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Press Release

PennyMac Mortgage Investment Trust Reports Fourth Quarter and Full-Year 2019 Results

Company Release - 2/6/2020 4:30 PM ET

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income attributable to common shareholders of $52.4 million, or $0.55 per common share on a diluted basis for the fourth quarter of 2019, on net investment income of $155.0 million. PMT previously announced a cash dividend for the fourth quarter of 2019 of $0.47 per common share of beneficial interest, which was declared on December 20, 2019 and paid on January 30, 2020 to common shareholders of record as of December 31, 2019.

Fourth Quarter 2019 Highlights

Financial results:

  • Net income attributable to common shareholders of $52.4 million, down from $63.8 million in the prior quarter
    • Strong performance from government-sponsored enterprise (GSE) credit risk transfer (CRT) investments
    • Increased income contribution from the Correspondent Production segment
    • Improved performance from Interest Rate Sensitive Strategies despite elevated hedge costs driven by continued interest rate volatility
  • Annualized return on average common equity of 10 percent1
  • Book value per common share of $21.37 at December 31, 2019, up from $21.14 at September 30, 2019

Other investment and financing highlights:

  • Record correspondent production volumes drove organic investment growth in CRT and mortgage servicing right (MSR) investments
    • Conventional correspondent loan production totaled $22.7 billion in unpaid principal balance (UPB), up 22 percent from the prior quarter and 125 percent from the fourth quarter of 20182
    • CRT deliveries totaled $16.6 billion, resulting in a firm commitment to purchase $655 million of CRT securities
    • Added $303 million of new MSR investments
  • Expanded the capital structure in support of continued growth with the private placement of $210 million of senior exchangeable notes
  • Strong share price performance and increased investment opportunities drove successful capital raises
    • Raised $201 million in net proceeds from an issuance of 9.2 million common shares in an underwritten equity offering
    • Raised $14 million through the “At-The-Market” (ATM) equity offering program, issuing 637,000 shares

Notable activity after quarter end:

  • Committed to issue $350 million of 3-year notes related to the remainder of PMT’s fifth CRT transaction3

Full-Year 2019 Highlights

Financial results:

  • Net income attributable to common shareholders of $201.4 million, up 58% from the prior year
  • Diluted earnings per common share of $2.42, up 22% from the prior year
  • Net investment income of $488.8 million, up 39% from the prior year
  • Return on average common equity of 12%, up from 10% in the prior year4
  • $1.8 billion in new CRT investments and $838 million in new MSR investments created in 2019, sourced from record correspondent production volumes
  • Completed distressed loan sales representing $138 million in UPB; equity allocated to distressed loan investments declined to 1 percent of total equity at December 31, 2019 from 8 percent at the end of 2018

1

Annualized return on average common equity is calculated based on annualized quarterly net income attributable to common shareholders as a percentage of monthly average common equity during the period.

2

Consists of delegated and non-delegated conventional conforming and non-Agency loans and includes conventional loans acquired from PennyMac Financial Services, Inc. (NYSE: PFSI).

3

This transaction is subject to continuing due diligence and customary closing conditions. There can be no assurance regarding the size of this transaction or that this transaction will be completed at all.

4

Return on average common equity is calculated based on net income attributable to common shareholders as a percentage of monthly average common equity during the year.

“Strong financial performance in the fourth quarter and for the full year 2019 was driven by our unique credit risk transfer investments, record conventional production volumes in our correspondent business and disciplined hedging of mortgage servicing rights,” said President and CEO David Spector. “We create organic CRT investments through our leading correspondent production business, which delivered approximately $60 billion in UPB of loans to the GSEs this year, resulting in new CRT investments of $1.8 billion. In light of our investment outlook, in the fourth quarter we expanded PMT’s capital structure with the private placement of $210 million of senior exchangeable notes and we issued additional common equity, bringing the total equity raised in 2019 to over $800 million to support continued capital deployment into CRT and MSR investments that we believe are accretive to PMT’s overall investment returns.”

