PennyMac Mortgage Investment Trust (PMT) surged 5.31% in Friday's pre-market trading session, driven by the company's impressive fourth-quarter results and promising growth prospects.

In the fourth quarter of 2024, PMT reported a remarkable 10% return on equity, fueled by robust income levels across all three investment strategies – credit-sensitive, interest rate-sensitive, and correspondent production. The company's net income attributable to common shareholders reached $36 million, or $0.41 per diluted share.

PMT's strong performance can be attributed to several key factors:

• Successful repositioning of its balance sheet for a higher interest rate environment, including the issuance of $1.3 billion in term debt and a major rebalancing of its agency MBS portfolio.
• Renewal of its mortgage banking agreement with PennyMac Financial Services, Inc. (PFSI), solidifying their synergistic partnership for another five years.
• Ability to organically create mortgage servicing rights (MSR) and credit investments from its own production volumes through successful securitizations of agency-eligible investor loans, a key competitive advantage highlighted by the company.

While interest rate volatility posed challenges in 2024, with the yield on the 10-year Treasury ranging from 3.6% to 4.7%, PMT's active hedging strategies and the stability of its dividend demonstrate the company's resilience.

Looking ahead, PMT is well-positioned to capitalize on growth opportunities in the private label securitization market. The company plans to maintain a pace of one securitization per quarter for investor loans, and is also exploring opportunities in jumbo loans and potentially non-QM loans.

Overall, PMT's strong fourth-quarter performance, strategic repositioning, renewed partnership with PFSI, and new investment opportunities through securitizations have boosted investor confidence, driving the stock's significant surge in pre-market trading.