Exhibit 99.1
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| Contact: |
| Kevin Chamberlain, |
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| 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.
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| Quarter ended September 30, 2010 |
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| Investment income |
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| Interest |
| Realized and |
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| Coupon |
| Discount |
| Total |
| unrealized |
| Total |
| Average |
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| (dollars in thousands) |
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Short-term money market investment |
| $ | 10 |
| $ | — |
| $ | 10 |
| $ | — |
| $ | 10 |
| $ | 18,545 |
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Mortgage-backed securities: |
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Non-Agency Alt-A |
| 263 |
| 103 |
| 366 |
| 223 |
| 589 |
| 19,751 |
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Non-Agency subprime |
| 110 |
| 651 |
| 761 |
| 254 |
| 1,015 |
| 71,391 |
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Non-Agency prime jumbo |
| 99 |
| 3 |
| 102 |
| 119 |
| 221 |
| 13,449 |
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| 472 |
| 757 |
| 1,229 |
| 596 |
| 1,825 |
| 104,591 |
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Mortgage loans |
| 2,607 |
| — |
| 2,607 |
| 7,561 |
| 10,168 |
| 224,953 |
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| $ | 3,089 |
| $ | 757 |
| $ | 3,846 |
| $ | 8,157 |
| $ | 12,003 |
| $ | 348,089 |
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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:
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Valuation changes |
| $ | 4,012 |
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Payoffs |
| 2,728 |
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Sales |
| 821 |
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| $ | 7,561 |
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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)
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| September 30, |
| December 31, |
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ASSETS |
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Cash |
| $ | 25,061 |
| $ | 54 |
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Short-term investment |
| — |
| 213,628 |
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Mortgage-backed securities at fair value |
| 137,049 |
| 83,771 |
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Mortgage loans at fair value: |
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Held for sale |
| 4,748 |
| — |
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Held for investment |
| 240,164 |
| 26,046 |
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| 244,912 |
| 26,046 |
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Real estate acquired in settlement of loans |
| 26,112 |
| — |
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Principal and interest collections receivable |
| 16,110 |
| — |
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Interest receivable |
| 755 |
| 492 |
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Due from affiliates |
| 55 |
| — |
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Other assets |
| 3,917 |
| 455 |
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Total assets |
| $ | 453,971 |
| $ | 324,446 |
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LIABILITIES |
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Accounts payable and accrued liabilities |
| $ | 782 |
| $ | 527 |
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Securities sold under agreements to repurchase |
| 116,139 |
| — |
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Contingent underwriting fees payable |
| 5,883 |
| 5,883 |
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Payable to affiliates |
| 4,687 |
| 4,238 |
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Total liabilities |
| 127,491 |
| 10,648 |
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Commitments and contingencies |
| — |
| — |
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SHAREHOLDERS’ EQUITY |
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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 |
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Additional paid-in capital |
| 316,952 |
| 315,514 |
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Retained earnings (accumulated deficit) |
| 9,360 |
| (1,883 | ) | ||
Total shareholders’ equity |
| 326,480 |
| 313,798 |
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Total liabilities and shareholders’ equity |
| $ | 453,971 |
| $ | 324,446 |
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PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(unaudited)
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| Quarter ended |
| Period from |
| Nine months |
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Investment Income |
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Interest income: |
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Mortgage loans |
| $ | 2,607 |
| $ | — |
| $ | 6,445 |
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Mortgage-backed securities |
| 1,229 |
| 449 |
| 3,780 |
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Short-term investment |
| 10 |
| 100 |
| 77 |
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| 3,846 |
| 549 |
| 10,302 |
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Gains on investments: |
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Mortgage loans |
| 7,578 |
| — |
| 18,697 |
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Mortgage-backed securities |
| 596 |
| 267 |
| 446 |
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| 8,174 |
| 267 |
| 19,143 |
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Loss on sale of loans purchased for sale |
| (17 | ) | — |
| (9 | ) | |||
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Results of real estate acquired in settlement of loans |
| 637 |
| — |
| 972 |
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Other income |
| 16 |
| — |
| 17 |
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Net investment income |
| 12,656 |
| 816 |
| 30,425 |
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Expenses |
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Management fees |
| 1,237 |
| 812 |
| 3,650 |
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Compensation |
| 573 |
| 483 |
| 2,212 |
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Loan servicing fees |
| 885 |
| — |
| 1,561 |
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Professional services |
| 628 |
| 72 |
| 1,121 |
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Interest |
| 251 |
| — |
| 251 |
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Insurance |
| 191 |
| 131 |
| 588 |
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Other |
| 801 |
| 48 |
| 1,508 |
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Total expenses |
| 4,566 |
| 1,546 |
| 10,891 |
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Income (loss) before provision for income taxes |
| 8,090 |
| (730 | ) | 19,534 |
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Provision for income taxes |
| 361 |
| — |
| 2,400 |
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Net income (loss) |
| $ | 7,729 |
| (730 | ) | $ | 17,134 |
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Earnings (loss) per share: |
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Basic |
| $ | 0.46 |
| $ | (0.04 | ) | $ | 1.02 |
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Diluted |
| $ | 0.45 |
| $ | (0.04 | ) | $ | 1.01 |
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Weighted average shares outstanding: |
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Basic |
| 16,796,487 |
| 16,735,317 |
| 16,755,931 |
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Diluted |
| 17,069,471 |
| 16,735,317 |
| 17,028,915 |
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(end)