The following table presents the contributions of PMT’s segments, consisting of Credit Sensitive Strategies, Interest Rate Sensitive Strategies, Correspondent Production, and Corporate:

Quarter ended December 31, 2019
Credit sensitive
strategies
Interest rate
sensitive strategies
Correspondent
production
CorporateConsolidated
 
 
(in thousands)
Net gain (loss) on investments:
CRT investments

$

36,850

 

$

-

 

$

-

 

$

-

 

$

36,850

 

Loans at fair value

 

(1,025

)

 

-

 

 

-

 

 

-

 

 

(1,025

)

Loans held by variable interest entity net of asset-backed secured financing

 

-

 

 

(1,064

)

 

-

 

 

-

 

 

(1,064

)

Mortgage-backed securities

 

-

 

 

(537

)

 

-

 

 

-

 

 

(537

)

Hedging derivatives

 

(2,116

)

 

(104

)

 

-

 

 

-

 

 

(2,220

)

Excess servicing spread investments

 

-

 

 

2,678

 

 

-

 

 

-

 

 

2,678

 

 

33,709

 

 

973

 

 

-

 

 

-

 

 

34,682

 

Net gain on loans acquired for sale

 

17,949

 

 

-

 

 

47,388

 

 

-

 

 

65,337

 

Net loan servicing fees

 

-

 

 

20,592

 

 

-

 

 

-

 

 

20,592

 

Net interest income (expense)
Interest income

 

9,021

 

 

43,739

 

 

41,577

 

 

873

 

 

95,210

 

Interest expense

 

(20,484

)

 

(38,668

)

 

(33,430

)

 

-

 

 

(92,582

)

 

(11,463

)

 

5,071

 

 

8,147

 

 

873

 

 

2,628

 

Other income

 

(224

)

 

-

 

 

32,020

 

 

1

 

 

31,797

 

 

39,971

 

 

26,636

 

 

87,555

 

 

874

 

 

155,036

 

Expenses:
Loan fulfillment and servicing fees payable to PennyMac Financial Services, Inc.

 

277

 

 

13,418

 

 

58,297

 

 

-

 

 

71,992

 

Management fees payable to PennyMac Financial Services, Inc.

 

-

 

 

-

 

 

-

 

 

10,314

 

 

10,314

 

Other

 

769

 

 

874

 

 

6,237

 

 

5,579

 

 

13,459

 

$

1,046

 

$

14,292

 

$

64,534

 

$

15,893

 

$

95,765

 

Pretax income (loss)

$

38,925

 

$

12,344

 

$

23,021

 

$

(15,019

)

$

59,271

Credit Sensitive Strategies Segment

The Credit Sensitive Strategies segment primarily includes results from CRT, and also includes distressed loans and non-Agency subordinated bonds. Pretax income for the segment was $38.9 million on revenues of $40.0 million, down from pretax income of $51.9 million on revenues of $55.0 million in the prior quarter.

The Credit Sensitive Strategies segment recorded a net gain on loans acquired for sale of $17.9 million, up from $10.5 million in the prior quarter. These amounts represent the recognition of the fair value of firm commitments to acquire CRT securities for deliveries during the fourth quarter; an additional $15.6 million was attributed to the Correspondent Production segment, up slightly from $15.4 million in the prior quarter.

Net gain on investments in the segment was $33.7 million, down from $51.5 million in the prior quarter.

Net gain on CRT investments for the quarter was $36.9 million, down from $50.9 million in the prior quarter, and included $15.3 million in valuation-related losses which reflects the impact of accelerated prepayment speeds. The prior quarter included $8.7 million in valuation-related gains related to credit spread tightening. Net gain on CRT investments also included $52.5 million in realized gains and carry, up from $45.6 million in the prior quarter driven by a larger CRT investment. Recognized losses were $1.7 million, unchanged from the prior quarter.

PMT’s distressed loan portfolio generated realized and unrealized losses totaling $1.0 million, compared to losses of $1.2 million in the prior quarter.

