PennyMac Mortgage Investment Trust (NYSE:PMT) Q4 2023 Earnings Conference Call February 1, 2024 6:00 PM ET

Company Participants

David Spector – Chairman and Chief Executive Officer

Dan Perotti – Chief Financial Officer

Conference Call Participants

Bose George – KBW

Matthew Howlett – B. Riley

Kevin Barker – Piper Sandler

Eric Hagen – BTIG

Jason Weber – JonesTrading

Operator

Good afternoon, and welcome to PennyMac Mortgage Investment Trust Fourth Quarter and Full Year 2023 Earnings Call. Additional earning material 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 will – this call may contain forward-looking statements that are subject to certain risks identified on Slide 2 of the earnings presentation that may 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 earning material.

Now I’d like to introduce David Spector, PennyMac Mortgage Investment Trust Chairman and Chief Executive Officer; and Dan Perotti, PennyMac Mortgage Investment Trust, Chief Financial Officer.

David Spector

Thank you, operator. Good afternoon and thank you to everyone for participating in our fourth quarter earnings call. PMT produced very strong results in the fourth quarter with sizable contributions from the credit-sensitive strategies and its correspondent production business. These results were partially offset by fair value declines in the interest rate sensitive strategies. Net income to common shareholders was $42 million or diluted earnings per share of $0.44. PMT’s annualized return on common equity was 12% and book value per share increased to $16.13 at December 31st, up from $16.01 at the end of the prior quarter. This strong financial performance marked the culmination of an outstanding year for PMT, demonstrating its resilience in a year of tremendous interest rate volatility and highlighting our management team’s unwavering commitment to managing interest rate risk.

PMT was profitable every quarter in 2023 with annual income contributions from all three of its investment strategies. Net income attributable to common shareholders for the year was $158 million or diluted earnings per share of $1.63. Return on common equity was 11% and book value per share grew 2% net of $1.60 in common share dividends. In 2023, we invested nearly $500 million into new MSR and opportunistic investments, which we believe will perform well over the long-term. As we head into 2024, we will remain disciplined in the deployment of capital and continue to look for opportunistic investments across the residential mortgage landscape. The strength of PMT’s balance sheet has always been a key differentiator among mortgage REITs, and I am very proud of the work our management team has accomplished in 2023.