Pennymac Mortgage Investment Trust · NYSE:PMT
Pennymac Mortgage Investment Trust — Q3 2012 Earnings Presentation
25 slides from Pennymac Mortgage Investment Trust's earnings presentation, Nov 13, 2012
Slide 1: Third Quarter 2012 Earnings Report
PennyMac Mortgage Investment Trust November 8, 2012 Third Quarter 2012 Earnings Report
Slide 2: Forward-looking statements
3Q12 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: Third Quarter 2012 Highlights
3Q12 Earnings Report 3 Third Quarter 2012 Highlights Net Income of $40.4 million on net investment income of $99.2 million Diluted EPS of $0.81 per share, and dividend of $0.57 per share Business segment pre-tax earnings reflect continued strength of the business model Correspondent Lending: $37.4 m
Slide 4: Market Environments Favor PMT's Business Model
Landscape Market Environments Favor PMT’s Business Model 3Q12 Earnings Report 4 Housing Mortgage Market Mortgage-Backed Securities Generally, drives higher returns on liquidations Improves investment valuations Increased demand for REO properties Home price stabilization Consumer sentiment toward ho
Slide 5: PMT's Investment Opportunities Optimized Through PennyMac Relationship
3Q12 Earnings Report 5 PennyMac Mortgage Investment Trust (NYSE: PMT) External Manager; Correspondent Fulfillment and Servicing Provider Unique, symbiotic relationship facilitates investments across the residential mortgage market PMT’s Investment Opportunities Optimized Through PennyMac(1) Relation
Slide 6: PMT Has the Ability to Invest Across the Residential Mortgage Market
3Q12 Earnings Report 6 For example, multi-family acquisition and securitization PMT Has the Ability to Invest Across the Residential Mortgage Market Current Opportunities Strategy and Outlook Acquire ABS and MBS on an opportunistic basis Forecast the population of available distressed loan acquisiti
Slide 7: Factors Impacting PMT's Investment Opportunities Going Forward
Modest improvements in home prices are likely to drive increased demand for home purchases, in addition to incremental refinance activity Non-bank aggregators in Correspondent with the requisite discipline and scalability will continue to grow Fannie Mae’s and Freddie Mac’s role and the evolution of
Slide 8: Mortgage Investment Activities
Mortgage Investment Activities
Slide 9: Correspondent Purchase Volume and Mix
Correspondent Purchase Volume and Mix 3Q12 Earnings Report 9 Correspondent Success Fuels Continued Investments in MSRs (1) For FHA/VA, PMT earns a sourcing fee and interest income for its holding period and does not pay a fulfillment fee. (1) ($ in millions) Correspondent loan purchases totaled $6.3
Slide 10: Investment Opportunities in Correspondent Remain Significant
The competitive environment remained favorable in 3Q12, with strong margins and growth in correspondent seller relationships Capital allocated to correspondent business delivers solid returns PMT has become a significant correspondent market participant, with capacity to grow Client-focused business
Slide 11: Distressed Whole Loan Investments and REO
Distressed Whole Loan Investments and REO (at fair value) PMT’s Whole loan acquisitions totaled $357 million in UPB for 3Q12, comprised entirely of nonperforming loans; Whole loan and REO investments have grown 25% since 3Q11(1) Committed to purchase an additional pool $231 million in UPB of nonperf
Slide 12: Specialty Servicing Expertise Drives Investment Returns
Specialty Servicing Expertise Drives Investment Returns 3Q12 Earnings Report 12 Outcomes After First Twelve Months of PennyMac Ownership (1) Based on a static population of 3,165 non-performing and underperforming whole loans with UPB of $878 million and an average delinquency at acquisition of 12 m
Slide 13: Financial Results
Financial Results (knnyMac’
Slide 14: Mortgage Asset Growth Continues
Mortgage assets rose 20% Q/Q to $2.1 billion The growth was driven by an 84% Q/Q increase in correspondent loans acquired for sale and a 10% rise in distressed whole loans Investments in mortgage servicing rights increased 98% Q/Q to $65 million, and MBS positions were liquidated, with proceeds allo
Slide 15: Solid Growth In Net Income and Dividends
3Q12 Earnings Report 15 Solid Growth In Net Income and Dividends Net Income and Dividends(1) Net income reached $40.4 million, an increase of 37% Q/Q and up 97% from 3Q11 The growth was primarily driven by a 54% Q/Q increase in net investment income, which reached $99 million for the quarter and inc
Slide 16: Investment Activities Segment Pretax Income
3Q12 Earnings Report 16 Investment Activities Segment Pretax Income Pretax income decreased 17% from Q/Q, largely as a result of a lower home price performance impact versus 2Q12 Annualized total return on distressed loan investments was over 17% in 3Q12(1) Interest income increased 5% Q/Q, as a res
Slide 17: Correspondent Lending Segment Pretax Income
3Q12 Earnings Report 17 Correspondent Lending Segment Pretax Income Correspondent segment pretax income rose $25.4 million during the quarter, as a result of strong gains from mortgages acquired for sale Effectively capitalized on favorable market conditions to drive higher gain on mortgage loans ac
Slide 18: MSR Capitalization Rates On New Production in 3Q12
3Q12 Earnings Report 18 MSR Capitalization Rates On New Production in 3Q12 The average capitalization rate on new conventional mortgage servicing rights was 107 bps in 3Q12, down slightly from 110bps in 2Q12 The weighted average coupon of mortgage loans underlying MSRs capitalized during the third q
Slide 19: Servicing Fees Rise as Portfolio Grows; MSR Impairment Driven by Lower Rates
Net loan servicing fees resulted in a loss of $(511) thousand, primarily resulting from impairment provisioning of $(2.9) million on MSRs carried at the lower of cost or fair value Provisioning charges resulted from a 22bps decline in mortgage rates(1) during the 3rd quarter MSRs are a particularly
Slide 20: PMT's REIT Income and Asset Test Results
3Q12 Earnings Report 20 PMT’s REIT Income and Asset Test Results Income Test Requirements YTD Status As of 9/30/12 Notes At least 75% of income must be derived from interest on obligations secured by mortgages or interests in real property, gain from the disposition of non-dealer real property and q
Slide 21: Key Takeaways
Key Takeaways (knnyMac’
Slide 22: Key Takeaways
Key Takeaways 3Q12 Earnings Report 22 PMT’s investments delivered solid returns and significant opportunities exist in today’s mortgage market Correspondent growth drives ongoing investment in valuable MSRs Distressed whole loan investments remain a key investment strategy The re-emergence of the no
Slide 23: Appendix
Appendix (knnyMac’
Slide 24: Portfolio Acquisitions Are Progressing in Line With Expectations
Portfolio Acquisitions Are Progressing in Line With Expectations 3Q12 Earnings Report 24 (1) Ratio of unpaid principal balance remaining to unpaid principal balance at acquisition Purchase 3Q12 Purchase 3Q12 Purchase 3Q12 Purchase 3Q12 Balance ($mm) 182.7 $ 81.1 Balance ($mm) 195.5 $ 77.0 Balance ($
Slide 25: PMT Portfolio Roll Forward
3Q12 Earnings Report 25 PMT Portfolio Roll Forward Loan Investment Portfolio Activity UPB ($ in millions) Beginning balance as of September 30, 2012: $1,859.6 Purchased Portfolios (settled during the quarter) 357.3 Quarterly Activities: REO Sales (66.1) Loan Principal Payments & Adjustments (5.9) Lo
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