Form 8-K PennyMac Mortgage Invest For: Feb 07

February 8, 2019 6:52 AM

 

 

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, 2019

 

PennyMac Mortgage Investment Trust

 (Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

Maryland

001-34416

27-0186273

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

 

 

 

 

3043 Townsgate Road, Westlake Village, California

91361

(Address of principal executive offices)

(Zip Code)

 

(818) 224‑7442

(Registrant’s telephone number, including area code)

 

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:

 

  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))

 

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 7, 2019, PennyMac Mortgage Investment Trust (the “Company”) issued a press release announcing its unaudited financial results for the fiscal quarter and year ended December 31, 2018.  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 7, 2019 and are furnished as Exhibit 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.

 

Item 9.01    Financial Statements and Exhibits.

 

(d)  Exhibits.

 

 

 

Exhibit No.

Description

 

 

99.1

Press Release, dated February 7, 2019, issued by PennyMac Mortgage Investment Trust pertaining to its unaudited financial results for the fiscal quarter and year ended December 31, 2018.

 

 

99.2

Slide Presentation for use beginning on February 7, 2019 in connection with a recorded presentation of financial results for the fiscal quarter and year ended December 31, 2018.

 



SIGNATURE

 

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 hereunto duly authorized.

 

 

 

 

 

PENNYMAC MORTGAGE INVESTMENT TRUST

 

 

Dated:  February 8, 2019

/s/ Andrew S. Chang

 

Andrew S. Chang

Senior Managing Director and Chief Financial Officer

 

Exhibit 99.1

 

 

 

 

 

Media

 

Investors

 

Stephen Hagey

 

Christopher Oltmann

 

(805) 530-5817

 

(818) 224-7028

 

PennyMac Mortgage Investment Trust Reports

Fourth Quarter and Full-Year 2018 Results

Westlake Village, CA, February 7, 2019 – PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income attributable to common shareholders of $35.4 million, or $0.55 per common share on a diluted basis for the fourth quarter of 2018, on net investment income of $83.9 million. PMT previously announced a cash dividend for the fourth quarter of 2018 of $0.47 per common share of beneficial interest, which was declared on December 21, 2018, and paid on January 28, 2019.

Fourth Quarter 2018 Highlights

Financial results:

 

Net income attributable to common shareholders of $35.4 million, down from $40.3 million in the prior quarter

 

o

Results reflect solid contributions from Government-sponsored enterprise (GSE) credit risk transfer (CRT) investments and Interest Rate Sensitive strategies

 

o

Fair value declines in CRT and mortgage servicing right (MSR) investments held in PMT’s taxable subsidiary drove $15.4 million benefit for income tax expense

 

Diluted earnings per common share of $0.55, down 11 percent from the prior quarter

 

Annualized return on average common equity of 11 percent, down from 13 percent in the


 

prior quarter1

 

Book value per common share of $20.61 at December 31, 2018, up from $20.48 at
September 30, 2018

Investment and operating highlights:

 

Continued investment in GSE CRT and MSRs resulting from PMT’s mortgage acquisitions

 

o

Correspondent production from nonaffiliates related to conventional conforming and jumbo loans totaled $9.1 billion in unpaid principal balance (UPB), up 21 percent from the prior quarter

 

o

Loan acquisitions from PennyMac Financial Services, Inc. (NYSE: PFSI) totaled $0.9 billion in UPB, down 2 percent from the prior quarter

 

o

Loans eligible for CRT investments totaled $8.1 billion, resulting in a firm commitment to purchase $310 million of CRT securities

 

o

New MSR investments totaled $128 million

 

Completed $267 million in UPB of previously announced distressed loan sales

Full-Year 2018 Highlights

Financial results:

 

Net income attributable to common shareholders of $127.9 million, up 25 percent from the prior year

 

Diluted earnings per common share of $1.99, up 34 percent from the prior year

 

Net investment income of $351.1 million, up 10 percent from the prior year

 

Return on average common equity of 10 percent, up from 8 percent in the prior year1

 

PMT’s equity allocation to CRT, MSRs and excess servicing spread (ESS) grew to 70 percent of total equity at December 31, 2018, from 66 percent at the end of 2017

