PennyMac Swings to a Loss as Book Value Falls

The Tip Desk · November 10, 2026 · 3 min read

GAAP net loss attributable to common shareholders was $36 million, or $(0.41) a share, while adjusted EPS rose to $0.35 from $0.25.

PennyMac Mortgage Investment Trust (PMT) reported a net loss attributable to common shareholders of $36 million, or $(0.41) a share, for the third quarter of 2026, reversing the $20 million profit, or $0.23 a share, recorded in the second quarter. Net investment income fell to $36 million from $73 million.

The mortgage REIT said widening mortgage spreads and sharply rising benchmark rates pressured the net fair value of portfolio assets and reduced book value by about 5%. Book value per share ended the quarter at $14.03, down from $14.83.

On an adjusted basis, results moved the other way. Adjusted net income attributable to common shareholders was $30 million, or $0.35 a share, compared with $21 million, or $0.25 a share, in the prior quarter. Annualized adjusted return on equity was 9%, up from 6%. Chairman and Chief Executive Officer David Spector said the underlying portfolio generated that adjusted result despite the mark-to-market pressure.

The company continued to rotate capital out of mortgage servicing rights and into private-label credit. It sold $13 billion in unpaid principal balance of Agency MSRs in the quarter and agreed to sell another $10 billion expected to close in the fourth quarter, after June agreements covering $13 billion. In recent periods it has sold or contracted to sell $35 billion of MSR UPB, it said, and expects the redeployed proceeds from private-label securitizations to deliver low-to-mid-teens returns. Projected run-rate return potential increased to $0.38 a share.

Credit Sensitive Strategies swung to a $42 million pretax loss from $11 million of income in the second quarter, with annualized ROE of (41)%. Organically created credit-risk-transfer investments were $878 million in fair value with $16.9 billion of underlying UPB at quarter end, down from $938 million and $18.1 billion UPB. Subordinate MBS from private-label securitizations rose to $930 million from $853 million. The segment completed eight securitizations totaling $2.9 billion UPB and generated $167 million of net new investments. The company said third-quarter losses on those subordinate bonds were driven by wider credit spreads and increasing interest rates.

Interest Rate Sensitive Strategies pretax income rose to $36 million from $9 million, with annualized ROE of 12% versus 3%. Net loan servicing fees were $242 million, including $210 million of fair-value gains on MSRs versus $19 million of gains in the prior quarter. MSR fair value was $3.5 billion with $192 billion of underlying UPB. The MBS portfolio was $4.3 billion after $548 million of Agency floating-rate purchases.

Aggregation and Securitization pretax income fell to $2 million from $11 million. Correspondent production volume was $1.2 billion UPB after the company stopped Agency-eligible conventional correspondent acquisitions in June; jumbo correspondent volume was $747 million and non-QM $400 million. Loans acquired from PFSI production for private-label securitizations were $2.1 billion UPB. Total loans acquired were $3.3 billion UPB.

Interest expense was $364 million, up from $311 million, while interest income was $314 million. Total debt outstanding increased to $24.8 billion from $23.0 billion, and total debt to equity rose to 13.9x from 12.4x.

The board approved a $130 million increase to share-repurchase authorization, bringing available capacity to over $200 million. The company said it expects to decrease the current dividend in favor of share repurchases. Dividends declared remained $0.40 a share in the quarter.

President and Chief Mortgage Banking Officer Doug Jones is retiring on June 30, 2027. Effective January 1, 2027, Chief Strategy Officer Kevin Ryan will become chief financial officer; Daniel Perotti will remain CFO through year-end and continue in an advisory role through the first quarter of 2027.