Net interest expense for the segment totaled $11.5 million, compared to $8.5 million in the prior quarter. Interest income totaled $9.0 million, down from $12.4 million in the prior quarter, driven primarily by lower short-term interest rates. Interest expense totaled $20.5 million, down from $20.9 million in the prior quarter, also driven by lower short-term interest rates.

Other income in the segment was down $1.7 million from the prior quarter, driven by changes in fair value related to the real estate acquired in the settlement of loans (REO) portfolio. At quarter end, PMT’s inventory of REO properties totaled $65.6 million, down from $79.2 million at September 30, 2019.

Segment expenses were $1.0 million, down from $3.1 million in the prior quarter due to a smaller distressed loan portfolio and lower related resolution costs.

Interest Rate Sensitive Strategies Segment

The Interest Rate Sensitive Strategies segment includes results from investments in MSRs, excess servicing spread (ESS), Agency mortgage-backed securities (MBS), non-Agency senior MBS and interest rate hedges. Pretax income for the segment was $12.3 million on revenues of $26.6 million, compared to a pretax loss of $10.1 million on revenues of $3.2 million in the prior quarter. The segment includes investments that typically have offsetting fair value exposures to changes in interest rates. For example, in a period with increasing interest rates, MSRs and ESS typically increase in fair value whereas Agency MBS typically decrease in fair value.

The results in the Interest Rate Sensitive Strategies segment consist of net gains and losses on investments, net interest income and net loan servicing fees, as well as associated expenses.

Net gain on investments for the segment was $1.0 million, and consisted of $2.7 million of gains in the fair value of ESS investments, partially offset by $1.1 million of losses on loans held by variable interest entity net of asset-backed secured financing, $0.5 million of losses on MBS, and $0.1 million of losses in the fair value of hedging derivatives.

Net loan servicing fees were $20.6 million, up from $5.2 million in the prior quarter. Net loan servicing fees included higher servicing fees of $90.8 million primarily driven by a larger portfolio, and $7.5 million in other fees, reduced by $59.2 million in realization of MSR cash flows, which was up 6 percent from the prior quarter. Net loan servicing fees also included a $129.3 million increase in the fair value of MSRs, $2.2 million of MSR recapture income, and $150.0 million in related hedging losses. PMT’s hedging activities are intended to manage the Company’s net exposure across all interest rate sensitive strategies, which include MSRs, ESS and MBS.

The following schedule details net loan servicing fees:

Quarter ended
December 31, 2019September 30, 2019December 31, 2018
(in thousands)
From non-affiliates:
Servicing fees (1)

$

90,822

 

$

76,377

 

$

57,400

 

Other fees

 

7,489

 

 

6,994

 

 

1,388

 

Changes in fair value of MSRs:
Realization of cashflows

 

(59,248

)

 

(55,673

)

 

(34,863

)

Other

 

129,292

 

 

(157,928

)

 

(40,927

)

 

70,044

 

 

(213,601

)

 

(75,790

)

(Losses) gains on hedging derivatives

 

(149,970

)

 

133,921

 

 

8,830

 

 

(79,926

)

 

(79,680

)

 

(66,960

)

 

18,385

 

 

3,691

 

 

(8,172

)

From PFSI—MSR recapture income

 

2,207

 

 

1,468

 

 

624

 

Net loan servicing fees

$

20,592

 

$

5,159

 

$

(7,548

)

(1)

Includes contractually specified servicing fees

MSR and ESS valuation gains were primarily driven by an increase in interest rates during the quarter, which resulted in lower expected prepayment activity in the future. PMT further benefited from higher recapture income from PFSI for elevated prepayment activity during the quarter. PMT generally benefits from recapture income when the prepayment of a loan underlying PMT’s MSR or ESS results from refinancing by PFSI.

Net interest income for the segment was $5.1 million, up from $3.7 million in the prior quarter. Interest income totaled $43.7 million, up from $41.5 million in the prior quarter, primarily driven by a larger MBS portfolio. Interest expense totaled $38.7 million, up from $37.8 million in the prior quarter, primarily driven by increased financing expenses related to the larger MBS portfolio and slightly higher interest shortfall expense from elevated prepayment activity.

