Pennymac Mortgage Investment Trust · NYSE:PMT
Pennymac Mortgage Investment Trust — Q2 2013 Earnings Presentation
24 slides from Pennymac Mortgage Investment Trust's earnings presentation, Aug 13, 2013
Slide 1: Second Quarter 2013 Earnings Report
PennyMac Mortgage Investment Trust August 8, 2013 Second Quarter 2013 Earnings Report
Slide 2: Forward-looking statements
2Q13 Earnings Report 2 This presentation 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 resul
Slide 3: Second Quarter and Recent Activity
2Q13 Earnings Report 3 Second Quarter and Recent Activity Second Quarter Highlights Net income of $54.5 million on net investment income of $129.7 million Diluted EPS of $0.86 per share and dividend of $0.57 per share Strong pretax earnings from both of PMT’s business segments Investment Activities:
Slide 4: PMT's Unique Business Model Drives Superior Long-Term Performance
4 PMT’s Unique Business Model Drives Superior Long-Term Performance 13% 16% 15% 13% 17% 16% 17% 18% Return on Equity(2) (1) At period end. (2) Return on average equity. 2Q13 Earnings Report 18% (right axis) (1)
Slide 5: PMT's Investments Are Well-Positioned in the Current Market Environment
5 PMT’s Investments Are Well-Positioned in the Current Market Environment Mortgage Assets ($ in millions) PMT’s Long-Term Investments (1) Defined as all debt, senior and subordinated, as a multiple of equity at quarter end. 1.7x 1.3x 1.0x 0.9x 1.3x Leverage Ratio(1) Mortgage servicing rights that in
Slide 6: Market Outlook
Market Outlook 6 Correspondent Lending Competition Jumbo Private-Label Securitization Mortgage Rates and Housing Increased mortgage rates have significantly reduced refinance activity since early May Total mortgage originations forecast to decline from ~$1 trillion in 1H13 to $500 - $700 billion in
Slide 7: Rising Rates Present Challenges, But PMT Remains Well Positioned
($ in millions) Industry forecasts for the second half of 2013 show origination volumes declining by an average of 36% compared to the first half of the year(1) Purchase volume forecast to grow 16% Refinance volume forecast to decline 56% Rising rates on fixed-rate mortgages have made adjustable-rat
Slide 8: Mortgage Investment Activities
Mortgage Investment Activities
Slide 9: Distressed Whole Loan Acquisitions Continue in 2Q13
9 Distressed whole loan purchases in 2Q13 were $397 million in UPB Acquired a $494 million UPB pool of nonperforming whole loans in July Agreed to acquire an additional pool of nonperforming loans with UPB totaling $502 million, expected to settle in late August(1) Pipeline of opportunities remains
Slide 10: PMT's Distressed Loans Are Held at Significant Discounts to Property Value
10 PMT's Distressed Loans Are Held at Significant Discounts to Property Value Nonperforming loans are valued at 68% of the estimated current value of the underlying properties Returns realized over time through property resolution strategies, including short sales and deeds-in-lieu of foreclosure Pe
Slide 11: Correspondent Acquisition Volume and Mix
Correspondent Acquisition Volume and Mix 2Q13 Earnings Report 11 Correspondent Growth Initiatives Continue in Face of Market Slowdown (1) For Government loans, PMT earns a sourcing fee and interest income for its holding period and does not pay a fulfillment fee. ($ in billions) UPB Correspondent ac
Slide 12: Disciplined Pricing and Risk Management Drive Correspondent Results
12 Disciplined Pricing and Risk Management Drive Correspondent Results Pretax income was $28 million, or 54 bps as a ratio of total locks Profitability, in an environment of declining margins, is driven by disciplined pricing and hedging PMT’s strategy for hedging interest rate exposure is to protec