 

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


 

Completed distressed loan sales representing $710 million in UPB; equity allocated to distressed loan investments declined to 8 percent of total equity at December 31, 2018, from 22 percent at the end of 2017

“Our results reflect solid performance in a volatile market environment during the fourth quarter,” said President and CEO David Spector. “PMT’s unique credit risk transfer investments, while somewhat impacted by credit spread widening, continued to deliver solid results and the returns on our Interest Rate Sensitive strategies reflect our disciplined focus on hedging through this period. Our correspondent production activities delivered strong volume growth as a result of our unique execution capabilities, driving continued growth in our CRT and MSR investment strategies.”

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

 

3


 

 

Quarter ended December 31, 2018

 

 

 

 

 

 

 

Credit

 

 

Interest rate

 

 

 

 

 

 

 

 

 

 

 

Correspondent

production

 

 

sensitive

stratgies

 

 

sensitive

strategies

 

 

Corporate

 

 

Consolidated

 

 

 

(in thousands)

 

Net gain (loss) on investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loans at fair value

 

$

-

 

 

$

2,505

 

 

$

-

 

 

$

-

 

 

$

2,505

 

Mortgage loans held by variable

   interest entity net of asset-backed

   secured financing

 

 

-

 

 

 

-

 

 

 

445

 

 

 

-

 

 

 

445

 

Mortgage-backed securities

 

 

-

 

 

 

(120

)

 

 

39,146

 

 

 

-

 

 

 

39,026

 

CRT investments

 

 

-

 

 

 

9,814

 

 

 

-

 

 

 

-

 

 

 

9,814

 

Hedging derivatives

 

 

-

 

 

 

-

 

 

 

(5,181

)

 

 

-

 

 

 

(5,181

)

Excess servicing spread investments

 

 

-

 

 

 

-

 

 

 

107

 

 

 

-

 

 

 

107

 

 

 

 

-

 

 

 

12,199

 

 

 

34,517

 

 

 

-

 

 

 

46,716

 

Net gain on mortgage loans acquired

   for sale

 

 

3,635

 

 

 

13,971

 

 

 

-

 

 

 

-

 

 

 

17,606

 

Net mortgage loan servicing fees

 

 

-

 

 

 

-

 

 

 

(7,548

)

 

 

-

 

 

 

(7,548

)

Net interest income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

23,611

 

 

 

10,152

 

 

 

32,944

 

 

 

417

 

 

 

67,124

 

Interest expense

 

 

(11,315

)

 

 

(12,624

)

 

 

(29,742

)

 

 

-

 

 

 

(53,681

)

 

 

 

12,296

 

 

 

(2,472

)

 

 

3,202

 

 

 

417

 

 

 

13,443

 

Other  income (loss)

 

 

15,038

 

 

 

(1,353

)

 

 

-

 

 

 

-

 

 

 

13,685

 

 

 

 

30,969

 

 

 

22,345

 

 

 

30,171

 

 

 

417

 

 

 

83,902

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loan fulfillment and servicing

   fees payable to PennyMac Financial

   Services, Inc.

 

 

28,591

 

 

 

2,032

 

 

 

9,492

 

 

 

-

 

 

 

40,115

 

Management fees payable to PennyMac

   Financial Services, Inc.

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,559

 

 

 

6,559

 

Other

 

 

3,006

 

 

 

2,382

 

 

 

531

 

 

 

5,107

 

 

 

11,026

 

 

 

 

31,597

 

 

 

4,414

 

 

 

10,023

 

 

 

11,666

 

 

 

57,700

 

Pretax income (loss)

 

$

(628

)

 

$

17,931

 

 

$

20,148

 

 

$

(11,249

)

 

$

26,202

 

 

Credit Sensitive Strategies Segment

The Credit Sensitive Strategies segment primarily includes results from CRT, distressed mortgage loans and non-Agency subordinated bonds. Pretax income for the segment was $17.9 million on revenues of $22.3 million, compared to pretax income of $33.1 million on revenues of $40.0 million in the prior quarter.