Segment expenses were $14.3 million, up from $13.3 million in the prior quarter, primarily driven by the larger MSR portfolio.

Correspondent Production Segment

PMT acquires newly originated loans from correspondent sellers and typically sells or securitizes the loans, resulting in current-period income and additions to its investments in MSRs and CRT related to a portion of its production. PMT’s Correspondent Production segment generated pretax income of $23.0 million, up from $21.8 million in the prior quarter.

Through its correspondent production activities, PMT acquired $37.7 billion in UPB of loans originated by nonaffiliates, up 20 percent from the prior quarter and 109 percent from the fourth quarter of 2018. Of total correspondent acquisitions, conventional conforming and jumbo acquisitions from nonaffiliates totaled $20.5 billion, and government-insured or guaranteed and non-delegated acquisitions totaled $17.2 billion, up from $16.6 billion and $14.9 billion, respectively, in the prior quarter. PMT also acquired $1.7 billion of conventional loans originated by PennyMac Financial, up from $1.4 billion in the prior quarter. Interest rate lock commitments on conventional loans totaled $19.7 billion, up from $19.5 billion in the prior quarter and $9.6 billion in the fourth quarter of 2018.

Segment revenues were $87.6 million, a 22 percent increase from the prior quarter and included net gain on loans acquired for sale of $47.4 million, other income of $32.0 million, which primarily consists of volume-based origination fees, and net interest income of $8.1 million. Net gain on loans acquired for sale in the quarter increased by $8.7 million from the prior quarter, driven by higher production volumes and slightly higher CRT-related gains, as noted earlier. Net interest income increased $0.4 million from the prior quarter and decreased $4.1 million from the fourth quarter of 2018. Net interest income in the third quarter of 2019 and the fourth quarter of 2018 included incentives totaling $1.0 million and $8.7 million, respectively, which the Company was entitled to receive under one of its master repurchase agreements to finance mortgage loans that satisfied certain consumer relief characteristics. As expected and previously disclosed, the lender completed the orderly wind down of the incentive program during the quarter ended September 30, 2019 and accordingly, the related master repurchase agreement expired. As a result, there were no consumer relief incentives in the fourth quarter of 2019.

Segment expenses were $64.5 million, up from $50.2 million in the prior quarter driven by the increase in production activity, as well as a slight increase in the weighted average fulfillment fee during the quarter. The weighted average fulfillment fee rate in the fourth quarter was 28 basis points, up from 27 basis points in the prior quarter.

Corporate Segment

The Corporate segment includes interest income from cash and short-term investments, management fees, and corporate expenses.

Segment revenues were $0.9 million, up from $0.6 million in the prior quarter.

Management fees were $10.3 million, up 2 percent from the prior quarter driven by an increase in base management fees as a result of PMT’s increased average shareholders’ equity and partially offset by decreased incentive fees paid to PFSI based on PMT’s profitability.

Other segment expenses were $5.6 million, down from $6.0 million in the prior quarter.

Taxes

PMT recorded income tax expense of $0.7 million compared to a tax benefit of $21.9 million in the prior quarter.

Executive Chairman Stanford L. Kurland added, “I am pleased to note that PennyMac Mortgage Investment Trust was among the best performing residential mortgage REITs in 2019. I am also pleased to note that since its inception over 10 years ago, PMT has delivered an outstanding annualized return to common shareholders of 12 percent, driven by its unique business model and investment strategies in residential mortgages. I am confident that as I begin to transition away my operational responsibilities at PennyMac Financial, PMT’s manager and services provider, this highly-experienced management team and synergistic relationship will continue to drive attractive risk-adjusted returns to shareholders.”

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at www.pennymac-REIT.com beginning at 1:30 p.m. (Pacific Time) on Thursday, February 6, 2020.

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. PMT is externally managed by PNMAC Capital Management, LLC, a wholly-owned subsidiary of PennyMac Financial Services, Inc. (NYSE: PFSI). Additional information about PennyMac Mortgage Investment Trust is available at www.PennyMac-REIT.com.