Slide 13: Continued Progress in Prime Jumbo Acquisitions and Securitization
Continued progress in expanding PMT’s jumbo loan program with correspondent sellers After quarter end, PMT purchased $393 million in UPB of prime jumbo mortgage loans Pool comprised entirely of prime quality, newly originated mortgages Acquired loans will be securitized with other jumbo loans acquir
Slide 14: Financial Results
Financial Results CennyMac’ Mortgage Investment Trust
Slide 15: Pretax Income by Operating Segment
15 Strong pretax earnings contributions from both Investment Activities and Correspondent Lending Pretax Income by Operating Segment Correspondent Lending 2Q12 3Q12 4Q12 1Q13 2Q13 $ 26.0 $ 21.5 $ 24.3 $ 50.3 $ 39.8 $ 12.0 $ 37.4 $ 41.0 $ 8.9 $ 28.1 Correspondent Lending Investment Activities ($ in m
Slide 16: 2Q13 Investment Activities Pretax Income
2Q13 Earnings Report 16 2Q13 Investment Activities Pretax Income Investment Activities Segment Pretax Income Revenue declined 6% Q/Q driven by lower net gain on mortgage loans Net gains on performing loans at more “normalized“ levels vs. 1Q13 Partially offsetting the decline was higher interest inco
Slide 17: Distressed Whole Loans Deliver Solid Gains in 2Q13
17 Distressed Whole Loans Deliver Solid Gains in 2Q13 Nonperforming loans drove net gains on mortgage loans in 2Q13 Gains on nonperforming loans rose 4%, driven by resolution activity and home price appreciation Gains on performing loans totaled $4.7 million, down from $23.0 million in 1Q13 First qu
Slide 18: Mortgage Servicing Rights (MSR) Asset Valuation
2Q13 Earnings Report 18 Mortgage Servicing Rights (MSR) Asset Valuation PMT accounts for most of its originated MSRs under the lower of amortized cost or fair value method MSRs where the note rate on the underlying loan is equal to or less than 4.5% Fair value of the MSRs increased in excess of thei
Slide 19: Correspondent Lending Delivers Strong Results in 2Q13
2Q13 Earnings Report 19 Correspondent Lending Delivers Strong Results in 2Q13 Correspondent Lending Segment Pretax Income Correspondent segment revenue increased 42% Q/Q to $58.5 million Net gains on mortgage loans acquired for sale increased 52% Q/Q Margin pressure stabilized vs. 1Q13 Conventional
Slide 20: Key Takeaways
Key Takeaways CennyMac’ Mortgage Investment Trust
Slide 21: PMT Is Investing in Many Attractive Opportunities Including New Areas
2Q13 Earnings Report 21 PMT Is Investing in Many Attractive Opportunities Including New Areas Distressed whole loans remain attractive $1.8 billion in acquisitions year-to-date(1); pipeline appears robust through 2014 Correspondent lending delivered strong results in a rising rate environment and dr
Slide 22: Appendix
Appendix CennyMac’ Mortgage Investment Trust
Slide 23: Distressed Portfolio by Acquisition Period
Distressed Portfolio by Acquisition Period 23 (1) Ratio of unpaid principal balance remaining to unpaid principal balance at acquisition 2Q13 Earnings Report Purchase 2Q13 Purchase 2Q13 Purchase 2Q13 Purchase 2Q13 Balance ($mm) 182.7 $ 68.3 Balance ($mm) 195.5 $ 61.7 Balance ($mm) 146.2 $ 46.8 Balan
Slide 24: Distressed Portfolio by Acquisition Period (cont.)
Distressed Portfolio by Acquisition Period (cont.) 24 (1) Ratio of unpaid principal balance remaining to unpaid principal balance at acquisition 2Q13 Earnings Report Purchase Q2 2013 Balance ($mm) 366.2 $ 339.6 Pool Factor (1) 1.00 0.93 Current 1.6% 6.4% 30 1.5% 3.0% 60 3.5% 3.5% 90+ 82.2% 69.6% FC
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