During the quarter, PMT continued to deliver to Fannie Mae loans eligible for CRT investments under a new REMIC structure.  The Company also settled its fourth CRT transaction with Fannie Mae in the quarter.

4


The Credit Sensitive Strategies segment recorded net gain on mortgage loans acquired for sale of $14.0 million, up from $12.3 million in the prior quarter, which represents the recognition of the fair value of firm commitments to acquire CRT securities under the REMIC structure.  The quarter-over-quarter increase in net gain on mortgage loans acquired for sale was driven by the higher volume of loans delivered into CRT investments resulting from increased loan production activity.

Net gain on investments was $12.2 million, down 54 percent from the prior quarter.  

Net gain on CRT investments was $9.8 million, compared to $29.5 million in the prior quarter.  Net gain on CRT investments included $19.6 million in valuation-related losses, driven by declines in fair value from credit spread widening and increased market volatility.  Net gain on CRT investments also included $30.1 million in realized gains and carry on CRT investments, up from $27.0 million in the prior quarter, as well as losses recognized during the quarter of $0.7 million, up from $0.4 million in the prior quarter, reflecting portfolio seasoning and in line with expectations.

PMT’s distressed mortgage loan portfolio generated realized and unrealized gains totaling $2.5 million, compared to a loss of $3.1 million in the prior quarter. Fair value gains on performing loans in the distressed portfolio were $7.7 million, while fair value losses on nonperforming loans were $4.0 million.

Net interest expense for the segment totaled $2.5 million, compared to $0.1 million in the prior quarter.  Interest income totaled $10.2 million, a 17 percent increase from the prior quarter, driven by an increase in deposits securing CRT agreements resulting from the settlement of our fourth CRT transaction during the quarter.  Interest expense totaled $12.7 million, up from $8.8 million in the prior quarter, resulting from the growth in CRT investments subject to financing arrangements.

Other investment losses were $1.4 million, compared to a gain of $1.5 million in the prior quarter, driven by costs related to ongoing reduction of the real estate acquired in the settlement of loans (REO) portfolio.  At quarter end, PMT’s inventory of REO properties totaled $85.7 million, down from $95.6 million at September 30, 2018.

5


Segment expenses were $4.4 million, down 36 percent from the prior quarter driven by servicing advance recoveries and lower professional services expense.

Interest Rate Sensitive Strategies Segment

The Interest Rate Sensitive Strategies segment includes results from investments in MSRs, ESS, Agency mortgage-backed securities (MBS), non-Agency senior MBS and interest rate hedges. Pretax income for the segment was $20.1 million on revenues of $30.2 million, compared to pretax income of $24.1 million on revenues of $33.2 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 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 totaled $34.5 million, primarily consisting of $39.1 million of gains on MBS, partially offset by a $5.2 million loss in the value of hedging derivatives.

Net interest income for the segment was $3.2 million compared to $5.5 million in the prior quarter.  Interest income totaled $32.9 million, up from $30.6 million in the prior quarter primarily driven by growth in the MBS portfolio. Interest expense totaled $29.7 million, up from $25.1 million in the prior quarter, driven by increased financing costs from higher short-term interest rates and a larger MSR asset.

Net mortgage loan servicing fees resulted in a loss of $7.5 million, compared to a gain of $44.4 million in the prior quarter. Net mortgage loan servicing fees included $57.4 million in servicing fees and $1.4 million in ancillary and other fees, reduced by $34.9 million in realization of MSR cash flows. Net mortgage loan servicing fees also included a $40.9 million decrease in the fair value of MSRs, $8.8 million of related hedging gains and $0.6 million of MSR recapture income. 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.