Forward-Looking Statements

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 the Company’s investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject it to additional risks; the occurrence of natural disasters or other events or circumstances that could impact the Company’s operations; volatility in the Company’s industry, the debt or equity markets, the general economy or the real estate finance and real estate markets specifically, whether the result of market events or otherwise; events or circumstances which undermine confidence in the financial and housing markets or otherwise have a broad impact on financial and housing markets, such as the sudden instability or collapse of large depository institutions or other significant corporations, terrorist attacks, natural or man-made disasters, or threatened or actual armed conflicts; changes in general business, economic, market, employment and domestic and international political conditions, or in consumer confidence and spending habits from those expected; declines in real estate or significant changes in U.S. housing prices or activity in the U.S. housing market; the availability of, and level of competition for, attractive risk-adjusted investment opportunities in mortgage loans and mortgage-related assets that satisfy the Company’s investment objectives; the inherent difficulty in winning bids to acquire mortgage loans, and the Company’s success in doing so; the concentration of credit risks to which the Company is exposed; the degree and nature of the Company’s competition; the Company’s dependence on its manager and servicer, potential conflicts of interest with such entities and their affiliates, and the performance of such entities; changes in personnel and lack of availability of qualified personnel at its manager, servicer or their affiliates; the availability, terms and deployment of short-term and long-term capital; the adequacy of the Company’s cash reserves and working capital; the Company’s ability to maintain the desired relationship between its financing and the interest rates and maturities of its assets; the timing and amount of cash flows, if any, from the Company’s investments; unanticipated increases or volatility in financing and other costs, including a rise in interest rates; the performance, financial condition and liquidity of borrowers; the ability of the Company’s servicer, which also provides the Company with fulfillment services, to approve and monitor correspondent sellers and underwrite loans to investor standards; incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of the Company’s customers and counterparties; the Company’s indemnification and repurchase obligations in connection with mortgage loans it purchases and later sells or securitizes; the quality and enforceability of the collateral documentation evidencing the Company’s ownership and rights in the assets in which it invests; increased rates of delinquency, default and/or decreased recovery rates on the Company’s investments; the performance of mortgage loans underlying mortgage-backed securities in which the Company retains credit risk; the Company’s ability to foreclose on its investments in a timely manner or at all; increased prepayments of the mortgages and other loans underlying the Company’s mortgage-backed securities or relating to the Company’s mortgage servicing rights, excess servicing spread and other investments; the degree to which the Company’s hedging strategies may or may not protect it from interest rate volatility; the effect of the accuracy of or changes in the estimates the Company makes about uncertainties, contingencies and asset and liability valuations when measuring and reporting upon the Company’s financial condition and results of operations; the Company’s ability to maintain appropriate internal control over financial reporting; the Company’s exposure to risks of loss and disruptions in operations resulting from adverse weather conditions and man-made or natural disasters; technologies for loans and the Company’s ability to mitigate security risks and cyber intrusions; the Company’s ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct its business; the Company’s ability to detect misconduct and fraud; the Company’s ability to comply with various federal, state and local laws and regulations that govern its business; developments in the secondary markets for the Company’s mortgage loan products; legislative and regulatory changes that impact the mortgage loan industry or housing market; changes in regulations or the occurrence of other events that impact the business, operations or prospects of government agencies such as the Government National Mortgage Association, the Federal Housing Administration or the Veterans Administration, the U.S. Department of Agriculture, or government-sponsored entities such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or such changes that increase the cost of doing business with such entities; the Dodd-Frank Wall Street Reform and Consumer Protection Act and its implementing regulations and regulatory agencies, and any other legislative and regulatory changes that impact the business, operations or governance of mortgage lenders and/or publicly-traded companies; the Consumer Financial Protection Bureau and its issued and future rules and the enforcement thereof; changes in government support of homeownership; changes in government or government-sponsored home affordability programs; limitations imposed on the Company’s business and its ability to satisfy complex rules for it to qualify as a REIT for U.S. federal income tax purposes and qualify for an exclusion from the Investment Company Act of 1940 and the ability of certain of the Company’s subsidiaries to qualify as REITs or as taxable REIT subsidiaries for U.S. federal income tax purposes, as applicable, and the Company’s ability and the ability of its subsidiaries to operate effectively within the limitations imposed by these rules; changes in governmental regulations, accounting treatment, tax rates and similar matters (including changes to laws governing the taxation of REITs, or the exclusions from registration as an investment company); the Company’s ability to make distributions to its shareholders in the future; the Company’s failure to deal appropriately with issues that may give rise to reputational risk; and the Company’s organizational structure and certain requirements in its charter documents. 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 (UNAUDITED)

