3Q26
Filed Oct 29, 2026PennyMac Mortgage Investment Trust reported a net loss attributable to common shareholders of $36 million, or $(0.41) per common share, while adjusted EPS was $0.35 and book value per share declined 5% from the prior quarter to $14.03.
Adjusted net income attributable to common shareholders increased 42% sequentially to $30 million and the Interest Rate Sensitive Strategies segment improved, but GAAP results moved to a $36 million loss attributable to common shareholders as wider credit spreads and higher interest rates drove losses, book value per share declined 5% sequentially, and aggregation volume fell sharply.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net investment income, 3Q26GAAP | $36M | (50)% | (63)% |
| Net loss attributable to common shareholders, 3Q26GAAP | $36M | N/M | N/M |
| Diluted earnings (loss) per common share, 3Q26GAAP | $(0.41) | N/M | N/M |
| Adjusted net income attributable to common shareholders, 3Q26non-GAAP | $30M | 42 % | (5)% |
| Adjusted EPS, 3Q26non-GAAP | $0.35 | 42 % | (5)% |
| Annualized return on common equity, 3Q26GAAP | (11)% | N/M | N/M |
| Annualized adjusted ROE, 3Q26non-GAAP | 9 % | 3 % | 0 % |
| Book value per share at period end, 3Q26GAAP | $14.03 | (5 )% | (7)% |
| Dividends declared per common share, 3Q26GAAP | $0.40 | — | — |
| Net loan servicing fees, 3Q26GAAP | $242M | – | N/M |
| Net gains on loans acquired for sale, 3Q26GAAP | $5M | – | (65 )% |
| Net gain (loss) on investments and financings, 3Q26GAAP | −$162M | – | N/M |
| Interest income, 3Q26GAAP | $314M | – | 37 % |
| Interest expense, 3Q26GAAP | −$364M | – | 60 % |
| Net interest income (expense), 3Q26GAAP | −$50M | – | N/M |
| Total expenses, 3Q26GAAP | $53M | – | 1 % |
| Net loss, 3Q26GAAP | −$25M | – | N/M |
| Provision for income taxes, 3Q26GAAP | $9M | – | N/M |
| Cash, September 30, 2026GAAP | $161M | – | (39)% |
| Cash and short-term investments, 3Q26other | $310M | – | (30)% |
| Total liquidity, 3Q26other | $524M | – | (32)% |
| Total assets, September 30, 2026GAAP | $26.85B | – | 45 % |
| Total shareholders' equity, September 30, 2026GAAP | $1.78B | – | (5 )% |
| Total debt outstanding, 3Q26other | $24.75B | – | 52 % |
| Total debt outstanding excluding non-recourse debt, 3Q26non-GAAP | $11.57B | – | 7 % |
| Total debt / equity, 3Q26other | 13.9x | – | 5.2x |
| Total debt excluding non-recourse debt / equity, 3Q26non-GAAP | 6.5x | – | 0.7x |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Credit Sensitive Strategies Segment, total income contribution, 3Q26Market-driven value changes were $(54) million. Subordinate bonds from PMT private label securitizations generated a pretax loss of $48 million, driven by wider credit spreads and increasing interest rates. | −$42M | N/M | N/M |
| Interest Rate Sensitive Strategies Segment, total income contribution, 3Q26Income excluding market-driven value changes was $37 million, up from $20 million in the prior quarter as lower prepayments reduced realization of MSR cash flows. | $36M | 300 % | 11 % |
| Aggregation and Securitization Segment, total income contribution, 3Q26Net gains on loans acquired for sale declined from the prior quarter due to spread widening on jumbo and non-QM loans during aggregation for securitization and lower volumes. | $2M | (81 )% | (77 )% |
| Corporate and Other, pretax loss, 3Q26Corporate revenues were $1 million, compared to zero in the prior quarter, while corporate expenses were $13 million. | −$13M | – | (4 )% |
Future periods outlook
- NoteProjected run-rate return potential increased to $0.38 per share.
- NoteInvestments from private-label securitizations are expected to deliver low-to-mid-teens ROEs.
- NoteThe company expects to decrease its current dividend in favor of share repurchases.
- NoteAn additional $10 billion in UPB of Agency MSRs is expected to close in the fourth quarter.
- NoteThe $12 billion in UPB Agency MSR sale entered after quarter end is expected to close in the fourth quarter.
- NoteThe inaugural non-QM debt service coverage ratio securitization has expected retained investments of $26 million and an expected close in early November.
Capital returns
- The Board of Trustees approved a $130 million increase to its share repurchase authorization, bringing total available repurchase capacity to over $200 million.
- Dividends declared per common share were $0.40.
- Management expects to decrease its current dividend in favor of share repurchases.
What drove it
- PMT completed eight securitizations with combined UPB of $2.9 billion and generated $167 million of net new investments from private label securitizations.
- PMT sold $13 billion in UPB of Agency MSRs and entered agreements to sell an additional $10 billion in UPB of Agency MSRs, with another $12 billion agreement entered after quarter end.
- PMT purchased $548 million of Agency floating-rate MBS.
- Interest Rate Sensitive Strategies net loan servicing fees were $242 million, including $210 million in fair value gains on MSRs, $(31) million in hedging losses, and $3 million of MSR recapture income.
- Interest Rate Sensitive Strategies interest income was $242 million, up from $237 million in the prior quarter, primarily due to increased income from a higher amount of retained investments from private label securitizations.