6


The following schedule details net mortgage loan servicing fees:

 

 

Quarter ended

 

 

December 31, 2018

 

 

September 30, 2018

 

 

December 31, 2017

 

 

(in thousands)

 

From non-affiliates:

 

 

 

 

 

 

 

 

 

 

 

Servicing fees (1)

$

57,400

 

 

$

49,864

 

 

$

45,553

 

Ancillary and other fees

 

1,388

 

 

 

3,111

 

 

 

1,877

 

Effect of MSRs:

 

 

 

 

 

 

 

 

 

 

 

Carried at fair value—change in fair value

 

 

 

 

 

 

 

 

 

 

 

Realization of cashflows

 

(34,863

)

 

 

(30,053

)

 

 

(2,806

)

Other

 

(40,927

)

 

 

33,004

 

 

 

(959

)

 

 

(75,790

)

 

 

2,951

 

 

 

(3,765

)

Gain on sale

 

-

 

 

 

-

 

 

 

660

 

Carried at lower of amortized cost or

   fair value:

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

-

 

 

 

-

 

 

 

(22,609

)

Additions to impairment valuation

   allowance

 

-

 

 

 

-

 

 

 

(1,589

)

Gains (losses) on hedging derivatives

 

8,830

 

 

 

(12,093

)

 

 

(782

)

 

 

(66,960

)

 

 

(9,142

)

 

 

(28,085

)

 

 

(8,172

)

 

 

43,833

 

 

 

19,345

 

From PFSI-MSR recapture income

 

624

 

 

 

561

 

 

 

570

 

Net mortgage loan servicing fees

$

(7,548

)

 

$

44,394

 

 

$

19,915

 

 

(1) Includes contractually specified servicing and ancillary fees

Before January 1, 2018, PMT carried the majority of its MSRs at the lower of amortized cost or fair value.  Beginning January 1, 2018, and prospectively, the Company accounts for all MSRs at fair value.

MSR valuation losses were primarily driven by a decrease in mortgage rates at quarter end, resulting in expectations for higher prepayment activity in the future.  ESS investments also declined in value from a decrease in mortgage rates; however, the valuation losses were more than offset by higher recapture income from PFSI for prepayment activity during the quarter.  PMT generally benefits from recapture income when the prepayment of a loan underlying PMT’s ESS results from refinancing by PFSI.

Segment expenses were $10.0 million, a 10 percent increase from the prior quarter, primarily driven by higher servicing expenses on a growing MSR portfolio.

7


Correspondent Production Segment

PMT acquires newly originated mortgage loans from correspondent sellers and typically sells or securitizes the loans, resulting in current-period income and ongoing investments in MSRs and CRT related to a portion of its production.  PMT’s Correspondent Production segment generated a pretax loss of $0.6 million, compared to a profit of $6.0 million in the prior quarter.  

Through its correspondent production activities, PMT acquired $18.1 billion in UPB of loans and issued interest rate lock commitments totaling $19.1 billion in the fourth quarter, compared to $16.6 billion and $17.9 billion, respectively, in the third quarter.  Of the correspondent acquisitions, conventional conforming and jumbo acquisitions from nonaffiliates totaled $9.1 billion and government-insured or guaranteed acquisitions totaled $8.9 billion, compared to $7.5 billion and $9.0 billion, respectively, in the prior quarter.

Segment revenues were $31.0 million, an 11 percent decrease from the prior quarter and included a net gain on mortgage loans of $3.6 million, other income of $15.0 million, which primarily consists of volume-based origination fees, and net interest income of $12.3 million.  Net gain on mortgage loans acquired for sale in the quarter decreased by $8.9 million from the prior quarter, driven by heightened competition for conventional loans during the quarter.  Net interest income increased $2.5 million from the prior quarter, primarily driven by production volume growth and the corresponding recognition of incentives the Company is currently entitled to receive under one of its master repurchase agreements to finance mortgage loans that satisfy certain consumer relief characteristics.  These incentives totaled $8.7 million, up from $5.0 million in the third quarter.  The Company expects that it will cease to accrue incentives under this repurchase agreement beginning in the second quarter of 2019.  While there can be no assurance, the Company expects that the loss of any such incentives could be partially offset by an improvement in pricing margins.

Segment expenses were $31.6 million, up 10 percent from the prior quarter from increased production activity, partially offset by a reduction in the weighted average fulfillment fee during the quarter.  The weighted average fulfillment fee rate in the fourth quarter was 32 basis points, down from 35 basis points in the prior quarter, reflecting discretionary reductions made by PFSI to facilitate successful loan acquisitions by PMT.