 
December 31, 2019September 30, 2019December 31, 2018
(in thousands, except share amounts)
ASSETS
Cash

$

104,056

$

113,651

$

59,845

 

Short-term investments

 

90,836

 

74,895

 

74,850

 

Mortgage-backed securities at fair value

 

2,839,633

 

2,325,010

 

2,610,422

 

Loans acquired for sale at fair value

 

4,148,425

 

3,947,368

 

1,643,957

 

Loans at fair value

 

270,793

 

290,527

 

408,305

 

Excess servicing spread received from PennyMac Financial Services, Inc.

 

178,586

 

183,141

 

216,110

 

Derivative and credit risk transfer strip assets

 

202,318

 

274,444

 

167,165

 

Firm commitment to purchase credit risk transfer securities at fair value

 

109,513

 

54,734

 

37,994

 

Real estate acquired in settlement of loans

 

65,583

 

79,201

 

85,681

 

Real estate held for investment

 

-

 

-

 

43,110

 

Deposits securing credit risk transfer arrangements

 

1,969,784

 

2,044,250

 

1,146,501

 

Mortgage servicing rights

 

1,535,705

 

1,162,714

 

1,162,369

 

Servicing advances

 

58,084

 

32,057

 

67,666

 

Due from PennyMac Financial Services, Inc.

 

2,760

 

4,993

 

4,077

 

Other

 

195,275

 

157,624

 

85,309

 

Total assets

$

11,771,351

$

10,744,609

$

7,813,361

 

LIABILITIES
Assets sold under agreements to repurchase

$

6,648,890

$

6,355,476

$

4,777,027

 

Mortgage loan participation and sale agreements

 

-

 

-

 

178,639

 

Exchangeable senior notes

 

443,506

 

249,269

 

248,350

 

Notes payable secured by credit risk transfer and mortgage servicing assets

 

1,696,295

 

1,361,142

 

445,573

 

Asset-backed financing of a variable interest entity at fair value

 

243,360

 

261,209

 

276,499

 

Interest-only security payable at fair value

 

25,709

 

24,729

 

36,011

 

Assets sold to PennyMac Financial Services, Inc. under agreement to repurchase

 

107,512

 

107,678

 

131,025

 

Derivative liabilities

 

6,423

 

9,160

 

5,914

 

Accounts payable and accrued liabilities

 

91,149

 

108,913

 

70,687

 

Due to PennyMac Financial Services, Inc.

 

48,159

 

39,744

 

33,464

 

Income taxes payable

 

1,819

 

-

 

36,526

 

Liability for losses under representations and warranties

 

7,614

 

7,678

 

7,514

 

Total liabilities

 

9,320,436

 

8,524,998

 

6,247,229

 

SHAREHOLDERS' EQUITY
Preferred shares of beneficial interest

 

299,707

 

299,707

 

299,707

 

Common shares of beneficial interest—authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding 100,182,227, 90,345,127 and 60,951,444 common shares, respectively

 

1,002

 

903

 

610

 

Additional paid-in capital

 

2,127,889

 

1,901,852

 

1,285,533

 

Retained earnings (accumulated deficit)

 

22,317

 

17,149

 

(19,718

)

Total shareholders' equity

 

2,450,915

 

2,219,611

 

1,566,132

 

Total liabilities and shareholders' equity

$

11,771,351

$

10,744,609

$

7,813,361

 

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

 

For the Quarterly Periods ended

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

(in thousands, expect per share amounts)

Investment Income
Net gain on investments:
From nonaffiliates

$

32,004

 

$

49,224

 

$

46,609

 

From PennyMac Financial Services, Inc.

