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8-K - 8-K - PennyMac Mortgage Investment Trusta10-20711_18k.htm
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Exhibit 99.1

 

 

GRAPHIC

 

 

 

Contact:

 

Kevin Chamberlain,

 

 

 

Managing Director, Corporate Communications

 

(818) 224-7028

 

PennyMac Mortgage Investment Trust Reports Third Quarter 2010 Results

 

Calabasas, CA November 3, 2010 — PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income for the third quarter of 2010 of $7.7 million, or $0.45 per share, on total net investment income of $12.6 million.  In addition, the Board of Trustees of PMT has declared a cash dividend of $0.42 per common share of beneficial interest.  This dividend is payable November 30, 2010 to common shareholders of record on November 19, 2010.

 

During the third quarter of 2010, the Company invested $125 million in distressed mortgage assets, comprised of $73 million in nonperforming residential mortgage whole loans and $52 million in mortgage-backed securities.  These investments were purchased with a combination of cash flows from existing investments and debt from security repurchase agreements on the Company’s mortgage-backed securities.  Cash flows generated from existing investments were $45 million for the third quarter.  At the end of the quarter, the Company’s portfolios of residential mortgage whole loans and mortgage-backed securities were valued at $245 million and $137 million, respectively.  After the end of the third quarter, the Company entered into a transaction to purchase nonperforming whole loans valued at $222 million.  That transaction is scheduled to close in the middle of December.(1)

 

Earlier this week, PMT completed a key strategic initiative by executing an agreement pursuant to which the Company can borrow up to $100 million for nonperforming loans and REO assets.  The Company’s objective is to utilize this facility to finance the aggregation of NPL investments pending sale, securitization or other liquidation.  As loans are moved from this facility, for

 


(1)  The pending transaction is subject to continuing due diligence, customary closing conditions, and procuring additional debt financing and there can be no assurance that the committed amount will ultimately be acquired or that the transaction will be completed at all.

 



 

example into a securitization or when liquidated, a corresponding amount will be again available on the facility to finance the purchase of additional non-performing loans. PMT continues to pursue ways to increase its purchasing power through prudent leverage, including securitizations of nonperforming loans, with its first securitization targeted for completion in the beginning of 2011.

 

During the quarter ended September 30, 2010, PMT recorded net investment income on financial instruments totaling $12.0 million, as summarized below.

 

 

 

Quarter ended September 30, 2010

 

 

 

Investment income

 

 

 

 

 

Interest

 

Realized and

 

 

 

 

 

 

 

Coupon

 

Discount
accrual

 

Total
interest

 

unrealized
gains

 

Total

 

Average
balance

 

 

 

(dollars in thousands)

 

Short-term money market investment

 

$

10

 

$

 

$

10

 

$

 

$

10

 

$

18,545

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Agency Alt-A

 

263

 

103

 

366

 

223

 

589

 

19,751

 

Non-Agency subprime

 

110

 

651

 

761

 

254

 

1,015

 

71,391

 

Non-Agency prime jumbo

 

99

 

3

 

102

 

119

 

221

 

13,449

 

 

 

472

 

757

 

1,229

 

596

 

1,825

 

104,591

 

Mortgage loans

 

2,607

 

 

2,607

 

7,561

 

10,168

 

224,953

 

 

 

$

3,089

 

$

757

 

$

3,846

 

$

8,157

 

$

12,003

 

$

348,089

 

 

The Company’s mortgage loans generated realized and unrealized gains totaling $7.6 million in the third quarter.  Of these gains, $3.5 million was realized through payoffs and sales, the result of collection on the loan balances at levels higher than their beginning of quarter fair values.  The following is a breakdown of the realized and unrealized gains on mortgage loans for the third quarter:

 

 

 

(in thousands)

 

Valuation changes

 

$

4,012

 

Payoffs

 

2,728

 

Sales

 

821

 

 

 

$

7,561

 

 

Stanford L. Kurland, Chairman and Chief Executive Officer of PMT, stated, “Cash flows produced from our investments were strong in the third quarter, generating strong returns from our investments.  This strong cash flow helped to fund a 20% increase in our quarterly dividend payment.  We also saw valuation gains of almost $4 million during the quarter.  This valuation increase is predominantly a function of our NPL portfolio.  As NPLs acquired at discounts move closer to resolution they are generally anticipated to increase in value.