8


Corporate Segment

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

Segment revenues were $417,000, down from $611,000 in the prior quarter.

Management fees were $6.6 million, up 1 percent from the prior quarter primarily driven by a 10 percent increase in incentive fees paid to PFSI in the fourth quarter based on PMT’s profitability.

Other segment expenses were $5.1 million, down from $5.6 million in the prior quarter.

Taxes

PMT recorded an income tax benefit of $15.4 million compared to a $5.1 million expense in the prior quarter, resulting from net losses driven by fair value declines in PMT’s taxable subsidiary.

***

Executive Chairman Stanford L. Kurland concluded, “PMT’s partnership with PFSI and exclusive access to unique investments in GSE CRT and MSRs from its own conventional correspondent production have delivered strong results, placing PMT among the top performing residential mortgage REIT stocks in 2018.  We remain focused on prudently growing PMT’s core investments in CRT and MSRs while continuing to seek attractive new opportunities in the dynamic U.S. mortgage market.  The recent launch of HELOC and prime non-QM loan products by our manager and service provider, PennyMac Financial, is expected to leverage PMT’s ability to securitize and retain credit risk investments from securitizations while further diversifying its investment portfolio.”

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 Standard Time) on Thursday, February 7, 2019.

 

9


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.

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 Companys 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,” ormay 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 our investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject us to additional risks; volatility in our industry, the debt or equity markets, the general economy or the real estate finance and real estate markets specifically; events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets; changes in general business, economic, market, employment and 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 our investment objectives; the inherent difficulty in winning bids to acquire mortgage loans, and our success in doing so; the concentration of credit risks to which we are exposed; the degree and nature of our competition; the availability, terms and deployment of short-term and long-term capital; the adequacy of our cash reserves and working capital; our ability to maintain the

10


desired relationship between our financing and the interest rates and maturities of our assets; the timing and amount of cash flows, if any, from our investments; unanticipated increases or volatility in financing and other costs, including a rise in interest rates; the performance, financial condition and liquidity of borrowers; incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of our customers and counterparties; changes in the number of investor repurchases or indemnifications and our ability to obtain indemnification or demand repurchase from our correspondent sellers; increased rates of delinquency, default and/or decreased recovery rates on our investments; increased prepayments of the mortgages and other loans underlying our mortgage-backed securities or relating to our mortgage servicing rights, excess servicing spread and other investments; our exposure to market risk and declines in credit quality and credit spreads; the degree to which our hedging strategies may or may not protect us from interest rate volatility; the effect of the accuracy of or changes in the estimates we make about uncertainties, contingencies and asset and liability valuations when measuring and reporting upon our financial condition and results of operations; 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; our ability to mitigate cybersecurity risks and cyber incidents; our exposure to risks of loss with real estate investments resulting from adverse weather conditions and man-made or natural disasters;  our ability to satisfy complex rules in order to qualify as a REIT for U.S. federal income tax purposes; our ability to make distributions to our shareholders in the future; and our organizational structure and certain requirements in our 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.

 

 

 

 

11


PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

December 31, 2018

 

 

September 30, 2018

 

 

December 31, 2017

 

 

(in thousands except share amounts)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash

$

59,845

 

 

$

88,929

 

 

$

77,647

 

Short-term investments

 

74,850

 

 

 

26,736

 

 

 

18,398

 

Mortgage-backed securities at fair value

 

2,610,422

 

 

 

2,126,507

 

 

 

989,461

 

Mortgage loans acquired for sale at fair value

 

1,643,957

 

 

 

1,949,432

 

 

 

1,269,515

 

Mortgage loans at fair value

 

408,305

 

 

 

633,168

 

 

 

1,089,473

 

Excess servicing spread purchased from PennyMac

   Financial Services, Inc.