 

2,678

 

 

(3,435

)

 

107

 

 

34,682

 

 

45,789

 

 

46,716

 

Net gain on loans acquired for sale:
From nonaffiliates

 

60,311

 

 

45,054

 

 

14,902

 

From PennyMac Financial Services, Inc.

 

5,026

 

 

4,206

 

 

2,704

 

 

65,337

 

 

49,260

 

 

17,606

 

Loan origination fees

 

31,959

 

 

25,470

 

 

15,010

 

Net loan servicing fees:
From nonaffiliates
Contractually specified

 

90,822

 

 

76,377

 

 

57,400

 

Other

 

7,489

 

 

6,994

 

 

1,389

 

 

98,311

 

 

83,371

 

 

58,789

 

Amortization, impairment, and change in fair value of mortgage servicing rights

 

(79,926

)

 

(79,680

)

 

(66,961

)

 

18,385

 

 

3,691

 

 

(8,172

)

From PennyMac Financial Services, Inc.

 

2,207

 

 

1,468

 

 

624

 

 

20,592

 

 

5,159

 

 

(7,548

)

Interest income:
From nonaffiliates

 

93,043

 

 

85,510

 

 

63,570

 

From PennyMac Financial Services, Inc.

 

2,167

 

 

2,291

 

 

3,554

 

 

95,210

 

 

87,801

 

 

67,124

 

Interest expense:
To nonaffiliates

 

91,295

 

 

82,702

 

 

51,905

 

To PennyMac Financial Services, Inc.

 

1,287

 

 

1,527

 

 

1,776

 

 

92,582

 

 

84,229

 

 

53,681

 

Net interest income

 

2,628

 

 

3,572

 

 

13,443

 

Results of real estate acquired in settlement of loans

 

(526

)

 

702

 

 

(2,953

)

Other

 

364

 

 

808

 

 

1,628

 

Net investment income

 

155,036

 

 

130,760

 

 

83,902

 

Expenses
Earned by PennyMac Financial Services, Inc.:
Loan fulfillment fees

 

58,297

 

 

45,149

 

 

28,591

 

Loan servicing fees

 

13,695

 

 

12,964

 

 

11,524

 

Management fees

 

10,314

 

 

10,098

 

 

6,559

 

Loan origination

 

5,382

 

 

4,328

 

 

2,582

 

Compensation

 

1,513

 

 

1,644

 

 

1,369

 

Professional services

 

1,066

 

 

1,430

 

 

688

 

Safekeeping

 

1,729

 

 

1,633

 

 

683

 

Loan collection and liquidation

 

218

 

 

1,551

 

 

953

 

Other

 

3,551

 

 

3,830

 

 

4,751

 

Total expenses

 

95,765

 

 

82,627

 

 

57,700

 

Income before provision for (benefit from) income taxes

 

59,271

 

 

48,133

 

 

26,202

 

Provision for (benefit from) income taxes

 

674

 

 

(21,867

)

 

(15,423

)

Net income

 

58,597

 

 

70,000

 

 

41,625

 

Dividends on preferred shares

 

6,235

 

 

6,234

 

 

6,235

 

Net income attributable to common shareholders

$

52,362

 

$

63,766

 

$

35,390

 

Earnings per share
Basic

$

0.56

 

$

0.75

 

$

0.58

 

Diluted

$

0.55

 

$

0.71

 

$

0.55

 

Weighted average shares outstanding
Basic

 

93,169

 

 

84,367

 

 

60,951

 

Diluted

 

101,865

 

 

92,834

 

 

69,418

 

Dividends declared per common share

$

0.47

 

$

0.47

 

$

0.47

 

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

 

 

 

Year ended December 31,

 

 

2019

 

2018

 

2017

 

(in thousands, except per share amounts)

Net investment income
Net gain on investments:
From nonaffiliates

$

270,848

 

$

70,842

 

$

110,914

 

From PennyMac Financial Services, Inc.

