Pennymac Mortgage Investment Trust · NYSE:PMT
Pennymac Mortgage Investment Trust — KBW 2013 Mortgage Finance Conference
15 slides from Pennymac Mortgage Investment Trust's conference presentation, Jun 4, 2013
Slide 1: PennyMac Mortgage Investment Trust, KBW 2013 Mortgage Finance Conference
PennyMac Mortgage Investment Trust June 4, 2013 KBW 2013 Mortgage Finance Conference
Slide 2: Forward-looking statements
1 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 results, future operations
Slide 3: PennyMac Mortgage Investment Trust Is a Unique Mortgage REIT
PennyMac Mortgage Investment Trust Is a Unique Mortgage REIT 2 Demonstrated record of EPS and dividend growth, focused on delivering strong returns on equity over the long term Invests in unique residential mortgage strategies with relatively limited leverage Earnings contributions from both distres
Slide 4: Demonstrated track record of increasing EPS and dividends over the long term
3 Demonstrated track record of increasing EPS and dividends over the long term Raised over $800 million of new equity during this period Earnings Per Share and Dividends Declared KBW 2013 Mortgage Finance Conference 7% 13% 16% 15% 13% 17% 16% 17% 18% Return on Equity(1) (1) Return on average equity.
Slide 5: Investment activities and correspondent lending are both key contributors to pre-tax earnings
4 Investment activities and correspondent lending are both key contributors to pre-tax earnings KBW 2013 Mortgage Finance Conference Pre-tax Net Income by Operating Segment Correspondent Lending Intersegment Elimination 1Q12 2Q12 3Q12 4Q12 1Q13 Intersegment Elimination $ 14.3 $ 26.0 $ 21.5 $ 24.3 $
Slide 6: Investments Today Are Primarily Distressed Loans With Relatively Low Leverage
5 Investments Today Are Primarily Distressed Loans With Relatively Low Leverage Mortgage Assets ($ in millions) KBW 2013 Mortgage Finance Conference PMT’s Long-Term Investments (1) Defined as all debt, senior and subordinated, as a multiple of equity at quarter end. 1.3x 1.0x 0.9x 1.3x 1.1x Leverage
Slide 7: PMT's Distressed Loans Are Held at Significant Discounts To Property Value
6 PMT's Distressed Loans Are Held at Significant Discounts To Property Value (1) KBW 2013 Mortgage Finance Conference Nonperforming loans are valued at 68% of the estimated current value of the underlying properties Expect to realize returns over time through property resolution strategies, includin
Slide 8: IPO of PennyMac Financial Services, Inc.
7 IPO of PennyMac Financial Services, Inc. Leading non-bank mortgage specialist Broad operational capabilities Loan origination and fulfillment Prime servicing Special servicing Investment management expertise Distressed whole loans MSRs Non-agency securities Legacy-free, specialized and scalable op
Slide 9: Agreements, controls and oversight to mitigate potential conflicts in PFSI relationship
8 We believe that PMT has in place the proper agreements, controls, and oversight to mitigate potential conflicts in its relationship with PFSI Governance led by our Board of Trustees which includes seven independent members PMT receives services from PFSI’s subsidiaries pursuant to a Management Agr
Slide 10: Current Market Trends and Opportunities for PMT
Current Market Trends and Opportunities for PMT 9 Correspondent competitive landscape Distressed whole loan demand Ongoing improvement in home prices Home prices continue to improve in most regions of the country and housing appears to be on a steady path to recovery Shortage of home inventory and s
Slide 11: PMT Continues To Be Active in Distressed Whole Loan Acquisitions
10 Distressed whole loan purchases in 1Q13 reached $366 million in UPB Comprised largely of nonperforming loans Acquisition price to UPB averaged 55% in 1Q13 In April, we committed to enter into forward purchase agreements for a total of $481 million in UPB for two pools of nonperforming mortgage lo
Slide 12: Rising Home Values Drove Solid Valuation Gains In Distressed Loans
11 Valuation gains in PMT’s $2.4 billion(1) distressed loan portfolio totaled $56 million in 1Q13 Performing - $674 million(1) performing loan portfolio had valuation gains of $23 million Nonperforming - $1,680 million(1) nonperforming loan portfolio had valuation gains of $33 million Valuation gain
Slide 13: Correspondent Acquisitions Drive Continued Growth in MSR Investment
MSR Portfolio and MSR Asset Correspondent Purchase Volume and Mix 12 Correspondent Acquisitions Drive Continued Growth in MSR Investment (1) For Government-insured loans, PMT earns a sourcing fee and interest income for its holding period and does not pay a fulfillment fee. (2) For the two months en
Slide 14: Correspondent Lending Economics Are Attractive
13 Correspondent Lending Economics Are Attractive KBW 2013 Mortgage Finance Conference Low-cost debt financing and short holding periods for inventory produce attractive returns on equity at these margins Other revenues include origination fees from customers and sourcing fees for FHA/VA loans Resul
Slide 15: Prime Jumbo Acquisitions and Private Label Securitization Opportunity
Prime Non-Agency Jumbo Securitizations(1) ($ in billions) Private-label jumbo securitization represents a significant long-term growth opportunity Securitization levels are a fraction of pre-crisis levels, but recent activity indicates that the market is recovering As the mortgage market normalizes,
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