 

“A number of strategic initiatives are currently underway at PMT, including procuring additional prudent leverage; increasing volume in our conduit operation; developing a jumbo loan conduit program; and completing an NPL securitization,” continued Mr. Kurland.  “These initiatives are

 



 

 intended to not only enhance our short-term earnings potential, but to position PMT to capitalize across the mortgage spectrum as the market converges back to a more normalized market.  While we see the current opportunity for distressed whole loans being very attractive in the near term, we recognize the need to prepare for a revitalized market.  We continue to see investment opportunities in the residential whole loan space that should only be enhanced by these new initiatives as we head into the last quarter of 2010 and the beginning of 2011. ”

 

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 Wednesday, November 3, 2010.

 

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.

 



 

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(unaudited)

 

 

 

September 30,
2010

 

December 31,
2009

 

ASSETS

 

 

 

 

 

Cash

 

$

25,061

 

$

54

 

Short-term investment

 

 

213,628

 

Mortgage-backed securities at fair value

 

137,049

 

83,771

 

Mortgage loans at fair value:

 

 

 

 

 

Held for sale

 

4,748

 

 

Held for investment

 

240,164

 

26,046

 

 

 

244,912

 

26,046

 

Real estate acquired in settlement of loans

 

26,112

 

 

Principal and interest collections receivable

 

16,110

 

 

Interest receivable

 

755

 

492

 

Due from affiliates

 

55

 

 

Other assets

 

3,917

 

455

 

Total assets

 

$

453,971

 

$

324,446

 

LIABILITIES

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

782

 

$

527

 

Securities sold under agreements to repurchase

 

116,139

 

 

Contingent underwriting fees payable

 

5,883

 

5,883

 

Payable to affiliates

 

4,687

 

4,238

 

Total liabilities

 

127,491

 

10,648

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

Common shares of beneficial interest—authorized, 500,000,000 shares of $0.01 par value; issued and outstanding, 16,832,343 and 16,735,317 shares, respectively

 

168

 

167

 

Additional paid-in capital

 

316,952

 

315,514

 

Retained earnings (accumulated deficit)

 

9,360

 

(1,883

)

Total shareholders’ equity

 

326,480

 

313,798

 

Total liabilities and shareholders’ equity

 

$

453,971

 

$

324,446

 

 



 

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(unaudited)

 

 

 

Quarter ended
September 30,
2010

 

Period from
August 4, 2009

(commencement
of operations) to
September 30,
2009

 

Nine months
ended
September 30,
2010

 

Investment Income

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

Mortgage loans

 

$

2,607

 

$

 

$

6,445

 

Mortgage-backed securities

 

1,229

 

449

 

3,780

 

Short-term investment

 

10

 

100

 

77

 

 

 

3,846

 

549

 

10,302

 

Gains on investments:

 

 

 

 

 

 

 

Mortgage loans

 

7,578

 

 

18,697

 

Mortgage-backed securities

 

596

 

267

 

446

 

 

 

8,174

 

267

 

19,143

 

 

 

 

 

 

 

 

 

Loss on sale of loans purchased for sale

 

(17

)

 

(9

)

 

 

 

 

 

 

 

 

Results of real estate acquired in settlement of loans

 

637

 

 

972

 

Other income

 

16

 

 

17

 

Net investment income

 

12,656

 

816

 

30,425

 

Expenses

 

 

 

 

 

 

 

Management fees

 

1,237

 

812

 

3,650

 

Compensation

 

573

 

483

 

2,212

 

Loan servicing fees

 

885

 

 

1,561

 

Professional services

 

628

 

72

 

1,121

 

Interest

 

251

 

 

251

 

Insurance

 

191

 

131

 

588

 

Other

 

801

 

48

 

1,508

 

Total expenses

 

4,566

 

1,546

 

10,891

 

Income (loss) before provision for income taxes

 

8,090

 

(730

)

19,534

 

Provision for income taxes

 

361

 

 

2,400

 

Net income (loss)

 

$

7,729

 

(730

)

$

17,134

 

Earnings (loss) per share:

 

 

 

 

 

 

 

Basic

 

$

0.46

 

$

(0.04

)

$

1.02

 

Diluted

 

$

0.45

 

$

(0.04

)

$

1.01

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

16,796,487

 

16,735,317

 

16,755,931

 

Diluted

 

17,069,471

 

16,735,317

 

17,028,915

 

 

(end)