PennyMac Mortgage Investment Trust Reports First Quarter 2011 Results

CALABASAS, Calif.--(BUSINESS WIRE)--PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income for the first quarter of 2011 of $7.6 million, or $0.35 per diluted share, on total net investment income of $17.3 million. Quarterly earnings were up from the fourth quarter’s earnings of $7.3 million; however, earnings per share declined as the number of shares outstanding increased with the equity offering completed during the first quarter. In addition, the Board of Trustees of PMT has declared a cash dividend of $0.42 per common share of beneficial interest. This dividend is payable on May 31, 2011 to common shareholders of record on May 16, 2011.

During the first quarter, PMT invested $243 million in nonperforming residential mortgage whole loans and real estate owned properties (REO). At the end of the quarter, the Company’s portfolios of residential mortgage whole loans and mortgage-backed securities were valued at $592 million and $102 million, respectively. After the end of the first quarter, the Company completed a transaction to purchase nonperforming whole loans valued at $31 million. Also, since the end of the first quarter, the Company has entered into two additional transactions to purchase nonperforming whole loans valued at $134 million in aggregate.¹

PMT completed an equity offering for 10.9 million of the Company’s common shares during the quarter. This generated net proceeds of $188 million for the Company, most of which was deployed into three whole loan transactions with two different counterparties. In conjunction with the whole loan transactions, the Company also increased the capacity of one of its existing credit facilities from $125 million to $250 million. This puts the total capacity of the Company’s credit facilities to finance nonperforming whole loans and REO at $350 million. To date, we have utilized $217 million of these facilities’ capacity.

During the quarter ended March 31, 2011, PMT recorded net investment income on interest-earning assets totaling $16.2 million, as summarized below.

The Company’s mortgage loans generated realized and unrealized gains totaling $10.4 million in the first quarter. Of these gains, $2.4 million was realized through payoffs and sales, the result of collection on the loan balances at levels higher than recorded fair values. The following is a breakdown of the realized and unrealized gains on mortgage loans for the first quarter:

Expenses for the first quarter of 2011 totaled $9.0 million, compared to $6.1 million in the fourth quarter of 2010. This increase was largely attributable to increases in loan servicing fees of $780 thousand and interest expense of $1.7 million. The Company’s portfolio of loans serviced grew by $459 million in unpaid principal balance during the first quarter. The increase in interest expense was expected as leverage was utilized for the entire quarter, and we expect continued increase in this expense as we more fully utilize our credit facilities and acquire additional portfolios.

Stanford L. Kurland, Chairman and Chief Executive Officer of PMT, stated, “We continued to identify attractive investment opportunities in the quarter, capitalizing on persisting market dislocations in the non-agency residential mortgage market. As a result, we were able to put to work the proceeds from our recent equity offering and increased credit capacity almost immediately with purchases in three whole loan transactions. The results of these acquisitions should positively contribute to returns as we hold them for a full quarter and as the loans proceed to liquidation.

“The whole loan portfolio performed well in the quarter,” continued Mr. Kurland. “We saw some seasonality effects early in the quarter as fewer investors purchased homes out of foreclosure or via REO sales. The extreme winter conditions across the United States had a negative effect on sales as well, impacting our liquidation results for the quarter and increasing the age of the portfolio of REO we hold in inventory. In March, we saw a return in activity to levels similar to those seen in the fourth quarter. This activity, along with our healthy pipeline of nonperforming loans at the end of the quarter, makes us believe PMT is well positioned as we look forward.

“The Board maintained the dividend at $0.42 per share, reflecting our continued positive outlook for the Company and belief that we are continuing to grow shareholder value,” concluded Mr. Kurland.

Management’s recorded earnings call and slide presentation will be available in the Investor Relations section of the Company’s website at www.PennyMacMortgageInvestmentTrust.com beginning at 5:30 a.m. (PT) on Wednesday, May 4, 2010.

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. PennyMac Mortgage Investment Trust trades on the New York Stock Exchange under the symbol "PMT" and is externally managed by PNMAC Capital Management, LLC, a wholly owned subsidiary of Private National Mortgage Acceptance Company, LLC. Additional information about PennyMac Mortgage Investment Trust is available at www.pennymacmortgageinvestmenttrust.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 Company’s 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,” or “may” 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 general business, economic, market and employment conditions from those expected; continued declines in residential real estate and disruption in the U.S. housing market; the availability of, and level of competition for, attractive risk-adjusted investment opportunities in residential mortgage loans and mortgage-related assets that satisfy our investment objectives and investment strategies; changes in our investment or operational objectives and strategies, including any new lines of business; the concentration of credit risks to which we are exposed; the availability, terms and deployment of short-term and long-term capital; unanticipated increases in financing and other costs, including a rise in interest rates; the performance, financial condition and liquidity of borrowers; increased rates of delinquency or decreased recovery rates on our investments; increased prepayments of the mortgage and other loans underlying our investments; 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; and our ability to satisfy complex rules in order to qualify as a REIT for U.S. federal income tax purposes. 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.

¹ These pending transactions are subject to continuing due diligence, customary closing conditions, and obtaining additional capital adequate to fund the acquisitions. There can be no assurance that the committed amount will ultimately be acquired or that the transactions will be completed at all.