Pennymac Mortgage Trust (PMT) Posts $5.99/Sh Loss
Pennymac Mortgage Trust (NYSE: PMT) reported Q1 EPS of ($5.99), which may not compare to the analyst estimate of $0.23.
Driven by non-cash fair value losses on government-sponsored enterprise (GSE) credit risk transfer (CRT) investments related to the COVID-19 crisis, partially offset by outsized results in the interest rate sensitive strategies segment resulting from substantial gains on interest rate hedge instruments and record correspondent production results
“PMT’s financial results in the first quarter reflected the extreme market dislocations resulting from the COVID-19 crisis and were driven by non-cash fair value losses on CRT investments partially offset by outstanding performance from the interest rate sensitive strategies and correspondent production,” said President and CEO David Spector. “We believe that the fair value losses recognized on our CRT investments in the first quarter are outsized compared to the additional losses from borrower defaults that we expect to incur over the life of these investments. Furthermore, PFSI, PMT’s manager and subservicer, is well-positioned to refinance qualifying borrowers and successfully manage forbearance and other assistance programs to reduce the likelihood of borrower default and ultimate credit losses.”
Mr. Spector continued, “We believe that PMT’s performance during this crisis and the strength of PMT’s liquidity and capital position are the direct result of our manager’s steadfast focus on risk management, including interest rate, credit and operational risk disciplines, throughout our more than 10-year history. Unlike other market participants, PMT has not sold any assets to raise liquidity; and as a result of the innovative term financing structure we put in place, PMT has not been subject to margin calls for its CRT investments. While we have curtailed new investments in CRT, recent market dislocations have expanded the opportunity for PMT as certain competitors have limited or reduced their participation in what was already a capacity constrained industry. Looking ahead, we expect improved financial performance and are confident in the return potential of PMT’s investment strategies.”
For earnings history and earnings-related data on Pennymac Mortgage Trust (PMT) click here.