News Details

CALABASAS, Calif.--(BUSINESS WIRE)-- PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income for the second quarter of 2011 of $16.6 million, or $0.59 per diluted share, on net investment income of $30.2 million. Quarterly earnings per share increased 69% from the first quarter results of $0.35 per diluted share. In addition, the Board of Trustees of PMT has declared a cash dividend of $0.50 per common share of beneficial interest, as compared to $0.42 from the prior quarter. This dividend is payable on August 31, 2011 to common shareholders of record on August 16, 2011.

During the second quarter, PMT invested $119 million in residential mortgage whole loans and real estate owned (REO) properties. At the end of the quarter, the Company’s portfolios of residential mortgage whole loans and REOs were valued at $706 million, an increase of 14% from the previous quarter. On July 12, 2011, the Company entered into a forward purchase agreement for a pool of mortgage loans with an initial purchase price totaling $178 million.¹

During the quarter ended June 30, 2011, PMT recorded net investment income on financial instruments totaling $30.1 million, as summarized below.

The Company’s mortgage loans generated realized and unrealized gains totaling $22.9 million in the second quarter. Of these gains, $4.5 million was realized through payoffs and sales, the result of collections on the loan balances at levels higher than recorded fair values. During the quarter ended June 30, 2011, the Company recognized valuation gains totaling $18.4 million, $7.4 million of which was attributable to an increase in the reliability of claims on government insured loans. The following is a breakdown of the realized and unrealized gains on mortgage loans for the second quarter:

Expenses for the second quarter of 2011 totaled $12.2 million, compared to $9.0 million in the first quarter of 2011. This increase was largely attributable to increases in loan servicing fees of $1.1 million and interest expense of almost $700,000. Servicing costs increased with the growth in managed assets. The Company’s average portfolio of loans serviced grew by $349 million in unpaid principal balance during the second quarter. The increase in interest expense is attributable to the increased borrowings under credit facilities associated with PMT’s whole loan investments. The interest rate on borrowings for the second quarter was 3.67%. As PMT continues to increase its use of leverage, we expect interest expense to increase accordingly.

During the second quarter, PMT entered into a $200 million master repurchase agreement with Credit Suisse First Boston Mortgage Capital LLC. The facility is committed for a period of 364 days and can be used to finance non-performing loans (NPLs) and REO properties. With the addition of this facility, PMT’s total available credit for NPLs and REOs increased to $550 million, $253 million of which had been drawn as of the end of the second quarter. PMT has pledged $580 million of its NPLs and REOs to secure this capital.

Stanford L. Kurland, chairman and chief executive officer of PMT, stated, “In the second quarter, the company delivered record results, continued to invest in NPLs, and expanded its correspondent lending business to capitalize on opportunities beyond distressed mortgages once the market normalizes.

“PMT reported record levels of second quarter earnings, cash flow and portfolio activity and correspondent lending volume. Returns from liquidations were up for the quarter on increased volume of activity. Our first quarter acquisitions, in conjunction with the first quarter equity offering, have contributed meaningfully to second quarter earnings. Our short sales activity was at record levels for the quarter and our REO sales continue to quickly turn over our inventory, with properties at present averaging less than 3 months in REO status. During the second quarter, PMT’s portfolio of whole loans, REO properties and MBS generated over $75 million in cash. New whole loan investments of $117 million completed during the second quarter were partially funded by this cash flow, ensuring that PMT’s shareholders remain invested in potentially high yielding investments.

“Our correspondent activities gained momentum, as our manager has added key personnel, approved new lenders and increased volume,” continued Mr. Kurland. “We see an increasing need for new market intermediaries as large financial institutions deemphasize their conduit activities and the GSEs reduce their conforming loan limits – creating more opportunity for PMT to gain market share. Correspondent production doubled in the second quarter to over $50 million. With fundings in July alone close to $50 million, we expect to triple the second quarter volume in the third quarter. We are targeting funding volumes reaching $200 million per month in the fourth quarter.

“As a financial enterprise, we believe our outstanding counterparty strength and deep relationships will be integral to success,” concluded Mr. Kurland. “We have excellent business relationships with top financial institutions, including Bank of America, Barclays, Cantor Fitzgerald, Citi, Credit Suisse, and Wells Fargo. During the second quarter we structured an innovative NPL transaction – a forward trade – with Citi to acquire loans that were sold by another money center bank. This forward trade was completed early in the third quarter and allows PMT to participate in the economic rewards of ownership and PennyMac servicing of this new pool. The outlays of capital for the acquisition occur under a flexible buyout arrangement spanning up to 12 months. As we move forward, we will continue to find new and creative ways to effectively and efficiently secure investments that meet our risk-adjusted return criteria.”

Management’s recorded earnings call and slide presentation will be available in the Investor Relations section of the Company’s website at www.PennyMacMortgageInvestmentTrust.com beginning at 5:30 a.m. (PT) on Thursday, August 4, 2011.

About PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust is a mortgage real estate investment trust (REIT) that invests primarily in residential mortgage loans and mortgage-related assets. PennyMac Mortgage Investment Trust trades on the New York Stock Exchange under the symbol "PMT" and is externally managed by PNMAC Capital Management, LLC, a wholly owned subsidiary of Private National Mortgage Acceptance Company, LLC. Additional information about PennyMac Mortgage Investment Trust is available at www.pennymacmortgageinvestmenttrust.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: changes in general business, economic, market and employment conditions from those expected; continued declines in residential real estate and disruption in the U.S. housing market; the availability of, and level of competition for, attractive risk-adjusted investment opportunities in residential mortgage loans and mortgage-related assets that satisfy our investment objectives and investment strategies; changes in our investment or operational objectives and strategies, including any new lines of business; the concentration of credit risks to which we are exposed; the availability, terms and deployment of short-term and long-term capital; unanticipated increases in financing and other costs, including a rise in interest rates; the performance, financial condition and liquidity of borrowers; increased rates of delinquency or decreased recovery rates on our investments; increased prepayments of the mortgage and other loans underlying our investments; changes in regulations or the occurrence of other events that impact the business, operation or prospects of government sponsored enterprises; changes in government support of homeownership; changes in governmental regulations, accounting treatment, tax rates and similar matters; and our ability to satisfy complex rules in order to qualify as a REIT for U.S. federal income tax purposes. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.

¹ This agreement is subject to obtaining additional capital adequate to fund the acquisition within the agreed upon time frame. There can be no assurance that the committed amount will ultimately be acquired or that the transaction will be completed at all.

Source: PennyMac Mortgage Investment Trust

PennyMac Mortgage Investment Trust

Kevin Chamberlain,

Managing Director, Corporate Communications

818-224-7028