Before we get into details, let’s review PMT’s second quarter highlights. Net income was $29.6 million in the second quarter, up 55% from the first quarter on revenues with $64.4 million. Diluted earnings per share reach an all time high at $0.79, a 22% increase from the first quarter. Return on equity was 17% for the quarter.
We believe this is particular with multiple keeps (indiscernible) at least raised over $200 million in new equity in the quarter, roughly a third of our market capitalization at that time demonstrating our ability to quickly and efficiently deploy capital. The new capital allowed for the purchase of four distressed whole loan pools provided more continued growth in our Correspondent business and facilitated the pay down of our borrowings under the forward purchase agreements. All of these activities contributed to PMT’s strong quarterly results.
Our Correspondent business continues to perform exceptionally well. Correspondent purchase activity increased 88% during the quarter to $3.4 billion in total purchases, of which conventional purchases accounted for $1.8 billion. Our selective client-focused model drives growth in deeper relationships with our Correspondent business partners. This simply means that we keep to do business with Correspondent [partners] who view the relationship with PMT as the partnership that has mutually beneficial to the long-term success of both parties. Doug will expand on this later in the presentation.
Turning to our activity, we’re pleased with the performance of PMT’s distressed mortgage loan investments during the quarter, with pre-tax earnings increasing 82% from the first quarter driven by 144% increase in net investment income. These results were driven by a combination of increased valuation on note, [balance in] the portfolio and strong liquidation activity. Moreover, we purchased $402 million in UPB, distressed whole loans during the quarter.The purchases were comprised of $224 million in UPB of non-performing whole loans and $178 million of UPB in re-performing whole loans, which is our largest purchase of re-performing loans thus far. As we’ve mentioned in the past, re-performing pools are likely to become more prevalent in the option classes and expand the amount of whole loans available to purchase.