- Acquisitions from PFSI production for inclusion in private label securitizations were $2.1 billion in UPB, up 60% from the third quarter of 2025.
Concerns
- Widening mortgage spreads and sharply rising benchmark interest rates pressured portfolio fair values and reduced book value by approximately 5%.
- Credit Sensitive Strategies reported a pretax loss of $42 million and an annualized ROE of (41)% as market-driven value changes were $(54) million.
- Net loss attributable to common shareholders was $36 million, compared with net income attributable to common shareholders of $20 million in the prior quarter and $48 million in the third quarter of 2025.
- Correspondent production volume was $1.2 billion in UPB, down 53% from the prior quarter and 64% from the third quarter of 2025.
- Total debt / equity increased to 13.9x from 12.4x in the prior quarter and 8.7x in the third quarter of 2025.
- Total liquidity was $524 million, down 32% from $772 million in the third quarter of 2025.
What to watch
- Completion timing and terms of the announced Agency MSR sales, including the $10 billion and $12 billion UPB agreements expected to close in the fourth quarter.
- Redeployment of capital from MSR sales into private-label securitization investments and whether those investments deliver the expected low-to-mid-teens ROEs.
- Performance and valuation of subordinate MBS investments, which had fair value of $930 million at period end and produced a $48 million pretax loss during the quarter.
- Mortgage spreads, benchmark interest rates, prepayments, and their effects on MSR cash-flow realization, MBS losses, interest expense, and book value.
- The expected reduction of the current dividend and the use of the expanded repurchase authorization.
- Leadership transitions: Doug Jones is retiring on June 30, 2027, and Kevin Ryan will become CFO effective January 1, 2027.
Balance sheet and cash flow
- Cash was $161 million at September 30, 2026, compared with $225 million at June 30, 2026 and $263 million at September 30, 2025.
- Cash and short-term investments were $310 million and total liquidity was $524 million.
- Total assets were $26,854 million, including $14,401 million of loans held for investment at fair value and $4,306 million of mortgage-backed securities at fair value.
- Total debt outstanding was $24,752 million, including $13,146 million of asset-backed financings of variable interest entities at fair value.
- Total shareholders' equity was $1,783 million.
- Operating cash flow and free cash flow were not reported.
Analysis
PMT's third-quarter results were mixed. Net investment income was $36 million, down from $73 million in the prior quarter and $99 million in the third quarter of 2025. The company reported a net loss attributable to common shareholders of $36 million, or $(0.41) per common share, compared with net income attributable to common shareholders of $20 million in the prior quarter. Adjusted net income attributable to common shareholders increased to $30 million from $21 million, and adjusted EPS increased to $0.35 from $0.25.
The principal pressure came from market valuation changes amid wider mortgage spreads and higher interest rates. Credit Sensitive Strategies recorded a $42 million total income contribution loss, with $(54) million of market-driven value changes. The company stated that subordinate bonds from its private-label securitizations generated a $48 million pretax loss, driven by wider credit spreads and increasing interest rates. Net gain (loss) on investments and financings was $(162) million, versus $22 million in the prior quarter.
Interest Rate Sensitive Strategies improved materially, with total income contribution of $36 million compared with $9 million in the prior quarter. Income excluding market-driven value changes increased to $37 million from $20 million, which management attributed to lower realization of MSR cash flows due to lower prepayments. Net loan servicing fees rose to $242 million from $40 million, while the MBS portfolio increased to $4,306 million after the purchase of $548 million of Agency floating-rate MBS. The MSR asset declined to $3,514 million and underlying UPB declined to $192,136 million as a result of previously announced sales and runoff.
Aggregation and securitization activity weakened sequentially. Total UPB of loans acquired was $3,276 million, compared with $4,789 million in the prior quarter, while correspondent production volume declined to $1,199 million from $2,565 million. The segment's total income contribution was $2 million, down from $11 million. Management cited wider spreads on jumbo and non-QM loans during aggregation for securitization and lower volumes as reasons for the decline in net gains on loans acquired for sale.
Capital allocation is shifting toward retained private-label securitization investments and repurchases. PMT completed eight securitizations, generating $167 million of net new investments, sold $13 billion in UPB of Agency MSRs, and has agreements to sell additional Agency MSRs. The Board increased the share repurchase authorization by $130 million, bringing total available capacity to over $200 million. Management also stated that it expects to decrease the current dividend in favor of share repurchases. Balance-sheet leverage increased, with total debt / equity at 13.9x, while book value per share declined to $14.03 from $14.83 in the prior quarter.
Management, verbatim
PMT navigated a challenging third-quarter market backdrop characterized by widening mortgage spreads and sharply rising benchmark interest rates.
David Spector, Chairman and CEO
While these dynamics pressured the net fair value of our portfolio assets and reduced book value by approximately 5%, our underlying portfolio performed well, generating adjusted EPS of $0.35 per common share, or an annualized adjusted ROE of 9%.
David Spector, Chairman and CEO
Given these dynamics and considering PMT currently trades at a steep discount to book value, we expect to decrease our current dividend in favor of share repurchases.
David Spector, Chairman and CEO
Not in the filing
stated, not guessed- Prior outlook was not provided, so no comparison of actual results with prior guidance is available.
- Formal revenue guidance was not reported.
- Formal gross-margin guidance was not reported.
- Formal operating-expense guidance was not reported.
- Formal tax-rate guidance was not reported.
- Gross margin was not reported.
- Operating income was not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases executed during the quarter were not reported.
- A new dividend amount or effective date for the expected dividend decrease was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.