 

216,110

 

 

 

223,275

 

 

 

236,534

 

Firm commitment to purchase credit risk transfer

   security at fair value

 

37,994

 

 

 

18,749

 

 

 

-

 

Derivative assets

 

167,165

 

 

 

143,577

 

 

 

113,881

 

Real estate acquired in settlement of loans

 

85,681

 

 

 

95,605

 

 

 

162,865

 

Real estate held for investment

 

43,110

 

 

 

45,971

 

 

 

44,224

 

Mortgage servicing rights

 

1,162,369

 

 

 

1,109,741

 

 

 

844,781

 

Servicing advances

 

67,666

 

 

 

48,056

 

 

 

77,158

 

Deposits securing credit risk transfer agreements

 

1,146,501

 

 

 

662,624

 

 

 

588,867

 

Due from PennyMac Financial Services, Inc.

 

4,077

 

 

 

2,351

 

 

 

4,154

 

Other assets

 

85,309

 

 

 

92,857

 

 

 

87,975

 

Total assets

$

7,813,361

 

 

$

7,267,578

 

 

$

5,604,933

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Assets sold under agreements to repurchase

$

4,777,027

 

 

$

4,394,500

 

 

$

3,180,886

 

Mortgage loan participation and sale agreements

 

178,639

 

 

 

31,578

 

 

 

44,488

 

Notes payable

 

445,573

 

 

 

445,318

 

 

 

-

 

Asset-backed financing of a variable interest entity at

   fair value

 

276,499

 

 

 

278,113

 

 

 

307,419

 

Exchangeable senior notes

 

248,350

 

 

 

248,053

 

 

 

247,186

 

Assets sold to PennyMac Financial Services, Inc. under

   agreement to repurchase

 

131,025

 

 

 

133,128

 

 

 

144,128

 

Interest-only security payable at fair value

 

36,011

 

 

 

8,821

 

 

 

7,070

 

Derivative liabilities

 

5,914

 

 

 

11,880

 

 

 

1,306

 

Accounts payable and accrued liabilities

 

70,687

 

 

 

70,362

 

 

 

64,751

 

Due to PennyMac Financial Services, Inc.

 

33,464

 

 

 

27,467

 

 

 

27,119

 

Income taxes payable

 

36,526

 

 

 

52,382

 

 

 

27,317

 

Liability for losses under representations and warranties

 

7,514

 

 

 

7,413

 

 

 

8,678

 

Total liabilities

 

6,247,229

 

 

 

5,709,015

 

 

 

4,060,348

 

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 60,951,444, 60,951,444,

   and 61,334,087 common shares, respectively

 

610

 

 

 

610

 

 

 

613

 

Additional paid-in capital

 

1,285,533

 

 

 

1,284,537

 

 

 

1,290,931

 

Accumulated deficit

 

(19,718

)

 

 

(26,291

)

 

 

(46,666

)

Total shareholders' equity

 

1,566,132

 

 

 

1,558,563

 

 

 

1,544,585

 

Total liabilities and shareholders' equity

$

7,813,361

 

 

$

7,267,578

 

 

$

5,604,933

 

 

12


PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

For the Quarterly Periods ended

 

 

December 31, 2018

 

 

September 30, 2018

 

 

December 31, 2017

 

 

(in thousands, expect per share amounts)

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

Net mortgage loan servicing fees:

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

$

(8,172

)

 

$

43,833

 

 

$

19,345

 

From PennyMac Financial Services, Inc.

 

624

 

 

 

561

 

 

 

570

 

 

 

(7,548

)

 

 

44,394

 

 

 

19,915

 

Net gain on mortgage loans acquired for sale:

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

14,902

 

 

 

22,121

 

 

 

17,488

 

From PennyMac Financial Services, Inc.

 

2,704

 

 

 

2,689

 

 

 

2,744

 

 

 

17,606

 

 

 

24,810

 

 

 

20,232

 

Mortgage loan origination fees

 

15,010

 

 

 

12,424

 

 

 

9,683

 

Net gain (loss) on investments:

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

46,609

 

 

 

7,977

 

 

 

41,847

 

From PennyMac Financial Services, Inc.

 

107

 

 

 

1,706

 

 

 

(3,610

)

 

 

46,716

 

 

 

9,683

 

 

 

38,237

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

63,570

 

 

 

58,584

 

 

 

39,173

 

From PennyMac Financial Services, Inc.