 

(7,530

)

 

11,084

 

 

(14,530

)

 

263,318

 

 

81,926

 

 

96,384

 

Net gain on loans acquired for sale:
From nonaffiliates

 

155,783

 

 

48,260

 

 

62,432

 

From PennyMac Financial Services, Inc.

 

14,381

 

 

10,925

 

 

12,084

 

 

170,164

 

 

59,185

 

 

74,516

 

Loan origination fees

 

87,997

 

 

43,321

 

 

40,184

 

Net loan servicing fees:
From nonaffiliates
Contractually specified

 

295,390

 

 

204,663

 

 

164,776

 

Other

 

24,099

 

 

8,062

 

 

6,523

 

 

319,489

 

 

212,725

 

 

171,299

 

Amortization, impairment, and change in fair value of mortgage servicing rights

 

(383,731

)

 

(94,330

)

 

(103,487

)

 

(64,242

)

 

118,395

 

 

67,812

 

From PennyMac Financial Services, Inc.

 

5,324

 

 

2,192

 

 

1,428

 

 

(58,918

)

 

120,587

 

 

69,240

 

Interest income:
From nonaffiliates

 

307,594

 

 

207,634

 

 

178,225

 

From PennyMac Financial Services, Inc.

 

10,291

 

 

15,138

 

 

16,951

 

 

317,885

 

 

222,772

 

 

195,176

 

Interest expense:
To nonaffiliates

 

291,144

 

 

167,709

 

 

143,333

 

To PennyMac Financial Services, Inc.

 

6,302

 

 

7,462

 

 

8,038

 

 

297,446

 

 

175,171

 

 

151,371

 

Net interest income

 

20,439

 

 

47,601

 

 

43,805

 

Results of real estate acquired in settlement of loans

 

771

 

 

(8,786

)

 

(14,955

)

Other

 

5,044

 

 

7,233

 

 

8,766

 

Net investment income

 

488,815

 

 

351,067

 

 

317,940

 

Expenses
Earned by PennyMac Financial Services, Inc.:
Loan fulfillment fees

 

160,610

 

 

81,350

 

 

80,359

 

Loan servicing fees

 

48,797

 

 

42,045

 

 

43,064

 

Management fees

 

36,492

 

 

24,465

 

 

22,584

 

Loan origination

 

15,105

 

 

6,562

 

 

7,521

 

Compensation

 

6,897

 

 

6,781

 

 

6,322

 

Professional services

 

5,556

 

 

6,380

 

 

6,905

 

Safekeeping

 

5,097

 

 

1,805

 

 

2,918

 

Loan collection and liquidation

 

4,600

 

 

7,852

 

 

6,063

 

Other

 

15,020

 

 

15,839

 

 

17,658

 

Total expenses

 

298,174

 

 

193,079

 

 

193,394

 

Income before (benefit from) provision for income taxes

 

190,641

 

 

157,988

 

 

124,546

 

(Benefit from) provision for income taxes

 

(35,716

)

 

5,190

 

 

6,797

 

Net income

 

226,357

 

 

152,798

 

 

117,749

 

Dividends on preferred shares

 

24,938

 

 

24,938

 

 

15,267

 

Net income attributable to common shareholders

$

201,419

 

$

127,860

 

$

102,482

 

Earnings per common share
Basic

$

2.54

 

$

2.09

 

$

1.53

 

Diluted

$

2.42

 

$

1.99

 

$

1.48

 

Weighted average common shares outstanding
Basic

 

78,990

 

 

60,898

 

 

66,144

 

Diluted

 

87,711

 

 

69,365

 

 

74,611

 

 

Media
Janis Allen
(805) 330-4899

Investors
Isaac Garden
(818) 224-7028

Source: PennyMac Mortgage Investment Trust