UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 7, 2020 (February 6, 2020)
PennyMac Mortgage Investment Trust
(Exact name of Registrant as Specified in Its Charter)
Maryland | 001-34416 | 27-0186273 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| | |
3043 Townsgate Road Westlake Village, California | | 91361 |
(Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (818) 224-7442
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Shares of Beneficial Interest, $0.01 par value | | PMT | | New York Stock Exchange |
8.125% Series A Fixed-to-Floating Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value | | PMT/PA | | New York Stock Exchange |
8.00% Series B Fixed-to-Floating Cumulative Redeemable Preferred Shares of Beneficial Interest, $0.01 par value | | PMT/PB | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 | Results of Operations and Financial Condition. |
On February 6, 2020, PennyMac Mortgage Investment Trust (the “Company” or “PMT”) issued a press release announcing its unaudited financial results for the fiscal quarter and year ended December 31, 2019. A copy of the press release and the slide presentation used in connection with the Company’s recorded presentation of financial results were made available on February 6, 2020 and are furnished as Exhibits 99.1 and Exhibit 99.2, respectively.
The information in Item 2.02 of this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to the Company, except to the extent, if any, expressly set forth by specific reference in such filing.
Fourth Quarter and Year End Results
The press release issued by the Company on February 6, 2020 announcing its financial results for the fiscal quarter and year ended December 31, 2019 includes the information set forth below. The Company’s independent public accountants have not completed the audit of its financial statements for the fiscal quarter and the full year of 2019, and, as a result, the financial results and other information set forth below remain subject to change.
| • | For the fourth quarter 2019, the Company reported the following financial results: |
| ▪ | Net income attributable to common shareholders of $52.4 million, down from $63.8 million in the prior quarter |
| o | Strong performance from government-sponsored enterprise (GSE) credit risk transfer (CRT) investments |
| o | Increased income contribution from the Correspondent Production segment |
| o | 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 |
| o | 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 |
| o | CRT deliveries totaled $16.6 billion, resulting in a firm commitment to purchase $655 million of CRT securities |
| o | 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 |
| o | Raised $201 million in net proceeds from an issuance of 9.2 million common shares in an underwritten equity offering |
| o | Raised $14 million through the “At-The-Market” (ATM) equity offering program, issuing 637,000 shares |
| ▪ | The Company also reported that, after quarter end, it committed to issue $350 million of 3-year notes related to the remainder of PMT’s fifth CRT transaction3 |
1 | Annualized 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. |
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. |
1
| • | For the full year ended 2019, the Company reported the following 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 |
| • | 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 stratgies | | | Interest rate sensitive strategies | | | Correspondent production | | | Corporate | | | Consolidated | |
| | (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 | |
Forward-Looking Statements
This Current Report on Form 8-K 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
4 | 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
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 Current Report on Form 8-K are current as of the date of this report only.
[FINANCIAL TABLES FOLLOW]
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PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | December 31, 2019 | | | September 30, 2019 | | | December 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 | |
4
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 | |
5
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 | |
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Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PENNYMAC MORTGAGE INVESTMENT TRUST |
| |
Dated: February 7, 2020 | /s/ Andrew S. Chang |
| Andrew S. Chang Senior Managing Director and Chief Financial Officer |
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