 

3,554

 

 

 

3,740

 

 

 

3,940

 

 

 

67,124

 

 

 

62,324

 

 

 

43,113

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

To nonaffiliates

 

51,905

 

 

 

44,797

 

 

 

33,397

 

To PennyMac Financial Services, Inc.

 

1,776

 

 

 

1,812

 

 

 

2,092

 

 

 

53,681

 

 

 

46,609

 

 

 

35,489

 

Net interest income

 

13,443

 

 

 

15,715

 

 

 

7,624

 

Results of real estate acquired in settlement of loans

 

(2,953

)

 

 

(310

)

 

 

(4,101

)

Other

 

1,628

 

 

 

1,785

 

 

 

2,113

 

Net investment income

 

83,902

 

 

 

108,501

 

 

 

93,703

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Earned by PennyMac Financial Services, Inc.:

 

 

 

 

 

 

 

 

 

 

 

Mortgage loan fulfillment fees

 

28,591

 

 

 

26,256

 

 

 

19,175

 

Mortgage loan servicing fees (1)

 

11,524

 

 

 

10,071

 

 

 

11,077

 

Management fees

 

6,559

 

 

 

6,482

 

 

 

5,900

 

Mortgage loan collection and liquidation

 

953

 

 

 

2,747

 

 

 

1,507

 

Compensation

 

1,369

 

 

 

1,924

 

 

 

1,404

 

Mortgage loan origination

 

2,582

 

 

 

2,136

 

 

 

1,786

 

Professional services

 

688

 

 

 

2,616

 

 

 

1,374

 

Real estate held for investment

 

1,799

 

 

 

1,713

 

 

 

2,037

 

Other

 

3,635

 

 

 

2,894

 

 

 

3,496

 

Total expenses

 

57,700

 

 

 

56,839

 

 

 

47,756

 

Income before (benefit from) provision for income

   taxes

 

26,202

 

 

 

51,662

 

 

 

45,947

 

(Benefit from) provision for  income taxes

 

(15,423

)

 

 

5,100

 

 

 

5,109

 

Net income

 

41,625

 

 

 

46,562

 

 

 

40,838

 

Dividends on preferred shares

 

6,235

 

 

 

6,235

 

 

 

6,235

 

Net income attributable to common shareholders

$

35,390

 

 

$

40,327

 

 

$

34,603

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.58

 

 

$

0.66

 

 

$

0.53

 

Diluted

$

0.55

 

 

$

0.62

 

 

$

0.50

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

Basic

 

60,951

 

 

 

60,950

 

 

 

64,485

 

Diluted

 

69,418

 

 

 

69,417

 

 

 

72,952

 

Dividends declared per common share

$

0.47

 

 

$

0.47

 

 

$

0.47

 

 

1 Mortgage loan servicing fees expense includes both special servicing for PMT’s distressed portfolio and subservicing for its mortgage servicing rights

13


PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

 

 

(in thousands, except per share amounts)

 

Net investment income

 

 

 

 

 

 

 

 

 

 

 

 

Net mortgage loan servicing fees:

 

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

$

118,395

 

 

$

67,812

 

 

$

53,216

 

From PennyMac Financial Services, Inc.

 

 

2,192

 

 

 

1,428

 

 

 

1,573

 

 

 

 

120,587

 

 

 

69,240

 

 

 

54,789

 

Net gain on mortgage loans acquired for sale:

 

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

 

48,260

 

 

 

62,432

 

 

 

97,218

 

From PennyMac Financial Services, Inc.

 

 

10,925

 

 

 

12,084

 

 

 

9,224

 

 

 

 

59,185

 

 

 

74,516

 

 

 

106,442

 

Mortgage loan origination fees

 

 

43,321

 

 

 

40,184

 

 

 

41,993

 

Net gain (loss) on investments:

 

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

 

70,842

 

 

 

110,914

 

 

 

24,569

 

From PennyMac Financial Services, Inc.

 

 

11,084

 

 

 

(14,530

)

 

 

(17,394

)

 

 

 

81,926

 

 

 

96,384

 

 

 

7,175

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

From nonaffiliates

 

 

207,634

 

 

 

178,225

 

 

 

199,521

 

From PennyMac Financial Services, Inc.

 

 

15,138