Pennymac Mortgage Investment Trust · NYSE:PMT
Pennymac Mortgage Investment Trust — Q2 2012 Earnings Presentation
25 slides from Pennymac Mortgage Investment Trust's earnings presentation, Aug 8, 2012
Slide 1: Second Quarter 2012 Earnings Report
PennyMac Mortgage Investment Trust August 2, 2012 Second Quarter 2012 Earnings Report
Slide 2: Forward-looking statements
2Q12 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 2012 Highlights
2Q12 Earnings Report 3 Second Quarter 2012 Highlights Net Income of $29.6 million on revenue of $64.4 million Diluted EPS of $0.79 per share, dividend of $0.55 per share and ROAE of 17% Correspondent purchase volume increased to $3.4 billion in UPB, an increase of 88% from 1Q12 Conventional purchase
Slide 4: Home Prices and Purchase Demand Indicators Showing Improvement
2Q12 Earnings Report 4 Home Prices and Purchase Demand Indicators Showing Improvement Signs of home price equilibrium are evident in recent HPI data, with all major metro areas showing some level of price improvement from trough levels Home builder sentiment at four year highs Pending home sales at
Slide 5: Mortgage Origination Market Continues To Evolve
2Q12 Earnings Report 5 Mortgage Origination Market Continues To Evolve Mortgage Originations(1) Estimate Actual Correspondent Market Share of Selected Banks(2) Banks have given up significant market share in correspondent Non-bank financial intermediaries offer competitive alternatives to banks Incr
Slide 6: PMT's Distinctive Business Model Focused On Long-term Value
Focus on residential mortgage loans and the business of mortgage banking Complete end-to-end origination and servicing capabilities Growing correspondent business fuels growth of MSR servicing portfolio Leading specialty servicer; PMT is the only REIT participating in the distressed whole loan oppor
Slide 7: Financial Results
Financial Results (&nnyMac’
Slide 8: Income Statement Overview (Unaudited)
2Q12 Earnings Report 8 Income Statement Overview (Unaudited) Drivers Net gain on investments rose Q/Q as a result of strong liquidation activity and improved loan attributes Net gain on loans acquired for sale increased 35% Q/Q Servicing income was impacted by increased prepayment expectations as a
Slide 9: Solid Growth In Mortgage Assets and Net Investment Income
2Q12 Earnings Report 9 Solid Growth In Mortgage Assets and Net Investment Income Mortgage assets rose 42% Q/Q, driven by four distressed loan pool acquisitions and increase in mortgage loans held for sale at quarter end The MSR asset increased 77% Q/Q to $33 million ($ in millions) Increased activit
Slide 10: Investment Activities Produce Record Pretax Income in Q2
2Q12 Earnings Report 10 Investment Activities Produce Record Pretax Income in 2Q12 Investment Activities pretax income increased 82% from 1Q12 Liquidation activity increased 28% Q/Q(1) Loan valuations rise a result of improving loan attributes and a net increase in home prices Interest income declin
Slide 11: Correspondent Lending Segment Pretax Income Rises in 2Q12
2Q12 Earnings Report 11 Correspondent Lending Segment Pretax Income Rises in 2Q12 Correspondent segment pretax income rose 17% Q/Q, on higher net gain on mortgage loans acquired for sale Lock volumes reached $4.6 billion, a 94% Q/Q increase Conventional loan sales rose 43% Q/Q Margins remain healthy
Slide 12: MSR Capitalization Rates On New Production in 2Q12
2Q12 Earnings Report 12 MSR Capitalization Rates On New Production in 2Q12 The average capitalization rate on new conventional mortgage servicing rights was 110 bps in 2Q12 MSRs booked in the current environment have an inherently lower risk of prepayment due to low rates on the underlying mortgage
Slide 13: Servicing Portfolio Continues to Grow; MSRs Impacted By Lower Rates
Loans serviced for others grew 91% Q/Q driven by the solid growth in correspondent loan purchases Net loan servicing fees incurred an $855K loss, primarily due to MSR valuation adjustments Resulted from higher prepayment assumptions driven by falling mortgage rates Mortgage rates declined 33bps in 2
Slide 14: Investment Activities
Investment Activities (&nnyMac’
Slide 15: Market For Distressed Mortgage Loans
15 Market For Distressed Mortgage Loans Flow of distressed whole loan deals available for review in 2Q12 was strong We anticipate that the flow of deals will be consistent for next twelve months and possibly longer We expect the pipeline for potential distressed loan acquisitions to be $15-$20 billi
Slide 16: Distressed Mortgage Investments
16 Distressed Mortgage Investments Whole loan acquisitions totaled $402 million in UPB in 2Q12 Largest quarterly purchase of distressed loan pools since 1Q11 Purchased pools were both nonperforming and reperforming loans Nonperforming loans: UPB acquired – $224 million Current – 5% 90+ days delinque
Slide 17: PMT Loan Portfolio Liquidation Activity Rose On Strong REO Sales
2Q12 Earnings Report 17 PMT Loan Portfolio Liquidation Activity Rose On Strong REO Sales Loan portfolio liquidations rise 24% Q/Q REO sales comprised 48% of liquidations, increasing 19% Q/Q Solid demand, with multiple offers Assets sold at foreclosure auctions doubled quarter-over-quarter, implying
Slide 18: Market for Foreclosure and REO Properties Improved in 2Q12
18 Market for Foreclosure and REO Properties Improved in 2Q12 Sales of REO and Foreclosures to Third Parties increased in 2Q12 Third Party foreclosure sales doubled as buyers more readily met our reserve price Demand for foreclosure properties from investors and first-time home buyers has been stron
Slide 19: Portfolio Acquisitions Are Progressing in Line With Expectations
Portfolio Acquisitions Are Progressing in Line With Expectations 2Q12 Earnings Report 19 (1) Ratio of unpaid principal balance remaining to unpaid principal balance at acquisition Purchase 2Q12 Purchase 2Q12 Purchase 2Q12 Purchase 2Q12 Balance ($mm) 182.7 $ 85.2 Balance ($mm) 195.5 $ 82.9 Balance ($
Slide 20: Correspondent Lending
Correspondent Lending (&nnyMac’
Slide 21: PMT Is Capitalizing On The Significant Opportunity in Correspondent
PMT Is Capitalizing On The Significant Opportunity in Correspondent Significant transformation occurring in the correspondent channel New focus on retail channel originations and the capital treatment of MSRs under Basel III has caused many banks to reduce their presence or exit the channel PMT is c
Slide 22: Correspondent Delivers Continued Growth
Purchases totaled $3.4 billion in 2Q12, up 88% vs. 1Q12 and the fourth consecutive quarter of greater than 80% quarter over quarter growth July volume: Purchases of $1.7 billion, Locks of $2.4 billion Correspondent Purchases and Lock Volumes (UPB) 2Q12 Earnings Report 22 Correspondent Delivers Conti
Slide 23: Growth Strategy
Growth Strategy 2Q12 Earnings Report 23 Operations(1) Correspondent Partners Product Development Variable cost structure allows for greater flexibility and scale Ongoing enhancement to fulfillment capabilities and systems to drive increased efficiencies and lower costs Data integrity and asset quali
Slide 24: Key Takeaways
Key Takeaways (&nnyMac’
Slide 25: Key Takeaways
Key Takeaways 2Q12 Earnings Report 25 PMT’s business model and strong operational execution deliver solid results Investment Activities and Correspondent Lending deliver record pretax earnings Growth in correspondent purchase volume and the servicing portfolio continues Increased liquidation activit
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