management said on 29 July 2026

• MSR sale to close end of August: The sale of $13 billion UPB of low-coupon Agency MSRs is expected to close at the end of August. Source
• Further MSR reduction actions planned: Management said the June steps are initial and that further actions to reduce MSR exposure are planned. Source
• Non-Agency loan buying continues: PMT will keep buying all non-Agency loans while it stops buying Agency-eligible conventional loans through correspondent production. Source

Figures management reported

Risks management discussed

• Financial: Hedging losses of $33 million reduced net loan servicing fees, against $12 million in the first quarter. Source
• Financial: Total debt to equity rose to 12.4x from 10.9x, as asset-backed financing of variable interest entities grew with securitization activity. Source
• Financial: Amounts available to draw on facilities fell to $96 million, and total liquidity fell to $517 million. Source
• External: Higher interest rates lowered prepayment expectations, which reduced the realization of MSR cash flows. Source

Earlier plans management reported on

• Not stated: Management described the MSR actions as initial steps to free capital from MSRs for redeployment into credit investments. Source

Other quarters

• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.